IF YOU DRIVE A CAR, I'LL TAX THE STREET. IF YOU TRY TO SIT, I'LL TAX YOUR SEAT. MR. WILSON. MR. HEATH.

There are only three kinds of taxes regardless of the guises politicians pitch the gullible to disguise the tax. There are taxes on wealth, there are taxes on capital and there are permission taxes.

With the rise of Born-Again Socialism revivalist preacher Thomas Piketty, there have been howls for taxes to get levied.

In ELITES SEEK TO PUNISH WORKERS WITH A CONSUMPTION TAX, OR A TAX ON WORKERS' WEALTH, I reveal the sneaky effort of some who seek to claim a consumption tax is not a tax on wealth.

Behind every tax scheme of every politician is a this: You don't have right to your property gained by profit in trade and they lack the duty to keep their hands from your property. 

Said another way: You have the duty to surrender all of your property to the amount that politicians say you do.

Wealth Taxes

Wealth is the name given to property put to purchase and sale for cash and credit. Any tax levied on property in a purchase and sale is a wealth tax.

Wealth taxes go by these names — income tax, capital gains tax, payroll tax, gift tax, estate tax, excise tax, as well as the family of ad valorem taxes such as sales tax, goods and sales tax, land tax, declared worth tax, car registration tax, legal filings tax.

Businesses get taxed on net sales, which are sales less expenses. Unfairly, workers get taxed on gross sales. Workers don't get to deduct their expenses incurred to produce their sales, which is defined as work.

So-called negative income taxes aren't taxes at all. Such is welfare. It's not full freight welfare. It's subsidy welfare, or that which subsidizes the inefficiency of workers who qualify to receive it based on an arbitrary benchmark of income.

A Capital Gains tax is a tax on income derived from the sale of an asset, most often ownership in a firm, which gets called stock or equity, or ownership in a debt owed by a firm, which gets called bond. As a capital gains tax is an income tax, it is a wealth tax.

Payroll taxes to fund social security are wealth taxes as such taxes get levied on income. As always, all taxes on income are taxes on wealth since such taxes get levied on sales in purchases and sales of wealth for wealth.

Payroll taxes that force workers to purchase unemployment insurance all the same are wealth taxes, regardless of the intent. As always, income taxes are wealth taxes. Payroll taxes are wealth taxes.

Excise taxes are taxes levied on the quantity of property being traded. Typical excise taxes are fuel taxes of gasoline and diesel, alcohol taxes on the quantity sold, tobacco taxes on the quantity sold.

Sales taxes as well as GST (goods and services tax) are known as ad valorem taxes since taxes get levied on the sum paid in a purchase and sale. Sales and GST taxes are taxes on wealth. 

Any tax on either unimproved land or improved land also is a tax on wealth whether as a one-time levy or as a recurring levy and also get consider as ad valorem taxes since the tax gets levied on a claimed fictitious resale price. 

Other sneaky ad valorem taxes include taxes on so-called declared worth of things such as car registration fees, taxes on property in chattel sent through mail, tariffs on imports or exports, taxes on cash or bank credits transferred to foreign bankers, taxes on legal document filings related to purchases and sales such as realty deed transfer filings.

Gift taxes and inheritance taxes (also said estate taxes) are among the most pernicious kinds of taxes as such are direct swipes of property by politicians.

When someone gives a gift to another, the gift giver relinquishes property in what is given without pay. As it is a gift, a trade fails to arise as all trades consist of property for property, specifically, wealth for wealth.

Capital Taxes

Capital is the name given to property put to produce work or stock. Any tax levied on property used to produce work or stock is a capital tax.

A tax on capital would be a fee paid to license a dump truck that hauls gravel to pave roads since the dump truck is the capital. If the tax levied levied on the weight of the truck, it is an excise tax. If the tax gets levied on the estimated sales price of the vehicle, it is an ad valorem tax.

