Monday, August 24, 2015

4 Steps In the Fallacy of Income Equality

The truth and morality of 'equality of outcome' economics as narrated by Piketty and his shills in politics and media is a good example of gaslighting. It is fueled by 'truth by concensus'

Margaret Thatcher's last House of Commons Speech on November 22, 1990.

UPDATE: An article on the site on the Ayn Rand Institute is explaining the Piketty type fallacy:
Democratic presidential hopeful Bernie Sanders complaining about economic inequality in America: 
There is something profoundly wrong when in recent years we have seen a proliferation of millionaires and billionaires yet the average American is working longer hours for lower wages and we have shamefully the highest rate of child poverty of any major country on earth. 
A question for the socialist senator from Vermont: would he prefer that that there was no proliferation of millionaires and billionaires, and that all Americans were equally mired in poverty? If not, then let’s stop talking about poverty as if it were an inequality problem. 
Sanders is employing one of the most popular gimmicks inequality alarmists use to get Americans fired up about income disparities: he is conflating hardship and comparative differences. Here’s how it works: 
Step 1: Point to people facing a genuine hardship, like poverty. 
Step 2: Point to people who are enjoying above-average success. 
Step 3: Imply that the problem is the gap between the two, not the hardship itself. (Bonus points if you can suggest that the one group’s success is the cause of the other group’s hardship.) 
Step 4: Advocate closing the gap by bringing down the high fliers. 
Whenever you see this sort of argument, you can be sure that the goal of the speaker is not to end the hardship, but to smash the successful. An analogy might help. Imagine two people are thrown into a lake: a kid who can’t swim and Michael Phelps. What would you make of someone who said, “There is something profoundly wrong when we’ve seen a child drown while an Olympic gold medalist easily swims to the shore”? Take Phelps out of the picture, and the kid is still drowning. The only reason to mention Phelps is if your goal is not to help the kid, but to smear the athlete. So it is for the inequality alarmists. They don’t want to guide everyone to dry land. They want to drown the best swimmers. (source)

July 20, 2014

Spain Introduces 0,03% tax on bank deposits

The OECD and the IMF have for some time now been advocating this measure. Spain is the first country to introduce the 'bail in': retroactive from Jan. 1, 2014 onwards bank deposits will be subject to a tax of 0,03%. (Source (German)) - H/t @AncetreIV

June 21, 2014

Debunking Piketty: Free People Are Not Equal

June 2, 2014

Piketty's Neo Marxism 

"Chopping off the legs of tall people equalizes height"
Piketty says that return on capital is higher than the growth rate. He believes the return on capital is 5 percent and the growth rate is 1 percent. The share of wealth owned by the rich is increasing. Consider Exxon Mobil. Today, it’s worth over 400 billion dollars. If Piketty is right, it will be worth over a trillion in 20 years—a multiple of its current value. Compare to your salary. If you earn a hundred grand today, you’ll be making $122,000. Owners are getting farther and farther ahead of workers, or in Marxist terms, capital is taking what belongs to labor. The Marxist views the economy like a pie that doesn’t grow, so the only thing to do is squabble over the division of it. (...) 
Piketty’s takes two planks straight out of The Communist Manifesto. The first is an 80 percent tax on income. Think about that. You work and take risks, and the government steals the lion’s share. Why would anyone bother? The second is to impose a tax on wealth too. Every year, you will have to add up the value of your wealth and forfeit a percentage. This hurts everyone, of course, but think about a family farm or startup business. It might be worth millions according to the IRS, but you will have to find something to sell so you can pay. The wolf will be back at your door every year, until you lose your assets. Sure, these taxes will equalize wealth—the way chopping off the legs of tall people equalizes height. Piketty is clear that this is his goal. He doesn’t propose taxes merely to raise revenues. His goal is to keep anyone from growing wealthy. (Source)

May 26, 2014

Piketty's Infallible Dogma

Piketty is denying his work contains any mistakes. Scientists who present their work as dogma instead of falsifiable thesis prove themselves to be ideologues rather then scientists. In the process the article is committing an argument from authority: many economists have confirmed Piketty's findings, the article contends. And that's thuth by consensus. (Source) (...)
Perry Metzger has this interesting bit to add:
One wonders why Professor Piketty chose to first publish his ideas in a popular account rather than in academic journals, where peer review might have caught these problems earlier. Perhaps then, however, we would not have experienced the treat of Paul Krugman explaining to us that no real counterargument exists to Piketty’s claims. Quoting Professor Krugman only a month ago: The really striking thing about the debate so far is that the right seems unable to mount any kind of substantive counterattack to Mr. Piketty’s thesis. Note that Professor Krugman wrote this mere days after the book even became available to most readers, long before it could be expected that anyone could have double-checked the data or formulated a coherent response, and long before any but the swiftest of readers could have been expected to digest the contents. I recommend that connoisseurs of schadenfreude read all of Professor Krugman’s writings in The New York Times on the subject of Piketty. They are, especially in the light of the emerging news, a rare treat. (Source)

May 24, 2014

Piketty's Gaslighting Is Falling to Pieces

Bill Whittle explains the psychology of Gaslighting.

