The Economist Who Wants To Make the World Poorer

Writer and philosopher Ayn Rand was often accused of inventing cartoonish villains. Rogues like Ellsworth Toohey in The Fountainhead would scheme to seize the global economy’s commanding heights in pursuit of a distorted sense of justice. But the people who hold such ideas don’t just appear in cartoons or in Rand’s novels.

Enter Thomas Piketty and company.

In early June, Piketty—the French economist whose work on inequality has made him something of a rock star even while being serially challenged for methodological errors, data imputations, and cherry-picked baselines—and his large team unveiled what can only be described as a villainous plan. It’s a comprehensive program for global managed decline dressed up in the language of climate justice and equality.

The plan is far too ambitious for most nations to accept. But given the influence of Piketty and his circle of economists on U.S. wealth taxes and prominent global policy proposals, we should take its underlying ideas seriously.

Piketty’s plan would cap gross domestic product (GDP) per capita in wealthy countries at roughly $69,000, far less than America’s current $94,430. The plan would also limit annual global economic growth to between 0 percent and 0.5 percent. Monsieur Piketty would allot only 0.115 percent annual growth to the U.S, whose GDP has expanded by more than 3 percent on average since 1930. This would hurt not just the billionaires but every American.

The plan would mandate an international three-day work week and reduce construction activity by 70 percent, manufacturing by 87 percent, and even leisure-sector activity by 58 percent. There would be massive and punishing trade actions against noncompliant countries.

It envisions a “Global Justice Fund” financed not by taxing carbon but by global wealth and income taxes. This fund would be 20 times the size of current development aid and would be administered by a new international bureaucracy answerable to heaven knows who.

Don’t be fooled by Piketty’s training as an economist. This is not economic thinking. Consider the utter inconsistency of relying on a vast stock of wealth (mostly from the U.S.) for redistribution while suffocating long-term growth to near zero. Much of the value of the assets needed to finance this scheme would be destroyed. It is also disqualifying to claim that sub-Saharan Africa will grow at 4 percent if we crush the economies that provide the capital for its investments and buy its exports.

Let’s ask the uncomfortable question: What would it require to enforce Piketty’s plan? About this matter, he is conveniently vague. Confiscating something on the order of 10 percent of world GDP and redirecting it through a newly created supranational body does not happen by asking nicely. You cannot restructure the global economy at that scale without a coercive apparatus that dwarfs anything in human history.

The mechanism must be authoritarian. It would require a world government with the power to tell billions of people which jobs they may and may not hold, what they may build, what they may eat, and how many hours they are permitted to work.

And to what end? “Climate change” is an insufficient answer when Piketty’s entire edifice is built on a discredited foundation. The report relies on a baseline from the “RCP8.5” climate scenario that projects Earth warming by as much as 4.8 degrees Celsius by 2100. But last month, the United Nations’ own climate panel officially retired RCP8.5 (always a high-end estimate) as “implausible.” A more central projection is around 2.7 degrees Celsius. Replies to Piketty’s X feed pointed this out immediately. His response, as far as anyone can tell, has been silence.

That leaves the inequality argument. Worldwide income inequality is nearing a 150-year low, but Piketty insists that radical redistribution of wealth is essential for the Global South. And where have billionaires and wealth been popping up fastest in recent decades? Embarrassingly, data from Piketty’s World Inequality Database confirms that it’s in South and Southeast Asia and East Asia. These are the exact Global South regions that have spent recent decades rescuing hundreds of millions of people from poverty through market-directed economic growth.

A core confusion of the degrowth ideology is its conflation of inequality and poverty, in fact two very different things. Reducing inequality by making everyone poorer is not a victory for the poor. The billions of people still lagging in the global income distribution have one realistic path out: growth. Dynamic, market-driven, property-rights-protected growth is the only proven path to prosperity. It’s also the path to environmental improvement, which costs money.

Degrowth is the ultimate luxury belief. It’s dreamed up by tenured professors in Paris and progressive think-tank pundits in Brussels. These are people who already have high incomes, comfortable apartments, generous health care, and pensions, and whose ideas would pull up the ladder on billions of poor people.

Rand’s villains always insisted they were acting for the greater good. They always had elaborate plans. They always needed just a little more power to make it work. And they thought little about the terrible burdens their plans would impose on ordinary people.

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