- The gang's walk. Picketty and the Catalan syndrome
- Books: The Ten Commandments Against the Inequality of the 'Prophet' Piketty
Thomas Pikkety (Clichy, France, 1971) is in a hurry. France's strikes have delayed it. In addition, he has a lot of experience giving answers after the best seller that supposed Capital in the 21st Century (2014). Now he returns with Capital and Ideology (Ed. Deusto), where he puts his thesis on economic inequality to walk through the history of humanity. His proposal to move towards a new capitalism: a tax of 90% to the super rich, an inheritance of 120,000 euros for all at 25 years and the disappearance of indirect taxes."Inequality is not economic or technological: it is ideological and political." This is the main conclusion of his book. What does it tell me if I tell you that inequality is a natural phenomenon? Well, it comes from nature, in the sense that everyone is different and has different talents, but then the institutions developed by man make a difference. In some institutions the initial inequality is exacerbated, large concentrations of wealth and property accumulate across families. The great lesson of history is that the legal or fiscal or educational system can make a huge difference in terms of inequality. Elites are always conservative and want to see inequality as something impossible to change. But history shows us the opposite. Why do you write about Catalonia which is "especially shocking to see that Catalan nationalism is more pronounced among the most favored social categories than among the most modest ones?" The problem of Catalonia is complicated and my intention is not is to affirm that the tax complaint is the only one that exists. We know that there are issues related to the form of government - republic versus monarchy, for example - and there are many conflicts. But I am concerned about the tax issue and that part of the motivation for independence, not all, but an important part, is the desire to maintain more tax revenue within Catalonia. But you declare yourself surprised because you expected that in Catalonia the richest and most educated would be less nationalistic or what? It is very shocking that this happens. Because if it were only for culture or language, you would not expect the relationship of separatism with the level of income to be so strong. That this relationship is what it suggests is that the economic motivation to ask for independence is very significant. I would like the leftist independence parties to clarify their position regarding fiscal solidarity. I know that people who defend the independence of Catalonia want to stay in the EU and my question then is very simple: would they accept to continue paying tax transfers at the European federal level or want to be a kind of Luxembourg to attract more investment and stay tax revenues for them alone? We cannot organize Europe with a lot of tax havens that compete with each other, we need solidarity. I am sure that in California they would be very happy to keep their tax revenues, but they have to pay Washington their federal tax and that is a good system to have a broader federal project. And the EU should be such a project, not based on the tax competition of all against all. There are people who say that the only possibility that their global tax system is imposed is a "Chinese-style" world government, to avoid competition fiscal between countries ... The Chinese system is very opaque and very unequal. In post-communist countries, such as Russia and China, there may be a communist party, but the economic system is more capitalist than communist and in fact both Russia and China have become the best allies of tax havens and hypercapitalism. In these countries some people close to power become oligarchs and can transmit all their wealth to their children without any regulation or taxes. For me this is the worst possible combination. And then how is your global taxation imposed? I think it can be done at many levels. In Spain, in France ... Of course, we can move forward a lot if we do it together, but much can be done at the country level, especially if we abandon this vision that we can have free movement of capital without any regulation , without any exchange of information on who, how and when it transfers. That was a big mistake of the Maastricht Treaty. I am in favor of the circulation of investments, but the treaty does not contemplate any sanctions for countries that do not transmit tax information and I think we should change it ... There are more than one hundred countries that exchange tax information ... But we do not know exactly what It is what they share. There is no tax administration in the world, neither in France nor in Spain, that is able to say what information they have and how they use it. If we want the system to work, there must be binding sanctions for countries that do not provide information. We are still in the stage of talking about fairy tales, but we have to change the European treaties. And we have that unanimity problem: some countries do not want to change this, they want to have independent treaties. We cannot wait for unanimity to come to change in Europe. His and his colleagues' emphasis on the richest 1% has captured the imagination of many people. But the question is: what about the rest? We can have two countries with the same 1%, but with a 99% remaining very different: one very unequal and one not.In the case of the US, what is very shocking is that the great boom of the top of the owners of the 1% of the rent is matched by the bottom 50%. There has been a collapse in the share of national income. What used to be 20% of the rent, now is 10%. Which is scary. It can be explained by the fact that the top 1% has monopolized a greater part of an economy that was not growing very fast. If