Friday, 30 May 2014

Piketty's Envy Problem

French rockstar economist Thomas Piketty has responded to his critics, mostly to the Financial Times who claimed his data is shoddy, cherrypicked and some of it “made up out of thin air.” Tyler Cowen reports:

There are 4,400 words here, mostly on the FT kerfluffle, and Neil Irwin summarizes it here: “The short version: He doesn’t give an inch.”

In this Guest Post by Peter Schiff, Schiff argues Piketty has an envy problem – and it’s this most fundamentally that explains his popularity.

Piketty's Envy Problem

There can be little doubt that Thomas Piketty's new book Capital in the 21st Century has struck a nerve globally. In fact, the Piketty phenomenon (the economic equivalent to Beatlemania) has in some ways become a bigger story than the ideas themselves. However, the book's popularity is not at all surprising when you consider that its central premise: how radical wealth redistribution will create a better society, has always had its enthusiastic champions (many of whom instigated revolts and revolutions). What is surprising, however, is that the absurd ideas contained in the book could captivate so many supposedly intelligent people. 

Prior to the 20th Century, the urge to redistribute was held in check only by the unassailable power of the ruling classes, and to a lesser extent by moral and practical reservations against theft. Karl Marx did an end-run around the moral objections by asserting that the rich became so only through theft, and that the elimination of private property held the key to economic growth. But the dismal results of the 20th Century's communist revolutions took the wind out of the sails of the redistributionists. After such a drubbing, bold new ideas were needed to rescue the cause. Piketty's 700 pages have apparently filled that void.

imageAny modern political pollster will tell you that the battle of ideas is won or lost in the first 15 seconds. Piketty's primary achievement lies not in the heft of his book, or in his analysis of centuries of income data (which has shown signs of fraying), but in conjuring a seductively simple and emotionally satisfying idea: that the rich got that way because the return on invested capital (r) is generally two to three percentage points higher annually than economic growth (g). Therefore, people with money to invest (the wealthy) will always get richer, at a faster pace, than everyone else. Free markets, therefore, are a one-way road towards ever-greater inequality.

Since Piketty sees wealth in terms of zero sum gains (someone gets rich by making another poor) he believes that the suffering of the masses will increase until this cycle is broken by either: 1) wealth destruction that occurs during war or depression (which makes the wealthy poorer) or 2) wealth re-distribution achieved through income, wealth, or property taxes. And although Piketty seems to admire the results achieved by war and depression, he does not advocate them as matters of policy. This leaves taxes, which he believes should be raised high enough to prevent both high incomes and the potential for inherited wealth.

Before proceeding to dismantle the core of his thesis, one must marvel at the absurdity of his premise. In the book, he states "For those who work for a living, the level of inequality in the United States is probably higher than in any other society at any time in the past, anywhere in the world." Given that equality is his yardstick for economic success, this means that he believes that America is likely the worst place for a non-rich person to ever have been born. That's a very big statement. And it is true in a very limited and superficial sense. For instance, according to Forbes, Bill Gates is $78 billion richer than the poorest American. Finding another instance of that much monetary disparity may be difficult. But wealth is measured far more effectively in other ways, living standards in particular.

For instance, the wealthiest Roman is widely believed to have been Crassus, a first century BC landowner. At a time when a loaf of bread sold for ½ of a sestertius, Crassus had an estimated net worth of 200 million sestertii, or about 400 million loaves of bread. Today, in the U.S., where a loaf of bread costs about $3, Bill Gates could buy about 25 billion of them. So when measured in terms of bread, Gates is richer. But that's about the only category where that is true.

imageCrassus lived in a palace that would have been beyond comprehension for most Romans. He had as much exotic food and fine wines as he could stuff into his body, he had hot baths every day, and had his own staff of servants, bearers, cooks, performers, masseurs, entertainers, and musicians. His children had private tutors. If it got too hot, he was carried in a private coach to his beach homes and had his servants fan him 24 hours a day. In contrast, the poorest Romans, if they were not chained to an oar or fighting wild beasts in the arena, were likely toiling in the fields eating nothing but bread, if they were lucky. Unlike Crassus, they had no access to a varied diet, health care, education, entertainment, or indoor plumbing.

In contrast, look at how Bill Gates lives in comparison to the poorest Americans. The commodes used by both are remarkably similar, and both enjoy hot and cold running water. Gates certainly has access to better food and better health care, but Americans do not die of hunger or drop dead in the streets from disease, and they certainly have more to eat than just bread. For entertainment, Bill Gates likely turns on the TV and sees the same shows that even the poorest Americans watch, and when it gets hot he turns on the air conditioning, something that many poor Americans can also do. Certainly flipping burgers in a McDonald's is no walk in the park, but it is far better than being a galley slave. The same disparity can be made throughout history, from Kublai Khan, to Louis XIV. Monarchs and nobility achieved unimagined wealth while surrounded by abject poverty. The same thing happens today in places like North Korea, where Kim Jong-un lives in splendour while his citizens literally starve to death.

