The officers and soldiers in the trenches treated Baxter well. They had heard about his stand, and seemed to respect it. I presume that many felt they were being used on a foolish cause, and wished that they had had the courage to make the same stand. The real hostility came from the officers who remained well back from the front line.
My life dragged on from day to day, each day much the same. Rations were often short up there. The other men supplemented them from the canteen, but I was unable to as I had no money, what I had having been taken from me by the police.Twenty-eight men went out, only eleven returned.
Every day I went up the lines with a man in charge of me. One morning we started off, following the duckwalk in a zigzag course among the shell holes. As usual there was a certain amount of shelling going on. At a corner we came to some bodies lying side by side, wrapped up ready for burial. We walked on, glancing at them as we passed. I thought of them as individuals, of what their lives had been before, of the friends and relatives who would, in time, get this news. Not sentimentality, just as much fact as these corpses lying beside the track. I had felt the same about a dead German we had seen in a shell hole further hack, lying with his arms spread wide and the rifle still beside him. Just after we passed the corner a shell passed close to us and struck a bank a few yards to our left. We were knocked down by something - we did not know what.
When the earth heaved up by the explosion had fallen again we pressed on and found that the duckwalk had been blown up in places. Arriving at the brow of a little hill we - the man who was detailed for my escort and I- found we had lost sight of those in front. We were walking in twos with about ten yards between each pair. Presently we saw some of them in the distance. We left the duckwalk and took a short cut over some low-lying ground to catch up with them.
Halfway across my companion shouted "Gas!", adjusted his box respirator and helped me with mine. I do not know whether it was defective, but I found I couldn't breathe in it, at any rate while I was moving. At the last gasp, my labouring lungs unable to draw another breath, I pulled it off, thinking I might as well take my chance with the gas as die by suffocation then and there. I could smell nothing, but there was a dark blue haze floating among the shell holes. The other man persuaded me to put it on again. It was just as bad as ever, but by the time I was forced to pull it off again we were pretty well out of the area affected by the gas shells. It must, however, have had some effect on me. For weeks afterwards I coughed up black stuff.
We could see the other men going up a hill a little ahead of us. Afterwards heard that that hill was in dlrect view from the German lines. Shells were bursting between us and the men ahead. We paused for a moment, doubtful what to do, then went on. Shells began to fall behind us. As we hurried up the hill they came thick and fast and gained on us. When we got to the top of the hill we met the other men corning back. The shelling was closing in on us from both sides. We were surrounded by a perfect storm of shells. We all stood for a moment huddled together, the last thing we should have done.
The officer in charge of the party was standing close to me as the storm closed over us and I heard him call out "Every man for himself as he jumped over a bank. I had a quickened sense that something frightful was happening. The earth seemed to be like the waves of the sea, and struck me again and again. I felt a strange swaying motion, another bump and then utter darkness and suffocation. There was a violent tugging at my legs and before I could realise that I had landed head-first in the mud at the bottom of a shell hole, I came out choking and spluttering but able to breathe.
One of the two men with me in the hole - they had tugged me out - plunged his arms nearly to the shoulders into the mud, retrieved my helmet and slapped it onto my head. The shelling was still going on. One of the men said, "Come on, it's not good here," and we scrambled out. I gave one glance up, saw dark fragments falling through the air, and looked down again. We were knocked down several times, but not one of the three of us was directly hit. We came right on a little door that seemed to lead into the earth. It was a small dug-out over the top of a shaft. One man was there at the windlass.
"It's no good here," he said. "It won't stand a shell and I am expecting it to go any minute.
He directed us to a place about a hundred yards further on. At that moment a shell almost blocked the entrance. We scrambled out and found the other shelter, a wooden drive with steps leading deep underground. For the present we were safe. The others took out their cigarettes and pushed handfuls into my pockets. I did not know them and I thought it probable that they did not know who I was. I did not feel I could take their help and comradeship on false pretence, so I told them I was refusing service.
