Tuesday, May 06, 2014

Michael Hudson on Piketty

An earlier longer interview was posted before. Generally the bits by Michael Hudson seem reasonable to me. He started working for banks and became a Marxist (of what denomination I do not know). He was one of those economists who explicitly warned about the housing crisis. Some excerpts from the interview:
"And so, basically, he’s described the symptoms of what’s wrong. And people are very glad that at least he’s described the symptoms that everybody knew but nobody had spent the three or four years that it took to make all of the charts charts that he’s made...
Well, the one percent have got rich by holding the 99 percent in debt. Basically, you have an economy where governments and businesses, homeowners, credit card users, and people getting an education all have to run into student debt, mortgage debt, credit card debt, government debt, corporate debt, all to the 1 percent. So the 1 percent wouldn’t be making all of this income and concentrating all this wealth if they didn’t hold the bottom 99 percent in debt to itself. So you have a polarity. You wouldn’t have the 1 percent getting rich if they weren’t–if it wasn’t in an exploitative way, making the 99 percent more dependent on them.
Now, if the 1 percent made their money–you know, they call themselves job creators as if they’re creating the prosperity, but they’re not creating the prosperity, because what they’re getting is interest and economic rent much more than profits. They’re getting rich in an exploitative way, not in a productive way that helps the economy grow and raises living standards....
So the first thing he wants is an inheritance tax.
The second thing he wants is more problematic. He said, well, maybe there can be a world tax on wealth, because after all, the rich families in America hold their money offshore or in Swiss banks or in the Caribbean. So he wants a general wealth tax. And that’s what he’s been criticized for, because he hasn’t really gone to the root of what is creating this polarization."
And then comes the criticism. Well worth a read.
P.S. Piketty has been getting it both from the right and left ( those from the left are usually posted by Yves Smith). The above seems to me to be a good appraisal of what Piketty has done and what is missing. MH said earlier that he did not read Piketty's book but is familiar with Piketty papers on which it is based. See in particular 'Capital is back' by Piketty and Zucman.
P.P.S. A bit more about Michael Hudson The man who fired Alan Greenspan and a review of one his books Super Imperialism.

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