A tax on capital would be a fee paid to pollute the air during the blasting of pig iron with pure oxygen while producing steel since the blast furnace is the capital. A tax paid on the tons of pollutants would be an excise tax. A tax paid on the pig iron before its conversion into steel would be an ad valorem tax.

A tax on capital would be a fee paid for a building permit since the labor put to building is capital. 

Permission Taxes

Permission taxes are taxes against the property in oneself. These are the strangest kinds of taxes. 

One kind of permission tax is a marriage license, which is a levy for a legal filing. Another kind of permission tax is a driver's license for personal use.

Permission taxes levied as licenses to do work are capital taxes. So a permission tax for a driver's license for commercial use is a capital tax. A fee paid to have a restaurant inspected before opening is a capital tax. A fee paid for any kind of license authorizing work is a capital tax.

VAT — Value Added Taxes

A VAT (value-added tax) is a wealth tax, though wrongly, many believe such taxes are capital taxes. The key to understand the difference between a wealth tax and a capital tax is this: 

A wealth tax gets levied on what you are trying either to own to rid yourself thereof. A capital tax gets levied on what you own already.

For the seller of product, if the seller bears the burden, a VAT is a wealth tax. A VAT tax can work like a capital tax if the buyer of bears the tax and uses what is acquired in a purchase and sale as capital in production because such a tax inhibits using capital.

Often, a VAT gets levied as an ad valorem tax.

Here are the Beatles in a cartoon!

Here are the Beatles performing their song Taxman.

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PRICES HAVE BEEN FALLING FOR YEARS! INFLATION? MAJOR DEFLATION HAS BEEN UNDERWAY SINCE 2007. SO WHY DOES LIFE SEEM HARDER? THE ANSWERS ARE COMING NEO.

In THE CONSUMER PRICE INDEX NEVER HAS MEASURED INFLATION, EVER. CLAIMING SO HAS BEEN A EPIC CON JOB, I show how the  "the most widely used measure of inflation," the Consumer Price Index (CPI), fails to measure inflation precisely because those behind it measure prices and not inflation. 

The worst is the jokers at the BLS who conjure the CPI measure current inflated prices by a base of past inflated prices. Stop. Think about that for a moment.

With their failed method, they cannot eliminate the effects of inflation. In short, the CPI is bunco.

Milton Friedman was a famed economist, popular writer and winner of the Nobel Prize in Economics back in 1976. Friedman is famous in egghead circles for having said:

"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output." 

Edwin Walter Kemmerer was a famed economist, a man known as "the money doctor." Kemmerer said this about inflation:

Friedman and Kemmerer point the way. Here is the Red Pill that you must swallow if you want to free yourself from the silly, false belief of rising prices means inflation. 

You must come to see that you do not have money. No one does. 

Instead, you have Federal Reserve Bank Units (FRBUs), or if you like better, Federal Reserve Buying Units. FRBUs are what pay for goods. All goods get priced in FRBUs. 

Money is coined metal by weight and fineness. Always, money can exist without banking and government. Cash only can exist with banking and banks. Legal tender cash needs banking backed by the force of government.

In the fiduciary monetary system of centralized bank notes, inflation is merely the growth of the circulating media — cash, which is evidence of past deposits circulating in perpetuity and bank credit in the form of checkable deposits transferred by bank instruments such as checks and debit cards.

Thus, to know reality and escape the Matrix requires you to account for inflation by FRBUs and by no other way. The FRBU deflator is our red pill to see reality. 

INFLATION FIRST, THEN DEFLATION ALWAYS. 

Inflation happened already. That is what led to the banking crisis of 2008.

The damaging effects of inflation become revealed when the growth of credit outstrips the growth of output owing to credit being priced too cheap. Banking crises always happen at peak inflation right in the midst of prosperity.

Have a look at true credit and true GDP.

Since 2008, true bank credit has been falling. True GDP has fallen right along with the fall in bank credit. The fall of bank credit means deflation has been underway. 