Don’t you worry”, they said. “We know all about you”, and they offered me more cigarettes.
Saturday, August 02, 2014
The officers and soldiers in the trenches treated Baxter well. They had heard about his stand, and seemed to respect it. I presume that many felt they were being used on a foolish cause, and wished that they had had the courage to make the same stand. The real hostility came from the officers who remained well back from the front line.
Friday, August 01, 2014
Baxter was sent up to the trenches too.
I remained with the Otagos and had nothing more to do with him. From that time I received the same food as the other men. A day or two later I saw him departing, no doubt to make his report to Simpson. He had done his best and the unpopularity he had gained in the doing of it - the camp cooks collected and counted him out the night after he had dragged Briggs - probably seemed to him most unjust. After all, he was only carrying out his orders.
Next morning I was standing in the hut alone, the others having gone out, when two men came to me and said they had orders to take me up the lines. "Very well," I said. "You can take me up, but I'm not taking on anything when I get there." All the way up they discussed my position and attitude in a very friendly manner. When we got up there the men in charge of me were told by a sergeant that he intended to give me no orders and, on their asking what they were to do with me, he laughed and said they could show me round. Accordingly they took me about and told me the names of the different positions; pointed out the crooked German lines and many gun positions. We spent the whole day in this way. They showed me how to duck from shell explosions and how to take cover when it seemed that none existed.
At night I went back to the camp. At this time I always slept and got my food with a hut full of men - seventeen of us there were. I found them perfectly friendly. The position of the objectors was the talk of the camp and the anger of the men was aroused against the provost-sergeant.
I lived a strange life at that time. I would not serve in the army and yet I was at the front. In one way I was isolated and alone, and yet I lived the life the soldiers did. I lay in holes and trenches with them round by Hellfire Corner, hour after hour until the shelling slackened or drove us out. I was only seeing a glimpse of the war, but it was enough to bring home to me its terrible reality.
I remember before I reached the front meeting men who had been there and thinking they looked hard and strange. Their faces had a drawn look and they seemed to have eyes like eagles. Now that I was amongst them I did not notice this. They seemed ordinary, but new arrivals looked as gentle as sheep.
I will not attempt to describe the battle front above Ypres, but will try to convey the impression it made upon me. It looked as though a herd of prehistoric monsters had chewed and rooted up the earth for miles around. Not a sign of anything green and not a chance for anything to grow. It was part of the front that had been taken and retaken so often that it presented an appearance of indescribable chaos. Everywhere there was mud and slush and men always floundering through it by tracks and duck walks that were always being blown up. I was told that a million men had fallen there. The cemetery of a million men! It was still being shelled and the yawning mouths of the countless shell holes were ready to suck in the living men who moved day and night among them like maggots in the slime.
I would often stand alone at night gazing at the red glare along the front while everything vibrated to the ceaseless roar of the guns. Thoughts came to me as I stood. Every day the war lasted only made things worse for the world. Victory in the field seemed to me the worst that could happen, no matter which side won - not for lack of patriotism, but because I honestly believed it would be the greatest bar to enduring world peace. At times everything was blackest gloom without one ray of hope. The war might go on for years. I believed it could be stopped any day and that the feelings of all the peoples would be joy and relief. Why should it go on?
I discussed the war frequently with the men I happened to be with. They were not war-minded
Thursday, July 31, 2014
Baxter described a speech by an army chaplain.
I remember one day a padre addressing the troops. As we listened to him I heard the men around me sigh and murmur beneath their breath. The padre seemed to be out of touch with his audience and not very sure of himself. He told us that wonderful things would come out of the war, when it was over we would be free to build a new and better world. Great spiritual blessings would spring from these times of trouble and sacrifice. Rulers were to gain great wisdom and lead us to a condition of wellbeing and security that we had not dreamed of in pre-war days.
