Keynes And Piketty Revisited

May 26, 2014

Europe is abuzz with “Capital in the Twenty-First Century” by French economist Thomas Piketty, released in Europe in March of this year and now a best-seller. It has since crossed the Atlantic and is already the number-one best-seller on Amazon. It has been called a “blockbuster” of a book and many reviewers believe that it has the ability to revolutionize the study of economics - Jeff Thomas

That is a normal and expected reaction given the fact that at least 90% of the economists in Academia refer to themselves as Progressive if not outright Socialists. The same is true for politicians the world over including right here in the good old USA regardless of parties.  The leaders of the GOP call themselves NEO CONS so as to differentiate themselves from Democrats. They are conservative in name only and the only conservative views they hold are all non-economic; such as “The Right to Life, the 2nd Amendment, GUN’S, English only and a few others of that nature. The one universal feature that unites all Socialists is their excuse for the failure of Socialism, which is “we never tried enough of it and or they did not appropriate enough money to it:” That, plus the fact that they ignore the facts that history teaches.  

Cuba is a pure Socialist, Communist country that went from being referred to as the “Jewel of the Caribbean” up until Castro took over to where it is now referred to as the “Armpit of the Caribbean”. The same is true for both the Soviet Union and China. Both languished in poverty until they started to employ Capitalistic economic principles while still maintaining Communist, Fascist political systems.

Even a pure Socialist system like the Israeli Kibbutz (populated by volunteer, educated, idealistic Americans) in spite of receiving outside aid from Jews from around the world as well as from their own government, failed miserably to the point where there are none left.  Yet the Moshaves (basically a capitalist Kibbutz), which were started at about the same time are thriving without any outside support or assistance.

To make a long story short, there has never in history been a Socialist or Communist entity that has ever succeeded in achieving any of its stated economic goals. And the reason is that Socialism is against Human Nature for all who try to live under its premises. I am in the process of writing a book on the hidden lessons of the Bible, the most important one being that Capitalism is the Economics of the Bible. Unfortunately, Socialists, Progressives and Communists are famous for ignoring the facts whenever the facts don’t meet their ideas.

Here are a few quotes from reviews:

In Piketty’s view, the solution is a measure beyond the political reach of any individual nation or international body, as they are now constituted: A global wealth tax. Only such a tax “could contain the unlimited growth of global inequality of wealth, which is currently increasing at a rate that cannot be sustained in the long run.”—Thomas B. Edsall

This is not possible since it would require every country to agree to the same tax or people and companies would flee to that country. Who would get to levy and collect those taxes? The United Nations?  Who in their right mind would want to live and work under the auspices of the UN?

Many of the book’s 700 pages are spent marshalling the evidence that 21st-century Capitalism is on a one-way journey towards inequality – unless we do something.  Piketty seems to ignore the fact that there is tremendous mobility between economic classes and although the proportion of the people living in poverty, the people themselves can easily work their way out and do.  Piketty's call for a “confiscatory” global tax on inherited wealth makes other supposedly radical economists look positively house-trained. He calls for an 80% tax on incomes above $500,000 a year in the US, assuring his readers that there would be neither a flight of top execs to Canada nor a slowdown in growth, since the outcome would simply be to suppress such incomes. Where do his assurances come from? Certainly not from any facts.  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.—

Rosaline Christine McGreevy

We can plainly see that Rosaline is no economist: If nothing else, INFLATION distributes poverty, never wealth downwards. She is obviously a naive do-gooder with absolutely no idea as to how Human Nature or Economics works or any idea of by whom and how these taxes would be collected and redistributed. Can you even imagine the level of corruption that would grow out of such a debacle?

His findings will transform debate and set the agenda for the next generation of thought about wealth and inequality. … A work of extraordinary ambition, originality, and rigor, Capital in the Twenty-First Century reorients our understanding of economic history and confronts us with sobering lessons for today. —Amazon

What Economic History is he referring to? None that I ever learned of or observed in my 50 plus years as a practicing economics. The only thing his work would do is give license to Fascists and Dictators like Putin.

The words, “Brilliant!”, “Ground-breaking!” and “Visionary!” will no doubt be seen in many reviews of Mr. Piketty’s book. He has written some 700 pages and gone back as far as the eighteenth century in his research, so few would doubt that he has been thorough. And there can be no doubt that the world is presently facing greater economic turmoil than it ever has in history. One might say that his tone is “right on time.”  So let us examine his principal conclusions and learn why so many people are seeing his vision as the answer to the world’s troubles.  He recommends:

  • Uniform global taxation
  • Confiscatory tax on inherited wealth
  • 15% tax on capital
  • 80% tax on annual incomes over US$500,000
  • Enforced transparency on all bank transactions
  • Overt use of inflation to redistribute wealth downwards

Why didn’t anyone else think of this brilliant plan? Well actually, they did. In fact, the above is essentially the shopping list of the IMF, the EU, the OECD and Obama and the Democrats, in fact, many of the governments that make up what was formerly described as “the free world.” Piketty’s “vision” so closely follows the visions of these entities that, if he did not exist, they might have had to invent him.

After all, if governments come up with an economic plan that is dramatically socialistic, they might be regarded as being somewhat suspect. However, if an economist, who is of course “independent” in his thinking, offers a grand solution, it becomes easier for the masses to swallow.

Since when are economists independent? I have tried numerous times to get a Free Market thesis past a Socialist Board of Economic Academics, always to no avail.

