Thomas Piketty’s Capital in the Twenty-First Century

I recently plowed through this voluminous tome. Due to its length, I imagine more people have read about it than have actually read it. Still, it was worthwhile.

If you just want the gist of Piketty’s arguments, you might focus upon the Introduction and Conclusion. If you are up for more – including the thorough and exhausting statistical case – the whole tour might be worth the journey.

Piketty creates a compelling case, buttressed by exhaustive assembled historical evidence, that the growing worldwide (and domestic) inequality is not only dangerous, but inherently structural. His argument shows it is built-in to capitalism. Thus regulation and intervention is not only desirable, but necessary to save capitalism from itself (much as FDR did in the United States following the Great Depression).

Piketty’s mechanism to save capitalism from itself involves policies decidedly unpopular with some of today’s “deciders,” though necessary to save them from a fate similar to that Karl Marx might have imagined for their forbears who “sold the rope.” Indeed, the concentration of wealth leads to a concentration of political power and deprivation to those without power such that the system cannot be maintained without significant repression (a la Mussolini, Hitler, Franco) — or it will collapse in violent revolution.

Piketty recommends a tax on capital, including wealth itself as well as inheritance. The irony is that while this is unpopular with those it impacts, it would increase their quality of life as it increased the common good.

The difficulty is that for this to be done effectively, it necessitates much international cooperation, lest nations and regions are played against each other in a bidding war to the bottom.

This is an important book: for citizens and theologians, as well as economists! After all, we don’t want to live in a world where the many suffer (and the earth itself cries out) just so a few can live in regal splendor.

Of course, there are those who think Piketty does not go far enough (see below). For those of us who are persons of faith that bears a certain resonance. We are not inevitably tied to any earthly system, especially one in which “the past devours the future.” Instead, we are looking to the future in hope, with the redemptive possibilities for all creation which God calls us to work towards. (And we need hope, when one considers the trends Piketty reveals!) The recent Papal encyclical regarding the challenge of Climate Change is evidence of Christian hope!

For some more commentary on and summary of the arguments of Piketty’s Capital in the Twenty-First Century, you might check out the following — or even read the book!
The Guardian: Thomas Piketty’s Capital: everything you need to know about the surprise bestseller.

Piketty’s Capital, unlike Marx’s Capital, contains solutions possible on the terrain of capitalism itself: the 15% tax on capital, the 80% tax on high incomes, enforced transparency for all bank transactions, overt use of inflation to redistribute wealth downwards. He calls some of them “utopian” and he is right. It is easier to imagine capitalism collapsing than the elite consenting to them.

For the case that perhaps what Piketty advocates is not enough, see The Compelling Conclusion About Capitalism That Piketty Resists in Truthout.

The excesses of capitalism are not simply a question of bad management and a political unwillingness to properly regulate it by imposing the right sort of checks and balances, but symptoms of a fundamentally and irretrievably flawed system that tends toward destruction of human and other life.

Happy reading!

Book: The Healing of America

T.R. Reid’s book: The Healing of America: a global quest for better, cheaper, and fairer health care, is timely material for deliberations of how we might manage to craft a health care system for all the people of our nation — instead of an insurance system for some, and a death sentence for others. Reid’s paramount point is that we need to consider health care for all citizens as a MORAL issue! We need to keep this in mind as we contemplate the rest of his data.

Reid explores at length the health care systems in other countries, including personal experience during periods of residence abroad. He uses the “test case” of seeking physician advice concerning some minor shoulder pain and mobility issues stemming from an ancient injury. Responses are illuminating. Whereas his U.S. physician is quick to suggest an expensive and somewhat risky surgical shoulder replacement, other doctors suggest various alternatives before jumping to surgery. It is no wonder why we have the most expensive health care system by far … along with one of the worst outcomes.

Reid categorizes health care systems into four basic categories, and of course hybrid mixes thereof.

