When Thomas Piketty's book about capital and inequality became a best-seller the shills for the 1% recognized the danger.
The soft Marxism in Capital, if unchallenged, will spread among the clerisy and reshape the political economic landscape on which all future policy battles will be waged. We’ve seen this movie before.So in the same spirit that brought us physician tested and approved cigarettes, I present to you the official response from the "serious" economists of the 1%.
ZERO! That's what "real" economists know for a "fact".The Boston University economist Christophe Chamley and the Stanford economist Kenneth Judd came up independently with what we might call the Chamley-Judd Redistribution Impossibility Theorem: Any tax on capital is a bad idea in the long run, and that the overwhelming effect of a capital tax is to lower wages. A capital tax is such a bad idea that even if workers and capitalists really were two entirely separate groups of people—if workers could only eat their wages and capitalists just lived off of their interest like a bunch of trust-funders—it would still be impossible to permanently tax capitalists, hand the tax revenues to workers, and make the workers better off.And the thing about this is that it’s a rather well known finding too. Which is why optimal taxation theory insists that the correct rate of taxation of returns to capital is zero.
The article goes on to tell us that the only possible reason why anyone would want to tax capital, earned or unearned, is for reasons of jealousy. It's all science.
Who could possibly be such a leftist wacko as to suggest that capital should ever be taxed?
Jefferson cited Adam Smith, the hero of free market capitalists everywhere, as the source of his conviction that (as Smith wrote, and Jefferson closely echoed in his own words), "A power to dispose of estates for ever is manifestly absurd. The earth and the fulness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural." Smith said: "There is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death."'Ol Crazy Thomas Jefferson and Nutzo Adam Smith. What conservative economist would ever listen to them, right? Or Herbert Hoover or Teddy Roosevelt.
Marxist wackos wanting to tax wealth and redistribute it like Piketty and John Maynard Keynes.
It reminds me of something I was reading about the other day.
Back in the 1830's in England, some people wanted to reform the factories there. It seems they were disturbed by 9-year old children working 12 hours a day around dangerous machinery.
So without consulting any serious economist they passed the first of the Factory Acts. This law, which can only be considered as "socialism" had various elements, such as:
* Children (ages 14–18) must not work more than 12 hours a day with an hour lunch break. Note that this enabled employers to run two 'shifts' of child labour each working day in order to employ their adult male workers for longer.
* Children (ages 9–13) must not work more than 8 hours with an hour lunch break.
* Children (ages 9–13) must have two hours of education per day.
* Outlawed the employment of children under 9 in the textile industry.
* Children under 18 must not work at night.
Well the Cotton Manufacturers were not going to stand for this! So they hired a "serious" Oxford economist called Nassau William Senior, who like the economists of the 1% today, was very well respected by his peers. Together with the Manchester cotton tycoons, they wrote a letter to the President of the Board of Trade.
Mr. SENIOR then enters into an analysis, from which it appears that the whole net profit is derived from the work done in the last hour. If the factory could be kept at work an hour and a half longer, the net profit would be doubled ; if the time were reduced one hour per day, net profit would be destroyed ; and if it were reduced an hour and a half, even gross prolit would go.You see. It's simple economics.
If we don't work our children by at least 12 hours a day then the mills will be unprofitable and they will all shut down. It's scientifically proven!
Any plan, therefore, which should reduce the present comparatively short hours, must either destroy profit, or reduce WageThe "comparatively short hours" of 11 hour days for 12 year old children is an iron-clad law of economics. It can never change. Just like taxing capital on any level will reduce wages.
Professor Senior had a few other opinions he liked to share as well:
[The Irish Famine] "would not kill more than one million people, and that would scarcely be enough to do any good."
- Nassau William Senior
It all reminds me of how famous, respected, and loved by the right-wing, economist Alan Greenspan somehow failed to predict the collapse of Lincoln Savings and Loan in 1989, and then failed to predict the failure of Wall Street in 2008. Both times it was "impossible to predict".
In between those two events "serious" economists waited on his every word as he explained that businesses didn't need to be regulated because they were self-regulating. It's an iron-clad law of economics, you understand. If you disagree then you simply aren't smart enough.