Wednesday, October 15, 2014

Bill Gates Slams Thomas Piketty

Bill Gates has a blog post out attacking Thomas Piketty’s Capital in the Twenty-First Century. The post is sadly titled Why Inequality Matters.

The most humorous whopper in the post is this comment from the richest man in the world:
I very much agree with Piketty that..High levels of inequality are a problem...
Why Gates would buy into such a goofy perspective is difficult to understand. Inequality is inherently  the nature of the world. SEE: This Is What Those Who Are Concerned About Inequality Fail to Grasp.

But further, the case made by Gates against Piketty is very technical in nature and doesn't get to the essence of the problem, say, the way Gary North did in his destruction of Piketty.

Most bizarre, at one point, it seems that Gates is in favor of the decay of wealth:
Piketty is right that there are forces that can lead to snowballing wealth (including the fact that the children of wealthy people often get access to networks that can help them land internships, jobs, etc.). However, there are also forces that contribute to the decay of wealth, and Capital doesn’t give enough weight to them.
To be sure, wealth can disappear from one generation to the next, in cases where a second, or third, or fourth generation does not know how to husband capital properly, but this should not be something to be looked upon as a blessing. Great wealth over generations, outside of a crony system, suggests a consistent employment of capital in a manner that provides products others demand.

Perhaps this confusion about the nature of capital over generations is why Gates takes the opportunity of his review of Piketty to once again champion higher estate taxes:
Like Piketty, I’m also a big believer in the estate tax. Letting inheritors consume or allocate capital disproportionately simply based on the lottery of birth is not a smart or fair way to allocate resources. 
One thing is for sure, with this proposal. wealth would decay, especially when it is diverted to governments. So Gates would get his wish.

But Gates doesn't stop there and indicates he is truly clueless about the economy and how funds in the hand of governments are always an indication of funds that have been acquired by coercive transactions and thus do not compare to the win-win of voluntary transactions. In a coercive transaction, it the the subjects of the government taxation that object to the transactions. Thus they are transactions based on evil doing. Gates does not want to limit his proposed evil doing to the estate tax, he wants evil doing to continue against all of us and takes his Piketty review to make that clear, also:
I think we’d be best off with a progressive tax on consumption...As Piketty pointed out when we spoke, it's hard to measure consumption (for example, should political donations count?). But then, almost every tax system—including a wealth tax—has similar challenges.


  1. Sadly, we expect prosperity and job creators like Gates to comprehend the marvel of the free market and the "invisible hand", but are disappointed, He thinks much like his cohort, Buffett. Perhaps an analogy is like expecting a talented singer, to understand the physiology and mechanics of the vocal cords producing sound. Mr Gates has entrepreneurial talent, but understands very little about the economics behind his success.


    1. A lot like a basketball player. He's really good at getting the ball in the hoop but probably can't actually calculate the physics to make it happen.

  2. how would a progressive consumption tax work? Would the rate depend on the price of the item or would people have to declare their income when making a purchase? Maybe it's pegged to their account so, when they swipe their card, their tax rate is read into the machine automatically.