Comic Strips

Thomas Pickety lays out the mechanics of this transference in Capitalism In The Twenty-First Century.

He establishes a comparison between the domestic rate of economic growth (typically measured in GDP) relative to the average return on investment (typically measured by bond rates or annualized stock market asset inflation). He finds that when GDP < ROI, wealth aggregates into the hands of a small pool of elites. Meanwhile, when GDP > ROI, wealth diffuses to the general public (the so-called Trickle Down Economics promised by Reagan).

These leveraged buyouts are only possible when private lenders can generate a compounding return in fictitious assets that outpaces a return investing in material capital and labor improvements. And the compounding return is, at its heart, a consequence of unpaid wages, bad debt, and unaccounted depreciation.

Picketty concludes that the most straightforward remedy to rebalancing GDP and ROI is to tax capital gains. This effectively forces down the ROI, while redirecting cash flow to public investments that boost GDP without triggering an inflationary spiral.

But what he can't answer is how to address the social dynamic that allows taxes to fall and predatory business practices to accumulate. Media manipulation, imperialist plundering, and the exploitation of domestic lower social castes can't be solved with tax policy. Who actually stops the Business Genius from wrecking the factory? What are the real material functions of the economy being controlled? And how do a handful of individuals successfully rent-seek from them without triggering a public revolt?