Do not let the very natural splendors of richness distract from the very unnatural causes of unequal richness.

Sir I refer to Lawrence Summers’ “The rich have advantages that money cannot buy” May 9. 

In it Summers writes “In areas ranging from local zoning laws to intellectual property protection, from financial regulations to energy subsidies, public policy now bestows great fortunes on those who primary skill is working the political system rather than producing great products and services. There is a compelling case for policy measures to reduce profits from such rent-seeking activities…”.

Indeed that is the most important task at hand, and nothing should distract our attention from it.

For instance the fact that “the average affluent child now receives 6.000 hours of extracurricular education, more than the average poor child”… has absolutely nothing to do with the challenges at hand… but neither do I think that similar activities is what Summers now suggests we give the less fortunate ones to support their education… and this even though they might be much more motivated receiving it.

Is Thomas Piketty, with his “Capital” unwittingly working for the big time Oligarchs and Plutocrats?

Sir, I refer to Gillian Tett’s “The lessons from a rock-star economist”, April 26.

Anyone wanting to tax more wealth and income, in order to make up for an inequitable distribution, without first identifying and remedying the causes of such inequities is, de facto, working to increase the wealth and power of the big time Oligarchs and Plutocrats, because if no other changes, to them is where all those new taxes paid by the other wealthy is going to go, before the end of the day.

And I have not really understood the reason for the great hullaballoo around Thomas Piketty´s 685 pages long Capital in the Twenty-First Century. Of course it contains many interesting arguments but… what is really its new news? Gillian Tett might be quite right when she says “it has forced Americans to confront a growing sense of cognitive dissonance”… though perhaps one could equally describe that as having created the opportunity for some to exploit a growing sense of cognitive dissonance.

The book is based on a gross simplification that forces reaching the wrong conclusions. Already in the flap cover we read: “The main driver of inequality-the tendency of returns on capital to exceed the rate of economic growth-today threatens to generate extreme inequalities…But economic trends are not acts of God. Political action has curbed dangerous inequalities in the past, Piketty says, and may do so again”.

Much more accurate, and meaningful, would have been to start the analysis by asking … why is there a tendency of returns on capital to (in between crises) to exceed the rate of economic growth”. Most, if perhaps not all of those causes, are to be found directly linked to one sort of rent seeking or crony capitalism, something which clearly involves the hand of politics and governments, and something which has little to do with real capitalism. But that might not have been a welcomed conclusion to those who want to work at both ends… where the inequalities and the headaches are created and where the aspirins are handed out.

And of course to me, when Piketty writes “there is absolutely no doubt that the increase of inequality in the United States contributed to the nation’s financial instability” he is totally wrong. It was bad bank regulations which basically permitted banks to work with less and less capital, and the exaggerated importance given to the financing of home ownership, which caused the nation’s instability.

And when Piketty writes: “one consequence of increasing equality was virtual stagnation of purchasing power… which inevitably made it more likely that modest households would take on debt, especially since unscrupulous banks… freed from regulation and eager to earn good yields on the enormous savings injected into the system by the well-to-do, offered credit on increasingly generous terms”, it frankly reads like a simple provocateur pamphlet. By the way “increasing generous terms”? What a laugh! He clearly never saw the terms of the bad mortgages awarded to the subprime sector. 

And when Piketty writes “the financial crisis as such seems not to have had an impact on the structural increase of inequality”, we are left with the question of … why do you think that is so Professor?, since he seems to wish to ignore the role of Tarp and QEs in saving the wealth, at the price of even increasing the inequalities.

What can I say? I just hope for the sake of its many fans, that by next year they will not see in bookstores a bestseller titled “How we masterfully launched Piketty’s Capital”.

PS. I have read about one third of the book jumping from here to there. If I find something that will make me change my opinion while reading the rest, I will let you know.

If the ordinary citizen, not just “civil society”, is not part of the climate change challenge, we are all toast.

Sir, my first reaction when I read Nicholas Stern’s “World leaders must act faster on climate change” September 30, was “How could they? There are none.

When about a decade ago I was an Executive Director at the World Bank, I often held that since at our board no one spoke for the world at large, and really only parochial interests were represented, we should perhaps in the name of transparency, rename us the World Pieces Bank, or perhaps the World Puzzle Bank.

And I also held and hold that if we allow acting on climate change to become just another rent seeking opportunity, or a political agenda pushing opportunity, we are all toast!

Having had the opportunity of flying over many environmentally affected areas, I really do not need a lot of scientifically studies to know that something is very wrong with how we maintain our planet, or our pied à terre as I like to call it. But what can we do about it?

I have no definitive answers of course, but I do firmly believe that impeding “climate change” to become an issue which belongs solely to an elite, and engaging the full attention of the ordinary citizen, is an absolute must.

For example when reading about the Copenhagen Climate Change Conference of 2009, I got upset about how often it was implied that the solution was the exclusive responsibility of the rich countries, as if the poorest human being, in the poorest of the countries has not exactly the same right, and duty, as an indigenous of the world, to participate in the challenge.

And to stimulate such citizen participation, and by which I mean immensely more than “civil society”, creating a visual aide, such as an environmental Google-map that tracks the climatic and environmental changes, and make it accessible in all schoolrooms around the world, could help.

If the threat to our earth is truly serious, something that I have no real evidence to doubt, it is clear that we cannot leave its solution to politicians, and green rent seekers. If we do so we are toast.

Stealing and rent seeking has nothing to do with “social contracts”

Sir, your reporters, on the issue of fuel subsidies, April 19, wrote: “For oil producers such as Venezuela… fuel subsidies are part of the social contract and relatively manageable.”

Venezuela sell’s its gasoline locally for less than 2 US$ cents per liter. Your reporters should never ever confuse blind and irresponsible rent seeking by which, those in power, usually with cars, rob the implicit value of the petrol or gasoline, from those poor and not in power, usually without cars, with any type or form of “social contract”.