Emmanuel Saez

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“The Rise Of The Top 1 Per Cent Is An American Thing”

June 28, 2015 in Excerpts, Politics, Science/Tech, Urban Studies | Permalink

Thomas Piketty is a capitalist, which might surprise some. The French economist simply believes the system is a driving force of wealth inequality if left unfettered and must be constantly treated, like a patient prone to fever. In a Financial Times piece by Anne-Sylvaine Chassany, Piketty discusses the development of his ideas. An excerpt:

Piketty says his interest in inequality crystallised after the collapse of the Berlin Wall and the first Gulf war. He recalls visiting Moscow in 1991 and being struck by “the lines in front of shops”. He came back vaccinated against communism — “I believe in capitalism, private property, the market” — but also with a question central to his work: “How come those people had been so afraid of inequality and capitalism in the 19th and 20th century that they created such a monstrosity? How can we tackle inequality without repeating this disaster?”

The first Gulf war, he believed, demonstrated the cynicism of the west: “We are told constantly that states can’t do anything, that it’s impossible to regulate the Cayman Islands and the other tax havens because they are too powerful, and all of a sudden we send a million soldiers 10,000km from home to allow the emir of Kuwait to keep his oil.”

I am halfway through the now tepid bolognese when I ask him why his work had such an impact in the US without causing anything like such a stir in France at the time of its original publication. Piketty says he caught American attention in 2003 when, together with Emmanuel Saez, a fellow French economist who teaches at the University of California, he first compiled historical data on the US’s wealthiest people. In 2009, newly elected President Obama used the French economists’ graph that showed inequality was back to its 1929 peak. “We became the target of Republican think-tanks,” he recalls. The French version of the book acted as a teaser to those critics, he believes, helping propel it to the top of Amazon’s bestseller list for three weeks when it was released in English.

“The rise of the top 1 per cent is an American thing. It’s not by chance that Occupy Wall Street happened in Wall Street, and not in Brussels, Paris or Tokyo,” he says. “It’s different in Europe. Here, inequality takes the form of unemployment and public debt.”

Though Piketty concedes that the global wealth tax he recommends is a “utopian” dream, he also says a confiscatory tax rate of more than 80 per cent on earnings exceeding $1m would work.•

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“The Share Of Americans Convinced That Health Care Is A Right Shrank From A Majority To A Minority”

April 23, 2015 in Excerpts, Politics, Science/Tech, Urban Studies | Permalink

Obamacare, as it was derisively labeled by those who wanted to scare us from it, has been one of our nation’s most successful large-scale pieces of legislation in recent memory. It’s expanded insurance tremendously, slowed formerly ballooning costs and would seem to be a long-term job creator. (Diagnostics and service aspects of medicine may soon be automated, but many other positions will require a human element for the foreseeable future.) Even Tea Party representatives have enjoyed the benefits.

You would think the populace would be thrilled, but poll numbers stubbornly suggest that the Affordable Healthcare Act has turned off much of the nation to a further sharing of our responsibility for one another. I don’t think of this as a victory for the GOP PR machine. I’m not one of those people who believe that the matter with Kansas is that the citizens have been hoodwinked. The matter with Kansas is Kansans, and to extrapolate that, the matter with America is Americans. I don’t believe we’re fooled. I think we often see things through ideology rather than by results, and that’s a dangerous stance, especially if we are headed for greater wealth inequality, encouraged by AI which will reduce employment opportunities. Perhaps futurists in Silicon Valley believe we’re entering an age of technological socialism, but the people are not enamored with such an idea, even if it would benefit them. From Thomas Edsall at the New York Times:

With the advent of the Affordable Care Act, the share of Americans convinced that health care is a right shrank from a majority to a minority.

This shift in public opinion is a major victory for the Republican Party. It is part of a larger trend: a steady decline in support for redistributive government policies. Emmanuel Saez, an economics professor at Berkeley and one of the nation’s premier experts on inequality, is a co-author of a study that confirms this trend, which has been developing over the last four decades. A separate study, “The Structure of Inequality and Americans’ Attitudes Toward Redistribution,” found that as inequality increases, so does ideological conservatism in the electorate.

The erosion of the belief in health care as a government-protected right is perhaps the most dramatic reflection of these trends. In 2006, by a margin of more than two to one, 69-28, those surveyed by Gallup said that the federal government should guarantee health care coverage for all citizens of the United States. By late 2014, however, Gallup found that this percentage had fallen 24 points to 45 percent, while the percentage of respondents who said health care is not a federal responsibility nearly doubled to 52 percent.•

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“In America At Least, Inequality In Wealth Is Approaching Record Levels”

November 10, 2014 in Books, Excerpts, Politics, Science/Tech, Urban Studies | Permalink

Although better education, particularly at the primary and secondary levels, would be a great thing in America, I don’t really believe that such an improvement would reverse wealth inequality in the country, as Thomas Piketty has suggested. We seem to be in a spiral with no easy answers. From the Economist:

“AMONG the most controversial of Thomas Piketty’s arguments in his bestselling analysis of inequality, Capital in the Twenty-First Century is that wealth is increasingly concentrated in the hands of the very rich. Rising wealth inequality could presage the return of an 18th century inheritance society, in which marrying an heir is a surer route to riches than starting a company. Critics question the premise: Chris Giles, the economics editor of the Financial Times, argued earlier this year that Mr Piketty’s data were both thin and faulty. Yet a new paper suggests that, in America at least, inequality in wealth is approaching record levels.

Earlier studies of American wealth have tended to show only small increases in inequality in recent decades. A 2004 study of estate-tax data by Wojciech Kopczuk of Columbia University and Emmanuel Saez of the University of California, Berkeley, found an almost imperceptible rise in the share of wealth held by the top 1% of families, from about 19% in 1976 to 21% in 2000. A more recent investigation of the Federal Reserve’s data on consumer finances, by Edward Wolff of New York University showed a continued but gentle increase in inequality into the 2000s. Mr Piketty’s book, which drew on this previous work, showed similarly modest rises in wealth inequality in America.

A new paper by Mr Saez and Gabriel Zucman of the London School of Economics reckons past estimates badly underestimated the share of wealth belonging to the very rich. It uses a richer variety of sources than prior studies, including detailed data on personal income taxes (which the authors mine for figures on capital income) and property tax, which they check against Fed data on aggregate wealth. The authors note that not every potential source of error can be accounted for; tax avoidance strategies, for instance, could cause either an overestimation of the wealth share of the rich (if they classify labour income as capital income in order to take advantage of lower rates) or an underestimation (if they intentionally seek out lower yielding investments for their tax advantages). Yet they believe their estimates represent an improvement over past attempts.

The results are enough to make Mr Piketty blush.”

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