Unemployment, infirmity or disabilities are not death sentences in America as they were in many other places throughout history. In fact, it's very possible here to earn more by not working. Yet Piketty would have us believe that the inequality in the U.S. now is worse than in any other place, at any other time. If you can swallow that, I guess you are open to anything else he has to serve.

All economists, regardless of their political orientation, acknowledge that improving productive capital is essential for economic growth. We are only as good as the tools we have. Food, clothing and shelter are so much more plentiful now than they were 200 years ago because modern capital equipment makes the processes of farming, manufacturing, and building so much more efficient and productive (despite government regulations and taxes that undermine those efficiencies). Piketty tries to show that he has moved past Marx by acknowledging the failures of state-planned economies.

imageBut he believes that the state should place upper limits on the amount of wealth the capitalists are allowed to retain from the fruits of their efforts. To do this, he imagines income tax rates that would approach 80% on incomes over $500,000 or so, combined with an annual 10% tax on existing wealth (in all its forms: land, housing, art, intellectual property, etc.). To be effective, he argues that these confiscatory taxes should be imposed globally so that wealthy people could not shift assets around the world to avoid taxes. He admits that these transferences may not actually increase tax revenues, which could be used, supposedly, to help the lives of the poor. Instead he claims the point is simply to prevent rich people from staying that way or getting that way in the first place.

Since it would be naive to assume that the wealthy would continue to work and invest at their usual pace once they crossed over Piketty's income and wealth thresholds, he clearly believes that the economy would not suffer from their disengagement. Given the effort it takes to earn money and the value everyone places on their limited leisure time, it is likely that many entrepreneurs will simply decide that 100% effort for a 20% return is no longer worth it. Does Piketty really believe that the economy would be helped if the Steve Jobses and Bill Gateses of the world simply decided to stop working once they earned a half a million dollars?

Because he sees inherited wealth as the original economic sin, he also advocates tax policies that will put an end to it. What will this accomplish? By barring the possibility of passing on money or property to children, successful people will be much more inclined to spend on luxury services (travel and entertainment) than to save or plan for the future. While most modern economists believe that savings detract from an economy by reducing current spending, it is actually the seed capital that funds future economic growth. In addition, businesses managed for the long haul tend to offer incremental value to society. Bringing children into the family business also creates value, not just for shareholders but for customers. But Piketty would prefer that business owners pull the plug on their own companies long before they reach their potential value and before they can bring their children into the business. How exactly does this benefit society?

If income and wealth are capped, people with capital and incomes above the threshold will have no incentive to invest or make loans. After all, why take the risks when almost all the rewards would go to taxes? This means that there will be less capital available to lend to businesses and individuals. This will cause interest rates to rise, thereby dampening economic growth. Wealth taxes would exert similar upward pressure on interest rates by cutting down on the pool of capital that is available to be lent. Wealthy people will know that any unspent wealth will be taxed at 10% annually, so only investments that are likely to earn more than 10%, by a margin wide enough to compensate for the risk, would be considered. That's a high threshold.

imageThe primary flaw in his arguments are not moral, or even computational, but logical. He notes that the return of capital is greater than economic growth, but he fails to consider how capital itself "returns" benefits for all. For instance, it's easy to see that Steve Jobs made billions by developing and selling Apple products. All you need to do is look at his bank account. But it's much harder, if not impossible, to measure the much greater benefit that everyone else received from his ideas. It only comes out if you ask the right questions. For instance, how much would someone need to pay you to voluntarily give up the Internet for a year? It's likely that most Americans would pick a number north of $10,000. This for a service that most people pay less than $80 per month (sometimes it's free with a cup of coffee). This differential is the "dark matter" that Piketty fails to see, because he doesn't even bother to look.

Somehow in his decades of research, Piketty overlooks the fact that the industrial revolution reduced the consequences of inequality. Peasants, who had been locked into subsistence farming for centuries, found themselves with stunningly improved economic prospects in just a few generations. So, whereas feudal society was divided into a few people who were stunningly rich and the masses who were miserably poor, capitalism created the middle class for the first time in history and allowed for the possibility of real economic mobility. As a by-product, some of the more successful entrepreneurs generated the largest fortunes ever measured. But for Piketty it's only the extremes that matter. That's because he, and his adherents, are more driven by envy than by a desire for success. But in the real world, where envy is inedible, living standards are the only things that matter. 

