O que é este blog?

Este blog trata basicamente de ideias, se possível inteligentes, para pessoas inteligentes. Ele também se ocupa de ideias aplicadas à política, em especial à política econômica. Ele constitui uma tentativa de manter um pensamento crítico e independente sobre livros, sobre questões culturais em geral, focando numa discussão bem informada sobre temas de relações internacionais e de política externa do Brasil. Para meus livros e ensaios ver o website: www.pralmeida.org. Para a maior parte de meus textos, ver minha página na plataforma Academia.edu, link: https://itamaraty.academia.edu/PauloRobertodeAlmeida.

sexta-feira, 2 de maio de 2014

The Need for Nations - Roger Scruton (lecture delivered in Hungary)

*Here is a lecture I recently delivered in Hungary. 
The Need for Nations
Roger Scruton
(received: May 2nd, 2014) 

The project of European integration, advanced by politicians and elites of defeated nations in the wake of the Second World War, was founded on the belief that nationhood and national self-determination were the prime causes of the wars that had ruined Europe. There were disputes as to who started it: Napoleon? Bismarck? The French Revolutionaries? The Revolutionaries of 1848? The Reactionaries and Monarchists? Metternich? Talleyrand? Garibaldi? Fichte? Wagner? Louis XIV? But, however far back you went, in the eyes of the post-war political survivors, you came across the demon of nationalism, locked in conflict with the pure spirit of Enlightenment. As a result of this founding myth European integration was conceived in one-dimensional terms, as a process of ever-increasing unity, under a centralised structure of command. Each increase in central power was to be matched by a diminution of national power.
          In other words, the political process in Europe was to be endowed with a direction. It is not a direction that the people of Europe have chosen, and every time they are given the chance to vote they reject it – hence everything is done to ensure that they never have the chance to vote. The process moves always towards centralisation, top-down control, dictatorship by unelected bureaucrats and judges, cancellation of laws passed by elected parliaments, constitutional treaties framed without any input whatsoever from the people. In the current debt crisis the European elite – composed largely of the governing circles in France and Germany – has assumed the right to depose the elected governments of Greece and Italy, and to impose their own henchmen, chosen from the ranks of obedient apparatchiks. Meanwhile Hungary is constantly assailed with provocative questions and threats of investigation, for having dared to pass its own laws about matters in which the European political class has tacitly assumed sovereignty. In this way, the process is moving always towards imperial government, making very clear that the opposite of nationhood is not Enlightenment but Empire. And only one thing stands opposed to this result, and that is the national sentiments of the European people.
          As an Englishman and a lover of the civilisation of Rome I am not opposed to Empire. But it is important to recognise what it involves and to distinguish the good from the bad forms of it. In my view the good forms serve to protect local loyalties and customs under a canopy of civilisation and law; the bad forms try to extinguish local customs and rival loyalties and to replace them by a lawless and centralised power. The European Union has elements of both arrangements: but it suffers from one overwhelming defect, which is that it has never persuaded the people of Europe to accept it. Europe is, and in my view has ever been, a civilisation of nation states, founded on a specific kind of pre-political allegiance, which is the allegiance that puts territory and custom first and religion and dynasty second in the order of government. Give them a voice, therefore, and the people of Europe will express their loyalties in those terms. In so far as they have unconditional loyalties – loyalties that are a matter of identity rather than agreement – they take a national form.
          The political class in Europe does not like this, and as a result has demonised the direct expression of national sentiments. Speak up for Jeanne d'Arc and le pays réel, for the 'sceptred isle' and St George, for Lemmenkäinen's gloomy forests and the 'true Finns' who roam in them, and you will be called a fascist, a racist and an extremist. There is a liturgy of denunciation here that is repeated all across Europe by a political class that affects to despise ordinary loyalties while surreptitiously depending on them. In recent years Hungary has been a particular target of attack. There are extraneous reasons for it in Hungarian history, of course, and I don't need to remind you of them. But those reasons are not what animate the European elite. The present Hungarian government, by making issues of national identity and national sentiment fundamental to its platform, has excited a strong and censorious response from the European Union, regardless of any other grounds for such disapproval.
          On the other hand, national sentiment is, for most ordinary Europeans, the only publicly available and publicly shared motive that will justify sacrifice in the common cause – the only source of obligation in the public sphere that is not a matter of what can be bought and sold. In so far as people do not vote to line their own pockets, it is because they also vote to protect a shared identity from the predations of those who do not belong to it, and who are attempting to pillage an inheritance to which they are not entitled. Philip Bobbitt has argued that one major effect of the wars between nation states in Europe has been the replacement of the nation state with the 'market state' – the state conceived as a firm, offering benefits in exchange for duties, which we are free to join or to leave as we choose. (See The Shield of Achilles.) If this were true, then the nation, as an identity-forming community, would have lost its leading role in defining political choices and loyalties. Indeed, we would have emerged from the world of political loyalty altogether, into a realm of self-interested negotiations, in which sacrifices are no longer accepted, and perhaps no longer required. But if the present crisis has convinced us of nothing else, it has surely brought home to us that the capacity for sacrifice is the pre-condition of enduring communities, and that when the chips are down politicians both demand sacrifice and expect to receive it.
          We have been made well aware by the Islamists that not everyone accepts the nation as the fount of unconditional loyalty. The followers of Sayyid Qutb, the leader of Egypt's Muslim Brotherhood in the 1950s and 1960s, tell us that national obedience is a form of idolatry, and that it is to Allah alone that obedience is owed. There is a direction connection between those ideas and the failure of Middle Eastern countries to acquire stability since the fall of the Ottoman Empire and their division into nation states. The European nations have never whole-heartedly accepted that kind of theocratic absolutism, and firmly rejected it at the Treaty of Westphalia. The problem for Europe is that the ensuing centuries of territorial jurisdiction have implanted sentiments that do not fit easily into any kind of imperial ambition. In the circumstances of modern democratic government it is only on behalf of the nation that people are prepared to think outside the frame of self-interest. Hence the new imperial project has entered into conflict with the only source of sentiment upon which it could conceivably draw for its legitimacy. The nation states are not equally stable, equally democratic, equally free or equally obedient to the rule of law. But they alone inspire the obedience of the European people, and without them there is no way that the machinery of the Union can act. By replacing national accountability with distant bureaucracy, that machinery has left people disarmed and bewildered in the face of the current crisis.
          We see this clearly in the matter of the common currency. The Euro, imposed without proof that the people of the 'Eurozone' had any desire for it, was immediately understood, by many politicians in the Mediterranean, as a way of enlarging the national debt. This was very obviously the case in Greece. Bonds issued in Euros would benefit from the strength and probity of the Northern economies, and would be regarded as safe bets by investors who would not dream of buying bonds issued in drachmas. And the people of Greece agreed, since nobody alerted them to the cost – the national­ cost – that will be paid, once the Eurozone breaks up, as surely it must. Now that the day of reckoning is approaching, people all across the continent sense the need to prepare themselves for hard times. In a crisis people 'take stock', which means that they retreat to the primary source of their social attachment, and prepare to defend it. They do not do this consciously. But they do it nevertheless, and the futile attempt by the politicians to denounce the 'extremism' of the people whose inheritance they have squandered merely exacerbates the reaction. But the situation is not a happy one, since there is no trans-national idea of Europe to which the politician can appeal by way of identifying an object of loyalty outside the borders of the nation state. The half-century of peace and prosperity has fed upon the European cultural inheritance without renewing it. For it is all but impossible for a European politician to evoke the civilisation of Europe when its source – the Christian Religion – has been expunged from official documents and openly repudiated by the European courts. One ground of the current attacks on the 'nationalist' government of Hungary by the European Commission is that the Hungarians have drawn up a constitution which, in its preamble, describes the Hungarians as a 'Christian nation': two words that have been expunged from the official vocabulary of Europe. Indeed, if you look at the verdicts of the European courts, and especially of the Court of Human Rights, you will find a systematic bias against Christianity and Christians which has no other explanation than the ideological assumptions on which the European project has been built.
          The constitutional treaties likewise have made a point of granting no favours to the Christian faith or to the morality that has sprung from it. A 'cult of the minority' has been imposed from above, as a kind of rebuke to the people of Europe for being Europeans in spirit. This official multiculturalism has done nothing to reconcile immigrant communities to their new surroundings; instead it has destroyed much that was confident and joyful in the national cultures of Europe and rejected the Christian pieties in favour of a kind of morose materialism.