I wondered as he went on word- spinning how much of it he believed himself. It was impossible to tell, for the poor man had not the freedom that I had to express himself. Was there a parson at the front who dared to preach ‘Thou shalt not kill', that all men are brothers and God the father of all, irrespective of race, creed or colour, and that, things being so, the combatants on both sides should fraternize with the enemy? Or a parson with socialist views who dared to say to the troops that the fact that the imperialists and financiers had fallen out was no reason why the workers should be led into war to blow the soup out of one another? And what would happen to such a man? He would be brought up with a round turn, adjudged a nerve case or a mental case and so rendered harmless. To run the military machine efficiently everyone must be regimented. Beliefs on war or religion matter little but the expression of them must not be suffered to do harm.
This was the only religious address I remember hearing in France. No padre ever spoke to me personally all the time I was there.
Wednesday, July 30, 2014
Baxter was to be sent to the trenches too.
Finally they decided to send me into the front trenches. A message was sent to the officer in charge there. The messenger returned with the reply that the officer refused to take the responsibility. When the shelling stopped, he was returned to his tent.
On this, Booth asked Stevenson if there were any place, near at hand, that was being heavily shelled. He pointed out an ammunition dump at some distance. The Germans had got the range of it and it was being heavily shelled at intervals of about twenty minutes. He told Booth to take me across to it and leave me there. Booth told me to stay there and not to move from where he had placed me. As he hurried away, leaving me standing by the dump, he called back, "I hope a shell gets you and blows you to your Maker."
I stood waiting. I could see him and he, of course, he could see me, though he was well out of range. Suddenly firing began age and the shells came thick and fast. I was in the midst of a storm of spouting, belching mud and fire and flying fragments. The shells seemed to strike everywhere but where I was. I believe that if had moved at all from where I stood I should inevitably have been killed. If the dump had gone up I should have gone with it. I stood and waited for what seemed inevitable death.
I remember that I had very strange sensations. They were probably due to my over-wrought condition. The normal instinct of self-preservation seemed for the time being to leave me entirely. I felt quite calm and peaceful and and saw everything round about bathed in a bright white radiance. The whole thing felt strange and unusual, but not unpleasant. I never felt the same again when I was, at subsequent times, under heavy shell fire.
Labels: Baxter Bombed
Tuesday, July 29, 2014
The army decided that the conscientious objectors should be sent into the trenches. One of them named Briggs refused to walk up to the trenches. Here is Baxter’s description of how he was treated.
He had refused to walk up to the front trenches when ordered to do so that morning by Captain Stevenson. Booth, who was present, had dragged him outside by the wrists, tied a long piece of cable wire round his body under the arms and, with the aid of three other men, dragged him at the end of the wire for about a mile along the duckwalk. Battens were nailed across the boards of the duckwalk at short intervals and, to make walking easier, netting wire was nailed over them in parts. Later in the war, Briggs was declared unfit for service. He was physically broken.
Any clothing that protected his back was soon torn off, leaving it naked and exposed to the battens and the wire. They dragged him like this for about a mile until they came to a large shell hole, full of water. Here they stopped and Booth asked Briggs if he would walk now. If not, he'd go into the shell hole. On his saying that wherever he was going he was not going to walk up, he was thrown into the shell hole, pulled through it by the wire, dragged over the ground till they came to the next shell hole and pulled through it in the same way.
When they got him out on the bank at the other side they took him by the shoulders and tipped him head over heels back into the water. Just as he had managed to get his head above water and was trying to get his breath, Booth fired a handful of muck into his mouth.
"Drown yourself, you bastard," he said.
They dragged him out along the ground to another shell hole, through that in the same way, and a short distance further along the ground Then Booth asked him if he would walk up if they took him back to camp and gave him a change over a fire. Briggs said, "Never, as long as I draw breath."
He agreed to walk back to camp. When he came to try he found he was unable to and he was half carried, half dragged back by the two of the men, suffering greatly in the process. Back in the hut they took his clothes away, dressed him in a fresh shirt and trousers and left him lying on the floor of the hut under a pile of blankets. After several hours the doctor had come in and exclaimed, "What a damned shame!" when he saw the state of Briggs' back.