Peter Schiff by Gage Skidmore.jpgPeter Schiff is an American businessman, investment broker, author and financial commentator. Schiff is CEO and chief global strategist of Euro Pacific Capital Inc., a broker-dealer based in Westport, Connecticut.
This post first appeared at the website of Euro Pacific Capital.


  1. "The primary flaw in his arguments are not moral ... but logical".

    So, according to Mr. Schiff the moral is not necessarily the logical.

  2. The *fundamental* flaw in Piketty's argument is logical, but the primary flaw is moral. Theft is wrong. Period.

  3. Terry

    "So, according to Mr. Schiff the moral is not necessarily the logical."

    No. You're conclusion is incorrect. You are wrong.


  4. Clarification: When I write "Period", what I mean by that is that if we are both rational people, the moral argument for the immorality of theft is, I assume, settled.

    Amit, reason please? I am a Schiff supporter, on the whole, but here the inference he makes is that logical trumps morality, as if there can be some dichotomy between the two. That is, I submit, a flawed premise.

  5. Terry - what I think Mr Schiff is meaning is this;

    1. Piketty is basing his theory on things (production, turnover, profits etc) continuing as they are at the moment and rich people simply paying more (ie: it is an illogical assumption)

    2. Businessmen would not continue as they are at present because the money they earn, above a certain level, would all go to the tax department and therefore they would be wasting their time (ie: even if they did it would be illogical).

    3. If rich people and businessmen simply won't bother you have a theory which is flawed.

    I think that is what he means by the flaw being illogical rather than moral.

    You can debate until the cows come home the 'morality' of taxation, but it is a simple matter of logic as to whether these taxes would work - and they won't.

    Piketty's theories were (sort of) tried in Britain in the 1970s with Dennis Healey's 98% tax rate; the result was a massive drop in investment in Britain, and very little money being collected, because there was no point earning more than 22,000 pounds per year.

    The most famous example of this was the James Bond movie 'Moonraker' where Roger Moore earned the grand total of 1206 pounds after tax ....for 7 months work! (less than a dustman earned during the same 7 month period)

  6. @ Mr Lineberry -
    I agree with Peter Schiff on all the other points he makes, and especially with his choice of heading. What I do not agree with is the focus of his argument, which deviates from the title and from the primary flaw in Pickett's argument, which is moral.

    Logic is a method, morality a code. To live successfully as a human beings, we must employ the method of logic and apply it to the facts of reality and our chosen code of morality. If one's code is not consistent with one's own nature, i.e. is not itself arrived at logically, then no matter how good the rest of one's logic, or how accurate the rest of one's facts, that code will lead to one's own destruction and/or the destruction of others.

    In the second paragraph Schiff recognizes that Marx only succeeded against the power of the ruling class by winning them over with an "end run" moral argument for redistribution. Marx' argument is thus recognized as being morally flawed, despite it gaining support from the ruling elite. That "end run" only got the support it did because no one else of any influence stepped up to counter with a better moral argument – one that was *right*. Things are no different today. Schiff is prominent and somewhat influential yet he chooses to focus on exposing errors in deduction rather than induction.

    The crux of Schiff's attack and expose is where he points out that the assumption that "the wealthy would continue to work and invest at their usual pace once they crossed over Piketty's income and wealth thresholds" is a flawed one, with the rest of the article arguing why that is and implicitly assuming Picketty’s utilitarian premise. If it could be shown that the world's wealthy turkeys *would* continue to work and invest at their usual pace while their feathers are being plucked at the rate Picketty proposes, then using Schiff’s logic, Picketty's logic *could* be found to be sound, when the fact is it couldn’t. Schiff unwittingly assumes Picketty's flawed moral premise, which is no way to win the war. Skirmishes is all his approach is good for.

    Schiff notes that Picketty's essential "point is simply to prevent rich people from staying that way or getting that way in the first place". It is that point that the title of his article rightly calls Picketty out on, but then goes on to ignore.

    The correct approach to winning the argument/war is to demonstrate how upholding property rights, which necessitates minimizing (and as soon as circumstances allow, eliminating compulsion from) taxes, is not only consistent with the existence of human life, but absolutely vital to it.

    Coercion in all its forms is demonstrably an obstacle to the mind. It follows that coercive funding of government goes against the human nature; such coercion assumes that we are mere animals and must have our "impulses" kept in check. Humans are not mere animals!