          The result of official multiculturalism is in fact cultural blindness – an inability to perceive the real cultural distinctions that obtain across the European continent and which are rooted in the custom and history of the nation states. If the architects of the Euro had taken national cultures properly into account they would have known that the effect of imposing a single currency on Greece and Germany would be to encourage Greece to transfer its debts to Germany, on the understanding that the further away the creditor the less the obligation to repay. They would have recognised that laws, obligations, and sovereignty don't have quite the same meaning in the Mediterranean as they do on the Baltic, and that in a society used to kleptocratic government the fairest way out of an economic crisis is by devaluation – in other words, by stealing equally from everybody. And they would have recognised that, by imposing a single currency on Greece and Germany nevertheless, they would sow the seeds of mutual resentment.
          Why didn't the architects of the Euro know those things? The answer is to be found deep within the European project. Cultural facts were simply imperceivable to the Eurocrats. Allowing themselves to perceive culture would be tantamount to recognising that their project was an impossible one. This would have mattered less if they had another project with which to replace it. But – like all radical projects, communism being the archetype – that of the European Union was conceived without a Plan B. Hence it is destined to collapse and, in the course of its collapse, to drag our continent down. An enormous pool of pretence has accumulated at the centre of the project, while the political class skirmishes at the edges, in an attempt to fend off the constant assaults of reality.
          Thus we have to pretend that the long observed distinctions between the Protestant North of our continent and the Catholic and Orthodox South is of no economic significance. Being a cultural fact it is imperceivable, notwithstanding Weber's (admittedly exaggerated) attempt to make it central to economic history. The difference between the culture of common law and that of the code napoléon has likewise been ignored, at the cost of alienating the British and the Danes, for whom law has ever been a social rather than a political product. The distinction between the Roman and the Ottoman legal legacies has been set aside, as has that between countries where law is certain and judges incorruptible and places where law is only the last resort in a system of bribes. Times and speeds of work, and the balance between work and leisure, which go to the heart of every community since they define its relation to time, are ignored, or else regimented by a futile edict from the centre. All that is distinctive of the Hungarian experience – the shock of the Treaty of Trianon, which divided the Hungarian people from each other, the distinctive culture of a land-locked country in which a large population of Roma has never properly settled, the still present record of the country's struggle against Islamic domination – all this too has been ignored. And everything is to be brought into line by those frightening courts – the European Court of Justice and the European Court of Human Rights – whose unelected judges never pay the cost of their decisions, and whose agenda of 'non-discrimination' and 'ever-closer union' is calculated to wipe away the traces of local loyalties, family-based morality, and rooted ways of life. Not surprisingly, when you build an empire on such massive pretences, it very soon becomes unstable.
          We can rescue Europe, it seems to me, only if we can recover the project that Charles de Gaulle wished to place at its heart, and which was effectively scotched by Jean Monnet – the project of a Europe of Nations. It will not be easy to unravel the web of regulations and edicts contained in the 180,000 pages of the acquis communautaire; nor will it be easy to redefine the roles and the structures of the European courts and the competences of the European Institutions. But the most difficult thing will be to obtain agreement on what national sovereignty really means. In particular, what will sovereignty mean in the aftermath of the European Union? Conservative politicians in Britain often speak of recapturing powers from Brussels, as though these powers will not have been altered by captivity, and as though they can be easily domesticated when they are brought back home. This is like Menelaus thinking that home life in Mycenae would be just the same when he had returned victorious from Troy, the recaptured Helen obediently trotting behind, as it was in the good old days before she left.
          The situation of Europe today reminds us that by conceiving pre-political loyalties in national, rather than religious terms, European civilisation has made room for the Enlightenment. The national idea is not the enemy of Enlightenment but its necessary precondition. National loyalty marginalizes loyalties of family, tribe and faith, and places before the citizen's eyes, as the focus of his patriotic feeling, not a person or a group but a country. This country is defined by a territory, and by the history, culture and law that have made that territory ours. It is the emergence of territory from behind religion, tribe and dynasty that characterises the nationalist art and literature of the 19th century, and the national anthems of the self-identifying nations were conceived as invocations of home, in the manner of Sibelius's Finlandia or the unofficial national anthem of England, 'Land of Hope and Glory'.
          In short, Enlightenment means borders. Take away borders, and people begin to identify themselves not by territory and law, but by tribe, race or religion. Nationality is composed of land, together with the narrative of its possession. It is this form of territorial loyalty that has enabled people in Western democracies to exist side by side, respecting each other's rights as citizens, despite radical differences in faith, and without any bonds of family, kinship or long-term local custom to sustain the solidarity between them. For on the foundation of territorial attachment it has been possible to build a kind of civic patriotism, which acknowledges institutions and laws as shared possessions, and which can extend a welcome to those who have entered the social contract from outside. You cannot immigrate into a tribe, a family or a faith; but you can immigrate into a country, provided you are prepared to obey the rules that make that country into a home.
          National loyalty is not known everywhere in the world. Consider Somalia. People sometimes refer to Somalia as a 'failed state', since it has no central government capable of making decisions on behalf of the people as a whole, or of imposing any kind of legal order. But the real trouble with Somalia is that it is a failed nation. It has never developed the kind of secular, territorial and law-minded sovereignty that makes it possible for a country to shape itself as a nation state rather than an assemblage of competing tribes and families.
          The same is true of many other countries in which Islam is the dominant faith. Even if such countries do function as states, like Pakistan, they are often failures as nations. They seem not to generate the kind of territorial loyalty that would enable people of different faiths, different kinship networks, different tribes to live peacefully side by side, and also to fight side by side on behalf of their common homeland. They are more likely to fight each other for possession of the homeland than to join forces in protecting it. And their recent history might lead us to wonder whether there is not, in the end, a deep conflict between Islamic conceptions of community and the conceptions that have fed our own idea of national sovereignty. Maybe the nation state is an anti-Islamic idea. Certainly that is what Sayyid Qutb would have us believe. Living in 'the shade of the Koran', as he famously put it, you surrender to God, not to mortals. And all lesser jurisdictions, including those founded on territory, custom and man-made law, are abolished by the supreme jurisdiction of the Almighty. (Fi zilâl al-qur'ân.) Ayatollah Khomeini said the same, when he dismissed patriotism as paganism.
          This observation is, of course, pertinent to the Middle East today, where we find the remnants of a great Islamic Empire divided into nation  states. With a few exceptions this division is the result of boundaries drawn on the map by Western powers, and notably by Britain and France as a result of the Sykes-Picot accords of 1917. It is hardly surprising if Iraq, for example, has had such a chequered history as a nation state, given that it has been only spasmodically a state, and never a nation. It may be that Kurds, Sunnite Arabs and Shi'ites in Iraq could all come, in time, to see themselves as Iraqis. But this identity will be fragile and fissiparous, and in any conflict the three groups will identify themselves in opposition to each other. Indeed, it is only the Kurds who seem to have a developed national identity, and it is an identity opposed to that of the state in which they are included. As for the Shi'ites, their primary loyalty is religious, and they look to the homeland of Shi'ism in Iran as a model in turbulent times. Today we are witnessing the collapse of civil order in Syria, a country which has never been a nation-state, but in which one minority sect, the 'Alawites, controlled the main centres of power, striving for legitimacy through aggressive territorial claims against Lebanon and Israel. The current civil war is degenerating into a war between the sects, with Christians as the principal victims.
          The vexed question of Islam and modernity takes us too far from our topic; suffice it to say that tribe and creed have always been more important than sovereignty in Islamic ways of thinking, and the non-emergence of nations in the Middle East is partly explained by this, as is their embryonic emergence in those countries, like Lebanon and Egypt, with substantial Christian minorities, maintaining long-standing trade links with Europe.
          More importantly, I have no doubt that it is the long centuries of Christian dominance in Europe which laid the foundations of national loyalty, as a loyalty above those of faith and family, and on which a secular jurisdiction and an order of citizenship can be founded. It may sound paradoxical, to identify a religion as the major force behind the development of secular government. But we should remember the peculiar circumstances in which Christianity entered the world. The Jews were a closed community, bound in a tight web of religious legalisms, but governed from Rome by a law which made no reference to any God and which offered an ideal of citizenship to which every free subject of the Empire might aspire.
          Christ found himself in conflict with the legalism of his fellow Jews, and in broad sympathy with the idea of secular government – hence his famous words in the parable of the Tribute Money: render unto Caesar what is Caesar's and to God what is God's. The Christian faith was shaped by St Paul for the use of communities within the Empire, who wanted only space to pursue their worship, and had no intention of challenging the secular powers. Hence 'the powers that be are ordained of God' (Romans 13). And this idea of dual loyalty continued after Constantine, being endorsed by Pope Gelasius the First in the 6th century, in his doctrine of the two swords given to mankind for their government, that which guards the body politic, and that which guards the individual soul. It is this deep endorsement of secular law by the early Church that was responsible for the subsequent developments in Europe – through the Reformation and the Enlightenment – to the purely territorial law that prevails in the West today.