True bank credit is down -43.4% from peak credit at the start of Q2, 2008. True Credit has been falling at an annualized rate of -9.1%.

True GDP has been falling and falling. True GDP is down -42.8% from the peak! True GDP has been falling at an annualized rate of -8.9%!

That's a trade depression. Look at it. I call it the Greatest Depression.

AND FALLING PRICES, IT'S TRUE

So let's have a look at true prices, shall we? Prices have been falling for decades since before peak credit. 

Say what?! Yes, it's true. Once the effects of accretion of FRBUs get removed using the FRBU deflator, we get true, inflation-free prices. 

First let's look at food and energy.

It's no wonder chief bankers at the Federal Reserve exclude food and energy from their watch. Yet, always, you hear many decry that your friendly neighborhood Fed Res bankers ignore food and energy prices.

Now, let's look at house prices. 

House prices went on quite the roller coaster ride between 1980 and 2013. Yet, the average price for a house today is lower than in 1980 by 36%! 

Interestingly, the average house price to income has averaged $6.63. The 2012 ratio of $6.44 is under 3% from the average.

Yet, there is a fly in the ointment, which I shall get to soon, the fly on the wall that explains why you suffer.

But first, here is the ugliness that many Americans understand. Tuition prices have risen a whopping 85% since 1980!

WHY MISERY IF PRICES ARE FALLING?

So why do Americans feel so miserable and claim to be broken financially? Well, there is good reason for that too.

A wage is a price and as all prices have been falling, so too have wages fallen.




The average wage has fallen 41% since 1980!




So why have true wages fallen? All should heed my dictum:

Labor makes property. Capital makes property efficiently.

THE CHART SOCIALISTS AND POLITICIANS DON'T WANT YOU TO SEE

True wages have fallen in lockstep with true capital spending per capita of prime age working adults (25-54). Wages and capital are interlinked.

Trading wealth as property in cash and credit in a purchase and sale for wealth as property in things determines the extent of markets. Only in proportion as labor becomes pricier that it becomes profitable to use cheaper methods (capital) to amplify labor.

There are no means by which living standards can better that do not involve the increase in wealth per capita of prime age workers. Increasing returns to capital arise when true wages go up. To discover how to make increasing returns to capital is to solve the problems of poverty and lowering living standard. 

As can be seen here, the growth in prime age working adults in America has been tremendous, up 45.3% since 1980.





And not-so-coincidentally, wages have fallen 41% and capital spending has fallen 49.5%!





Born-again socialism revivalist preachers like Thomas Piketty who attack wealth simply do not understand trade and commercial life at all. 

Having more wealth is what makes all better off. More wealth comes from more efficient production. More efficient production comes from more capital.  More capital spending per worker raises wages. 

While the living standard in America has been falling, the living standard for Chinese has been rising. Why is that? There has been more capital spending per worker in China since the Chinese turned capitalist.

It's the same story everywhere.

Be sure to check out these:

• WHY IS THE ECONOMY SO HORRIBLE? BECAUSE ACADEMIA ECONOMICS IS FAKE.
• WORK NEVER CREATES VALUE. WORK CREATES PROPERTY.
• INFLATION REVEALED! "REAL GDP" AND FEDERAL RESERVE BANK UNITS.
• THE THEORY OF TRADING PROPERTY FOR PROFIT
• FALLACY FRAUGHT FORBES TRIES TO STOKE FEARS OF HYPERINFLATION

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THOMAS PIKETTY, REVIVALIST PREACHER OF BORN-AGAIN SOCIALISM. THE SECOND GREAT AWAKENING OF SOCIALISM HAS COME TO AMERICA

Socialism Revivalist preacher Thomas Piketty has written the new millennial age bible for crypto-socialists everywhere luring them from the shadows to the new socialist church.