    I'll now let Ayn Rand finish off as Peter Schiff should have:

    "They do not want to own your fortune, they want you to lose it; they do not want to succeed, they want you to fail; they do not want to live, they want you to die; they desire nothing, they hate existence, and they keep running, each trying not to learn that the object of his hatred is himself . . . . They are the essence of evil, they, those anti-living objects who seek, by devouring the world, to fill the selfless zero of their soul. It is not your wealth that they’re after. Theirs is a conspiracy against the mind, which means: against life and man." [Galt's speech, Atlas Shrugged]

  7. Terry - I agree with you, however I think Mr Schiff (having lost a couple of elections) is looking at things from the point of view of ordinary people who vote (alas).

    When "That nice Mr Obama" does a couple of photo ops patting a dog, and suggests 'Wall Street Bankers' should pay more taxes he wins, fairly easily, in the Court of Public Opinion.

    "The choice is simple - do you want old aged pensioners destitute and sleeping in the gutter because Mr Brown from Goldman Sachs buy a new yacht? or should he pay more in taxes?" - says Obama, whilst patting a cute puppy.

    If you were to argue against that, you are arguing with people whose lives comprise the following undertakings -

    They get up at 6:03am when they preferred to sleep longer; rushed breakfast; got the children ready for school; got wet walking to the train station (they can't afford a car); were squashed up against lots of smelly people on their 12 minute train journey; got to work; did tasks they found boring; work finished; back to the train station (got wet again); more squashing; walked home (wet a 3rd time!); made dinner (using ingredients with plain packs on special because the good stuff was too expensive); children misbehaved; 2 letters in the mail were bills for $87 and he wonders when he will be able to pay them (etc...etc...etc)

    - and at the end of the week the grand total of $573-47 sailed into their bank account for their efforts.

    The whole problem (the only problem) with the libertarian faction of politics is an incredible naivety about this sort of thing - about public opinion, about the 24 hour news cycle, and 'government by soundbite'.

    Schiff and others are focusing on whether what Piketty advocates would actually work, rather than 'morality', because the moral standard during the last century has been so degraded and it is a hard sell.

    What is needed is to play the socialists at their own game.

    Consider the person I described above; consider what is most likely to capture their hearts and minds -

    Would it be:

    1. A lecture on 'morality' - to say it is perfectly okay for Mr Brown of Goldman Sachs to buy a new yacht, and tough titties for some feckless pensioner who is destitute? (and a 3 hour lecture on why)


    2. Sending them a fake 'Redundancy Notice' in the mail saying "Your Boss won't bother staying in business if all his profits and wealth are taxed away; that means you lose your job thanks to Obama"

    (One involves 'morality' and doomed to failure; one is 'logical' and likely to get his attention! haha!)

    The point I am making is this - if you want to change things, improve things, return morality to what it should be, and have a widespread outbreak of freedom, first you have to.... win.

    Winning will mean playing the socialists at their own game - being a bit devious, having your own soundbites, manipulating 'ordinary folk', and doing lots of other rather ghastly things.

    Sitting back and saying "oh we are bigger than that".... means you lose.

  8. @ Lineberry

    It seems that you too have inadvertently bought what Picketty is selling: a flawed moral premise.

    One does not "return to morality" by adopting immoral means, such as with "devious(ness) ... manipulating 'ordinary folk', and doing lots of other rather ghastly things".

    One CANNOT lose by advocating and practicing what is right, because it is only by adopting the right path that one remains human. The flaw in your reasoning is that you underestimate how difficult it is to regain your humanity once you have lost it. Selling your soul - i.e., your mind, your reason, your values - to the devil is not how you "win", it is how you *lose*. And that is all the likes of Picketty want of you. To lose.

    The moral *is* the practical. If you can't learn that lesson, you are lost. If humanity can't, it is lost.

  9. Terry - I agree with you that "the moral is the practical, One CANNOT lose by advocating and practicing what is right, because it is only by adopting the right path that one remains human"

    That is so correct!

    The difference is I have spent my life actually doing it - rather than complaining about it -

    I have never paid taxes, I don't keep money in bank accounts where it can be stolen, I don't do business in NZ, I don't have investments in NZ; I don't obey laws I disagree with; I don't obey rules and regulations I disagree with; I am not owned by the state...etc....etc

    I am so pleased to hear you have spent the last 30 years doing (or not doing, as the case may be) all of these things as well Terry. A true freedom warrior!

    Unlike you and me, Terry, there are a few people around - (I know this will astonish you to learn) - who are too scared of doing any of these things -

    the silly buggers hand over 6 figure sums to the tax man; they obey silly laws which infringe on their freedoms, they fill out forms just because the State orders them to, they wear seat belts, and don't smoke, and stop for traffic lights on empty roads (because it's the law!), they bend over for civil servant 'inspectors of this' and 'inspectors of that' - their lives comprise this misery 24/7 - and tomorrow they will get up and do it all again! haha!

