The great debt debate | Thomas Piketty + Michael Hudson I RSA Replay

hi uh i'm nikan david's wife um and this is  an event in corner in the owner of the first   anniversary of david graber's passing and in the  spirit of his rejection of academic arrogance   and our urgent need to get out of the  crisis we are in we set up the art project   fight club welcome to the first one of the series  today we're talking about what is that the next   one will be about the nature of money david was  probably the most famous anthropologist of our   times and the best-selling offer even still he had  a food in his computer called nightmare in which   he dumped all bills bureaucratic papers invoices  and papers of his academic achievements he regards   the idea of isolated individual as a myth  what interested david much more was a dialogue   he believed that it is only in dialogue in the  class of opinions where answers are formed and how   human consciousness is born we humans according to  david are the product of our social relationship   that's why it was so important for him  to be involved in a situation in which   people think and act collectively and david  grabber foundation will follow the same path   so we have several projects lined up from  collective education of his archive to publishing   the anthology of the fight club starting from the  first debate between david greber and peter thiel   as fight club official cheerleader i urge our  fighters to be emotional provocative and bold   because the questions that we'll discuss concern  us all if enough of us will change the way we   think about what deb mean then the social design  of our society will change i'll change along with   this so this is just that as david described  what a revolution is a change of common sense   and the collective imagination and david argued  that the main achievement of the paris commune   despite a defeat had been the transformation  of the common sense about how we live together   so most of what we consider ordinary in our  cities public transportation street lights   public schools the eight hours work days and even  the not yet achieved equal pay for women and men   originated in the paris commune and it  was then considered to be a social madness   so the same can be said said about occupy those  10 anniversary we celebrate it now just as we   celebrate david's life occupy didn't take over any  territory he didn't have leaders and government   but it did change the public discourse it's become  important to talk about equality poverty and that   so after after occupy we'll look at the world  differently speaking on death the position of   our fighters today are radically different  we want to i want to express my immense   gratitude to thomas piketty who replied to  my email although we didn't know each other   and agreed to participate in this debate i also  want to thank michael hudson who came up with them   many of the ideas that david graber built upon  in his book 5000 years of death and i really hope   that this debate can radically change the way we  think about the world and what else could be more   exciting so i passed to liam who uh thank  you for agree to moderate his discussion   well it's my great pleasure and it's wonderful  to welcome everyone from all over the world uh we   share some commonalities in our human experience  and one of them is that we tend to come into the   world most of us sort of under-capitalized for the  experience so in a sense most of us are united in   debt and that's why it's especially exciting to  have two such brilliant thinkers help us unpack   this difficult subject from the suitcase where we  like to push it way into the back of the closet   today i'm very delighted to welcome my friend  michael hudson he is a distinguished professor   of economics at the university of missouri kansas  city he's also a researcher at the levy institute   at bard he's a former wall street analyst and  a frequent commenter on economic matters and   historical matters he's written extensively about  debt and as you just heard from nika his work was   a great inspiration for david graber he can  also tell you more about the ancient sumerians   than you ever dreamed of knowing so hopefully  we get to hear a little bit about that today   uh welcome professor hudson and welcome also to  tomati he is the um professor at the e-h-e-s-s   and the paris school of economics and he's also  the co-director of the world inequality lab   uh you know him for going viral with his books  telling us why most of us don't have any money   of course there was his smash hit capitalism in  the 21st century and more recently which you must   get if you haven't read it capitalism and ideology  uh welcome to you professor pikati and we'll start   out having each of you tell us uh your thoughts  about debt your position on the topic and you'll   have about five minutes each and uh i think we'll  start with you professor hudson i thought we're   going to let tom go first otherwise it's going  to be fine all the things i agree with that he   wrote and let him say what nobody wrote that's  fine with me thomas would you like to go first   uh yeah whatever is it's fine i mean so okay  let me say a few words first let me you know   thank you for organizing this and and you know  i was very you know when i received nika's email   you know i felt you know where you know  i felt very emotional because you know i   remember very well the discussion we had with  david grubber back in 2013 in paris which was   right after my book capital in the 21st century  was first published in french it was not yet   available in english so david has not read it but  i had read this book and on that um the first ten   thousand years and and um and and this was you  know this was for me this was really a very um   you know powerful reading and this made me think  a lot maybe this was not so visible in capital   in the 21st century because i had written it  actually before i i could read david's book but   but you know to me this was this was really  a major and this is a major contribution   so what about that let me simply say that you know  there will be in the future there will be again   other debt constellation massive debt consolation  so you know there are long cycles about that which   