This Second Great Awakening of Socialism is sure to stimulate reformers seeking to remedy the evils of society, which they believe capitalism drives, as they strive to usher in their anticipated Second Coming of progressive Utopia.

This Second Great Awakening, this socialist resurgence could alter life, worsening life for working Americans unless stopped.

Already we have seen mass-scale camp meetings such as Occupy Wall Street. Those who flocked to Occupy Wall Street listened to revivalist oratory and sang hymnody. Many unwitting Americans who watched on their taxpayers' financed, welfare-funded, big, flat screens have been converted to socialistic thought through this enthusiastic preaching.

Second Great Awakening socialist revivalists pull chapter-and-verse from their playbook of trickery railing against purported evils of capitalism, damning capitalists and crying for mercy for all of the down trodden workers and welfare needy-greedies.

Piketty has become the Henry Ward Beecher of the Second Great Awakening of Socialism, luring many to come forth and become worshippers, baptized into a Born-again Socialism.

Piketty's Postmillennialist socialism theology is a call to purify society of capitalism as preparation for the return of Socialist Utopia. This is why Piketty calls for Progressive reforms.

Yet, Piketty's demonic false religion is easily exposed, which I have done in these:

• Thomas Piketty, 696 Pages Of Foolery Destroyed In Less Than Five Minutes
• Ut Oh, Someone Better Tell Thomas Piketty About L > G Too
• More Bad News For Thomas Piketty P > G Too!

SERMON OF THE PAST DEVOURS THE FUTURE

Piketty preaches a fire and brimstone sermon of "the past devours the future." Piketty strives to seduce the minds of seekers with such phrases as 

"A market economy based on private property, if left to itself, contains powerful forces of convergence, in particular with knowledge and skills; but it also contains powerful forces of divergence, which are potentially threatening to democratic societies and to the values of economic and social justice.

"The principal destabilizing force has to do with the fact that the private rate of return on capital, signified as "r", can be significantly higher for long periods of time than that rate of growth of income and output, as signified by "g". 

"Hence, since inequality r > g implies that wealth accumulated in the past grows more rapidly than output and wages, this inequality expresses a fundamental logical contradiction. The entrepreneur inevitably tends to become a "rentier", more and more dominant over those who own nothing but their labor. Once constituted, capital reproduces itself faster than output increases. i.e. the past devours the future."

Few know that Piketty stole his now famous line from the late 19th century-early 20th century French philosopher Henri Bergson (1859–1941) who said, “The pure present is an ungraspable advance of the past devouring the future." 

Bergson is the guy who believed in élan vital, an invisible force that could be harvested, embedded into an inanimate thing, and activated with electricity to create life!

But is it true? Does "wealth accumulated in the past" that becomes capital devour wages and output? It turns out, this is the central contradiction of Piketty rather than capitalism.

According to reality, rather than hoarding their wealth, rentiers take their year before return, levering up their wealth to create more capital, putting their wealth at risk!

In short, the present creates the future! And that is what capitalism and credit is all about. 

In 77 of 84 years, rentiers — landlords and dividends earners — for every $1 rentiers earned, spending on capital rose by more than $1 in the following year. In 69 of 84 years, spending on capital by entrepreneurs — farmers and proprieters — rose by more than $1 for every $1 earned. 

In short, through the genius of credit, capitalists leveraged their wealth to bring forth capital into the now. This is how an economy grows.

Credit is expected profits of the future embodied in property. Thus, credit is a kind of conditional property. Credit embodies estimates of prices for future sales and prices for future outlays.

Credit arises from worthful rights, rights to existing goods, rights to expressible services, rights to future profit should such materialize. The one who extends credit, in truth, buys a right of action against the borrower for a preferential share of profit, should profit materialize.

Reality reveals the irreality of the socialist revivalist preacher Piketty. The irony of it all is that Piketty preaches heresy relative to the reality of trading property for profit, but his preaching gets absorbed as orthodoxy as standard academia economics.