          It is very clear from the history of our continent, that new forms of solidarity have here come into being which owe much to the Christian inheritance, but which are premised on the assumption that legitimacy is a man-made and not a God-bestowed achievement. Nations emerged as forms of pre-political order that contain within themselves the principles that would legitimise sovereign government. Political theorists of the Enlightenment such as Locke and Rousseau tried to encapsulate this legitimising process in a social contract, by which the members of society form an agreement to be governed in a certain way in exchange for renouncing the state of nature. But it is surely obvious that if people assemble to consider a contract that will unite them, it is because they already belong together, already acknowledge that the welfare of each depends upon the actions of all. A contract, however strong its terms, can never establish more than a conditional obligation, whereas political order depends, in the end, on an unconditional component, as do marriage and the family. Without this unconditional component no community can survive a real crisis.
          The social contract therefore establishes a form of government that will protect and perpetuate an allegiance that precedes the contract and makes it possible. This allegiance is shaped by history and territory, and by all the forms of association that spring from these, notably language, customary law and religious observance. Seeing things in this way, religious observance is demoted to one factor among others, and is reshaped as a subject of law, rather than a source of it. That, to my mind, is the great achievement of European civilisation: to have placed man-made law at the heart of the community, to have subordinated all associations, including those stemming from religion, to the demands of the secular jurisdiction, and to have established the institutions through which law can adapt to changes in social life instead of blurting out some 'eternal' message revealed in circumstances that have vanished, leaving no other trace.
          However, law so conceived is territorial and therefore national. It is a law that defines boundaries, beyond which its writ does not run. Claims to jurisdiction from a place outside those boundaries are fiercely resisted, as we know from the history of England and from the conflict between the crown and the papacy that has been decisive in forming many of the nation states of Europe. When it is proposed that the corpus iuris should permit European courts to charge British citizens with criminal offences, and extradite them to the place most convenient for their trial, it is hardly surprising that British people receive this suggestion with outrage. Their conception of law is the common law conception, which does not permit people to be held indefinitely without trial, and which depends for its authority on the 'law of the land', as embodied in cases decided in the sovereign territory of the English Crown. This attachment of law to territory is not some arbitrary limitation, as though there were a universal jurisdiction from which local jurisdictions are derived by restriction. It is the very essence of law, as the European experience has defined it. We are heirs to a conception of law as arising from the attempt to settle conflicts, to establish institutions, to adjudicate rights and duties, among people who are bound to each other as neighbours. Law, as we know it, is produced by the place that needed it, and is marked by the history of that place. (The contrast with the Shari'ah is obvious, as is the contrast with the 'natural law' of the stoics and the Universal Church.)
          Hence the attempt to build a European Empire of laws that depend upon no national allegiance for their authority is not merely bound to fail. It is likely also to undermine the authority of secular law in the minds of the European people. There is already in the social contract theories of the eighteenth century a kind of wishful thinking about human nature, a belief that people can reshape all their obligations without reference to their affections, so as to produce an abstract calculus of rights and duties in the place of their contingent and historical ties. The French Revolutionaries began their seizure of power in this way, proposing a declaration of the rights of man and the citizen that would sweep away all the arbitrary arrangements of history and place Reason on the throne that had previously been occupied by a mere human being, who had arrived there by the accident of succession. But within weeks of the Declaration the country was being governed in the name of the Nation, the Patrie, and the old contingent association was being summoned in another and (to my mind) far more dangerous form, in order to fill the gap in people's affections that had been made by the destruction of customary loyalty, religious usage, and the unquestioned ways of neighbourhood. This was clearly perceived by Burke, who reminded his readers that human beings are thrown together by accidents that they do not choose, and derive their affections not from their decisions but from their circumstances. It is proximity, not reason, that is the foundation of ordinary charitable feeling. Take that thought seriously, and you quickly come to see that territorial forms of association are the best remedy that we have against the divisive call of ideology. National attachment is precisely what prevents 'extremism' from taking hold of the ordinary conscience.
          This is why we must distinguish national loyalty, which is the sine qua non of consensual government in the modern world, from nationalism, which is a belligerent ideology that looks for a source of government higher than the routines of settlement and neighbourhood. Nationalism is an ideological attempt to supplant customary and neighbourly loyalties with something more like a religious loyalty – a loyalty based on doctrine and commitment. Ordinary national loyalty, by contrast, is the by-product of settlement. It comes about because people have ways of resolving their disputes, ways of getting together, ways of cooperating, ways of celebrating and worshipping that seal the bond between them without ever making that bond explicit as a doctrine. This is surely how ordinary people live, and it is at the root of all that is best in human society, namely that we are attached to what goes on around us, grow together with it, and learn the ways of peaceful association as our ways, which are right because they are ours and because they unite us with those who came before us and those for whom we will in turn make way. Seen in that way national feelings are not just natural, they are essentially legitimising. They call upon the sources of social affection, and bestow that affection on customs that have proved their worth over time, by enabling a community to settle its disputes and achieve equilibrium in the changing circumstances of life.
          National sentiments enable people successfully to defend themselves in wartime. But they are also essential in peacetime too. This we are now seeing in Europe, as the sovereign debt crisis begins to affect the lives of ordinary people. Governments are calling on their citizens to make sacrifices for the common good. They are not asking them to make sacrifices for 'Europe', still less for the European Union. If they were to use this language then they would be forced to recognise that Europe is not the bureaucratic machine that has conferred upon them the small measure of legitimacy that they can claim, but a spiritual inheritance that the machine has tried to extirpate. Hence the only invocations that they can make address national sentiments. They speak of the need to pull together, for the sake of our community, and at every point their language invokes the contingencies of human affection, that make it possible for people to give up something for the sake of others – a habit of mind that social democracies do not normally encourage. They are not speaking the language of nationalism, but the language of attachment, which is something entirely different. Their response to the crisis of Europe reveals that the nation state is not the problem but the solution – it contains within itself the only motives to which politicians can now appeal, when the effects of the European project are finally being felt across the continent.
          In conclusion I must say something about the situation of Hungary today, as I understand it, and the relevance of the national idea to the Hungarians. That Hungary is a special case is evident. The Hungarian language is an isolated remnant of a linguistic group that was for the most part extinguished by the Indo-European migrations, and bares little or no relation to any of the surrounding tongues. Ordinary uneducated Hungarians are therefore isolated from their immediate neighbours by their language. They have also been isolated from each other by the forcible division of their territory at the end of the First World War. The remnant of territory that they still enjoy is shared with a substantial minority of Roma, whose unsettled ways are often resented by their neighbours, but whose cause inevitably gathers support in the wider world. The Jewish minority that survived the Nazi occupation suffered further persecution under the communists, but nevertheless is active in making its presence known. Many of the Budapest intelligentsia are Jewish, and form part of the extensive networks around the Soros Empire. People in these networks include many who are rightly suspicious of nationalism, regard nationalism as the major cause of the tragedy of Central Europe in the 20th century, and do not distinguish nationalism from the kind of national loyalty that I have defended in this talk. Moreover, as the world knows, indigenous anti-Semitism still plays a part in Hungarian society and politics, and presents an obstacle to the emergence of a shared national loyalty among ethnic Hungarians and Jews.
          Those are only some of the factors that stand in the way of a collective pre-political attachment in this part of the world. The European Union offers an idea of citizenship which is in fact a citizenship of nowhere. It encourages people to move from their homeland and to settle elsewhere in the Union, and inevitably those who move are the educated class, whose departure deprives the country of its teachers, doctors, lawyers and surgeons, and provides no replacements for them. The EU also encourages the sale of land to foreign nationals – so building a non-resident landlord class, which has no personal interest in the beauty and moral order of rural life, and which sees land merely as an investment, to be put to use. This has led, and will lead, to tensions of a kind that can be resolved only by a firm political will.

