Here at Mises Canada I’ve already tackled some of the serious theoretical problems underlying Thomas Piketty’s analysis in his bestseller Capital in the Twenty-First Century. However, I want to alert the innocent bystander to the shocking disregard for property rights and basic financial privacy that pervades the book. The quickest way to do this is simply reproduce some of the more alarming quotations, which I’ve done below.
As you skim these excerpts, remember that Piketty’s book has been celebrated by a host of progressive intellectuals; even when they criticize him, they pull their punches and make clear that his book is simply wonderful. The reason they are willing to overlook his numerous errors is that they endorse the spirit of the book. When you see just what that spirit is, you should be extremely concerned for the future. Just look at this stuff:
“Taxation is not a technical matter. It is preeminently a political and philosophical issue, perhaps the most important of all political issues. Without taxes, society has no common destiny, and collective action is impossible.” (p. 493)
“When a government taxes a certain level of income or inheritance at a rate of 70 or 80 percent, the primary goal is obviously not to raise additional revenue (because these very high brackets never yield much). It is rather to put an end to such incomes and large estates, which lawmakers have for one reason or another come to regard as socially unacceptable and economically unproductive…” (p. 505)
“[Piketty and co-authors’] findings have important implications for the desirable degree of fiscal progressivity. Indeed, they indicate that levying confiscatory rates on top incomes is not only possible but also the only way to stem the observed increase in very high salaries. According to our estimates, the optimal top tax rate in the developed countries is probably above 80 percent.” (p. 512)
“A rate of 80 percent applied to incomes above $500,000 or $1 million a year would not bring the government much in the way of revenue, because it would quickly fulfill its objective: to drastically reduce remuneration at this level but without reducing the productivity of the US economy, so that pay would rise at lower levels.” (p. 513)
“The primary purpose of the capital tax is not to finance the social state but to regulate capitalism. The goal is first to stop the indefinite increase in inequality of wealth, and second to impose effective regulation on the financial and banking system in order to avoid crises.” (p. 518)
“[Financial transparency associated with Piketty’s global capital tax] would generate information about the distribution of wealth. National governments, international organizations, and statistical offices around the world would at last be able to produce reliable data about the evolution of global wealth… [Citizens] would have access to public data based on clearly prescribed methods and information provided under penalty of law. The benefit to democracy would be considerable: it is very difficult to have a rational debate about the great challenges facing the world today–the future of the social state, the cost of the transition to new sources of energy, state-building in the developing world, and so on–because the global distribution of wealth remains so opaque.” (pp. 518-519)
“An 0.1 percent tax on capital would be more in the nature of a compulsory reporting law than a true tax. Everyone would be required to report ownership of capital assets to the world’s financial authorities in order to be recognized as the legal owner…” (p. 519)
Referring to the need to shut down offshore tax havens with global financial reporting on all assets: “No one has the right to set his own tax rates. It is not right for individuals to grow wealthy from free trade and economic integration only to rake off the profits at the expense of their neighbors. That is outright theft.” (p. 522)
“[I]f, tomorrow, someone were to find in her backyard a treasure greater than all of her country’s existing wealth combined, it is likely that a way would be found to amend the law to share that wealth in a reasonable manner (or so one hopes).” (p. 537)
“In Africa, the outflow of capital has always exceeded the inflow of foreign aid by a wide margin. It is no doubt a good thing that several wealthy countries have launched judicial proceedings against former African leaders who fled their countries with ill-gotten gains. But it would be even more useful to establish international fiscal cooperation and data sharing to enable countries in Africa and elsewhere to root out such pillage in a more systematic and methodical fashion, especially since foreign companies and stockholders of all nationalities are at least as guilty as unscrupulous African elites. Once again, financial transparency and a progressive global tax on capital are the right answers.” (p. 539)
“From the standpoint of the general interest, it is normally preferable to tax the wealthy rather than borrow from them.” (p. 540)
In closing, everybody who values the rule of law and financial privacy: Be afraid. Piketty and all those who have praised him have not the slightest regard for how a particular rich person built his or her wealth, and they don’t even have noble plans for how they’re going to use the property once it is seized–the point is to make sure the rich person doesn’t keep it. If you’re rich you’d better make friends with Piketty et al. real fast, and maybe they’ll let you keep some of your stuff.