    Mindboggling, I know, but true.

    Fortunately there are people like us around Terry - two chaps who know that it makes absolutely no difference to us what Piketty (or Cunliffe/Norman) do; we remain totally unaffected having both made a stand as youngsters and kept to it ever since.

  10. @ Lineberry,

    There is no "us". When the moral choice has been removed, the practical is the moral. You have decided that it is practical to set yourself up offshore and avoid paying taxes, for me it is not practical, nor is it practical to risk going to jail, therefore it is moral for me to pay the coercive taxation, even though I have a moral objection to it.

    If you have never paid a cent in taxes in the last 30 years as you claim, can I ask have you also never made a claim on the state? Ever been to a public hospital? Called the police for help? Used the court system? Had a subsidized doctor's visit? If you have, then I would be curious on what moral grounds you did so.

  11. people with money to invest (the wealthy) will always get richer, at a faster pace, than everyone else.

    Good. We deserve to. Bludgers deserve nothing. Matthew 18:15-17 for those Christians.

  12. Consider the person I described above; consider what is most likely to capture their hearts and minds -

    Neither. Didn't Vietman teach you anything? Fighting for hearts and minds is useless against leftists - the only solution is strategic force, applied as massively and quickly as possible. In this case, fire the communists, throw them out of their houses, terminate their free healthcare, schools and super, and let the die quickly on the gutter, with armed police standing by to shoot anyone who is "moved" to "help".

    The whole problem (the only problem) with the libertarian faction of politics is an incredible naivety about this sort of thing - about public opinion, about the 24 hour news cycle, and 'government by soundbite

    Wrong. The problem is one of reality, not of presentation. 10% of Kiwis pay for everything for 90%. 1% of Kiwis pay for everything for about 80% of Kiwis. 0.1% of Kiwis pay for everything or about 70% of Kiwis. So let's return to morality and freedom as the basis of the state. 90-95% of Kiwis will thereby be thrown into penury, many of 'em (at least a couple of million, probably more) would starve in the gutter in the first month. Things would get "better" after that, but 90-95% of Kiwis would be materially far worse off a "libertarian" regime. The calculus isn't so bad in the US or Asia, but is worse everywhere else in the Welfare West. Dependent though they may be, the lumpen bludging mass isn't stupid enough to vote like a Turkey for Christmas.

  13. Terry - did you just engage in a spot of Obama/Warren "you didn't build that"? haha! (a bit naughty)

    In answer to your questions, I have always, even as a boy, gone privately with my weekly medical treatment (for haemophilia), so, no, I am not a hypocrite; more than happy to pay the $600 myself.

    As for the Police, no never called them, although I have been arrested a few times for smuggling and some other larks in my 'wayward youth' haha!
    My use of the Courts to chase up unpaid debts involved them charging me a whopping great filing fee so no problems there.

    I would not call Australia 'offshore' haha! - but you and every other businessman should certainly investigate doing business abroad; you would make more money in one day in Sydney than in a whole week in NZ (and it's just like flying to the South Island).

    There is a spot of well meaning advice for you Terry.

  14. @ Lineberry,

    That is all very well and good, but I note that you did not after all that answer my main question: have you or have you not ever made a claim - any claim whatsoever - on the state during the last 30 years? If you can honestly reply that you haven't, then good for you, and I have no gripe with your set up and approach, although I would want to ask one well meaning question first, and that is whether or not you think it is necessary at all for Western countries to maintain a police and military for the protection of what freedoms *do* exist, and if you do, who do you think should be contributing towards the cost of providing said protections?

    Note that it is the *compulsion* involved in taxation that I object to, not that rights-valuing (i.e. rational) people are still required on moral (i.e. rational) grounds to contribute towards whatever cost is involved with upholding those rights they do happen to value and enjoy.

  15. This is just what Peter highlighted a week or two back - the "you didn't build that" nonsense which is trotted out by Obama and others (when even the Libz are doing it you know they have won! haha!).

    Of course I have used roads and electricity and other things - and so what?

    As I said at the beginning Terry - you are the one complaining about things, not me.

    None of the bad stuff the State does has any affect on me because I simply ignore it, or break the silly laws I disagree with.

    I spent 3 years in the 1990s 'enduring' busybody laws and rules and nonsense involved in conducting business in NZ before thinking 'stuff this' and focusing on the Australian market, where if you don't let the Government know certain things in the first place, they never know - (as Sir Robert Jones pointed out about the Aussie Government in one of his books, and he is correct haha!).

    I didn't complain - I just did an Atlas Shrugged and stopped doing what annoyed me. Simple!