which of course david uh talks about when we go  back to ancient history or to sumerian times and   as michael has has been has been working on and  so you have this long-run cycle but you also have   you know a short more short-run history of of that  consolation a more medium-run history if you want   and i think it's very important to to remember in  particular that you know after uh you know there   are two modern episodes which i find particularly  striking in terms of getting that back to zero   or at least you know concerning a big part of  that the french revolution of course is a very   important example so you know this was a time  when the basically the political system did not   manage to make pay those who should have paid  for the public spending which was the nobility   so there was a fight flight toward that because  people who should have paid the tax managed on   how to escape and the solution was the french  revolutions and the fiscal privileges of the   aristocracy the conservation of that through  partisan inflation partly through taxation   and that's sort of one modern episode the other  modern episode which i want to to refer to is of   course uh after world war ii uh you know after  you know in 1945 1950 most rich economies had   public debt which were enormous you know even even  bigger than than today and they made the choices   you know the political choice through you know  very conflictual social movement political fights   in the end the choice was made collectively not  to replace his debt so this happens in various   ways you know inflation in some cases but  but some countries like germany in particular   which is viewed today as as very conservative in  terms of economic doctrine and ideology and which   in many ways is very conservative we'll  see after the election in a few days but   you know it's still going to be quite conservative  probably in any case but in fact after world war   ii developed applied the solution to to  get rid of the debt of the past through   a monetary reform and through progressive taxation  of very high wealth holders in order to in effect   compensate the lower wealth holders for the uh for  the monetary reform and the the loss of links that   was implied by military reform so that in the  end i mean this is not job this was certainly   not a perfect system but as compared to all other  ways of getting rid of past that you know this was   certainly one of the one of the most equitable  or at least or the least unequitable way to   to address the problem and you know i think we  will have we will have other episodes like this   in the future so nobody knows the form it will  take you know the kind of political mobilization   you know occupier was was was an important episode  there will be other you know there are other you   know social movement tax revolt you know if you  think of the yellow vest movement in france a   couple of years ago which was a major tax level  to get rid of a very what i think was a very uh   an equal project to raise the carbon tax basically  on the poorest group in society and and there will   be you know to address uh climate uh challenges  but also you know all sorts of social and   developmental uh challenges uh we will we you know  societies will have to to to to find ways of of   getting rid of their debt right now we have this  illusion that you know we can just take it on the   central bank offer and and forget about it but you  know i think it will be more conflictual and more   less peaceful than this because it's  always a matter in the end of redefining   a power relation between different social groups  so it cannot be completely peaceful it involves a   conflicting social interest it involves different  groups of people with different agenda and you   know in many ways we have we are in a situation  which is not i think completely different from   the one at the time of the french revolution which  is at the you know those who those who should pay   have somehow managed to design a legal system  and a political system so that they can escape   taxation and and at the same time middle class and  lower class people are you know fed up of paying   the bill for them and so and so the solution is  more and more debt but you know at some point   there will have to be something else will have to  happen and i think it will be roughly the same it   will have to be roughly the same solution as it  was you know 200 years ago which is the end of   fiscal privileges of a small group in the  population that has that has managed to   escape taxation for for for too long so  that's okay that's a sort of initial uh   initial perspective and and that but you know  of course i'm very interested to hear michael   and continue the discussion thank you michael  it's uh floor is yours okay well i certainly   appreciated uh the the book that you published  on the uh accumulation of uh wealth and how it's   concentrated in the hands of the uh one percent  i think everybody knew intuitively that this was   the case but uh economists being who they are  they don't really accept something until it's   all there in statistics and uh you you did uh  just a wonderful job in tying together uh all of   these statistics and uh showing how the degree to  which wealth is uh the one percent of concentrated   wealth in every country and you also made i think  the most important point where you said what's   caused this and you came up with the broad answer  that i agree with you said that financial returns   exceed the overall rate of growth and if financial  returns exceed the overall rate of growth of   course you're going to have the rich getting uh  richer uh and richer uh and i think the reason   uh where we uh uh have a different approach is how  do you explain all of this well uh when your book   came out a number of writers said well this is uh  uh the marks of the uh uh 20th century and uh uh   you showed that there was an abrupt turning point  uh in 1980 and uh everything had been changed   there and i think the one percent looked at your  statistics as a success story they said yep we're   really uh doing better than everybody else and as  uh the head of goldman sachs said that's because   we're so uh productive uh but i think the reason  your book was praised so much