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MORE BAD NEWS FOR THOMAS PIKETTY P > G TOO!

In UT OH, SOMEONE BETTER TELL THOMAS PIKETTY ABOUT L > G TOO, I show how the growth in compensation to labor often outstrips the growth in the economy.

In THOMAS PIKETTY, 696 PAGES OF FOOLERY DESTROYED IN LESS THAN FIVE MINUTES, I show the deep flaws in Piketty's thought, flaws of false premises leading himself to false conclusion.

Now, I reveal the latest bombshell.

Piketty writes his doomsday pronouncement as R > G by which he means "the past devours the future." Other than being French, socialist-leaning and an academician with no business experience, Piketty believes that if the return to capitalists grows faster than the economy, we're all dooomed.

What Piketty fails to get is that capitalists get paid from profits, after all other bills get paid, including taxes to politicians and wages to workers.

Piketty doesn't get this inescapable fact of reality precisely because he is an academician who lives in the pretend world of economics rather than being a man of commerce and industry who lives in the reality of trade.

So what is the bombshell you ask? Ready?

Riffing off Piketty's inequality, I have shown the return to laborers often grows faster than the economy, or L > G.

And now I give you, P > G! That's right.

Here is the year-over-year growth or decline in GDP, compensation to laborers, return to capitalists and spending by politicians. As you can see, in the early years, spending by politicians outsized the economy to such a degree, the rest of the chart is hard to read.





And here is the chart of the same data transformed by log scale so all can better see what is going on.




In 41 of 85 years since 1929, spending by politicians using taxes to fund borrowed cash and credit has grown faster than the economy. Written Piketty-style, P > G.

In 26 of 85 years, spending by politicians grew faster than the economy while compensation to laborers grew slower than the economy! In 23 of 85 years, spending by politicians grew faster than the economy while return to rentiers grew slower than the economy.  Even worse, in 27 of 85 years, spending by politicians grew faster than the economy while return to entrepreneurs grew slower than the economy!

In a whopping 83 of 85 years, spending by politicians as a share of GDP was bigger than either the share of GDP returned to rentiers or the share of GDP earned by entrepreneurs. You would have to go all the way back to 1929 - 1930 for when pols spent less that rentiers or entrepreneurs earned.

You would need to go back all the way to 1951 for when the last time politicians spent less as a share of GDP than capitalists earned.

Once again, during the Reagan-Clinton prosperity (1986-1999), when spending by politicians grew much less than the economy, the economy boomed a prosperity came to all.

And once again, Piketty's pipe dream of more taxation and more spending by politicians would be poison rather than medicine.

For more on the Reagan-Clinton prosperity, check out PARTY OVER OOPS OUT OF TIME. YOU SHOULD HAVE PARTIED LIKE IT WAS 1999.

PIKETTY, THE USEFUL IDIOT

Piketty wants to curtail capitalism, remove competition among capitalists in their fight to buy shares of profit from entrepreneurs. Piketty wants to make it easier for the biggest capitalists who would remain standing in Piketty's Dystopian future masquerading as Fairness-Rhetoric Utopia.

If Piketty were to get his way, the western world would move ever closer to a neo-fascist, neo-feudal system. Individualism and freedom would at long last get crushed by the power elite.

Piketty is dangerous, especially dangerous to the wage-earning working man.





For the other articles which school Piketty, read

UT OH, SOMEONE BETTER TELL THOMAS PIKETTY ABOUT L > G TOO

and

THOMAS PIKETTY, 696 PAGES OF FOOLERY DESTROYED IN LESS THAN FIVE MINUTES.

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UT OH, SOMEONE BETTER TELL THOMAS PIKETTY ABOUT L > G TOO.

Thomas Piketty has rallied every crypto-socialist living in the western world today with his 696-page doorstop, Capitalism in the 21st Century.

