Reagan Revolution rollback

Here's how Matt O'Brien, the Washington Post/Wonkblog economics reporter, characterizes Obama's new tax proposals:

The state of the union is pretty good, actually, but President Obama has an idea to make it better: taxing Wall Street and the super-rich to make middle-class work even more worthwhile. It's Piketty with an American accent.

Okay, that's a little bit of an exaggeration, but not a huge one. Obama's State of the Union, you see, will call for $320 billion of new taxes on rentiers, their heirs, and the big banks to pay for $175 billion of tax credits that will reward work. In other words, it's fighting a two-front war against a Piketty-style oligarchy where today's hedge funders become tomorrow's trust funders. First, it's trying to slow the seemingly endless accumulation of wealth among the top 1, and really the top 0.1, no actually the top 0.001, percent by raising capital gains taxes on them while they're living and raising them on their heirs when they're dead. And second, it's trying to help the middle help itself by subsidizing work, child care, and education.

Stepping back, it's amazing the extent to which Thomas Piketty's tome Capital in the 21st Century, published in the U.S. in January 2014, has focused the U.S. policy debate on income inequality. Some economists have been talking about rising inequality since the 1980s, but Piketty and his colleague Emmanuel Saez have more recently put the spotlight on the very top -- the top 1%, .1% and .01% (they first published major findings pointing that way in 2003, but post-crisis updates have been making news in recent years). The book put the trends on the front pages. Now Democrats, after a rather disastrous pause to protect red-state senators in the 2014 election, are putting inequality front and center in their policy proposals.

The moral (and economic and social) equivalent of war, revisited

William James' prescient 1910 essay The Moral Equivalent of War was written in part as a rebuttal to pre-World War I theorizing about the role of war in human society that to post-world-war eyes look rather shocking:

Other militarists are more complex and more moral in their considerations. The Philosophie des Krieges, by S. R. Steinmetz is good example. War, according to this author, is an ordeal instituted by God, who weighs the nations in its balance. It is the essential form of the State, and the only function in which peoples can employ all their powers at once and convergently. No victory is possible save as the resultant of a totality of virtues, no defeat for which some vice or weakness is not responsible. Fidelity, cohesiveness, tenacity, heroism, conscience, education, inventiveness, economy, wealth, physical health and vigor — there isn't a moral or intellectual point of superiority that doesn't tell, when God holds his assizes and hurls the peoples upon one another.

James did not dismiss such views out of hand. Asserting, "The war-party is assuredly right in affirming and reaffirming that the martial virtues, although originally gain by the race through war, are absolute and permanent human goods," he wondered how humanity might martial those virtues in less destructive ways. And as I noted in The Moral Equivalent of Warmongering, Steinmetz's sentiments maintain a persistent half-life in in common attitudes, expressed via boomer-bashing and other (eternal) moralizing that excoriates those who have concerned themselves mainly with peacetime pursuits.

Today it's not acceptable to suggest that war is a consummation devoutly to be wished. But Ian Morris, in War! What is it Good For?* has updated the argument that war has so far been a major spur of human development -- not only technological, a reality impossible to ignore -- but social and political as well.  In effect, it seems Morris argues (I haven't read the book yet -- excuse the blogger's license) that war has taught us peace. From David Crane's review in The Spectator:

Did communism keep the west in the pink?

Thomas Edsall relays* the core ideas of a book by French economist Thomas Piketty, Capital in the 21st Century, that is causing a stir among economists. According to Picketty, the broad sharing of wealth and shrinking of economic equality in the developed world in the middle of the twentieth century was an historical anomaly:

There are a number of key arguments in Piketty's book. One is that the six-decade period of growing equality in western nations - starting roughly with the onset of World War I and extending into the early 1970s - was unique and highly unlikely to be repeated. That period, Piketty suggests, represented an exception to the more deeply rooted pattern of growing inequality.

According to Piketty, those halcyon six decades were the result of two world  wars and the Great Depression. The owners of capital - those at the top of the pyramid of wealth and income - absorbed a series of devastating blows. These included the loss of credibility and authority as markets crashed;physical destruction of capital throughout Europe in both World War I and World War II; the raising of tax rates, especially on high incomes, to finance the wars; high rates of inflation that eroded the assets of creditors; the nationalization of major industries in both England and France; and the appropriation of industries and property in post-colonial countries.