          For there is no alternative to nationality. If the government in Budapest is to enjoy legitimacy, that legitimacy must come from below, from the people whose unity and identity is expressed in the workings of government. This legitimacy must be inherited by each government, whether right or left, whether minority or majority. It must not be a loyalty of cliques, or a reprimand to the peasantry issued by the intellectuals of Budapest, or an edict issued by the true Hungarians in the villages against the traitors in the city. The electorate itself must be identified in territorial terms, since the jurisdiction is territorial, not ethnic or religious. The alternative is fragmentation, as competing ethnic groups or factional interests form parties whose purpose is not to rule in the interest of everyone, but to pillage for the sake of the group. I don't wish to comment here on the existing political parties in Hungary or to raise the question whether any of them has seen government as an opportunity for plunder rather than a duty to secure the common good. But I do know that, until the institutions of government are seen by Hungarians as representing the country, rather than some faction within it, the government will suffer a deficit of legitimacy. It will them lose its principal advantage over the EU in its battle for the affections of the Hungarian people.

Eleicoes 2014: o partido neobolchevique ensaia suas muitas estrategias viciosas

G1, Sexta-feira, 02/05/2014

O XIV Encontro Nacional do PT, que começa nesta sexta-feira (2) em São Paulo, tem um objetivo claro: sepultar de vez o movimento "Volta, Lula" que ganha força à medida em que Dilma Rousseff perde pontos nas pesquisas. Se de um lado, há os que aderem à idéia para tirar mais coisas (mais cargos) do governo; há também aqueles que gostariam de ter uma campanha "na zona do conforto" ao serem puxados por um forte candidato à Presidência.
No encontro desta sexta, a expectativa é a de que Lula deixe claro que estará com Dilma e que toda sua força eleitoral será usada para isso. Há até os que querem que ele tenha um cargo formal na campanha, para que tenha maior desenvoltura para fazer uma campanha. Ele já decidiu quer fará uma campanha paralela à agenda da candidata, nos dias em que ela terá de ficar em Brasília no Palácio do Planalto. Dilma só poderá fazer campanha fora do expediente ou nos fins de semana. Lula, ao contrário, pretende mergulhar de domingo a domingo.
No último pronunciamento de Dilma e no primeiro texto sobre o programa de governo para o segundo mandato, que será apresentado nesta sexta no encontro petista, é possível identificar os pontos que serão explorados na campanha eleitoral. Dilma, em pronunciamento de rádio e televisão, disse que seu governo "não será o do arrocho salarial e da mão forte contra o trabalhador".
Sem citar nominalmente, ela respondia a Aécio Neves que em encontro com empresários disse que não teria dificuldades em tomar medidas duras e impopulares. Esta frase dita por Aécio está sendo repetida por petistas na tentativa de criar distância dele com trabalhadores.

Ao mesmo tempo, a proposta de programa de governo que foi redigida pelo assessor especial da presidência, Marco Aurélio Garcia - o mesmo escriba de programas anteriores do PT - tenta recolocar o tema privatização em pauta. Vale lembrar que de 2006 para cá, foi assunto que fez diferença na campanha petista.
Desta vez, a privatização entra no contexto do debate sobre a Petrobras, assunto que, neste ano, é mais indigesto para o governo por conta dos mais recentes escândalos. O PT tenta assumir o debate sobre Petrobras acusando a oposição de tentar desgastar a empresa "com os mesmos interesses privatistas" do passado.

Os discursos de hoje em São Paulo servirão de orientação para a militância que está sendo chamada desde já a estar mobilizada para a campanha de outubro. Todos sabem que, tão importante quanto conquistar o voto do eleitor, é dar argumento para a militância conquistar este voto. Os discursos de hoje têm este objetivo.

 O XIV Encontro Nacional do PT já estava previsto, mas foi vitaminado diante da necessidade eleitoral de Dilma Rousseff. Nos últimos dias, os principais nomes do PT foram convocados a estar presentes para dar maior importância ao evento. E, também, para participarem das imagens que serão feitas lá pela equipe do publicitário João Santana e que serão utilizadas tanto no programa eleitoral do PT deste mês de maio como no programa da campanha eleitoral de Dilma Rousseff.
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Da coluna diária do jornalista Carlos Brickmann:


Acabou o teflon. Coluna Carlos Brickmann

(*)- ATENÇÃO: COLUNA EXCLUSIVA PARA A EDIÇÃO DOS JORNAIS DE DOMINGO, 04/MAIO/2014


O deputado federal Paulinho da Força, do Solidariedade, foi grosseiro ao se referir à presidente Dilma Rousseff. Não precisava; não devia (e avançar na tequila num ato político é claramente inconveniente). Correu o risco de abafar a mais importante constatação dos festejos de Primeiro de Maio: a de que acabou a época em que acusações a líderes petistas não aderiam a eles. Dilma, ausente, foi vaiada; vaiados foram, presentes, os ministros Gilberto Carvalho e Ricardo Berzoini, o prefeito paulistano Fernando Haddad (ficou mui-to bra-vo!), o candidato ao Governo paulista, Alexandre Padilha. Não foram vaiados só na festa da Força Sindical, que montou um palanque oposicionista; foram vaiados também - e alvejados por latas e garrafas - na festa da CUT, o braço sindical do PT.

É importante lembrar, também, que a CUT, de longe a maior central sindical do país, reuniu muito menos gente em sua festa de Primeiro de Maio do que a Força Sindical. A Força reuniu mais de cem mil pessoas (e anunciou um milhão e meio). A CUT reuniu algo como três mil (e anunciou 80 mil). Até os números inflados por ambas as centrais mostram a diferença de público entre suas festas.