For months now the media have been abuzz, heaping praise on Thomas Piketty’s book, ‘Capital in the Twenty-First Century’, which was awarded accolades as "the publishing sensation of the year". It's a narrative of rising inequality that taps straight into the Left's post-financial crisis public policy argument: tax the 'rich' and tax 'Big Business' to make up for the shortfall politicians cause by overspending and redistribution (which is the true reason of the crisis and the bailouts).

Piketty claims there is no general tendency towards greater economic equality. And that the relatively high degree of equality seen after the second world war was partly a result of progressive taxation and the destruction of inherited wealth, particularly within Europe, between 1914 and 1945. And that now we are slowly re-creating the 'patrimonial capitalism' – the world dominated by inherited wealth – as was the case in the late 19th century.

Inherited wealth is of course a remnant of feudalism, not of Capitalism, which runs on individual merit. So how could we be 're-creating patrimonial capitalism'? The rising income levels and wide distributions of wealth across the board since the Industrial Revolution are so self-evident that one would tend to dispense with proof. Trickle down works, but the truth of trickle down is now under attack by dexterous practitioners of postmodern Gaslighting.

After Piketty's work was debunked on several occasions by authors on Von Mises in last couple of months, now an investigation by the Financial Times has found he got his sums wrong.
The data underpinning Professor Piketty’s 577-page tome (...) contain a series of errors that skew his findings. The FT found mistakes and unexplained entries in his spreadsheets (...) there are transcription errors from the original sources and incorrect formulas. It also appears that some of the data are cherry-picked or constructed without an original source. For example, once the FT cleaned up and simplified the data, the European numbers do not show any tendency towards rising wealth inequality after 1970. 
An independent specialist in measuring inequality shared the FT’s concerns. Contacted by the FT, Prof Piketty said he had used “a very diverse and heterogeneous set of data sources ... [on which] one needs to make a number of adjustments to the raw data sources. “I have no doubt that my historical data series can be improved and will be improved in the future ... but I would be very surprised if any of the substantive conclusion about the long-run evolution of wealth distributions was much affected by these improvements,” he said. (Source)
Piketty's is a frontal attack on Capitalism which to Leftists equals inequality. But, as said, wealth accumulation was a feature of feudalism, not of Capitalism. The Left can't distinguish between collectivism and individualism.

But what exactly is morally good about the equality of outcome? Read in "Why You Didn't Build That" that egalitarianism in fact equals Nihilism. Excessive redistribution has been debunked in practice and found morally evil by every Leftism that has ever been tried. Capitalism on the other hand has lifted more people out of disease and poverty than any other system devised by man. (Source)

How wrong Piketty is, has also been born out recently by Professor Mark R. Rank of Washington University, co-author of Chasing the American Dream: Understanding What Shapes Our Fortunes. Far from having the 21st-century equivalent of an Edwardian class system the United States is characterized by a great deal of variation in income. 

More than half of all adult Americans will be at or near the poverty line at some point over the course of their lives; 73 percent will also find themselves in the top 20 percent at some point in their lives. Not forever. They're going to have good years and bad years. These are important numbers.

39 percent of Americans will make it into the top 5 percent for at least one year. That is a large number of people. It means that people who get there don't stay; that many of them fall out of it. Because income is not something that's steady. You don't earn the same amount every year. In many cases to earn that kind of money you have to be in business for yourself, or you have to be living on commission sales of some sort. 

Perhaps most remarkable, 12 percent of Americans will be in the top 1 percent for at least one year of their working lives. This is not possible because the only people that end up in the top five percent, one percent, are the winners of life's lottery, the lucky ones. This isn't luck or inherited, it's earned and lost. (Source)

If there is accumulation of wealth - if there is any - this is not on account of Capitalism, but due to a growing oligarchy, a nexus of the governing elite and heavily regulated corporations. State corporations are a thing of the past, but many industries are almost micromanaged by politicians and regulators. The result are lobbyists, cronyism and bailouts. It is in fact so bad, it's called the new Fascism

Graphic from the Lecture: "Capital in the 21st century" by Thomas Piketty showing knowledge well into the future (pg 17). (PDF) H/t @hanswisbrun (LiegGrafiek)

Lies repeated often enough are accepted as truth overtime, certainly by people who confuse truth with consensus. The net result of all this propaganda is Gaslighting. We all know that Capitalism has lifted entire continents out of poverty over the last couple of years. China, India, many countries in Africa and South America are but the latest examples after decades of Socialist engineering. 

Piketty is telling us our perceptions are playing tricks us, because his scientific* graphs are telling another story. Postmodernists used to attack reason as superficial and told us objective reality doesn't exist. That obvious nonsense doesn't fly anymore; so now they have to rely on pseudo science. But it now looks like this economic hoax is coming apart at the seems. *Economics is an art, not a science