uh in the west is   you didn't come up with a threatening political  solution uh and uh when they said this was the   mark book is the marks for modern time that meant  don't read marx read this book and i suspect that   after you put all of this enormous good work  into the uh statistics that you did on wealth   and income i think the publisher probably said  well what are what are your solutions well you   just came up with uh the solution that you uh said  in the book and that's to tax income and wealth   uh this is not a threatening solution because  there's no way that you're going to tax wealth   as long as you have offshore banking centers to  conceal wealth as long as you have what the oil   industry put in place a hundred years ago the  flags of convenience pretending to make their   uh income abroad the fact is uh the one percent  don't really make much income they're ideal if   you're a billionaire you want to do what uh half  of american corporations do you don't make a penny   of taxable income uh that that's uh the whole  problem so i want to go into what uh your   book was not about uh i'm not criticizing  you for not writing a different book but   it's what i write about and that is why what  is it that has created this uh uh disparity   and why is it widened so much since 1980. well  the most obvious reason is uh interest rates   reached a peak of 20 in uh 1980 and they've gone  down ever since well in the late 1970s uh my old   boss's boss at chase manhattan paul volcker  said let's raise interest rates to very high   because the 99 are getting too much income their  wages are going up let's uh raise interest to slow   the economy and that will prevent wages from going  up and he did and that was a large uh reason why   carter lost the the election to ronald reagan  interest rates then went down from 20 to almost 0   today the result was the largest bond market boom  in history bonds went way up in price the economy   was flooded with bank credit and most of this  credit uh apart from going into the bond market   went into real estate and there is a uh symbiosis  between finance and real estate and also between   finance and raw materials and also like oil and  gas and minerals uh extraction natural resource   rent land rent and also monopoly rent and most of  the monopoly rent has come from the privatization   that you had from ronald reagan margaret thatcher  and the whole neoliberalism uh if you look at how   did this one percent get most of its wealth well  if you look at the forbes list of the billionaires   in almost every country they got wealth in  the old-fashioned way from taking it from   the public domain in other words privatization  you have the largest privatization and transfer   of wealth from the public sector to uh the private  sector and specifically to the financial sector uh   in in history uh sell-offs and all of a sudden  instead of uh infrastructure uh public health uh   other uh basic needs being provided at subsidized  rates to the population you have uh privatized   owners uh financed by the banks raising the rates  to whatever rate they can get without any market   firing power uh in the united states the  government is not even allowed to bargain with   the pharmaceutical companies for the drug prices  so there's been a huge monopolization a huge   privatization a huge flooding of the economy with  credit and one person's credit is somebody else's   uh debt so you you've described the one percent's  wealth in the form of uh savings but uh i focus   on the other side of the balance sheet this one  percent finds its counterpart in the debts of the   99 so the one percent has got wealthy by indebting  the 99 uh for housing that is soared in price 20   uh just in the last year in the united states uh  for medical care for uh utilities for education   uh the economy is being forced increasingly  into debt and how how can one uh solve this   taxation will not be enough the only way  that you can uh actually reverse this uh   concentration of wealth is to begin wiping out uh  the debt if you leave the debt in place of the 99   uh then uh you're going to leave the one percent  savings all in place uh and these savings are   largely tax exempt uh so basically i think you  you uh left out the government's role in this   wealth creation of the one percent so your  finance has indeed grown faster than economy   absorbed real estate into the finance insurance  and real estate sector the fire sector finances   absorb the oil industry the mining industry  and it's absorbed most of the government so the   financial wealth has spilled over to become  essentially the economy's central planner   it's not planned in washington or paris or london  it's planned in wall street the city of london   and the paris ports the economy is being managed  financially and the object of financial management   isn't really to make money it's capital gains  and again as your statistics point out capital   gains are really what explains the increase  in wealth you don't get rich by saving the   income rent is for paying interest income is for  paying interest you get rich off the government   basically subsidizing an enormous increase in the  value of stocks the value of bonds by the central   banks which have been privatized and uh the reason  that this is occurring is that uh the largest   public utility of all money creation and banking  is left in private hands and private banking   in the west is very different from what government  banking is in say china government banking would   create credit for public uses for what the  economy needs to grow in the united states   and throughout the west banks create credit  to slow the economy from growing they make   loans only not to create new means of production  new factories and uh they create uh they make   loans against property already in place mainly  real estate already in place 80 of bank loans   in america and europe are for real estate uh they  make loans for corporate takeovers uh they make   loans to buy other companies they don't make loans  to build new factories which is what a government   creation money creation in say china china would  do so as long as you leave banking and credit in   private hands you're going to have banks trading  their product debt and the more debt