Thomas Piketty Debates Bain Capital's Edward Conard

[piezoe]

The middle east countries like Saudi Arabia are great examples of countries where you can have a high gdp per capita and a great level of poverty to go with it. But they have nothing to do with freedom or capitalism or reaganomics causing it. The wealth of the countries is in oil and the monarchies own it by divine right or some such thing. Those countries prove that a ruling monarchy causes unequal wealth distribution.

I certainly can't argue with that, and while I can't speak for Zzzz1 either, I'm sure he'd agree as well. I am certainly not an expert on economics in Saudi Arabia, so if Reaganomics hasn't reached there yet, I am not going to be surprised. In fact if you get word that it is headed their way, you could do the Saudis a favor and let them know, so they can head it off.

The question was, I think, how good a measure is GDP of prosperity. And on that point it appears to me the score is 1 to zero in favor of Zzzz1. We all know that very low GDP is invariably (or can you find an exception?) associated with backwardness and a lot of poverty. But the converse doesn't seem to hold that well. And it is that observation that ruins our lovely generality and wrecks our 'obvious' conclusion. While High GDP tends to be associated with greater prosperity, that prosperity can be unevenly distributed, and that inconvenient truth messes with our pat conclusion.

 

[Zzzz1]

That was precisely the point, thank you. GDP per capita is a bad measure of individual wealth as productivity and wealth are never normally distributed.

If you will permit me to answer for Zzzz1, Brazil in 1996 and 2011, relatively speaking. But perhaps the most glaring example would be Saudi Arabia which has a GDP/capita in the top rank but nearly 20% of its people live in abject poverty. So it is possible. Giving the benefit of a doubt to Zzzz1, I think that is all he meant. His main point stands, viz., the GDP figure alone, particularly the GDP growth rate, is not a very reliable measure of the general well being of the entire population.

The GDP/capita is going to be a less good measure of a countries general well being the more skewed the wealth distribution is.

 

[Zzzz1]

Can you let go at times? The entire point was that wealth is not normally distributed. Hence GDP per capita is not a good indicator of individual wealth. Saudi Arabia is a perfect example . Stop arguing about things that were never on the chopping bloc.

The middle east countries like Saudi Arabia are great examples of countries where you can have a high gdp per capita and a great level of poverty to go with it. But they have nothing to do with freedom or capitalism or reaganomics causing it. The wealth of the countries is in oil and the monarchies own it by divine right or some such thing. Those countries prove that a ruling monarchy causes unequal wealth distribution.

 

[fhl]

Can you let go at times? The entire point was that wealth is not normally distributed. Hence GDP per capita is not a good indicator of individual wealth. Saudi Arabia is a perfect example . Stop arguing about things that were never on the chopping bloc.

The point of the chart I provided was that economic freedom, defined by low taxes and regulation, increases the size of the pie. But you and piezoe don't feel that is a salient point. Really? The only thing that matters is whether the income is evenly distributed? Because if everybody isn't rich, then nobody should be? The new york times wrote glowing stories about the USSR boondoggle right up until the bitter end, because everybody had the same personal economic situation. That seems to characterize you and peizoe, too. Total wealth doesn't matter, it's irrelevant that they're all dirt poor and waiting in lines for a loaf of bread, just so long as there aren't any rich people who have a fresh baked loaf. Just measure the distribution and that's the end of the matter. Thank the Lord almighty that the US hasn't yet succumbed to this atrocious brand of economics.

I'll simplify it for you two. For the avg Joe to have the quality of life that they dream of, there must be a large pie, and that pie cannot be large unless there are low taxes and regulation. Read the chart. If there are high taxes and regulation, there is little income to redistribute. So a large pie doesn't guarantee a nice normal distribution, but a small pie from high taxes and regulation guarantees that there isn't much to redistribute.

 

[fhl]

I am certainly not an expert on economics in Saudi Arabia, so if Reaganomics hasn't reached there yet, I am not going to be surprised. In fact if you get word that it is headed their way, you could do the Saudis a favor and let them know, so they can head it off.

Saudi Arabia has a personal tax rate of 0 and a corporate tax rate of 20%. Next time I talk to the King, I'll let him know how displeased you are with that arrangement. I'm sure he'll run right out and buy Piketty's book. The book that economic journalists have checked the numbers on and were unable to reproduce the results that Piketty obtained. I'm pretty sure that's the same book that you speak so highly of.