Pior ainda, a CUT festejava também o discurso como eu sou boazinha da presidente Dilma Rousseff em rede nacional de TV, com farta distribuição daquilo que o pessoal do Palácio chamou de "bondades". Não adiantou e as vaias dominaram a comemoração. A explicação oficial é que "houve infiltração".

OK. E tudo indica que a tal infiltração cada vez será mais visível e barulhenta.

Book Review: Capital in the Twenty-first Century - Lewis Hunter (Mises Daily)

O Capital no Século XXI, do economista francês Thomas Piketty, vem fazendo sucesso em diversos meios, especialmente naqueles jamais convencidos de que o sistema capitalista, com todas as suas desigualdades e injustiças de que ele é (involuntariamente) capaz, é, de longe, o melhor sistema para criar E DISTRIBUIR riquezas, ao contrário de todos os demais inventados pelos homens e sociedades, que nada mais são do que receitas mal concebidas para a ineficiência e a baixa produtividade.
Nesta resenha crítica, Hunter Lewis (do Mises Daily) demonstra como os dados improváveis do livro destroem as teses principais de Piketty, e que elas na verdade contradizem seus principais argumentos.
Ou seja, mesmo aqueles que achavam que os dados eram fiáveis, ainda que as prescrições de correção das "desigualdades" fossem totalmente políticas, e não econômicas, podem ter agora certeza de que o livro não merece todos os elogios que tem recebido.
Ele é, mal comparando, o refúgio mais recente de todos aqueles que pretendem ainda descobrir uma fórmula mágica para escapar das duras realidades da vida cotidiana, e que ficam buscando algum embasamento empírico para contradizer os supostos benefícios do capitalismo, que podem não ser do agrado dos órfãos do socialismo, mas são os que existem de mais concreto em nossa civilização, acima, além e em descrédito dos sonhos e utopias.
Certamente haverá mais resenhas do livro, mas o que se necessita, na verdade, é a análise dos dados, como se faz com todos os experimentos científicos de qualidade.
As pessoas elogiam Piketty porque se impressionam com a quantidade de dados e não se aventuram na busca de seu embasamento empírico, segundo o alinhamento preferido pelo autor, e se intimidam com gráficos e tabelas.
Economistas sérios devem desmentir suas teses principais, e sobretudo a inconsistência de suas prescrições políticas, ou morais, que tem pouco a ver com a realidade.
Paulo Roberto de Almeida



by Hunter Lewis on May 2, 2014


Keynes’s keynote book, The General Theory, is loaded with economic theory. There are only two pages of data in that book, and Keynes dismisses the scant data he cites as “improbable.” By contrast, Piketty’s new book, Capital in the Twenty-first Century, is stuffed with data. Indeed Piketty considers himself a successor to the economist whose data Keynes dismissed, Simon Kuznets. Almost everyone admits that Piketty’s theoretical case is weak — but, his supporters say, look at all this data. You can’t argue with this mass of historical evidence!
Piketty’s primary argument is that wealth (which tends to be concentrated in few hands) grows faster than the economy, so that those with a lot of wealth keep getting richer relative to everyone else. This is supposed to be an inescapable feature of capitalism. (If this sounds familiar, it should be. It echoes both Marx and Keynes, although we should remember that Keynes mocked most of what Marx said as “hocus-pocus.”)
So what then is the evidence that wealth has grown faster than the economy?
Let’s look at the chart below, adapted from Piketty’s book. The top line is return on capital and the bottom line is the economic growth rate. The top line is supposed to be how the rich are faring and the bottom line how the average person is faring. Note that the lines on the far right are just a projection of Piketty’s, and not actual history.
This chart is astonishing for many reasons. First of all, it suggests that capital earned a 4.5 percent or higher return for the years 0-1800 C.E. This is a crazy number. If the human race had started out with only $10 in year 1 and compounded it at 4.5 percent a year for any series of 1,800 years, by now we would have much, much more than a trillion times the entire world’s wealth today, which is estimated at $241 trillion by Credit Suisse.
The 4.5 percent or higher number is also crazy because Piketty is right that there was negligible economic growth prior to the industrial revolution, and such high returns for the rich are just not consistent with so little growth. The truth is that rich people for most of those years were interested in spending or hiding their wealth, not in investing it, because wealth out in the open was likely to be stolen, if not by bandits, then by government.
If you look closely at the more modern part of the chart and ignore the projection into an unknown future, you will see that the lines do not support Piketty’s thesis. His idea that the rich will always necessarily get richer relative to everyone else under capitalism is not supported by the data he presents.
The next chart shows the share of wealth of the 10 percent richest in Europe over time (dark-blue, top line), the share of wealth of the 10 percent richest Americans (the light-green, second line from top), the share of wealth of the top 1 percent Europeans (the light-blue, third line from top), and the share of wealth of the top 1 percent Americans (the dark-green, fourth line from top). This chart doesn’t support Piketty’s thesis either. Yes the share of the rich has grown since 1970, but only after falling previously.
The next chart is one that I have commented on in an earlier article. It shows the income of the top 10 percent in the US over time as a percent of all income. Income in this case includes capital gains which arguably are not true income, but rather the exchange of one asset for another, and excludes government transfer payments which make a considerable difference to the results. Even so, once again we do not see an inexorable rise in the income of higher earners over time, far from it.
What we actually see is two peaks for high earners, right before the crash of 1929 and again before the crash of 2008. These are the two great bubble eras in which government printed too much new money, which led to a false and unsustainable prosperity. These were also crony capitalist eras, as rich people with government connections used the new money to become even richer or benefited from other government favors.
Unfortunately world central banks have blown up yet another bubble in capital markets following the crash of 2008, which has again brought the high earners share back to 50 percent in 2012, based on data that became available after the book’s publication. This newest bubble too will eventually burst and bring the share back toward the 40 percent level of 1910, the start of the chart.
Perhaps the most astonishing claim in Piketty’s book is that government bureaucracies need to be reformed so that they can make most efficient use of all the new income and wealth taxes that are recommended. The assumption is that almost complete government control of the economy would be best, but that     the machinery needs some fine tuning.
Economist Ludwig von Mises demonstrated almost 100 years ago that a state managed economy will simply not work, because among other problems it cannot set workable prices. Only a consumer run economy can do that. Socialists have been trying to disprove Mises’s thesis ever since, but have never succeeded. Piketty should at least read Mises.
Note: The views expressed in Daily Articles on Mises.org are not necessarily those of the Mises Institute.
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Getulio Vargas segundo John W. F. Dulles, resenhado por Voltaire Schilling