they create   the more debt service that the borrowers the 99  have to pay the banks in order to obtain a house   or an education or medical care or just to break  even and the more money they pay to the financial   sector the less they have to pay for goods and  services so as the economy polarizes between the 1   and the 99 the economy as a whole shrinks because  more and more of its income is spent not on   production uh and consumption it's spent just on  bit service so my solution is you have to restore   banking and credit in to public hands to prevent  the kind of lending that makes asset price   inflation secondly uh you talked about taxing some  taxes are more important than others i don't think   that as long as there are as long as the banks  and the financial sector write the tax codes   as long as the government lawmakers are basically  employees of the financial sector who finances   their political campaigns uh you're not going to  be able to tax them or to close down the fake uh   transfer pricing that corporations use to  pretend not to make money so uh you have to tax   the source of uh the money that pays interest  to the banks itself and that source is mainly   economic rent it's land rent if you would have a  tax on the increase in land values if you'd have   a land tax which is what the whole 19th century  was about adam smith john stewart mill uh marx   then if you would not have this uh increased  rent being paid to the financial sector to be   monopolized by the one percent uh so you you'd  have to change the the way in which the tax code   is based away from just overall income and wealth  which is really not very practical in today's   political situation you'd have to have a land  tax and a natural resource tax and to get rid   of monopoly rent you have to return basic key  uh infrastructure to the public domain where   it was before 1980 so that uh basic needs can be  supplied at low prices not uh creating monopoly   for uh the one percent uh and i guess i'm saying  you have to realize that finance has used as well   to take over the economy and this has to  be reversed uh because uh once you have   uh wealth taking the form of uh claims uh  loans and claims on other people's debt   we'll count you up compound interest any rate of  interest is a doubling time and compound interest   is always going to grow faster than the economy's  real growth and the only way to prevent this isn't   simply to lower the interest rate which you've  done today 0.1 uh the only solution is to wipe out   the overall debts that are stopping economic  growth and these debts are the savings of the   one percent the good thing about cancelling debts  is you cancel the savings of the one percent   and as long as you leave these savings in  place there's not going to be a solution   thank you so much michael and tomah feel free to  respond to this idea of uh canceling debt yeah   you know i i i don't feel like we have any major  uh disagreement about you know everything you just   said michael uh let me say also regarding you know  my book capital in the 21st century you know it's   a book that has lots of limitations and and you  know i have on many issues you know i've tried to   to to to make progress since then so this  was written 10 years ago i wrote capital   and ideology much more recently which i  think addresses some of the shortcomings   but this is and still this book has also a  lot of limitations so you know i'm trying to   make progress all the time and i certainly  don't pretend that all the answers are in   you know one book and that being said i think you  know many many things that you've mentioned you   know again i fully agree with that i as i said  you know the consolation of that is is is very   important because as as you very well say the the  part of the increase in private wealth at the top   was really made um through you know privatization  of public assets increase in public debt   you know there's one one statistic which i which i  stress a lot which is that if you look at the net   wealth of the public sector uh you know the net  wealth of the government so government assets   minus government debt it used to be you know in  the 1970s net public wealth was you know between   20 30 percent of total national wealth so you know  net private wealth was bigger you know was like 70   or 80 percent but still net public waste was 20  30 percent in germany in the u.s in france in   britain in japan so that was you know substantial  part of everything there was to own in terms of   of marketable assets in society belong to the  public domain you know say around one quarter   or between one quarter and one third today so you  know three four decades later it is uh close to   zero or actually negative in in in the u.s or in  the uk in the sense that the public debt is bigger   than the public assets because many public assets  were privatized and and public debt increased   and you know in effect there was a transfer of  public wealth uh two to private wealth holders   and that's a you know that's a very important  evolution which you see the most extreme case of   course will be russia and post communist country  where you know you just transfer all the public   wealth and you make oligarchs out of nothing but  in fact we've all you know all countries have had   this kind of trajectories over the recent decades  so that's really an important part of the story   that i've been trying to tell so you know again  i i don't think we have any disagreement on this   at an even broader level you know it's it's all  about power and and political institutions so   as you said you know as long as the system of  of political finance and you know parties and   campaigns and media and think tank you know  are largely controlled by by large wealth   holders you know our collective ability to  change the distribution of wealth and the   you know through through taxation or that  consolation and or what you know whatever   the method is going to be limited so it will take  major political fights and in some cases you know   changing the political rules of the game and the  political institution to to to changes and and   you know the good news is that this has  always been like this or this has always   and and still sometimes you know it has worked  