Jonah Goldberg writes Mr. Piketty’s Big Book of Marxiness in the July issue of Commentary.
Homburg, the American Enterprise Institute’s Kevin Hassett, and a team at the Sciences Po in Paris, moreover, argue that the recent widening of the wealth-to-income gap in the United States that Piketty reports is largely a function of a housing boom in the past 30 years. This fact complicates the story. The housing boom has benefited rich people, to be sure, but it has also been fueled by a massive expansion of home ownership among not only the wealthy but also the middle and lower classes (though not in proportion to gains by the wealthy). “The largest single component of capital in the United States is owner-occupied housing,” notes the liberal economist Lawrence Summers in his review of the book for Democracy. “Its return comes in the form of the services enjoyed by the owners—what economists call ‘imputed rent’—which are all consumed rather than reinvested since they do not take a financial form.”
Also, housing booms cannot go on forever. If you exclude housing from other forms of wealth or capital (Piketty explicitly uses the terms interchangeably), these economists argue, the return on capital is less robust. “In the U.S.,” the Sciences Po economists write, “the net capital income ratio of housing capital was the same in 1770 as it was in 2010 and there is neither a long run trend nor a recent increase of this ratio.” They add: “This type of situation, where a small share of the population owns most of the housing capital, appears to be far from the current situation of developed countries, where the homeownership rate varies between 40 percent and 70 percent. The diffusion of homeownership is likely to slow or even reverse the rise of inequality regardless of trends in housing prices.” Ultimately, the Sciences Po economists found that their conclusions about inequality in recent years “are exactly opposite to those found by Thomas Piketty.”
The exclusion of housing, a major source of wealth for middle income America distorts the data. It is further distorted by the exclusion of tax exempt capital gains on the sale of housing.
From The New York Review of Books, Are the Authoritarians Winning? by
Are contemporary politicians, on either side of the aisle, actually taking action to make the state more just and more efficient? The editors ofThe Economist do find some democratic heroes, here and there, mostly big-city mayors trying to make government more effective, but by and large they paint a scathing picture of democratic dysfunction at the national level. When conservatives win elections, corporate interests often take control. When progressives win back power, they only succeed in making the state more domineering. When conservatives are restored to office, they cut back. And so it goes, a continuing dynamic of political alternation that leaves the state unreformed and, worst of all, ever more intrusive. Both sides of modern democratic politics say they want to protect the freedom of citizens, and both end up increasing the state’s powers of surveillance.
Battered by this ever more futile political alternation, the liberal state is ever less liberal and ever less capable of controlling the interests it is supposed to regulate. Its tax and benefit systems are so distorted by special interests that it has lost the capacity to redistribute. Far from reducing inequality, the modern state is making the problem worse. As Micklethwait and Wooldridge observe, “If you put spending and taxes together, including all the deductions, the government lavishes more dollars overall on the top fifth of the income distribution than the bottom fifth.”
From The New Republic, Don’t Send Your Kid to the Ivy League by William Deresiewicz
Our system of elite education manufactures young people who are smart and talented and driven, yes, but also anxious, timid, and lost, with little intellectual curiosity and a stunted sense of purpose: trapped in a bubble of privilege, heading meekly in the same direction, great at what they’re doing but with no idea why they’re doing it.
So extreme are the admission standards now that kids who manage to get into elite colleges have, by definition, never experienced anything but success. The prospect of not being successful terrifies them, disorients them. The cost of falling short, even temporarily, becomes not merely practical, but existential. The result is a violent aversion to risk. You have no margin for error, so you avoid the possibility that you will ever make an error. Once, a student at Pomona told me that she’d love to have a chance to think about the things she’s studying, only she doesn’t have the time. I asked her if she had ever considered not trying to get an A in every class. She looked at me as if I had made an indecent suggestion.
College is not the only chance to learn to think, but it is the best. One thing is certain: If you haven’t started by the time you finish your B.A., there’s little likelihood you’ll do it later. That is why an undergraduate experience devoted exclusively to career preparation is four years largely wasted.
From Ricochet, Why Gaza by Paul Rahe
There is a profound difference between the Gaza Strip and the West Bank. In 1947, the population of the latter was miniscule. By 1948, it was considerable. Something on the order of 80% of those now living in the Gaza Strip are descended from refugees who fled from territory now Israeli as the Egyptian army approached.
The same is not true of the West Bank. There are refugees camps in that region, to be sure. But most of its inhabitants live in homes occupied by their parents or grandparents in 1948.
If Gaza now belongs to Hamas, it is because it is largely populated by Palestinians unwilling to settle for anything short of the destruction of the state of Israel. If the West Bank still tolerates Fatah and the PLO, it is because the majority of those who live there are less bitter than their counterparts in Gaza.
The battle now going on is the third such struggle since Ariel Sharon ordered Israel’s withdrawal from Gaza. If the current battle does not end with the wholesale destruction of Hamas’ rockets, there is apt to be another round. If Hamas ever does the Israeli core any great damage with these rockets, Israel will be forced to reoccupy Gaza. As things stand, were it not for the effectiveness of the Iron Dome, that day would be at hand.
From the National Review, Tenured Partisans by Richard Samuelson
Today we have the worst of both worlds: a tenured and partisan civil service. Government employees have civil-service protection and are seldom fired, only for the most egregious of crimes. Yet they lean to one party. From 1989 to 2012, two-thirds of donations from IRS employees, for example, went to Democrats. Even so, our civil servants seem to think that they are politically neutral. Hence the employees at the VA think it is reasonable to spy on (presumptively partisan) congressional investigators, and hard drives mysteriously get destroyed in the IRS scandal. Laws are for the little people, as Glenn Reynolds likes to say.
The rise of the “fourth branch” of government — the administrative bureaucracy — complicates things further. Obamacare was roughly 2,000 pages long when Congress passed it. Bureaucrats have added thousands more. The Hobby Lobby case was about a rule written by bureaucrats, not by Congress. In fact, Congress probably would never have passed such a law. Worse, our tenured partisans sometimes delegate their jobs to activists. Who drafted the EPA’s new greenhouse regulations? The National Resources Defense Council.
Nowadays, in other words, laws are, in effect, written, interpreted, and enforced by the bureaucratic equivalent of made men who are quite well paid. So much for checks and balances. Moreover, our legal code is so complicated that, as Harvey Silverglate notes, most businesses or individuals are probably guilty of breaking some law somewhere. That puts each of us at the mercy of the government.
In the 19th century, the social-science Ph.D. was new. Perhaps it was reasonable then to believe that science could provide neutral guidance on most issues, and to provide a professional ethic for the bureaucracy. Today that belief looks hopelessly naïve. Yet the hope is still alive on the left. One may even say that that hope has become the Left’s religion. From the time that the Temple of Reason was consecrated, through Marx’s science of history, up to today, the belief that all reasonable people are on the same side has been an essential support to the Left’s self-image. Only in the abstract do they allow that reasonable people may disagree. As William F. Buckley noted, “Liberals claim to want to give a hearing to other views, but then are shocked and offended to discover that there are other views.”