Getúlio Vargas: duas visões sobre a história do Brasil
Voltaire Schilling 01.05.14.
Vargas (centro) e apoiadores em Itararé, São Paulo, a caminho da Revolução de 30
Foto: Claro Jansson / Wikicommons / Wikimedia
Escrever a biografia política de Getulio Vargas é, guardadas as devidas proporções, descrever boa parte da história brasileira do período 1930/54.
A figura de Vargas vem fascinando há tempos os “brazilianists” cujas pesquisas se intensificaram nos últimos anos. A primeira obra sobre esta marcante figura data de 1942, realizada pelo muito citado Karl Lowenstein (Brazil under Vargas, N. York, Mcmillan) que terminou sendo uma obra isolada por mais de vinte anos. O jejum foi rompido, tendo aparecido ultimamente três obras de importância, as quais procuram lançar luzes sobre a Era de Vargas. O primeiro a ser editado, causando relativo impacto, foi o trabalho de Thomas Skidmore (Brasil: de Getúlio a Castelo) editado pela Saga em 1969. No ano que passou fomos brindados por duas traduções: a de John Wirth (A política de desenvolvimento na Era de Vargas, Rio de Janeiro, Fundação Getúlio Vargas) e a de John W. F.Dulles, filho do falecido secretário de Estado do governo Eisenhower. FosterDulles (Getúlio Vargas: Biografia Política, Rio de Janeiro, Renes) editada com seis anos de atraso. Por sua vez a nossa historiografia não ficou marcando passo. Hélio Silva, como é de conhecimento geral, vem editando desde 1964 uma série de documentos referentes a Era de Vargas, os quais já atingiram o décimo segundo exemplar, muito deles já em segunda edição.
O que se segue é uma analise da obra de John Watson Foster Dulles sob dois aspectos: primeiramente de maneira como ela é apresentada ao leitor, seu arcabouço. Em segundo lugar, faremos uma crítica à visão histórica de Dulles, apontando as omissões intencionais ou ingênuas daí decorrentes.
publicidade
A obra é dividida em onze livros titulados de maneira inteligente, não se desviando nenhum do que realmente foi importante na Era de Vargas. É um impressionante painel narrativo. Cada livro por sua vez é dividido em capítulos numerados, cada um possuindo de duas a três páginas e meia de extensão. A bibliografia contida em dezenove páginas atinge quase quatrocentas obras, das quais trinta e uma são de autores americanos. As novidades estão nos memorandos e relatórios enviados pelos diplomatas americanos ao Departamento de Estado, material de difícil acesso ao historiador brasileiro.
O que nos impressiona são as entrevistas, todas elas realizadas no período de 1963 a 65. Um material de fazer inveja. Nada menos de oitenta e três personalidades do mundo brasileiro ou a ele ligadas, como no caso deembaixadores americanos que aqui serviram, são arrolados como testemunhas ou participantes dos principais acontecimentos da Era Vargas.
Em sua relação constam dois ex-presidentes da República: Dutra e Café Filho; quatro governadores ou interventores estaduais: Adhemar de Barros, Cordeiro de Farias, Juraci Magalhães e Benedito Valadares; ministros civis e militares, tais como Francisco Campos, Vasco Leitão da Cunha, Eduardo Gomes, Amauri Kruele Juarez Távora; o ex-chefe de polícia do Estado Novo, Filinto Muller; político como Clemente Mariani, Tancredo Neves, Raul Pilla; o dirigente integralista Plínio Salgado; o líder do PC brasileiro, Luís Carlos Prestes; entre a intelectualidade destacamos Pedro Calmon, Caio Prado Júnior, Hélio Silva, Gilberto Freyre, Austregésilo de Athayde e Tristão de Athayde, assim como Afonso Arinos e Mello Franco. É de se perguntar se falta alguém!
A Visão Histórica De Dulles
Quanto a esta, apresenta os tradicionais defeitos do neo-positivismo (ideologia dos scholars americanos). Aliás, os mesmos defeitos apresentados pelos seguidores da doutrina econômica neoclássica, exacerbadamente criticados por John Galbraith, isto é, de analisar de maneira particular, isoladamente, os fenômenos estruturais da sociedade, sem fazer a devida interação entre eles. John W. F. Dulles é um ortodoxo. Para ele, a política é uma atividade executada por um determinado número de elementos humanos para tal capacitados, fechados em gabinetes, assembléias, palácios governamentais ou em reuniões conspiratórias. Aparentemente estas figuras “eleitas” por algum desígnio não especificado pelo autor representam suas funções tais como os heróis da tragédia grega, isolados em suas dores e poucas alegrias, cabendo ao resto da Nação o papel passivo de um coro que lamenta e aplaude as decisões dos heróis. O sr.Dulles parece ignorar os últimos trabalhos da moderna historiografia em relação às biografias políticas. Não conta com os levantamentos sociais e econômicos que tanto enriqueceram a história nos tempos mais recentes, entre as quais o trabalho de Boris Fausto sobre a Revolução de 1930 serve de modelo.
Para J.W. F. Dulles, a política é entendida no seu sentido vulgar, como “arte de governar” ou, como propunha Maquiavel, de se “manter no poder”. Não aentende como uma atividade muito mais ampla, que transcende a limitação da palavra, isto é, uma atividade onde todos os elementos da sociedade se dizem presentes, e se encontram representados e materializados no político.
Uma biografia política adquire maior dimensão quando consegue revelar o biografado em toda sua amplitude histórica. Que forças representam? A que tendência obedece? Quais as que lhe opõem? Pois todo indivíduo representa uma “categoria” de interesses que atuam na sociedade. Categorias essas “sociais e econômicas” que agem através dele, sobre ele e muitas vezes, como no caso de Vargas, contra ele. O sr. Dulles simplesmente emudece e este respeito. Não sabe aliar, por exemplo, as manifestações do Tenentismo (a revolta do Forte de Copacabana, de 1922, a Revolta de Isidoro em São Paulo em 1924, A coluna Prestes - Miguel Costa no período de 1924/27, e a própria revolução de 1930) a crescente clima de insatisfação reinante entre a classe média brasileira, marginalizada em suas tentativas de escolher “legalmente” seus representantes, no seu desejo de modernizar um país cujas estruturas políticas pouco se haviam alterado desde a deposição de D. Pedro II. Não vê os interesses de uma burguesia nacional, ainda que fraca, mas em ritmo de franco progresso, lutando por protecionismo e mais atenção dos “donos do poder”, a oligarquia “café com leite”.
Podemos dizer que Dulles cria uma imagem simpática de Vargas (afinal, Vargas aliou-se aos EUA na IIGM e cedeu uma base aeronaval para os americanos em Natal, no RGN). O autor louva-lhe a habilidade política, a transigência, a profunda reflexão que antecede qualquer tomada de decisão, o caráter contemporizador, o humanitarismo. Por outro lado, reconhece uma ponta de “maquiavelismo” em seu trato com inimigos, mas principalmente com os amigos (Borges de Medeiros, Flores da Cunha, Lindolfo Collor, João Neves da Fontoura e outros). Associa Vargas ao processo de modernização do país a uma maneira digna e séria no trato da “coisa pública”, característica, aliás, que herdou da tradição castilhista fortemente implantada no Rio Grande do Sul.
Além da crítica a ser feita em sua visão de história, devemos destacar outras falhas ou omissões de ordem estrutural que suspeitamos serem naturais num professor norte-americano. No jogo de interesses, dos quais os Estados Unidos fazem parte de forma leonina, o autor recorre aos despachos e memorandos da Embaixada Americana, fazendo-nos crer ser ela a única representante dos interesses do seu país. Não revela quais outras “categorias” representavam esses interesses, “categorias” pertencentes à própria estrutura de classes da sociedade brasileira.
Para dar ideia dessa omissão no do que ocorre no terreno dos acontecimentos econômicos e sua ação política, dedica o autor duas linhas e meia à crise de 1929 – o crash.
Dulles publicou esta biografia em um tempo que os documentos dos arquivos nacionais estavam bloqueados aos pesquisadores brasileiros. Na época do regime militar (1964-1985) nossa história era mais fácil de ser escrita por um acadêmico estrangeiro do que por um graduado nas nossas universidades

Foreign Affairs resenha O Capital no Seculo XXI: imposto sobre ricos nao vai terminar com a desigualdade