Piketty has produced a veiled attack against capitalism by attacking capitalists. How did Piketty do it?

Piketty believes that if the rate of return earned by capitalists exceeds the the rate of growth of an economy, we're in trouble. To quote Piketty, "the past devours the future." 

Piketty writes his doomsday pronouncement as R > G.

Already, I have dismantled Piketty's lame argument in THOMAS PIKETTY, 696 PAGES OF FOOLERY DESTROYED IN LESS THAN FIVE MINUTES. So let's have some more fun with Piketty.

Interestingly, we could examine the return to laborers relative to GDP. We could call the return to laborers L.

So, let's put Thomas Piketty's theory to the test.

Lest someone decry that I have cherry-picked the data, this is how far back the records go courtesy of your friendly neighborhood Bureau of Economic Analysis of the Department of Commerce.

Capitalists have been defined as farmers, proprietors, landlords and those receiving dividends. Mind you, capitalists were restricted to merely landlords and those receiving dividends, then the share of GDP to capitalists would be much smaller still.

Laborers are those receiving compensation as employees in the form of wages, salaries and supplements to wages and salaries.

First, someone should tell Piketty, that every year since 1929, the share of GDP going to laborers has exceeded the share going to capitalists.





Here is the year-over-year growth or decline in GDP, compensation to laborers and return to capitalists. Whenever the red line is above the blue line, the growth of compensation to laborers growing faster than the growth of the economy. Likewise, whenever the orange line is above the blue line, the return to capitalists is growing faster than the growth of the economy.

In 83 of 85 years, the sum of compensation to laborers consisted of 50% of GDP or greater.


 


For private sector labors, in 37 of 85 years since 1929, L_p > G. For capitalists, in 40 of 85 years since 1929, R > G. 

Now let's have a look at capitalists if we break out "rentiers" and entrepreneurs. Rentiers are landlords and those getting paid dividends, or those living on income from investments. Entrepreneurs are those who own farms and businesses.

Again, as above, the red line is above the blue line, the growth of compensation to laborers growing faster than the growth of the economy. Whenever the the orange line is above the blue line, the return to capitalists is growing faster than the growth of the economy. the green line is about the blue line, the return to entrepreneurs is growing faster than the growth of the economy.

Likewise, whenever any of those lines fall below the blue line, the economy is growing faster than returns to the respective "classes."

After breaking out R into rentiers and entrepreneurs, both rentiers and entrepreneurs lose a year when returns to either exceeded growth in GDP. Said another way, only in 39 of 85 years did the rate of return to either rentiers or entrepreneurs exceed the growth rate of GDP.

From above, you can see that it is tough being entrepreneurs. As the economy goes, so goes it for laborers. Rentiers experience stretches of better growth and stretches of sub-par growth relative to GDP.

After breaking out capitalists into rentiers and entrepreneurs, the share of GDP going to laborers greatly exceeds the share going to rentiers and entrepreneurs.

To socialists and crypto-socialists alike, rentiers are hated worse entrepreneurs. Yet, as a "class," rentiers get the least share of GDP.

The upshot of all the above is this. Piketty tells a false story from mythology. 

THE TRUE PROBLEM

Ironically, Piketty argues to increase the problem, not fix it so the problem gets cured.

So what is the true problem? IT'S ALWAYS CRONY POLITICS, CRONY GOVERNANCE AND CRONY REGULATORY CAPTURE and TRY CRONY POLITICS, CRONY GOVERNANCE AND CRONY REGULATORY CAPTURE BECAUSE THERE IS NO SUCH THING AS CRONY CAPITALISM.

Piketty wants to double down, creating even more crony politics, crony governance and crony regulatory capture. In short, Piketty wants to turn the world into the failure known as France!

Piketty wants to curtail capitalism, remove competition among capitalists in their fight to buy shares of profit from entrepreneurs. Piketty wants to make it easier for the biggest capitalists who would remain standing in Piketty's Dystopian future masquerading as Fairness-Rhetoric Utopia.

