Tuesday, March 31, 2015

Piketty's nuances

After selling 1.5 million books, now Piketty says:
The way in which I perceive the relationship between r>g and inequality is often not well captured in the discussion that has surrounded my book. For example, I do not view r>g as the only or even the primary tool for considering changes in income and wealth in the twentieth century, or for forecasting the path of inequality in the twenty-first century. Institutional changes and political shocks— which to a large extent can be viewed as endogenous to the inequality and development process itself—played a major role in the past, and it will probably be the same in the future.
His obsession with taxation remains:
In my book, I propose a simple rule of thumb to think about optimal wealth tax rates. Namely, one should adapt the tax ratesto the observed speed at which the different wealth groups are rising over time.
One of the main conclusions of my research is indeed that there is substantial uncertainty about how far income and wealth inequality might rise in the twenty-first century, and that we need more financial transparency and better information about income and wealth dynamics, so that we can adapt our policies and institutions to a changing environment. This might require better international fiscal coordination, which is difficult but by no means impossible.
Why is he focusing strictly on taxation, while admitting that institutional changes and political shocks play a major role?

So what?. Maybe the inequality explanation lies on housing wealth... and not on the return on capital. Anyway, the profitability from the book -for Piketty- is huge, and the solutions remain uncertain.

PS: WSJ, The economist,

PS. From the last Sistema Nacional de Salud report p.170:
"Extremadura con 9,5% de gasto sanitario público sobre el PIB, junto con Cantabria con 8,3% y Murcia con 7,9% fueron las comunidades autónomas que presentaron en el año 2012 el porcentaje más elevado. En el extremo opuesto se encontraba Madrid con el 4,1% de gasto sanitario público sobre el PIB y Cataluña con 4,9."
These are facts, not opinions. Now you can understand why we want to leave from this state soon,  double of public budget over GDP under the same taxation system!. Unacceptable. Good bye!

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