"Let's make more capitalists"

Look for nauseating praise for French economist Thomas Picketty's new book Capitalism in the 21st Century from any quarters in your life where you know Freedom-Haters lurk.  All the predictable founts of FHer punditry are swooning over it.

Cato Institute scholar Michael Tanner, writing at NRO, has a great counter-proposal to Picketty's redistributive prescription for the nagging aspect of the human condition known as inequality:

Piketty takes the evilness of inequality as a given, ignoring the broader question of whether the same conditions that lead to growing wealth at the top of the pyramid also improve material well-being for those at the bottom. In other words, does it matter if some people become super-rich as long as we reduce poverty along the way? Which matters more, equality or prosperity?

To cite just one example, Piketty devotes considerable effort to criticizing the rise of inequality in China over the past three decades as it has adopted market-oriented policies. But he largely glosses over the way those policies have lifted millions and millions of people out of poverty.

Piketty’s proposed “solutions” are equally problematic. He seems to believe that “confiscatory taxes” (his term) can be imposed without changing incentives or discouraging innovation and wealth creation. Piketty’s solutions would undoubtedly yield a more equal society, but also one that was remarkably poorer.

Still, Piketty makes some important points. In particular, he notes correctly that returns on capital nearly always exceed the return on labor. With capital held by a relatively narrow group, therefore, rising inequality is inevitable. Moreover, with the wealthy able to pass capital on to their heirs, that inequality will be perpetuated and even extended over generations.

One wonders why, then, Piketty’s fans ignore the obvious answer to this problem. Instead of attacking capital and capitalism, why not expand the number of people who participate in the benefits of having capital? In other words, let’s make more capitalists.

Tanner goes on to cite FHer Senator Elizabeth Warren, whose problem with privately-owned 401(k)s is that they're subject to the ups and downs of the stock market.  Tanner points out that what she fails to include in her argument is that, as the Chilean example demonstrates, enabling ordinary citizens to participate in the ownership of a nation's ever-froward-looking use of capital has a hell of a higher rate of return than a play-like investment program like Social Security.

Of course, FHers have no control in a scenario in which smart, free grownups are in charge of their own destinies.