If Piketty were to get his way, the western world would move ever closer to a neo-fascist, neo-feudal system. Individualism and freedom would at long last get crushed by the power elite.

Academicians like Piketty are among the priesthood who conjure up mythology, mythology which justifies action against unorganized individuals by the power elite. So Piketty would become a winner in a neo-fascist, neo-feudal future.

REAGAN-CLINTON VS THE NADIR OF SOCIETY, BUT ZENITH OF AMERICAN SOCIALISM

During the Reagan-Clinton prosperity (1986-1999), in 12 of 14 years, compensation to laborers grew faster than GDP. The same held true for capitalists, though the two years in which GDP grew faster differed for capitalists than laborers.

I lived through the 1970s otherwise known as Sucking-in-the-70s as the Rolling Stones called those years as well as the Reagan-Clinton prosperity of 1986 through 1999. In the 1970s gave us polyester junk clothes, long lines and odd-even days at gasoline pumps, and NYC a graffiti-wasteland.

Oh and not-so-coincidentally, the growth of return to capitalists ran far below the growth of GDP as well as far below the growth of compensation to laborers.
Yet, during the Reagan-Clinton prosperity, everyone had jobs, good times, cotton clothes and good music.

For more on the Reagan-Clinton prosperity, check out PARTY OVER OOPS OUT OF TIME. YOU SHOULD HAVE PARTIED LIKE IT WAS 1999.

Seriously, everyone should stop listening to academician economists. They have gotten everything wrong since the inception of the field. I give you a taste of this truth in WHY IS THE ECONOMY SO HORRIBLE? BECAUSE ACADEMIA ECONOMICS IS FAKE.

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THOMAS PIKETTY, 696 PAGES OF FOOLERY DESTROYED IN LESS THAN FIVE MINUTES

A French egghead academician with no business experience, Thomas Piketty, believes he has discovered the fatal flaw of capitalism so much so that Piketty wasted time writing an almost 700-page book about it and something like a whopping 15 years of his life researching it.

Piketty believes there is relationship between the rate of growth of an economy as expressed by GDP and the rate of return enjoyed by capitalists. 

Piketty calls the rate of return earned by capitalists R and the GDP, G. Piketty claims that when the return to capitalists is greater than GDP growth (R > G), "the past devours the future." 

The return to capitalists (their share of profit) can grow faster than GDP, easily. However, there is a limit, a limit Piketty fails to see precisely because Piketty knows nothing of trade and thus authentic economics.

If Piketty knew reality he would know this: 

The return to capitalists never can exceed total profit. All returns to capitalists are shares of profit and not sales.  

Profit is what is stands after paying expenses, including all wages and what politicians take as their taxes.

GDP is merely the sum of all sales. Alternatively, GDP can get calculated as the sum of all incomes. It means the same.

It's irrelevant if return to capitalists has grown at 9% or 90%. It's irrelevant that return to capitalists for any firm or all firms grows faster than GDP. 

Always, profit is a fraction of sales. Said another way, always, profit is a fraction of GDP. 

In the end, profit acts as limit. It's impossible to have a share of profit exceed 100%. 

Piketty needs a lesson in trade, or commerce, or what is truly authentic economics and not the foolery of academia economics.

The entirety of trade, or commerce, or real economics ties up with two words — property and profit.

All trade gets governed by one one, true, infrangible law and one axiom — the Law of Prices and the Axiom of Profit. The Law of Prices holds the winning bids of purchase and sale in the face of what is on offer set the price. The Axiom of Profit holds the sum of sales must at least equal the cost of production or the producer goes to ruin. 

The name for property put to making stuff is called capital. The name for property put to purchase and sale for cash and credit is wealth.  

Though most think of property as things possessed, property always has meant the right of ownership and never the thing owned. Only when property gets created, can trade arise between two persons. 

