Capital in the Twenty-First Century. Garett Jones’s review (“Living with Inequality”) of Piketty’s book is the best I’ve seen so far. French economist Thomas Piketty promises to have uncovered “the central contradiction of capitalism.” What’s this flaw at the heart of the economic machine, a flaw that hundreds of years of economists have overlooked? That at some times and at some places Simply, the interest rate is greater than the economy’s growth rate. Within their zeal to avoid the supposed danger of increasing inequality, liberals-and Piketty-ignore one apparent remedy.
Piketty overlooks the fact that the wealthy and the rich aren’t members of a closed club, but rather users of the membership that benefits and loses people all the right time. And the point is, getting rich is not just a zero-sum game. As the wealthy have obtained richer, so have the poor, a fact documented by Brookings’ Gary Burtless.
- AT&T CELLULAR
- Learn how and where to gather information
- What do you want to use the amount of money for
- They offered me a partial scholarship – plus they were the only ones to do so
- You have a lot of FREE TIME
- In the first stages, the business owner should make a initial business plan
Over recent decades, there has been an amazing shift in how businesses are taxed. Businesses are more and more taxed as pass-through entities, where in fact the income turns up on personal taxation statements rather than on corporate and business results. This phenomenon complicates the interpretation of tax return data. For instance, when one looks at the growth of the 1 percent, or the 0.1 percent, in the Piketty-Saez data, that development is probable exaggerated because some income is only being shifted from corporate and business returns. Perhaps more importantly, we should also know that the two central factors of production in virtually any capital-are and economy-labor intricately bound.
When capital becomes abundant, labor becomes scarce; lots of wealth leads to increased success and higher wages-more capital requires more labor. Anything that reduces the supply of capital makes labor redundant, restricting the growth of income. Besides, it’s very unlikely that the money that government fees away from the rich will be put to more effective use, being more likely exposed to waste, fraud, and corruption. The proper way to take a look at inequality is that it’s no problem, except to the level that politicians and statists believe that it is.
As Chinese technical and risk concerns have installed, contractual disputes have surfaced. On the Aynak copper mine in Afghanistan, for example, contractual bargaining resumed years after the initial deal because the Chinese state-owned partner wanted a renegotiation in five areas, including royalty payments, as its evaluation of viability, costs, and timelines changed. Then there’s the stark truth of security risks, which have hamstrung some tasks and slowed others.
Since 2014, for instance, militants wanting to disrupt focus on the China-Pakistan Economic Corridor have killed more than 40 Pakistani nationals. So the Pakistan government has had to improve a paramilitary drive to protect tasks in rural elements of Baluchistan, where the writ and reach of the police is constrained. Ultimately, the pace, scope, results, and returns on these Chinese investments will vary at the project level-with technical widely, business, political, and security risks a significant contributing factor.
Evolving Methods to Risk? First is the growing relationship between the Chinese state and Chinese companies, both public and private, in the evaluation of business risks, overseas particularly. As Erica Downs has argued, “China Inc.” isn’t really a coherent entity-firms sometimes compete keenly against each other abroad and hardly ever have a unitary agenda.
But more significant than mere general public outcry is the Communist Party and government’s own evaluation of the politics implications of certain financial risks. Chinese companies, even private ones, can still end up in the crosshairs if their purchases are considered “too risky” because they bargain the state’s other goals. Another concern concerns tradeoffs-will Beijing willingly tolerate long-term loss making by general public firms if an investment in this or that country, a bad one even, serves geopolitical and proper goals? Here, the Afghanistan copper concession plus some ventures in Pakistan bear close watching.