    But if you are going to keeping doing whatever the State tells you to do, then why are you complaining about it?

    I have found time and again that as soon as I suggest someone 'takes a stand' (beyond talking about it), or does something out of their comfort zone, or may require living Atlas Shrugged themselves (rather than just telling everyone else to) not only do I get a lot of abuse, but they fall back on socialist arguments - such as your spouting the "you didn't build that" line.

    If you do not like the things you complain about Terry - then stop doing them. Now.

    On Tuesday morning close down your business because you don't intend to be a slave to the state any longer, and it's time to put your words into action.

    (I believe I read a book about people doing that sort of thing)

  16. @ Lineberry

    I don't see the link between my position and Obama's "you didn't build that" statement. I am not saying that you didn't build what you did build. Only that you are being irrational if you think that there will be any apparatus left to support what freedoms you do have if you are not voluntarily contributing towards at least some of it's upkeep, and being immoral if you lump the totality of that responsibility onto others.

    Identifying what is not right and not working and then advocating for what is right and what would work is not the same as complaining.

    And again, you did not answer my question. Why the evasion? Is it that perhaps you do realize your approach is not the moral one after all?

    You are either in denial or ignorant if you think that "the bad stuff the State does" has no effect on your life. With that mentality you are only choosing to see what is and not what could have been or what could be. It is the same flaw in thinking that statists engage in when they do their meddling. And no more sustainable.

  17. "I just did an Atlas Shrugged and stopped doing what annoyed me."

    And the engine of the world stopped. I mean where are we without parasitic day-traders?

  18. @chaz - if only the engine of the world had stopped in 1998; if only the Socialist Century had ended with lots of people like me telling the State to get knotted, and marched off into the sunshine of freedom.

    What those living as slaves fail to realise (for obvious reasons) is how easy it is to actually live in freedom, where you are, if you choose to - you simply ignore the nonsense going on around you.

  19. Mate, you're a parasitic day-trader. There are no leeches less productive. Please, go on "strike".

  20. Chaz - money and greed trumps all.

    I spend a lot of time encouraging poor people to break out of their poverty ridden existence and start earning themselves a quid copying what I do.

    Around two dozen of my 'in laws' in the Hokianga, and lots their friends - who had all spent years on benefits - are now earning $2000 or $3000 a week thanks to me "teaching them how to fish".

    Due to it being incredibly simple to purchase a block of shares at a certain price, and sell them for a higher price, thereby earning a profit - the universal reaction when someone actually sits beside me and sees how easy it is to line their pockets is "how do I do this too?".

    A quick phone call to my cute yummy share broker in Melbourne to open a dealing account later - (and me lending them a few thousand to get started) - and hitherto poor people are just loving their newfound, lucrative, immoral behaviour HAHAHAHA!!

    Not only are they no longer in poverty, and no longer on benefits, but their bulging bank accounts has meant a dramatic change in 'attitudes' which I have noticed over the last couple of years.

    They no longer find any enthusiasm for such things as demanding Treaty handouts, or thinking they are 'victims', or complaining about (imaginary) 'injustices'.

    In one stroke of altruistic benevolence (!) I have done more for the Maoris in the far north than Hone ever will, and done more about changing attitudes than 1Law4All is ever likely to.

    Fancy that!

    In the last 3 years I have done this with around 50 people; some clever dick smartypants folk would be very surprised if they knew what is really going on in the Hokianga haha!

  21. You invent nothing, produce nothing, add nothing and take your meagre profits from those who do (assuming you make any, and there are liars aplenty selling the snake oil you're peddling). Not sure how that makes you think you're in anyway useful. Go on strike and we'll see if we miss you, Atlas.

  22. Chaz - nobody invents things, produces things or adds things anymore.

    No one.

    This is the 21st century (not the 19th) and a service economy; the days of industrial empires in the West are long gone and are not coming back - something of great comfort to working class people who don't have to do low paid, backbreaking manual labour like their granddad.

    There are no Thomas Edisons or Alexander Flemings or Henry Fords who invent products which structurally change day to day life - because it has all been invented.

    These days any so called 'inventions' are just another toy to play with and had it not been invented nobody would have missed it.

    The great thing about the modern age is the only way to make any money is financial markets - no need to do boring stuff like 'invent' or 'produce' - you just click a few buttons and then play golf or go sailing for the afternoon.

    Silly me! haha!

  23. @Chaz & Terry

    You can save your indignation, because 'Mr Lineberry' is totally full of shit. His comments are hilarious; boastful nonsense often incongruent with his previous claims. Come on, he should have set off your bullshit radars well & truly by now.