in the in the past but it has worked you know   i mentioned the french revolution you know of  course that's a huge popular mobilization uh also   in the 20th century i mentioned after world war  ii after world war one well let's be clear it's   only because there was a very powerful uh you know  labor movement a socialist movement and communist   counter model in the east which in the end put  pressure uh on the on the uh and you know and on   the in effect and the elite governing elite in in  in the west so that they they they had to accept   a number of decisions you know which which were  limited in their scope but still which transform   the economic and social system in in a very  substantial way as compared to the pre-world   war one and 19th century economic system but it's  only through this enormous political mobilization   and collective organization and you know it will  be the same in in the past so just one last point   you know you mentioned the case of china and you  know i think the chinese counter model can can   contribute maybe in the future also to sort of put  pressure on the west to to to change the system   also at this stage you know we are not um you know  the the big difference of course with the soviet   counter model is that the soviet control model  you know you had a a sort of a narrative and a   proximity between socialist and communist  party and the labor movement so that   in effect the elite in the west felt threatened  by the by the by this counter model and this   contributed to reinforce to some extent uh until  a certain point of the labor movement in the in   the in the west well until the final fall of the  soviet union which of course reinforced a lot uh   you know capitalist ideology and and  and everything we've seen since then   the chinese model you know you mentioned the fact  that the banking system is working a bit more to   the service of the real economy and infrastructure  and investment than the banking system in the west   but by and large you know the chinese  model you know looks more and more like   a sort of perfect digital dictatorship  and you know nobody really wants to   to to copy this and you know apart from other  government elites you know would like to to to   you know to keep quiet their population and  their grassroots movement as efficiently as   the beijing regime is doing but apart from  you know no no nobody in the world you know   no no collective movement in the world wants to  wants to look like this so this also limits the   the the sort of the pressure that  this this contour model can can put on   on on on on the on the west but you know at the  end of the day i think this can be one of the   fourths which still can induce uh for instance  you know when we talk about the taxation of   multinational in 2021 which uh you know what has  been decided by rich countries you know is very   limited you know they claim they have solved the  problem of multinational taxation but it's it's   a bit ridiculous how little they have done the  minimum tax rate of 15 percent is ridiculously   small and also it's only sort of sharing sort of  rich countries are sharing between themselves you   know the tax base that is currently in tax haven  but countries in the south in the global south   basically don't get anything and i think that's an  that's an issue that's something an area in which   the pressure of the chinese counter model in  the future maybe will contribute to induce   rich countries to to to to to to to have a bit  more you know inclusive attitude towards the   the south also well if they don't do  it i mean you know if they don't do it   in effect china will finance the investment and  the infrastructure investment that is needed in   africa and in south asia and and that's that's  you know this is at some point you know fully uh   western countries will realize that they have to  change something otherwise they will just lose any   any influence and any capacity to influence the  world yeah okay so this is getting us very far   from the initial discussion but uh i hope  this is still more or less relevant michael   feel free to respond well it would not surprise  me if we end up in agreement uh with what to do   uh and i realized that uh uh you wrote your book  about your topic and i wrote my book about what   to do about it i just want to uh point out where i  think we do have i have a disagreement uh my point   is that compound interest is always going to grow  faster than the economy's uh real ability to grow   so in the end debts can't be paid right now you  see a lot of third world debts that uh if the   third world better countries have to pay uh their  foreign debts under as the world economy slows   down they're going to be subject to austerity to  the world banks and the imf's austerity programs   and they're going to be kept in poverty uh is it  really right that they should be kept in poverty   just to enrich the bondholders of the one percent  the one percent will say yes that's why we're   the one percent so that we can impoverish  other people that's our liberty our liberty   is the right to impoverish other people and reduce  them to dependency uh that will happen if you do   not write down the debts uh it's already happening  in the united states to the student debt uh crisis   where students uh have to pay so much money uh as  they fall behind on their student debts that they   can't afford to take out mortgages to buy homes  uh and you're having the home ownership rates   plunge in the united states that's the result of  leaving the debts in place uh the mortgage steps   uh uh are causing shrinkage so there is no way  to get out of this economic polarization without   a debt write down and that's something that  is too radical and uh uh when we talked about   when i was referring to what china's doing i'm  referring to what it's doing today and tomorrow   about uh the uh real estate company evergreen  uh uh china has a choice is it going to leave   evergreen's real estate debts in place and every  grand uh as a real estate company is two to three   percent of the entire chinese economy if it  pays the foreign creditors and the domestic   one percent of china it's going to impoverish the  uh the employees of evergrand it's going to make   housing prices