  1. There is the Bismarck model, originally from Germany, where regulated private non-profit insurance plans cover everyone, and people visit private physicians. Employers and employees share the premiums. The government assures that those without employment coverage do not fall through the cracks.
  2. There is the Beveridge model, originating in post WWII Britain, financed by the government through taxes. The National Health Service is the single payer, with physicians being private, and hosptals nationalized.
  3. The National Health Insurance model, a la Canada, is a hybrid of the first two.
  4. The Out of Pocket model is the third world model. Those who can afford care get it: others suffer and die.

The U.S. has the craziest health care system: no system! For most of us for-profit insurance companies run the show. Care can vary from Cadillac to nearly worthless, as they play games to minimize “loss” and maximize returns pay shareholders and executives first. We also have the National Health Insurance (Medicare), and the Beveridge model (veterans, TriCare). … We even have the third world Out of Pocket model for the “have-nots.” Ironically, with increasing reliance on high deductible plans, coverage caps, and exclusions: this is effectively what we have even for many who have “insurance!”

Reid’s survey leads me to this conclusion: in every nation that provides effective health care with better outcomes at lower cost than the U.S., the standard care is provided without for profit health insurance. Either the government fulfills those functions as a single payer, or insurers (happily) provide the standard package (and with guaranteed coverage), competing on the “extras” — things like private rooms, super swift payment, … and more spa coverage! Even Switzerland, the supposed citadel of capitalism, wisely converted their system to a not-for-profit insurance basis — ironically at the very time that Clinton’s efforts for reform in the U.S. were being shot down by carpet bombing of “Harry and Louise” commercials in the early 1990s.

When we have for-profit insurance providers (with coverage linked to employment) as a significant portion of our (fragmented) system, there is an irresistible temptation for the insurance companies to aggressively seek to shift costs to someone else, whether that be some government plan (e.g. Medicare, as we age), the insured themself, or the plan from the person’s next employment. In a society where job mobility is accelerating in a breathtaking manner, there is likely to be an opportunity in 2.3 years or so to “dump” any adverse risks. (Then the new insurance company can exclude “pre-existing conditions!”) Needless to say, this risk-shifting scenario provides little incentive for preventive care, in contrast to rational systems where there is a continuity. Whether the provider is a government agency, or not-for-profit insurers with universal coverage, when the payer is in for the long haul, it has an incentive to reduce future costs (and provide better outcomes!) by taking care of the little things – such as preventive medicine. (In Britain, for example, physicians, media, and even signs on buses, encourage people to visit the clinic for their “flu jab,” or other preventive care. In the U.S. the only reason many insurance plans cover any prevention is as public relations or a marketing tool.)

It is also worth noting that in most of these health care systems, the primary care physician is respected as the one who coordinates care and facilitates prevention. This contrasts to the U.S. system where we have 2/3 specialists.

I would recommend that every member of Congress (and those in the Administration) read this book. Then they can refuse the gobs of cash from the Ins Co’s … and maybe craft us a sensible system of health care in the good old U. S. of A.! … Whatever we do we will need universal coverage (the big pool), and a removal of the profit-seeking and cost-shifting motives which distort our current environment to the point of imminent collapse.

Of course, we’ll have to overcome that streak of American exceptionalism whereby we insist upon doing nothing as others have done it, but only as we have “invented.” We didn’t invent the health care anti-system we now have; but we could invent one that uses the best of the experience of others to determine what might give us a real system with effective outcomes at much lower cost.

As we can see, it will be very difficult to change the system due to the financial power of the Insurance-Health complex. It will take true moral courage. Of course, if we fail, we’ll all go broke together!

Book: Deer Hunting With Jesus

I read a provocative book recently, Deer Hunting With Jesus, by a guy named Joe Bageant. Joe is one who was born in the hills of the Virginia-West Virginia border area, “escaped” to become a sociologist, and returned. This book, subtitled “Dispatches from America’s Class War,” was published in 2007.

Read this book if you want some insight (through vignettes of Joe’s old friends, neighbors, and acquaintances) into why it can be so hard for the classic “liberals” to enlist people such as those from the Va/WVa border into progressive causes. (Largely, they are just too busy surviving!)

