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Making Piketty Irrelevant

Marco Rubio Speech On Innovation At Uber's DC Offices

From Cafe Hayek, Uber vs Piketty by Don Boudreaux:

Thomas Piketty famously argues that owners of capital grab ever-larger shares of wealth, and that the single best ‘solution’ to this alleged problem is a global tax on wealth and high rates of income taxation.  Problems galore fill Piketty’s book – including his failure to recognize that market-driven innovation and competition are incessantly creating new capital while reducing or even destroying the value of older capital, all in ways that move new flesh-and-blood people into the central ranks of the ‘capitalists’ while moving others onto the periphery of those ranks.  (Twelve years ago Mark Zuckerberg, the son of a dentist, was no one’s idea of a capitalist.  He’s now worth close to $40 billion.)

Ashley had a brilliant insight, which I share here with her kind permission: Uber(and other ‘sharing economy’ innovations, such as Airbnb) allow ordinary people to turn their consumption goods into capital goods.

HKO

Capital is increasingly a human resource, rather than a material possession.  This simple truth makes Piketty’s thesis irrelevant.

 

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The Regressive Lottery

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from last week’s Atlanta Business Chronicle:

“Right now we’re funding HOPE on the backs of poor people,” said (state Rep. Ron) Stephens (R-Savannah), chairman of the House Economic Development and Tourism Committee. “These guys are willing to put $250 million a year into HOPE.”

Ron was addressing the prospect of MGM Resorts International building a casino resort in Atlanta, a prospect opposed by Governor Deal, and considered premature even by MGM.

What struck me was the frank revelation of the incredibly regressive nature of the lottery.  The average income of a lottery ticket buyer is much lower than the average income of the beneficiaries of the lottery.

Perhaps depending on gambling monopolies to fund education says something about our government’s priorities.

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Reading 2015 07 12

The Unafordable Care Act

Donald Trump’s Appeal—and Its Limits

 

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Intentionalism

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from Petterico’s Pontifications, King v. Burwell: Intentionalism Trumps Textualism, and the Rule of Law Dies:

excerpt:

This reminds me of a hypothetical I offered in 2010:

Assume you make $50,000 a year. The legislature passes a law imposing a hefty tax on “people making over $100,000 per year.” Since the law does not apply to you, by its plain terms, you do not pay the tax. However, you are convicted after a judge finds irrefutable contemporaneous evidence showing that all legislators who voted for the tax intended to impose it on people making over $10,000 a year. The judge, an “intentionalist,” finds that the intent of the legislature controls, regardless of the plain meaning of the law.

Under the plain language of the law, the tax does not apply to you. Applying the intent of the legislators, it does. Which is the better interpretation?

My view was that the law would not apply to you, because “$100,000″ means “$100,000.” Legislators can say all day long that they meant to say $10,000 — but if they didn’t include that extra zero in the law that was duly passed and signed, the text simply means what it means.

To me, $100,000 means $100,000 — not $10,000. To me, this is as simple as saying “established by the state” means “established by the state” and not “established by the state or the Secretary of Health and Human Services.” You don’t need to get into the legislators’ heads — and it is foolish and indeed dangerous to even try to do so.

But then, I am not an elite lawyer who went to Harvard or Yale and then went on to serve on the Supreme Court of the United States. And I am certainly not an “intentionalist.” I do not ascribe to statutory language mysterious secret meanings that signify the opposite of the common understanding of the public.

HKO

When talking about high court decisions there is much more to be concerned with than the outcome, or its desirability.  That too easily becomes a mere partisan fight.

One’s ire should not be raised at the decision to uphold a shitty law.  That anger is best reserved for Congress and one should vote accordingly.  It can be changed the same way it was enacted.

A legitimate case can be made to the degree that their tortured rationale intrudes into the legislative function,  Its implication goes far beyond the issue at hand in King vs Burwell.

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PR for a Free Market

“So what are we to make of this unexpected persistence of capitalism? John Kenneth Galbraith once observed, with respect to American capitalism, that “in principle the economy pleased no one; in practice it satisfied most.”2 Behind this observation is the familiar story of economic growth and diminished material scarcity. People didn’t like the concept of a market economy, but they had to admit that it did a good job of putting bread on the table. Yet the unease and suspicion have never gone away. A recent study by moral psychologists showed that a solid majority of Americans think it is immoral for businesses to raise prices in response to scarcity (say, charging more for shovels after a big snowstorm).3 But since having prices that will go up in response to scarcity is the single most important advantage of having a capitalist economic system, this moral intuition reveals something of a public relations problem for fans of the free market.”

Excerpt From: Joseph Heath. “Economics Without Illusions.” iBooks. https://itun.es/us/Gsw_y.l