Without profit from effort, anyone would lack buying power to buy anything else. Without property, no one can trade. 

At less than break even, anyone would stop trying to produce property. No one works at a loss.

When profit is growing on the same sum of sales, this means producers are becoming more efficient. When profit is growing on increasing sales, this means ever more of the whole economy are gaining buying power and becoming efficient. This ever more includes workers and entrepreneurs.

What Piketty fails to realize that when he Piketty says "capital reproduces itself faster than output increases," in so many words, Piketty has said capital reproduces itself faster than wealth. 

This is good! All should want capital to grow faster than wealth! Without capital there can be no wealth! 

In CAPITALISM. BECAUSE WITHOUT IT, YOU WOULD BE LIVING AS A BARE SUBSISTENCE SAVAGE, I show how laborers would toil barely producing anything, living by bare subsistence without capitalism.

Again, because Piketty only understands the fake world of academia economics and doesn't understand the real world of trade, Piketty fails to see that when the rate of return to capitalists is growing faster than profit, capitalists are enjoying greater bargaining power against entrepreneur-adventurers.

Interest is a price and conforms to the Law of Prices. In the credit market, capitalists bid down in a Dutch auction against each other. Entrepreneur-adventurers bid up in an English auction against each other.

This better bargaining power of capitalists has arisen because there are not enough capitalists engaged in intra-capitalist competition and not enough entrepreneur-adventurers at all.

Entrepreneur-adventurers are futures speculators who ensure enough capitalists remain in business, but not too many. Thus, entrepreneur-adventurers are natural regulators of capitalists.

When there is too much bureaucracy with too much regulation, this pushes up costs and stands as a barrier to entry for too many would-have-been-otherwise entrepreneur-adventurers. The shrinking field of entrepreneurs leads to better bargaining power for capitalists.

Robert E. Litan of the Brookings Institute has revealed for the first time in 30 years, business "deaths" in the U.S. exceeded business "births" and only 600,000 net new jobs were created in each quarter of 2012 (Declining Business Dynamism in the United States: A Look at States and Metros).

So as a campus Marxist, what is Piketty's prescription to cure the ills of his false conclusion? Why Piketty sounds the socialist battle cry — Tax the rich! Off with their heads!

Of course, Piketty can't see implication of his prescription. Curtailing capital will result in far fewer products and thus far fewer ventures. Worse, curtailing capital will lead to less employment and much lower wages owing to more employment competition for fewer jobs on lower capital. 

Instead, the winning move would be to end all subsidy for the poor and end minimum wage laws. Subsidy to the working poor ends up being a subsidy to capitalists.

It is an unassailable fact of trade, that absent subsidy of workers in the form of welfare, wages would rise. No one would work at a loss (wages - living expenses). Market forces would force employers to pay more.

A wage is a price and conforms to the the Law of Prices. Even laborers get constrained by the great Axiom of Profit. 

All laborers also are capitalists as labor is the poor man's capital. Labor is the sale of work through time.  

Labor without capital results in bare subsistence savagery. It is to capital alone that profit can arise. 

Labor creates property. Capital creates property efficiently so profits might get earned. 

Profits whether realized or expected are the source of all prices. 

Piketty is clueless. Piketty doesn't understand reality. Piketty lives by irreality forged from indoctrination.

After the fall of the Berlin wall and the dissolution of the Soviet Union, all believed the idiocy of socialism at long last had died. Yet, campus Marxists are like cockroaches. You can't kill them. And the lie in wait for times to spread their diseases into the minds of the young and desperate.

For a look at Piketty and the numbers, check out UT OH, SOMEONE BETTER TELL THOMAS PIKETTY ABOUT L >G TOO.


For even more, read THOMAS PIKETTY, REVIVALIST PREACHER OF BORN-AGAIN SOCIALISM. THE SECOND GREAT AWAKENING OF SOCIALISM HAS COME TO AMERICA

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