Joe goes into the myriad ways that the established class structure is maintained, quite obvious in these towns and countryside; but also prototypical for the rest of the nation. He also points the finger at the media, complicit in bread and circuses (mostly the later!), and the myths of America (“American Hologram”) that enlist people in a false patriotism.

The blame is not just on the exploiting class, but also on the well-meaning liberals who don’t understand how to communicate with these Scots-Irish descendants and their type.

I almost had to quite reading when I got to the chapter about the American Health System. It described painfully how people, after being milked of their productive energies and exploited by financial rackets, are left to die in sub-standard care facilitities. Ironically, some of these urine-reeking nursing homes were the eagerly received community hospitals in better days, where babies were born and people mended. That was before the profitable “not-for-profit” health care and insurance industries figured out how to squeeze more out of them for their executives and shareholders.

The title comes from the conflation of “down home religion” with gun culture. Joe explains how some of this is related to the frontier experience and the cultural origins of the people who settled here. He mercilessly describes how the rest of us were asleep at the switch while the right wing figured out what buttons to press to enlist these folks into their electoral army.

There’s a heck of a lot more here. One thing I came away with, though, is the importance of education. In many of these places there is a covert conspiracy to keep people dumb so they stay in their “place.” (After all, if the privileged children of the upper class had to compete on a level field with the children otherwise encumbered by poverty and despair, the outcomes might be surprising! Joe includes some stories of potential wasted, as he describes people’s change from friends in his youth to broken down or embittered old age.) People who are functionally illiterate, or not much better, will have trouble exercising their full rights and responsibilities as citizens, instead of merely being consumers and a labor pool.

Joe is a bit pessimistic though most of the stories. He’s only a few years older than I am. I think that good teachers, a little more economic security, and a re-invigorated union movement could work wonders — at least with the next generation!

Book: Flatlined: Resuscitating American Medicine

Guy L. Clifton, M.D. wrote an interesting book about health care in America. The important point he makes is that no matter what system we may devise, ultimately we can’t fix the current crisis without controlling costs.

Clifton’s describes from personal experience (as a neurosurgeon) how most physicians work without any clear notion of what is the most effective standard of care. For example, spinal fusion procedures which are truly effective for a narrow range of cases are used for many inappropriate – to the point of being counter-productive. (Then there are the drug companies, and others who esteem profit inordinately; who are motivated to push their wares onto harried physicians as the cure-all. They also attack consumers through advertising in a manner that used to be considered unethical if not illegal among medical professionals.)

Clifton’s contribution to the discussion is to suggest that we have a Quality Assurance organization/agency which seeks to involve physicians in developing scientifically-based standards for care. He believes that an incredible savings can result.

Book: Shop Class As Soulcraft

I picked this book up recently, in the way in which the original “hypertext” steers me from one read to another, and must share briefly.

You may know that I am a strong advocate for the appropriate education of our gifted children, many of whom struggle to move forward in a world where standing out risks being leveled as Alexander the Great sought to level his vassal peoples. You’d think I’d be happy to see the vocational training programs cast aside and things like the new Ohio CORE requirements where all high school graduates in 2014 must have taken Algebra 2, etc.

The truth is, I feel a little queasy about the assumption that all children must attend college — at least as we traditionally see college. … The truth of the matter is that college has become dangerously commodified! Often all the student is doing is just buying a credential (an expensive one at that), and not really learning the critical thinking that is associated with a classic education in the Arts, Sciences, Humanities.

In Shop Class As Soulcraft, Matthew Crawford, takes a look at “An Inquiry into the Value of Work.” Crawford made a pilgrimage from Think Tank to the motorcycle shop, and in this move he gleaned some thoughts pertinent to this subtitle.

Crawford maintains that many of these technical/vocational “craft” type jobs actually do use many of the practitioner’s “higher” faculties, in such procedures as learning how to systematically solve problems – e.g. the skilled mechanic can listen to an engine and learn much (just as the skilled physician used to practice auscultation!). … There’s also the added benefit that many of the repair type crafts cannot be out-sourced!