Thomas Piketty, we’re calling you out

Yes, dear reader, the chattering classes are upset by ‘inequality’. One man has a lot. Another has a little. Naturally, the man with little is jealous. And the fixers come forward with yet more fixes.

Jesus said that “the poor will always be with us”. But do there have to be so many of them? And what about the middle classes? They seem to be disappearing; their share of national income has gone down shockingly.

Rich? Poor? We’ve been both. And we don’t really give a damn. But everybody wants to be the hero of his own story. Our goal here on the ranch is to make the enterprise profitable, and to hire more people and raise wages.

People will be better off, financially, and we’ll be loved by one and all. Maybe the local people will erect a monument to Don Bill, or at least remember his name when he dismounts for the last time. We’ll let you know how that works out over the next few years.

Meanwhile, let’s moan together about the plight of America’s lumpen middle class. But first, we will give you a heads up.

Unlike Thomas Piketty, we will not blame capitalism; the free market is merely the aggregated choices of free consumers, workers, producers, and investors.

Nor, like Paul Krugman, will we blame hard-hearted Republicans; it is the soft heads of both parties whom we hold responsible. Yes, we lay the blame where it belongs: on the jackasses who created today’s ever-expanding credit bubble. Johnson, Nixon, Reagan, Greenspan, Bernanke…

The destruction of middle class incomes is just one of the miseries their policies wrought. Here’s the Washington Post on the subject: Wages aren’t stagnating, they’re plummeting.


Bill Bonner on markets, economics & the madness of crowds

To sign-up to Bill's free daily email just enter your email address below

Because these emails are completely free, we do have to fund them with advertising. Occasionally we will send you promotional emails, however we will never give, sell or rent your email address to any other companies.For more information, please see our Privacy policy.


But wait. There’s more. Ted Bauman reports:

“Last week, The New York Times lobbed a bombshell: the U.S. middle class is no longer the world’s top earner. Many countries’ middle classes now bring home more real income than ours. That includes our neighbour to the north, Canada (good news for Canada Day, July 1). The Dutch and Norwegians, who already earn more than the bottom 50% of Americans, are close behind.

“When we look at net worth per capita for the U.S. middle class, we find that it’s not just the Canadians who beat us. Just about every developed country does. Middle class households in the U.K., Japan, Australia, and — get this! — Italy have more than doubled the wealth of their U.S. counterparts. Luxembourg, Belgium, Iceland, Singapore, Austria, Qatar and Kuwait are all also ahead of the U.S. Overall, we’re 24th.

“But the true picture is even worse than that. Calculations of per capita net worth for the U.S. include personal retirement plans like IRAs and corporate pensions. In most of the countries that are ahead of the U.S., citizens receive excellent public pension benefits, which aren’t included in personal net worth. As a result, they tend to save a lot less for retirement than we do. And yet they still have greater net worth than us.

“In other words, not only is the American middle class earning less than those of other countries — it’s also getting poorer.”

Surely this is a great oddity too. The feds create a credit boom that adds $33trn to national spending (and debt) over the last 40 years. This is the greatest stimulation programme of all time. And it is an economic disaster. Middle class incomes go down. Debt goes up. Real wealth deteriorates. Real capital disappears. Growth declines.

Result: people get poorer.

Reaction of the elite: criticise capitalism for causing ‘inequality’. And demand more control by the feds!

• Don't miss Bill's next Daily Reckoning. To receive the next article straight into your inbox as soon as he's written it, enter your email address below.

Because these emails are completely free, we do have to fund them with advertising. Occasionally we will send you promotional emails, however we will never give, sell or rent your email address to any other companies.For more information, please see our Privacy policy.

[xyz_lbx_custom_shortcode id=5]

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

MoneyWeek magazine

Latest issue:

Magazine cover
Heading higher?

Or are house prices set to fall?

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Russell Napier: deflation is coming – hold on to your cash

Financial historian Russell Napier talks to Merryn Somerset Webb about the next deflationary bust – why it's coming, what it means for you, and how you can survive it.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


27 November 1924: Macy's first Thanksgiving Day parade

On this day in 1924, New York department store Macy's held its first Thanksgiving Day parade. It would soon become a city institution, kicking off the run-up to Christmas.