By Ronaldo Campos Carneiro
Thomas Piketty, aged 43, came to the conclusion that:
Capitalism, or what is left of it, just as it is now put in practice or crony capitalism is heavily concentrating income and wealth, in a process where the rich get richer and the poor get poorer. Estimates for the XXI century are alarming and define human coexistence as unfeasible under the rules prevailing nowadays.
The current market competition is like an athletic race in which some are well fed and have access to health assistance and education, whereas crowds of excluded are left far behind: the minimally decent atitude is to place them on the same starting line or to equal their opportunities at the beginning of the race.
“The 85 richest people in the world, who could fit into a single London double-decker, control as much wealth as the poorest half of the global population– that is 3.5 billion people”.
“Strong inequality is corrosive of growth; it is corrosive for society. I believe that economists and politicians ignored inequality for too long.” (Christine Lagarde, Executive Director of the International Monetary Fund)
I personally think that these conclusions are irrefutable. Economics is a science where agents are regulated by the inexorable law of supply and demand. Politics is an art where the human will prevails. This is the reason why they cannot blend: economics and politics have diferent natures.
My complete agreement with Piketty’s conclusions also take me to a complete disagreement with his recommendations of a progressive tax and a global tax on wealth. This would be a shortcut to hell: it would mean more government, bureaucracy, war, corruption or, in the economic view, it would transfer assets from the domain of supply and demand to the changing human will of bureaucrats and politicians – an antechamber to hell.
“Deficits mean future tax increases, nothing less.
Our generation has been the victim of decisions from past generations, that increased indebtedness, just like future generations will have to pay for the inconsequence of our own generation, that expanded those debts even further. The European discussion about austerity or Keynesian stimuli mean to penalize our generation or our descendants. The problem is that policy makers search immediate applause, transfering the solution of structural problems to the future. These are inconsequent acts, showing no concern with future generations.
I would go back to the time of the American Revolution – “You will never strengthen the weak by weakening the strong” – and to the moments when the French Revolution was promising “liberty, fraternity and equality”.
Inequality of opportunities in human coexistence has been generating the most terrible process of domination and human bondage: the dictatorship of bureaucracy. The enormous amount of financial resources under the power of the State, to be allocated by acts of human will, stimulates an unbridled race of unscrupulous politicians in search of power at any cost; “They do not disdain, in certain cases, to associate with cheating, fraud and corruption”, to use the words of Vilfredo Pareto.
It would be very efficient and useful if economic policymakers became convinced that applying more measures under the same keynesian references they would come to the same results. We must migrate to another reference frame if we wish to improve our development process.
The relation between income and wealth is like a river flowing to a dam, where income is the variable of flow or the fluidity of the river, and wealth is the variable of stock or the accumulation in the dam. They both have the same nature, because wealth is no more than accumulated labour, and only labour can generate wealth.
Only productive labour can generate capital.
One must not criticize without a corresponding proposition. The solution is not among the tools of economic theory, but in the scope of politics, by means of a broad, full and true agreement around a new Social Pact, in which nutrition, health and education will become a responsibility of the private productive process, after the corresponding reduction of taxes by the government, who will also reduce its interference in the economy. Instead of transferring resources from the rich to the poor, this pact will equal opportunities concerning nutrition, health care and education. I do not mean philanthropy, but a new concept of human labor as a process of transformation of human energy in physical or intelectual energy. This would replace the changing logic of ideas –ideology- by the invariable logic of life – biology. Of course, entrepreneurs will not act out of philanthropy: full productive labor will be the broker of this agreement of wills.
This idea is perfectly simple: Piketty proved that after centuries of distributive measures in all countries, in which resources were transferred from the rich to the poor, the result was more social exclusion.
To prohibit wealth with a ceiling on income, as Piketty proposes, means to weaken the strong to strengthen the weak. Better would be, instead of a ceiling on income, to establish a groundfloor, so as to permit wealth and prohibit poverty, in an open system that would open the pressure cooker after the progressive dissipation of pressure.
Let us equal, for all, the access to nutrition, health care and education, and liberate all the tools and values of the market economy.
The complete liberation of prices and wages will lead us to full productive labour, that is: salaries will be ascending – there will be no need to establish a minimum wage.
I offer, below, some challenges in the scope of this proposition, for the reader to ponder:
1) the agricultural sector and the reversion of migration to the cities;
2) health care, education and the power in the hands of the private sector; profit linked to people health.
Both force and money are impotent against ideas.
Widening and deepening inequality is not driven by immutable economic laws, but by laws we have written ourselves”.