  24. @ Scott - yes, thanks, I already came to that conclusion, a bit late in the piece admittedly. It took seeing him troll Chaz to realize he was doing the same to me.

  25. Simon
    Mr Schiff did not argue the moral is not necessarily the logical. That "implication" you created was not Schiff's. It was yours. Having drawn the erroneous "implication" yourself, you compounded the error by attributing it to him. That is why you are wrong (twice over).


  26. Simon, Terry

    Apologies, my comment ought to have been directed for Terry.


  27. Mr Lineberry

    How is it possible for you to be a resident of Australia, own a house in Sydney (or an apartment), conduct business there, live and work there and not pay any tax to the ATO or to the State of NSW? You would have to be blatantly breaking Australian Tax Law (and it is doubtful you would be able to do that successfully for very long). There is no way you could operate under the ATO radar indefinitely without being detected and dealt with in a most severe manner. A competent tax inspector would love to have a piece of your lilly white bottom. You can be certain it'd be seen to that your lilly whiteness would be provided straight to a selected cellmate who you'd be put in with while you are in remand. Did you ever wonder why a certain well known Sydney day trader committed suicide right after he spent but two evenings in prison? Ask around.

    Look, even the Police are super rough in Australia. When they were concerned that not enough people were paying their traffic fines on time they contrived to put a nice middle class white boy into a remand cell with a known prison predator. He was shoved in there overnight over non-payment of a modest fine. When he was released he hung himself. The story was in all the major newspapers the next day and then suddenly people started paying their fines. They were and are fearful of the Police, let alone the ATO. The ATO is harsh. You can't go trying to put one over on them without accepting some pretty dire consequences are likely to be in train for you.

    Look, either you are telling porkies and exaggerating to compensate for some perceived character shortcoming you have (likely the case), or you are living life right on the edge of a titanic risk (unlikley). If you are indeed blissfully unaware of the risk and you are indeed not paying Aussie taxes, then you are incredibly ignorant and are in for a terrible surprise. If you know the risk and are taking it anyway, then you are foolish beyond belief, playing with funnel webs would be a safer pastime for you. In either case, sympathies go out to your next of kin.


  28. @ Amit – you are right, there is an uncorrected error in my third comment. Remove "he makes" and that should clarify things. The *inference* was certainly one that *I* drew, and my challenge to you to point out the flaw in *my* logic stands. I agree with you that Peter Schiff never meant to imply the inference I drew from his statement, but that does not change the validity of the inference nor the mistake in his choice of focus in the article.

    If someone proposed to you that the best way to eliminate a crippling debt you had would be killing the creditor, surely you would conclude that the *primarily* flaw in the plan was its immorality, and that if you dug deeper that it was *fundamentally* illogical? Or would you conclude that the primary flaw was one of logic, and entertain a debate on logic of why you should or should not kill your lender, whereby if the logic was justified then you would?

  29. Terry.

    You've conceded the point. Further rationalisations unnecessary. That's just digging a bigger hole.

    While your "logic" might seem OK to someone arguing from the context of a doctrinaire Objectivist, that does not mean that anyone else (such as people who you might care to influence in the direction of Objectivism) will accept it, let alone the premise upon which it is based. It also does not mean that your "logic" is correct, self-consistent or true (faulty analogy and all) either.

    Schiff is a Libertarian. He does not argue from the ideology that economics and politics are derived from a hierarchy of absolutist thought beginning with the Objectivist Axioms, proceeding through Objectivist epistemology and onwards from there. Vanishingly few people accept that approach. They are not open to arguments from Objectivist morality because they understand morality to be quite different from that which Objectivists promote. Objectivism is, to most people, repugnant and malevolent- to be avoided, along with all the nasties it seems to attract. Schiff can't write from that position as his message would be instantly dismissed. He is writing for non-Objectivists (which is everyone other than Objectivists and that audience happens to be rather a lot larger than doctrinaire Objectivists alone).

    To recap:
    From the doctrinaire Objectivist view you may be arguably correct, "logic", analogy and all. The vast majority of Libertarians (such as Schiff and practically everyone who reads him) are unlikely to concur or, at the least, would consider your point merely noise, trivial weirdness of little importance. Conservatives, neocons, small "l" liberals, socialists and the rest wouldn't worry about the distinction anyway. It's all just too minor to matter a whit.

    Schiff keeps in mind the audience he wants to reach and so writes directly for them- avoids emoting on and on about morality or evil or any of that. Remember the context. He is dealing with an audience that is educated, believes in an understanding of science and "logic" delivered to them from years in state controlled educational establishments and exposure to media. He also writes for a Libertarian audience of people who derive alternative philosophical structure to the Objectivist example. They do not see economics as relating to morality in the same sense that Objectivists do.

