Um, brainstorming/spitballing here:
Furman tax on the wealthy went down in 1997 page 16.
my comment
Sorry about the long comment. Piketty and Furman give one a lot to think about. I feel like Furman doesn't really grapple with the economic history (and policy history) of the last 40 years and how it differs from the post-war years.
Furman assumes we'll get to full employment one of these days."I am confident that we will finish digging out of the hole left by the Great Recession ...But even after we do, we will still face the major challenges..."
The problem is the shampoo economy and the Republicans blocking fiscal action. There's also the secstags with not enough investment for growth.
I don't understand why he feels r will lower along with g. For the past 5 years, profits have been high as growth has been slow. As Obama himself has said, labor hasn't shared in productivity gains for a while. It doesn't seem like Furman fully examines this issue. Solow writes "productivity growth has been running ahead of real wage growth in the American economy for the last few decades, with no sign of a reversal, so the capital share has risen and the labor share fallen."
On the other hand, as Baker has written in his review of K21, there are lot of low hanging fruit policies some which Furman mentions like infrastructure spending. Or even if the Fed switched to an NGDP level path target. Labor did share in productivity gains in the tight labor market of the late 90s, so it's doable. (Interesting that Furman writes "although all of these capital tax rates remain below what they were prior to 1997.")
My takeaway from Piketty is ultimately that shrinking r so that it is less than g is what matters. Reforms are worthwhile to the extent they strengthen the political push to make that happen. Because otherwise you get an oligarchical doom loop. Because as good as the New Deal and Great Society reforms were, they didn't prevent the recent rise of r over g and the return of Gilded Age levels of inequality.
It is interesting that Furman chose to deliver this speech which mentions "race-to-the bottom" national tax incentives in Ireland, a known haven. It may be that it's a race between keeping a lid on inequality and the process of global arbitrage playing itself out. In his review Baker mentions the waning days of China as a low-wage haven.
Furman assumes we'll get to full employment one of these days."I am confident that we will finish digging out of the hole left by the Great Recession ...But even after we do, we will still face the major challenges..."
The problem is the shampoo economy and the Republicans blocking fiscal action. There's also the secstags with not enough investment for growth.
I don't understand why he feels r will lower along with g. For the past 5 years, profits have been high as growth has been slow. As Obama himself has said, labor hasn't shared in productivity gains for a while. It doesn't seem like Furman fully examines this issue. Solow writes "productivity growth has been running ahead of real wage growth in the American economy for the last few decades, with no sign of a reversal, so the capital share has risen and the labor share fallen."
On the other hand, as Baker has written in his review of K21, there are lot of low hanging fruit policies some which Furman mentions like infrastructure spending. Or even if the Fed switched to an NGDP level path target. Labor did share in productivity gains in the tight labor market of the late 90s, so it's doable. (Interesting that Furman writes "although all of these capital tax rates remain below what they were prior to 1997.")
My takeaway from Piketty is ultimately that shrinking r so that it is less than g is what matters. Reforms are worthwhile to the extent they strengthen the political push to make that happen. Because otherwise you get an oligarchical doom loop. Because as good as the New Deal and Great Society reforms were, they didn't prevent the recent rise of r over g and the return of Gilded Age levels of inequality.
It is interesting that Furman chose to deliver this speech which mentions "race-to-the bottom" national tax incentives in Ireland, a known haven. It may be that it's a race between keeping a lid on inequality and the process of global arbitrage playing itself out. In his review Baker mentions the waning days of China as a low-wage haven.