 

[luisHK]

But perhaps the most glaring example would be Saudi Arabia which has a GDP/capita in the top rank but nearly 20% of its people live in abject poverty. So it is possible. .

Yes, maybe, Saudi Arabia according to Piezoe...


"Saudi Arabia has the tenth lowest poverty rate worldwide and ranks the highest among the Arab region in terms of minimizing poverty, the latest World Bank report on global poverty revealed."

http://english.alarabiya.net/en/bus...t-poverty-rate-worldwide-says-World-Bank.html

as of its high unemployment rate, it actually looks like below 6%, but never mind right?

http://www.tradingeconomics.com/saudi-arabia/unemployment-rate

Wealthy monarchies in the Middle East have very strong social welfare nets, which might explain the longevity of their government, and that the lazy there do not need to look for a job - in case you find the labor participation low. Saudi also has the reputation to have the laziest/less apt to work in the private sector population in the region.

 

[luisHK]

Btw I made a typo earlier , the story was :

Which reminds me of an interview with an university professor : in France, when answering to a test he designed, the large majority of students favoured the idea of a poorer country with less income inequality than that of a wealthier country, with wealthier lower classes but with more income inequality .

I wonder why the same test would get with Swiss, US or chinese students. I write Swiss because while asking the question in a french university there was a student who favoured the second solution, and she was actually Swiss, but Switzerland is definetely a country which knows how to handle itself, and where despite the high concentration of ultra wealthy people, the working classes have a life standard their fellows in neighbouring european countries, especially South and West, can only dream of.

 

[Zzzz1]

In your world only two extremes seem to exist. Take, for example, Germany. It surpasses the US in terms of most metrics that measure wellbeing of individuals. Yet the country has a lower GDP per capita. Get my point? Germany ranks almost at the top in terms of wealth equality. One does not have to be socialist nor dirt poor to maintain a harmonious nation and one can do well without having to sell out to take no prisoners capitalism.

The point of the chart I provided was that economic freedom, defined by low taxes and regulation, increases the size of the pie. But you and piezoe don't feel that is a salient point. Really? The only thing that matters is whether the income is evenly distributed? Because if everybody isn't rich, then nobody should be? The new york times wrote glowing stories about the USSR boondoggle right up until the bitter end, because everybody had the same personal economic situation. That seems to characterize you and peizoe, too. Total wealth doesn't matter, it's irrelevant that they're all dirt poor and waiting in lines for a loaf of bread, just so long as there aren't any rich people who have a fresh baked loaf. Just measure the distribution and that's the end of the matter. Thank the Lord almighty that the US hasn't yet succumbed to this atrocious brand of economics.

I'll simplify it for you two. For the avg Joe to have the quality of life that they dream of, there must be a large pie, and that pie cannot be large unless there are low taxes and regulation. Read the chart. If there are high taxes and regulation, there is little income to redistribute. So a large pie doesn't guarantee a nice normal distribution, but a small pie from high taxes and regulation guarantees that there isn't much to redistribute.

 

[fhl]

In your world only two extremes seem to exist. Take, for example, Germany. It surpasses the US in terms of most metrics that measure wellbeing of individuals. Yet the country has a lower GDP per capita. Get my point? Germany ranks almost at the top in terms of wealth equality. One does not have to be socialist nor dirt poor to maintain a harmonious nation and one can do well without having to sell out to take no prisoners capitalism.

Ok, I'll take Germany. The metrics where it surpasses the US are subjective, made up measurements pulled out of someone's butt. Just like the world health organization does when they claim some hellhole central american country that has universal health care is better than the US's because everyone has health care. Even though the care they can get is next to worthless or worse.

"I feel good about this" is not a metric that I give two shits about.

 

[piezoe]

Ok, I'll take Germany. The metrics where it surpasses the US are subjective, made up measurements pulled out of someone's butt. Just like the world health organization does when they claim some hellhole central american country that has universal health care is better than the US's because everyone has health care. Even though the care they can get is next to worthless or worse.

"I feel good about this" is not a metric that I give two shits about.

I'm just curious, and you don't have to answer of course, But how much time have you spent outside the U.S. and what countries have you spent more than a month in besides the U.S.?