Then the orderlies had been told to get him to the medical hut and try to get some of the dirt out of the wound.
While I was in the hut the doctor came in again. I prepared to leave but he stopped me.
"Don't go. You can watch me dress his back."
I don't know why he wanted me to stay. I concluded that he hoped to frighten me into submission by the sight of Briggs' condition. I may have been wrong. If it was so he was sadly mistaken. My feelings were very far from being those of submission and fear as I looked at the huge flesh wound in Briggs' back and hip, about a foot long and nearly as wide. In spite of the attempts of the orderlies there was still a great deal of dirt in the wound. It ground too far in to be easily taken out.
That a man such injuries should not be sent to hospital was an unheard-of thing. For reasons which, after what Phillips had told me, were fairly obvious, Briggs was never sent to hospital. That he pulled round and recovered up to a point was certainly not due to the necessarily very scanty and inadequate attention he received, but to his own good health and excellent constitution. From the very first day he had to drag himself outside to the latrines, though another shell hole, utterly unfit to do so.
Monday, July 28, 2014
When I started school, it was less than ten years after the end of the second world war, so feelings about the war were strong. Returned servicemen came and spoke to us about their experiences. The men who had been to the first world war were still in their sixties. I remember a couple coming to tell us about the glories of the first war.
By the time I got to secondary school the story had changed. We studied the cause of the First World War, but it was not clear what the cause was. The war the result of a series of blunders by the leaders of several Christian empires. Their mistakes cost millions of lives. Now a hundred years from the beginning of the war, it is all a bit of a embarrassment. I hope the centenary celebrations will not try to turn it into a glorious event.
Accordingly I was very interested in a book called We Will Not Cease by Archibald Baxter. It is amazing story. Baxter was a conscientious objector during the First World War. The New Zealand government only recognized conscientious objectors, if they belonged to pacifist churches (like the Quakers). Baxter belonged to the Methodist Church, which supported the war, so he could not be listed as a conscientious objector.
Baxter was arrested, and when he refused to obey military orders, he was thrown in prison. While in prison he was sometimes beaten and often went without food. After he had been prison for a year, he and twelve others were put on a troop ship and sent to the Western Front in Belgium. It was assumed that once they arrived in Europe and were subjected to war they would knuckle down and fight.
Baxter believed that fighting war was contrary to the gospel, so he continued refusing to obey military orders. This led to terrible punishment.
No 1 Field Punishment
The first punishment was called No 1 Filed Punishment. Baxter gives a full description.
"Right-oh," he said. "Come along. I've got my orders." He took me over to the poles which were willow stumps, six to eight inches in diameter and twice the height of a man, and placed me against one of them. It was inclined forward out of perpendicular. Almost always afterwards he picked the same one for me. I stood with my back to it and he tied me to it by the ankles, knees and wrists. He was an expert at the job, and he knew how to pull and strain at the ropes till they cut into the flesh and completely stamp the circulation. When I was taken off my hands were always blue with congested blood. My hands were taken round behind the pole, tied together and pulled well up it, straining and cramping the muscles and forcing them into an unnatural position. Most knots will slacken a little after a time - his never did. After spending all day in this way for many weeks, the army realised that it was not going to beat Baxter and his mates, so they tried a new punishment. They were sent up to the trenches to face the full wrath of war.
The slope of the post brought me into a hanging position, causing a large part of my weight to come on my arms, and I could get no proper grip with my feet on the ground as it was worn away round the pole and my toes were consequently much lower than my heels. I was strained so tightly up against the post that I was unable to move body or limbs a fraction of an inch. Earlier in the war, men undergoing this form of punishment were tied with their arms outstretched. Hence the name of crucifixion. Later they were more often tied to a single upright, probably to avoid the likeness to a cross. But the name stuck.