Capital Punishment
Why a Global Tax on Wealth Won't End Inequality

Foreign Affairs, MAY/JUNE 2014 ISSUE

Capital in the Twenty-first Century
BY THOMAS PIKETTY. 
TRANSLATED BY ARTHUR GOLDHAMMER. 
Belknap Press, 2014, 696 pp. $39.95.
Every now and then, the field of economics produces an important book; this is one of them. Thomas Piketty’s tome will put capitalist wealth back at the center of public debate, resurrect interest in the subject of wealth distribution, and revolutionize how people view the history of income inequality. On top of that, although the book’s prose (translated from the original French) might not qualify as scintillating, any educated person will be able to understand it -- which sets the book apart from the vast majority of works by high-level economic theorists.
Piketty is best known for his collaborations during the past decade with his fellow French economist Emmanuel Saez, in which they used historical census data and archival tax records to demonstrate that present levels of income inequality in the United States resemble those of the era before World War II. Their revelations concerning the wealth concentrated among the richest one percent of Americans -- and, perhaps even more striking, among the richest 0.1 percent -- have provided statistical and intellectual ammunition to the left in recent years, especially during the debates sparked by the 2011 Occupy Wall Street protests and the 2012 U.S. presidential election.
In this book, Piketty keeps his focus on inequality but attempts something grander than a mere diagnosis of capitalism’s ill effects. The book presents a general theory of capitalism intended to answer a basic but profoundly important question. As Piketty puts it:
"Do the dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, as Karl Marx believed in the nineteenth century? Or do the balancing forces of growth, competition, and technological progress lead in later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznets thought in the twentieth century?"
Although he stops short of embracing Marx’s baleful vision, Piketty ultimately lands on the pessimistic end of the spectrum. He believes that in capitalist systems, powerful forces can push at various times toward either equality or inequality and that, therefore, “one should be wary of any economic determinism.” But in the end, he concludes that, contrary to the arguments of Kuznets and other mainstream thinkers, “there is no natural, spontaneous process to prevent destabilizing, inegalitarian forces from prevailing permanently.” To forestall such an outcome, Piketty proposes, among other things, a far-fetched plan for the global taxation of wealth -- a call to radically redistribute the fruits of capitalism to ensure the system’s survival. This is an unsatisfying conclusion to a groundbreaking work of analysis that is frequently brilliant -- but flawed, as well.
THE RICH ARE DIFFERENT
Piketty derives much of his analysis from a close examination of an important but generally overlooked driver of economic inequality: in contemporary market economies, the rate of return on investment frequently outstrips the overall growth rate, an imbalance that Piketty renders as r > g. Thanks to the effect of compounding, if that discrepancy persists over time, the wealth held by capitalists increases far more rapidly than other kinds of earnings, eventually outstripping them by a wide margin. To measure this effect, Piketty focuses on the annual capital-to-income ratio, which expresses the size of a country’s total stock of wealth relative to the income generated by its economy in a single year. Capital wealth is generally much larger than yearly national income -- in the case of today’s developed economies, about five to six times as large.
Piketty expertly narrates the story of how that gap has played a major role in economic history since the dawn of the modern era. The peace and relative stability enjoyed by western Europe during the second half of the nineteenth century allowed for enormous capital accumulation. Unprecedented concentrations of wealth arose, boosting inequality. But two world wars and the Great Depression destroyed capital and interrupted that trend. Those cataclysms led to a new, more egalitarian era, shaped by postwar rebuilding, a strong demand for labor, rapidly growing populations, and technological innovation. The three decades between 1950 and 1980 were truly unusual; the constellation of economic and demographic variables that produced prosperity during that period will probably not be re-created anytime soon.
After 1980, ongoing capital accumulation, slower technological progress, and rising inequality heralded a regression to something akin to the conditions of the nineteenth century. But few notice the resemblance between now and then, especially in one crucial respect: the role of inherited wealth. So many nineteenth-century novelists were obsessed with estates and inheritance -- think of Jane Austen, George Eliot, or Charles Dickens -- precisely because receiving wealth from one’s parents was such a common way of prospering during that era. In nineteenth-century France, the flow of inheritances represented about 20–25 percent of national income during a typical year. According to Piketty’s calculations, the Western world is headed toward a roughly comparable situation. The relatively thrifty and wealthy baby boomers will soon begin to die off in greater numbers, and inheritance as a source of income disproportionately benefits the families of the very wealthy.
At the core of Piketty’s story are the tragic consequences of capitalism’s success: peace and a declining population bring notable gains, but they also create a society dominated by wealth and by income from capital. In essence, Piketty presents a novel and somewhat disconcerting way of thinking about how hard it is to avoid growing inequality.
Yet there are flaws in this tale. Although r > g is an elegant and compelling explanation for the persistence and growth of inequality, Piketty is not completely clear on what he means by the rate of return on capital. As Piketty readily admits, there is no single rate of return that everyone enjoys. Sitting on short-term U.S. Treasury bills does not yield much: a bit over one percent historically in inflation-adjusted terms and, at the moment, negative real returns. Equity investments such as stocks, on the other hand, have a historical rate of return of about seven percent. In other words, it is risk taking -- a concept mostly missing from this book -- that pays off.
That fact complicates Piketty’s argument. Piketty estimates that the general annual rate of return on capital has averaged between four and five percent (pretax) and is unlikely to deviate too far from this range. But in too many parts of his argument, he seems to assume that investors can reap such returns automatically, with the mere passage of time, rather than as the result of strategic risk taking. A more accurate picture of the rate of return would incorporate risk and take into account the fact that although the stock of capital typically grows each year, sudden reversals and retrenchments are inevitable. Piketty repeatedly serves up the appropriate qualifications and caveats about his model, but his analysis and policy recommendations nevertheless reflect a notion of capital as a growing, homogeneous blob which, at least under peaceful conditions, ends up overshadowing other economic variables.
Furthermore, even if one overlooks Piketty’s hazy definition of the rate of return, it is difficult to share his confidence that the rate, however one defines it, is likely to be higher than the growth rate of the economy. Normally, economists think of the rate of return on capital as diminishing as investors accumulate more capital, since the most profitable investment opportunities are taken first. But in Piketty’s model, lucrative overseas investments and the growing financial sophistication of the superwealthy keep capital returns permanently high. The more prosaic reality is that most capital stays in its home country and also has a hard time beating randomly selected stocks. For those reasons, the future of capital income looks far less glamorous than Piketty argues.
RICARDO REDUX
Piketty, in a way, has updated the work of the British economist David Ricardo, who, in the early nineteenth century, identified the power of what he termed “rent,” which he defined as the income earned from taking advantage of the difference in value between more and less productive lands. In Ricardo’s model, rent -- the one kind of income that did not suffer from diminishing returns -- swallowed up almost everything else, which is why Ricardo feared that landlords would come to dominate the economy.
Of course, since Ricardo’s time, the relative economic importance of land has plummeted, and his fear now seems misplaced. During the twentieth century, other economists, such as Friedrich Hayek and the other thinkers who belonged to the so-called Austrian School, understood that it is almost impossible to predict which factors of production will provide the most robust returns, since future economic outcomes will depend on the dynamic and essentially unforeseeable opportunities created by future entrepreneurs. In this sense, Piketty is like a modern-day Ricardo, betting too much on the significance of one asset in the long run: namely, the kind of sophisticated equity capital that the wealthy happen to hold today.
Piketty’s concern about inherited wealth also seems misplaced. Far from creating a stagnant class of rentiers, growing capital wealth has allowed for the fairly dynamic circulation of financial elites. Today, the Rockefeller, Carnegie, and Ford family fortunes are quite dispersed, and the benefactors of those estates hardly run the United States, or even rival Bill Gates or Warren Buffett in the financial rankings. Gates’ heirs will probably inherit billions, but in all likelihood, their fortunes will also be surpassed by those of future innovators and tycoons, most of whom will not come from millionaire families.
