Thomas Piketty, New Fascist?

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On the face of it Piketty's work is orthodox, envy-ridden social democracy. Backed up by dodgy charts. But when we poke around at the words in the FT article there's an odd smell:

US inequality may now be so sharp, and the political process so tightly captured by top earners, that necessary reforms will not happen – much like in Europe before the first world war.

Here's the thing - the masterpiece created by the Great War was Fascism. It's authoritarian, directed, Listian autarky was the solution to those very problems that Piketty alludes to - essetially the excesses of capitalism.

The essence of the the New Fascism is that there must be a new authoritarian, directed, Listian solution - but petty nationalist autarky is rejected just as is personal liberty, choice and the idea of individual achievement. The fruits of success are not ours but the state's to determine.

The deepest irony of the New Fascism is that its adherents use the old discredited Fascism as a threat to beat us into submission. We are told that we must embrace their new order or suffer a return to that frightening past, a past that scarred Europe so terribly:

Short of that, many may turn against globalisation. If, one day, they found a common voice, it would speak the disremembered mantras of nationalism and economic isolation.

But Piketty and others propose the same solutions as did Gentile and Spirito - that identity is subsumed in a wider society and individual sovereignty is a false aspiration. Above all this is the central idea that the state must enforce society's sacrifice for the greater good. In this case it is a vain search for material equality built on the idea that we are unequal because the powerful have stolen from the weak.

I don't comment here on Piketty's economics but on the imperative behind his words - that liberty must be sacrificed on the altar of equality. This is the New Fascism.

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Larry Summers embraces the New Fascism

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“All within the state, nothing outside the state, nothing against the state.” Benito Mussolini

There's been a deal of comment about a little spat between Larry Summers (who is I discover a top American lefty economist chap) and George Osborne, Britain's Chancellor of the Exchequer. The debate between the two can be summed up as "hey you, yah boo, I'm right and you're wrong." Except it wasn't as witty or intelligent as that. It came across as a rather pompous version of an exchange on Question Time (and just as edifying).

However, I was curious about Mr Summers opinions and what he supposes we should be doing differently. Essentially the gist is here:

"It’s tragic that we are bequeathing to our children a deficit in the form of massive deferred maintenance on our infrastructure. If at a moment when we can borrow money for 30 years in the 3pc range, in a currency we print ourselves and the construction unemployment rate is in double digits, if that is not the moment to fix Kennedy airport, when will that moment ever come?"

Rather than have a money deficit, we have instead an 'infrastructure deficit'. Which supposes two things - we actually need that infrastructure and, more importantly, government borrowing is the only way to provide it. At the heart of this argument is a belief (which has nothing at all to do with macroeconomics but is absolutely an ideological position) that, in Isabella Kaminska's words:

...the only productive use of capital is increasingly through government spending.

This ideological position - the conviction that the only good investment is through government - is a core tenet of what I call the 'New Fascism'. This is a philosophy that adopts the same assumptions about society as Mussolini and his colleagues did in designing the Fascist state - for draining the Pontine Marshes read floating airports, high speed railways and freeways rammed through previously attractive small towns.

If (and this is a big question) it is right to raise government borrowing, why does Summers surmise that spending it without return on expensive and unproductive infrastructure programmes is better than cutting taxes on businesses and consumers? If businesses have more money will they not invest that money? And will that investment not generate a return - a real one - unlike those grand projects Larry likes?

And if we cut taxes for consumers won't they spend that money buying the things that the businesses are making? Perhaps on houses, maybe on cars? Isn't that a rather more efficient approach to stimulus that tying loads of borrowed cash up in incompetent government procurement programmes?

The truth is that Larry Summers is a New Fascist - wanting a planned, directed, controlled, state-led system rather than an untidy, exciting and people-led system.

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