    Amit Cim

  30. Terry

    I forgot to mention, as an example of an important economist who did not evaluate economics in the way that Objectivists are prone to, review von Mises.


  31. @ Amit, what I conceded was a typing error. My point stands firm. There is a logical inference to be drawn from Schiff's statement and an observation to be made about the focus of his article - I did both. Your countering with ad hominem, psychologizing and argument by intimidation whilst avoiding addressing my actual point *is* to concede the point, and further, your concession is punctuated by your admission that "From the doctrinaire Objectivist view you may be arguably correct, "logic", analogy and all".

    You conclude that "He is dealing with an audience that is educated ... They do not see economics as relating to morality in the same sense that Objectivists do". Objectivists derive morality from reason and reason alone, and hold that logic (i.e., non-contradictory identification) is the sole method of reasoning, you are thus necessarily agreeing with my inference, at least by way of implication, while at the same time denying it. I submit that I am not the one "digging a bigger hole"...

  32. I meant "by way of inference".

  33. Terry

    You've dug your hole already. It has become too large for you to escape!

    Remember you did claim this, "So, according to Mr. Schiff the moral is not necessarily the logical."

    It was false then and it is false now. He did not argue that one. You were wrong, as already pointed out to you. Game over.

    An aside:
    Your inference is yours. It would not be accepted, let alone recognised, by the audience Schiff directs his attention towards. Remember context please.

    I understand your subsequent argument and your critique of the Schiff piece. I am familiar with the Objectivist formulation upon which you rely.

    What you lable a concession on my part is an observation, nothing more. I do not state you are necessarily correct, merely that from the doctrinaire Objectivist view you may be argued to be correct. "May", as in "might", as in "possibly". Try to read a little less carelessly.

    As for your final paragraph, so now I supposedly necessarily accept inference by means of implication. Incredible! Do you often reason like this? Hardly a sterling example of the art of non-contradictory identification!


  34. Terry

    OK. So now it reads this, "you are thus necessarily agreeing with my inference, at least by way of inference, while at the same time denying it."

    And so, as you would have it now, I supposedly necessarily accept inference by means of inference.

    Or am I denying it? Am I denying the inference or is it the inference of the inference I am denying, or is it just the inference (not that inference, the other inference)?

    Like the man said, "It's turtles all the way down."


  35. Amit,

    Your eagerness to score points against me rather than reach a reasoned conclusion is disappointing and unfortunate.

    When I wrote "So, according to Mr. Schiff the moral is not necessarily the logical", that was not meant to imply that the inference I drew is what he was meaning. That is why I began my statement with "So".

    I admit poor logic in my last post. I was trying to express the inconsistency of and contradiction in your last sentence, but my choice of words did not achieve that aim, but it is side issue, so I will let it alone. What matters is that you again skirted the main points of this discussion, namely, the inference to be drawn from Schiff's statement, the *logic* of which implies a flawed premise, namely, that the moral can at the same time be the illogical, which means the unreasonable, since logic is the method of reason (or do you deny this?), and, my observation that the primary flaw in Pickett's argument is moral, not logical - the *fundamental* flaw being logical. Your only answer to these points has been, in effect, to argue for moral relativism and claim that Schiff tailors his economic arguments to a supposedly educated but morally relativistic audience.

    We have do a disservice to Mr. Schiff; I now realize after doing some more research that he has publicly voiced his contempt for those who argue for moral relativism ( and that I was too hasty in assuming that he might subscribe to the flawed premise which the logic of his statement implies. I thus re-categorize what he wrote as being a mis-statement, but stand by my observation about the focus of his argument.

    So that we may reach a reasoned conclusion, I shall now quote Hazlitt in 'Foundations of Morality': "When the rightly understood interests of the individual are considered in the long run, they are found to be in harmony with and to coincide (almost if not quite to the point of identity) with the long-run interests of society. And to recognize this leads us to recognize conduciveness to social cooperation as the great criterion of the rightness of actions, because voluntary social cooperation is the great means for the attainment not only of our collective but of nearly all our individual ends." The key word here is "voluntary"; one either acknowledges that the moral necessitates the chosen, or, one subscribes to the idea that the moral can (or must) be achieved through compulsion (or, one may also hold that morality as such does not exist at all). Tell me, which of these premises do you subscribe to Amit? I'd like to hear it straight from the horse's mouth.

  36. Amit - "That is why I began my statement with "So"" - in other words, just to be clear for you, I was drawing a logical inference as to what his underlying premise is using the logic of the statement. As I have explained in my last comment, I now see it as having been a misstatement rather than an implicit confession of premise.


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