more and more expensive in china  china has had a debt finance housing boom uh   if you leave the debts in place then uh you're  you're going to impoverish china and obviously   china is going to say i'm we're not going to put  the creditors first we're not going to do what   the west does and say the sanctity of debt service  debts are uh that you owe or sacred uh it's worth   sacrificing the economy it's worth plunging the  economy into poverty just to preserve the wealth   of the one percent i think china's uh is going to  make the opposite decision and say we're not going   to commit political suicide we're going to operate  for it's a socialist economy and when it comes to   debt and credit thank god we have our banking in  the public domain and since the public domain the   people's bank of china is the creditor they can  afford to write down the debt without having any   political backlash because it's cancelling that  so do itself uh which is a great advantage uh and   it's also uh as for the private bond holders uh  it's going to say well sorry bondholders you made   loans to a company that was way over leveraged  uh already uh the american bond rating companies   have reduced their bond rating to chunk so you  knew what you were buying if you continued to hold   bonds that uh fitch and other bond raiders moody's  all say or junk and you lose your money well   you took the risk you got a high rate of  interest now you're you're paying the price   that's how markets work uh and uh that really  uh is the argument and i think uh you have to   uh obviously what i'm suggesting is a radical  step just as you're suggesting of taxing wealth   would require the radical step of closing down  offshore banking centers of simply negating uh if   banks would simply erase all of the deposits  they have from the offshore banking centers from   the cayman islands from from panama from uh from  liberia to all the places that began by to be set   up by the mining companies the oil companies  and then were set up beginning in the 1960s   essentially by the cia to finance  the vietnam war by making america   like england the home for criminal capital  for flight capital all this uh all this flight   capital and the kleptocracy that you mentioned  in russia all this really should be wiped out   and if you leave this capital if you leave this  one percent in place the economy is going to be   sacrificed and shrinking is it worth shrinking  the economy just to leave the one percent in place   and if you challenge them that's pretty radical  that's really what i think marx would say today um thank you and i i wanted to just pitch  a question to you all before we turn over   it over to some questions from the audience um  you've both mentioned it's it's not the elephant   in the room it's sort of the tyrannosaurus rex in  the room i think tomorrow as you put it those who   should pay design the system uh you both have  commented on this enormous problem that we have   every time we have good ideas ranging from just  a tiny little tax on the rich you know to the   more radical ideas that michael is suggesting  we run up against this tyrannosaurus rex so   where do you all see the most effective  pressure points coming from right now um   in terms of getting anything  accomplished on debt where where   is the effective mobilization potentially  coming from or that you see developing now maybe let me first say you know we need that  consolation you know we need a regular debt   consideration i i i don't think at all this is  a radical or too radical if anything you know i   think this is not radical enough because i think  in addition to that cancellation we need also   to redistribute the assets to redistribute  wealth and so when i'm talking about taxing   wealth it's also redistributing wealth so giving  wealth to people who don't own anything so it's   not only counseling their debt it's also  giving them positive ownership rights in   companies in housing so so yeah we i think  there's not really no no disagreement on this   now what about you know the the pressure that  will come well two things first you know i   think the the real problem is the system of free  capital flow so you know the idea is that you can   um you know we have created an international  legal system where in effect we have sacralized   we have almost sacralized right you know to to  you you accumulate wealth in a country using the   public infrastructures your education system you  know the health system of your country and then   you can push on a button transfer your assets you  know another jurisdiction and nobody knows where   you are nobody and but you know there's nothing  natural in this system this was made by a set of   international treaties a particular legal system  and and that's just not this can we so individual   countries i think you know i have to get to get  rid of that and so in the case of europe you know   you cannot wait for unanimity to get rid of that  so individual countries have to say okay you know   i'm not against the circulation of investment  and capital goods but it has to come with   a common taxation with common regulation common  rules you know this cannot just be like this you   know you push on a button we don't know where  you are so this has to to to go uh um so you   know some proposals that was made by like bernie  sanders in the in the presidential campaign in   the u.s last year early last year this seems like  ages ago but this was only 18 months ago you know   when he said okay we you know you can if you want  to escape my federal wealth tax you can go away   but then you will have to buy a 40 percent exit  tax you know you will have to to keep 40 percent   of your assets in the us if you want to go ahead  you know that's clearly a big change as compared   to free capital flow and but that's the kind of  change we we need to you know we need we need to   we need to consider so how is this going to happen  well first we need to realize that you know the   free capital flows treaty agreement which came a  lot actually in fact from europe in the 1980s but   also from washington of course but it was a  co-production if you want with this has to   go and individual countries have to to escape  that other other source of change and pressure   you know i