To be sure, outside the realm of the ultra-elites, the United States suffers from unfairness in terms of who gets ahead in life, and a lack of upward mobility profoundly affects the prospects of lower-income Americans. Still, the success of certain immigrant groups suggests that cultural factors play a more significant role in mobility than does the capital-to-income ratio, since the children and grandchildren of immigrants from those groups tend to advance socioeconomically even if their forebears arrived without much in the way of accumulated fortunes.
It is also worth noting that many wealth accumulators never fully diversify their holdings, or even come close to doing so. Gates, for example, still owns a lot of Microsoft stock -- perhaps out of a desire for control, or because of a sentimental attachment to the company he co-founded, or maybe just due to excessive optimism. Whatever the reasons, over time such concentrations of financial interest hasten the circulation of elites by making it possible for the wealthy to suffer large losses very rapidly.
And in the end, even the most successful companies will someday fall, and the fortunes associated with them will dissipate. In the very long run, the most significant gains will be reaped by institutions that are forward-looking and rational enough to fully diversify. As Piketty discusses, that category includes the major private U.S. universities, and indeed the list of the top schools has not changed much over many decades. Harvard and other elite universities might, in fact, emerge as the true rentiers of the contemporary era: as of 2008, the top 800 U.S. colleges and universities controlled almost $400 billion in assets.
DOING WELL, THEN DOING GOOD
Piketty fears the stasis and sluggishness of the rentier, but what might appear to be static blocks of wealth have done a great deal to boost dynamic productivity. Piketty’s own book was published by the Belknap Press imprint of Harvard University Press, which received its initial funding in the form of a 1949 bequest from Waldron Phoenix Belknap, Jr., an architect and art historian who inherited a good deal of money from his father, a vice president of Bankers Trust. (The imprint’s funds were later supplemented by a grant from Belknap’s mother.) And consider Piketty’s native France, where the scores of artists who relied on bequests or family support to further their careers included painters such as Corot, Delacroix, Courbet, Manet, Degas, Cézanne, Monet, and Toulouse-Lautrec and writers such as Baudelaire, Flaubert, Verlaine, and Proust, among others.
Notice, too, how many of those names hail from the nineteenth century. Piketty is sympathetically attached to a relatively low capital-to-income ratio. But the nineteenth century, with its high capital-to-income ratios, was in fact one of the most dynamic periods of European history. Stocks of wealth stimulated invention by liberating creators from the immediate demands of the marketplace and allowing them to explore their fancies, enriching generations to come.
Piketty’s focus on the capital-to-income ratio is novel and worthwhile. But his book does not convincingly establish that the ratio is important or revealing enough to serve as the key to understanding significant social change. If wealth keeps on rising relative to income, but wages also go up, most people will be happy. Of course, in the past few decades, median wages have been stagnant in many developed countries, including the United States. But the real issue, then, is wages -- not wealth. A high capital-to-income ratio might be one factor depressing wages, but it hardly seems central -- and Piketty does not claim, much less show, that it is.
Two other factors have proved much more important: technological changes during the past few decades that have created a globalized labor market that rewards those with technical knowledge and computer skills and competition for low-skilled jobs from labor forces overseas, especially China. Piketty discusses both of those issues, but he puts them to the side rather than front and center.
Of course, income and wealth inequalities have risen in most of the world’s developed nations, and those processes will likely continue and perhaps intensify in the immediate future. But for the world as a whole, economic inequalities have been falling for several decades, mostly thanks to the economic rise of China and India. Growth in those countries has depended in part on policies of economic liberalization, which themselves were inspired and enabled, to a certain extent, by capital accumulation in the West. The relative global peace of the postwar period might have bred inequality in rich countries, but it has also led to reform and economic opportunity in poorer countries. It is no accident that communism was the product of war and civil conflict.
TAXMAN
The final chapters of the book, which contain Piketty’s policy recommendations, are more ideological than analytic. In these sections, Piketty’s preconceptions lead to some untenable conclusions. His main proposal is a comprehensive international agreement to establish a progressive tax on individual wealth, defined to include every kind of asset. Piketty concedes that this is a “utopian idea” but also insists that it is the best possible solution to the problem. He hedges a bit on the precise numbers but suggests that wealth below 200,000 euros be taxed at a rate of 0.1 percent, wealth between 200,000 and one million euros at 0.5 percent, wealth between one million and five million euros at 1.0 percent, and wealth above five million euros at 2.0 percent.
Although he recognizes the obvious political infeasibility of such a plan, Piketty has nothing to say about the practical difficulties, distorting effects, and potential for abuse that would inevitably accompany such intense government control of the economy. He points to estimates he has previously published in academic papers as evidence that such a confiscatory regime would not harm the labor supply in the short term. But he neglects the fact that in the long run, taxes of that level would surely lower investments in human capital and the creation of new businesses. Nor does he recognize one crucial implication of his own argument about the power of nondiminishing capital returns: if capital is so mobile and dynamic that it can avoid diminishing returns, as Piketty claims, then it will probably also avoid being taxed, which means that the search for tax revenue will have to shift elsewhere, and governments will find that soaking the rich does not really work.
Piketty also ignores other problems that would surely stem from so much wealth redistribution and political control of the economy, and the book suffers from Piketty’s disconnection from practical politics -- a condition that might not hinder his standing in the left-wing intellectual circles of Paris but that seems naive when confronted with broader global economic and political realities. In perhaps the most revealing line of the book, the 42-year-old Piketty writes that since the age of 25, he has not left Paris, “except for a few brief trips.” Maybe it is that lack of exposure to conditions and politics elsewhere that allows Piketty to write the following words with a straight face: “Before we can learn to efficiently organize public financing equivalent to two-thirds to three-quarters of national income” -- which would be the practical effect of his tax plan -- “it would be good to improve the organization and operation of the existing public sector.” It would indeed. But Piketty makes such a massive reform project sound like a mere engineering problem, comparable to setting up a public register of vaccinated children or expanding the dog catcher’s office.
Worse, Piketty fails to grapple with the actual history of the kind of wealth tax he supports, a subject that has been studied in great detail by the economist Barry Eichengreen, among others. Historically, such taxes have been implemented slowly, with a high level of political opposition, and with only modestly successful results in terms of generating revenue, since potentially taxable resources are often stashed in offshore havens or disguised in shell companies and trusts. And when governments have imposed significant wealth taxes quickly -- as opposed to, say, the slow evolution of local, consent-based property taxes -- those policies have been accompanied by crumbling economies and political instability.
Recent wealth-tax regimes in the European Union offer no exceptions to this general rule. In 2011, Italy introduced a wealth tax on real estate, but Rome retracted the plan after the incumbent government was dealt a major blow in elections last year, partly owing to public dissatisfaction with the tax scheme. Last year, the government of the Republic of Cyprus imposed the equivalent of a tax on bank deposits, only to see the tax contribute to, rather than reverse, the island’s economic struggles.
The simple fact is that large wealth taxes do not mesh well with the norms and practices required by a successful and prosperous capitalist democracy. It is hard to find well-functioning societies based on anything other than strong legal, political, and institutional respect and support for their most successful citizens. Therein lies the most fundamental problem with Piketty’s policy proposals: the best parts of his book argue that, left unchecked, capital and capitalists inevitably accrue too much power -- and yet Piketty seems to believe that governments and politicians are somehow exempt from the same dynamic.
A more sensible and practicable policy agenda for reducing inequality would include calls for establishing more sovereign wealth funds, which Piketty discusses but does not embrace; for limiting the tax deductions that noncharitable nonprofits can claim; for deregulating urban development and loosening zoning laws, which would encourage more housing construction and make it easier and cheaper to live in cities such as San Francisco and, yes, Paris; for offering more opportunity grants for young people; and for improving education. Creating more value in an economy would do more than wealth redistribution to combat the harmful effects of inequality.