there was a lot of growth the same would not have been a problem. That was Reagan's promise in the 1980s. If the economy grows a lot, then everything is fine, because there will be a smaller share, but of a bigger pie. But if you see the performance of the US economy in the three decades after Reagan and before, the fact is that it has been cut in half. And that is due to many factors, including the lack of public investment in education, falling wages ... We do not want to follow this path in Europe, but we cannot be sure of it because the forces of fiscal competition go in that direction. I was asking about the remaining 99% because today, in France, in Chile and in Hong Kong, it is the middle classes that protest ... Yes, of course, the middle class has suffered because they have seen a stagnation of their rent. Not a collapse like the one that has suffered the poorest 50% in the US, but a stagnation. And it can be seen in some cases that they end up paying more taxes than those above that are able to get rid of their tax obligations. And this is very dangerous, because if the middle class has the feeling that they are paying more than the ones above, then the whole social contract and tax consent is crushed because the middle class may say 'we don't want to pay more' and nobody wants to keep the system anymore. But this social model we have in Europe is the one that has prevented inequality from reaching American levels. The European system is fragile and if we do not have more cooperation between us to make the fiscal system more equitable, the social contract will be threatened.With its books you always talk a lot about taxes. Recently in a debate with Gabriel Zucman and Emmanuel Saez, Larry Summers, who was secretary of the Treasury with Clinton, said that the tax on the rich you propose is "bad policy, bad economy and based on bad data." What do you think? I think Larry Summers is a bad economist on issues of inequality. You don't know the numbers well, you haven't done research on these topics. He was already in power at the time of Bill Clinton at a time when there was intense financial deregulation and he was pushing for more and more. He should be a little more humble in view of what he has done and the consequences it had on the financial crisis and the growing inequality in the US. There have always been conservative economists like Summers. Before the federal income tax was created there were many Larry Summers saying that there should be no progressive taxation, etc. And today, in 2019, we have Larry Summers, saying we don't want a federal wealth tax. But when you have 100 billionaires today and there were 30 10 years ago and 10 20 years ago and this concentration process continues as much or more quickly than the size of the economy, you cannot say that having tax rates of 6% or 7% as those who propose Zucman or Saez be excessive. If you see the growth rate of fortunes it is much faster than the growth rate of the economy. If they grew together, you could say that everyone is growing, that there are rich and poor, but that everyone is benefiting, but here there is a huge imbalance and if Summers is not able to see that, he should read more magazines about billionaires and analyze the data.The success of his first book created problems for social democracy, because conservatives barely feel alluded to inequality, they are more frightened by their ideas about expropriating taxes. In this book, the criticism of social democracy is even more explicit. He accuses her of renouncing to organize in another way the global economy and the overcoming of the nation-state ... Social democracy has historically achieved great achievements. Compared to other political projects, they have been able to implement social systems, progressive taxation, public education, but there has been a strong limitation beginning in 1980 and 1990 at the level of European integration. An error was made by having a single currency and free movement of capital without a budget and a common taxation. I am in favor of free movement, but you need a common taxation. The Social Democrats have been in power in France, in Germany, for many years. In France between 1981 and 2017, they have been 20 years in power. Four legislatures with an absolute majority. In that same period they were also in power in Germany and there was never an explicit social democratic proposal to change Europe. He says that the fact that Mark Zuckerberg had a good commercial idea with 25 years does not justify that at 50 or 70 he continues to control Facebook . He does not believe that this approach can end the good ideas at age 25 ... I think Marc Zuckerberg would have been very happy to create Facebook even if he had been told at the beginning that instead of having 50,000 million in shares he was only going to have 1,000 million or one hundred million. When you are a student, what else do you get a hundred million than a million! You are already very motivated! The vast majority of useful entrepreneurs are not billionaires, they are people who manage to accumulate a million or maybe ten million if they are very successful, but the idea that an entrepreneur needs to have billions for the economy to be effective is wrong. I think we live in societies with a very high level of income ... But their theses lead to the disappearance of the concept of savings that is the basis of the capitalist accumulation that criticizes? In the case of Zuckerberg it is not about savings, it is about having a very successful idea, it was not a slow saving process, but it was a very fast fortune. This process of creating fast fortunes, I think, has to be replaced by a circular mobility flow of power and the economy, especially for large levels of capital accumulation.
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