think climate change is going to put  a strong pressure in the sense that you know i   think when people see more and more catastrophic  climatic events you know i think attitudes toward   globalization and attitudes toward inequality in  general you know can change very quickly because   you know at some point i think people will  not find it funny at all to have all these   billionaires you know giving lessons using  their private jet doing your space tourism   et cetera you know at some point you know i think  nobody is going to find this funny at all and   there can be a very quick and and fast you know  complete change in attitude following this and you   know i think the chinese sort of counter model  with all its good and bad very bad sometimes   aspects can also be a factor of change thank you  uh michael would you like to respond to that yeah   i don't see a change within the existing  system i guess that makes uh me radical uh uh thomas did not mention the main point that he made  in his book which was uh his number one suggestion   was tax inherited wealth because most wealth is  inherited that's one of the things that he's found   absolutely right great idea sam simone uh  the great french economist had this idea   when the very first book he wrote around 1806  it made him very unpopular and he soon realized   that that's one there was no way of doing that uh  from some simone on to the entire 19th century of   british political and french political economy  they all agreed uh with smith and the others   you have to uh there's a landlord tax the the  one percent in their day were the landlords you   have to tax away the land rent and make that  the public uh tax base not income not taxes on   consumer goods not taxes on capital because you  want good capital investment you want fortunes to   be made in a good way that add to the economy's  productivity you don't want them to be made in   a predatory bad way uh the whole fight to tax  economic rent and to even recognize that most   income is unearned when you talk about the uh  income disparity almost all this disparity is   unearned income it's economic rent it's not  income that's made by increasing uh production   it's not income that's made by increasing living  standards it's just predatory rent seeking from   special privileges that the wealthy have gained  from government and today it's not the landlord   class anymore as it was in the 19th century it's  the financial class and the raw materials class   uh and uh without dealing uh with this uh  cl structure i don't uh the system is going   to shrink and shrink and we've seen this before  we saw it in rome the same kind of polarization   and concentration of wealth in the roman empire  well the last stage of that is feudalism so we're   back to what rosa luxemburg said the choice is  between socialism and barbarism basically and uh   there's no other way to do it you can't  solve the problems within the existing system   because it's controlled already by the one  percent thank you michael and uh i'd like to   toss out a couple of questions from the audience  now uh we have a question about energy uh   one viewer asks isn't energy as much a source of  value as land should we have progressive taxes on   energy use as well or instead of land value tax  uh first of all land doesn't have any value nor   does uh energy have any value we're talking about  economic rent so part of the financial sectors use   part of its uh uh income to uh subsidize business  economic schools and universities to change the   vocabulary our vocabulary is different from the  realistic vocabulary that we have in the 19th   century land doesn't really have a value nature  creates it a value is created by people working   and creating it but nature provides other land  and the public sectors spending on infrastructure   creates the rent of locations which increases land  prices nature provides other oil so uh economic   rent is what we're talking about and this economic  rent of land and oil and minerals and monopolies   belongs in the public domain so that you don't  have to have an income tax and excise taxes   and value-added taxes on labor uh and industry  you should tax the rentiers not labor industry   that's that's what a free market meant in the 19th  century and it means inverted today a free market   is the right for the rentiers to avoid taxes and  shift the entire tax base onto labor and industry   and they do this by twisting around and perverting  the english language to get rid of the analytic   language that you need to even explain how some  in most income and most wealth is unearthed   uh how about you tamar do you think that we need  to clarify how we talk about and define value   yeah well you know in the case of energy  first we have to clarify the fact that you   know there are some sources of energy which  which create a negative value because of   of of global climate change and climate working  and warming and you know all the negative   external effect of using some energy so we have  some to make some of the energy uh sources just   illegal you know we have to keep some of the oil  in the ground we have to stop looking for new oil   and gas so you know so the solution to some of  the of the energy questions we have is just to to   to make illegal you know the use of certain energy  and to to to move to other energy so that's part   of the answer now if we if we have done that  and we deal with with energy that don't have the   the negative this much bigger negative impact  on mankind than their positive productive impact   then you know redistribution of wealth must be  about all forms of wealth you know whether it's   rent or energy or financial assets or i  was seeing you know we we need to have a   permanent circulation of wealth and power so you  know that's the way i i view you know taxation of   wealth is will be a permanent you know progressive  tax on net wealth which in effect will will will   wipe out all the biggest uh wealth right away you  know say up to 90 percent tax per year for you   know for for billionaires but among you know there  will still be some people who want 100 000 dollars   some people who earn 1 million or 2 million but  there will be a permanent circulation of wealth   holdings within within this limited