Readers of International Man are likely to take a different view. They may argue that the observation that “satisfactory answers have been hard to find for lack of adequate data and clear guiding theories” is poppycock. Libertarians and contrarians have been offering very real solutions for decades. Unfortunately, Boobus humanus rarely bothers to pay attention to any view that is not the one currently being promoted by the governments and academics of the day. Even when people recognize and intellectually understand the philosophy of personal freedom and responsibility, most just can’t integrate it emotionally. And others simply refuse to grasp it intellectually. I’m afraid libertarianism is fated to appeal to only a small minority - Doug Casey

Maybe so, but that does not make it wrong. How and Where would get all the Miners to work in the wilds of Northern Alaska or the Jungles of Africa.

It’s interesting to draw a parallel between Mr. Piketty and John Maynard Keynes. Mister Keynes published his General Theory of Employment, Interest, and Money in 1936. It was therefore well timed to provide the populace (who were then struggling with the Great Depression) with a brilliant solution from a Cambridge-educated economist. Mister Keynes’ book was an instant hit with most all governments of the day, as it endorsed more state-controlled, socialistic economic principles. Since 1936, Keynesian economics has been the standard for most all governments and is regularly referred to explain why they employ such confiscatory policies – Jeff Thomas

Mr. Thomas neglects to mention that the Socialist policies during the Depression managed to turn what should have been at most a 2 or 3 year Recession into a Depression that lasted 17 years which also encompassed WWII.

Most everyone seems to ignore the fact that between 1865 (the end of the civil War) and 1895 when the US was on a strict Gold and Silver standard and the government left the economy almost completely alone; was the single greatest period of Economic growth and universal prosperity in history,, which turned the USA into the most dynamic, most economic and most powerful country in the world all in less than 30 years. THAT IS AN EXAMPLE OF WHAT PURE CAPITALISM CAN ACHIEVE.


Now, just in time for the Greater Depression, fate has delivered what we might term Mister Piketty’s “Revised Keynesianism”—an economic standard for the twenty-first century, and one which takes the power of governments up several notches- Jeff Thomas

Where does this fantasy come from - certainly not history? What history tells us is that the Depression of 1918 to 1920 was over in 3 years precisely because the President would not allow Herbert Hoover, the then Secretary of Commerce to implement the very same policies he ended up implementing when he became president in 1931.  This was actually the beginning of the NEW DEAL that turned what should have been at worst a 3 year Recession into a 17 year DEPRESSION. It ended only after FREE MARKET CAPITALIST INVESTMENT returned in 1937 after the end of World War II. Although the Democrat Propaganda Machine convinced most everyone that FDR saved Capitalism from itself, nothing could have been further from the truth.  

Will the governments of the world respond to this new vision and announce that Mister Piketty has “shown the way” out of the current debacle, which has been blamed on capitalism? Most definitely. Just as Mister Keynes was “just right” for the goals of governments in the twentieth century, Mister Piketty is just right for the goals of governments in the twenty-first century. And, as in the Great Depression, the great majority of people will not only accept the new approach, but applaud.

Of course, those of us with a libertarian bent could simply choose to regard Mister Piketty as a misinformed academic who fails to understand economics, but this would be a mistake.

Yes, there are many people today who are thinking in a more libertarian direction. Indeed, many are seeking to internationalize themselves in order to save their liberty and their wealth. Far more people, however, who also fear the downfall of the present economic system, are sitting tight, in the hope that the light will suddenly go on in the minds of economists and political leaders alike, that what is needed is a more free-market society. This group of people hopes that national leaders will “come to their senses” and reverse the trend toward Socialism and Fascism.

These latter people might do well to consider that the blueprint for the future has now been published. The blueprint implies that the reason Keynesianism has failed is not that it was socialistic. We are told that it failed because it was not radical enough; not far-reaching enough. A more totalitarian Keynesianism was needed and has now been provided. - Jeff Thomas

Don’t they realize that anything more totalitarian is called Fascism?


Thus far, the US and the world are following in the footsteps of Hitler, becoming more Fascist almost by the day.  Now, along comes this 21st century Academic with a book that entices the ill informed and plays right into the hands of today’s Fascists, Obama and Putin.  The rest of the world’s politicians in power will gladly climb aboard since it justifies their desire to grab more money and power all in the name of helping the poor and narrowing the spread between the very rich and the poor. 

Oh, I almost forgot: In the US, the spread between classes has never been fixed (static) Entity.  There is massive mobility between classes. The numbers may stay the same, but the people themselves rapidly change classes. This is one of the wonders of Capitalism. There is rarely if ever a change of classes under Socialism and Communism.

Show me the poor who have benefitted by the world’s massive shift to the left after 1936.



Still worried about the economy? Instead of listening to all the PROPOGANDISTS and Pollyanna trend followers you see and hear on TV and in the Print Media who are always behind the times, subscribe to UNCOMMON COMMON SENSE and stay ahead of the game by getting the whole TRUTH and nothing but the TRUTH.

I am offering a two year subscription for only $349. The one year subscription is still a reasonable $249. Extend your subscription now! There is also a 5 month trial subscription for $99 for newcomers with a money back guarantee if not 100% satisfied.

Most Credit Cards Accepted

Please call (561) 840-9767 to subscribe by credit card or TAKE AN ADDITIONAL 10% DISCOUNT if you pay by check.


Aubie Baltin CFA, CTA, CFP, PhD.

2078 Bonisle Circle

Palm Beach Gardens FL. 33418


Don't forget to include your email address as well as your phone number.

This letter/article, like all my others, is for education purposes only and is designed to help you make up your own mind; not for me to make it up for you. Although I include recommendations from time to time, being a bi-monthly publication, it is not meant to be a trading letter. Only you know your own personal circumstances, so only you can decide the best places to invest your money and the degree of risk that you are prepared to take.

The melting point for silver is 961.93 °C - 1235.08 °K

Silver Phoenix Twitter                 Silver Phoenix on Facebook