uh wealth  gap that that will still exist and this should   be for all forms of wealth you know whether it's  land or housing or whatever whatever the origin   thank you uh we seem to have quite a  number of students in the audience today   so we have a question about student  debt and what types of resistance   students could make to uh to change the social  relationship of debt that they get forced into   do you have any suggestions on rhetorical  points that students need to engage with in   in order to gain support for a jet jubilee  on their debts michael you wouldn't i wish   there were i don't see any because uh the uh you  have a president of the united states who wrote   the law saying it you're not allowed to wipe out  student debt as a result of bankruptcy the basic   the american philosophy is the way to prevent  a middle class from developing is to keep them   basically so deeply indebted that uh they're  afraid they have to go to work they're afraid   to leave their jobs uh they can't afford houses  the the purpose of student debt is to make them   dependent under socialism on in europe china and  old countries uh education was free and the whole   idea was uh it's you need education in order to  grow uh under the finance capitalist system and   this is not industrial capitalism anymore this  is financial capitalism very different you use a   basic need as a means of saying your money or your  life if you don't pay us uh then uh you'll you'll   just have to forego your education so the price  of uh getting access to a labor force is to go so   deeply into debt that you're going to have to work  for a living and you're going to have to work for   what we pay you there's a class war on and you  got to realize that and there's very little you   can do with students because if you don't right  now i guess if you all stop paying the debt uh   make the government for uh throw uh 20 million of  you in jail they can't do it uh the only thing to   do i guess would be a strike couldn't mean well  they're going to uh try to uh go after your   credit rating they're going to try to uh fight  you you you have to back politicians who are   willing to change this and unfortunately there's  no party that's uh in favor of canceling student   debt or any kind of debt in the united states  because the political parties are subsidized   by the banking in the financial sector so  uh i don't see uh i don't see a way out   tomorrow yeah well i agree with michael that with  this government and with this president in the us   you know it's probably going to be difficult to  get a lot going but and i also agree that the   entire political system in the u.s in a way  is so corrupt by money and the way campaigns   are financed and you know the way media also are  financed and are biased in the way they cover the   different possible candidates this makes it very  difficult that being said uh again if we go back   to 18 months ago you know there were candidates  in the in the democratic primary which uh you know   together you know bernie sanders elizabeth i mean  they don't put them exactly together of course   but but they add a substantial share of the word  and on the issue of student debt you know i think   different things could have happened with  with a different president and a different   majority so i think it's it's important also  to to to to to be helpful and to try to prepare   you know what will be a more successful  coalition or a more successful political campaign   in the future and it's important to always  remember that as as michael was saying the   true source of economic prosperity is not  financial capitalism investment in education   investment in the real economy in infrastructure  and you know when the in the middle of the 20th   century in the 1950s 1960s when the u.s had were  in a situation of economic dominance over the rest   of the world it was not through extreme financial  inequality except you know you had 19 percent top   income tax rate after roosevelt and but you had  a big educational advance as compared to you   know at that time you had a 90 percent of a court  would go to high school in the us in 1950s 1960s   at the same time it was 20  30 percent in germany or in   france or so and this was this educational  advance which made prosperity historically and and   and we seem to to have forgotten this uh you know  in the us following you know since the 1980s but   so we we have to manage to put this back on the on  this agenda but that's that's of course that's not   that's not easy well thank you very much to uh  both of our speakers today i think you've helped   open our minds and and think about this topic um  a little more clearly even though we're still not   exactly sure how to overcome these um tremendous  forces uh that are working against us to find   solutions that uh really at the end of the day i  don't think anything either one of you has said   is truly radical in the sense of history i  mean we have as human beings we have approached   and confronted these problems before and there  have been good practical solutions uh that both   of you have offered so i wanted to just turn  the floor over to professor steve king now   and again thank you everyone for uh participating  in this conversation today thank you for our   speakers and thank you for the audience as well  i'm sorry that there was only one hour so there's   been over 70 questions asked we'd be here for  three hours trying to answer them so it took a   couple hours to make it make it worthwhile i think  i want to particularly thank thomas for being part   of this debate because one thing michael and i've  experienced so frequently is that we can't get   anybody in the establishment to join into  discussions with us outside the establishment   and i really respect you and honor you for  for doing that it also shows the tremendous   contribution that david made by being somebody who  can talk to everybody and everybody enjoys talking   to david we hope we can maintain that through the  idea of forthcoming debates and we look forward to   seeing you all there in the future installments  in the fight club so thank you everybody you

Channel: RSA

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Length: 57min 2sec (3422 seconds)

Published: Fri Sep 24 2021