A few minutes after the sergeant had left me I began to think of the length of my sentence and it rose up before me like a mountain. The pain grew steadily worse until by the end of half an hour it seemed absolutely unendurable. Between my set teeth I said, "Oh God, this is too much. I can't bear it." But I could not allow myself the relief of groaning, as I did not want to give the guards the satisfaction of hearing me. The mental effect was almost as frightful as the physical. I felt I was going mad. That I should be stuck up on a pole suffering this frightful torture, a human scarecrow for men to stare at and wonder at, seemed part of some impossible nightmare that could not continue. At the very worst, strength came to me and I knew I would not surrender. The battle was won, and though the suffering increased rather than decreased as the days wore on, I never had to fight it again.
Saturday, July 26, 2014
When the times get tough, many Christians will be unable to go to church.
They will have to start being the church where they live.
When Christians are really being church where they live, the neighbourhood where they live will become a kingdom community.
The gospel will spread from neighbourhood to neighbourhood as people and communities are transformed.
When kingdom communities spread throughout society, the Kingdom of God will have come.
The Kingdom reaches its fullness in an area when the neighbourhood church has transformed into a Kingdom community.
Friday, July 25, 2014
Piketty is really hostile to inheritance. When writing about it, he says “the past devours the future” (571). This statement is in the conclusion, so it has been widely quoted by those who have not read the entire book.
The statement is wrong. Savings and capital mean that the past enriches the present and the future. Modern prosperity is the result of sacrifices and savings made by people in the past.
Piketty describes the flow of inheritance in France over two centuries. I found this interesting.
Fig 11.1 represents the evolution of the annual inheritance flow in France from 1810 to 2010. Two facts stand out clearly. First, the inheritance flow accounts for 20-25 percent of annual income every year in the nineteenth century, with a slight upward trend towards the end of the century. This is an extremely high flow, and it reflects the fact that nearly all the capital stock came from inheritance. Its importance did not diminish with time, moreover. On the contrary, in 1900-1910, the flow of inheritance was somewhat higher (25 percent of national income compared with barely 20) that it had been in 1820s.I had not realised until I read this what a significant change had taken place. I am a member of the baby boom generation, so I never expected an inheritance. Most of what my parents owned was used up in paying for rest home care.
The evolution visible in Figure 11.1 reflects deep changes in perception as well as the reality of inheritance... In 1950-1960, bequest and gifts accounted for just a few points of national income, so it was reasonable to think that inheritances had virtually disappeared and that capital, though less important overall than in the past was now wealth that an individual accumulated by effort and saving during his or her lifetime. Several generations grew up under these conditions, in particular the baby boom generation born in the late 1940s and early 1950s, many of whom are still alive today, and it was natural for them to assume that his was the “new normal” (380-381).
Yet I remember my parents talking about small inheritances they and their parents received from parents, grandparents, and single aunts or uncles, even though they were not well off, and lived through a great deal of hardship. Reading Piketty made me realise that this was much more common in previous generations. It suggests that they appreciated future generations much more than we do.
The pattern has changed, associated with much greater state involvement in life. My mother’s father died when she was quite young, but she received a small bequest from her grandfather that contributed to her secondary and tertiary education. This really made a big difference in her life. The state paid for my tertiary education. Student loans from the state paid for my children’s education.
Biblical teaching on this topic is interesting.
A good person leaves an inheritance for their children’s children, but a sinner’s wealth is stored up for the righteous (Prov 13:33).Our grandparents understood this verse, but it seems like this has been forgotten by current generations of Christians.
Thursday, July 24, 2014
An even more interesting question is why so few Christian families have any wealth. We have a faith for the future, so we should be accumulating capital to make it better. God promised that those who obey his word would be blessed with wealth. Christians should be creating a legacy for their children. Most of this will be a spiritual inheritance, but is should be supported by a material inheritance. Abraham was the father of many nations. Jacob created twelve great tribes. Sin creates a barrier between generations. This explains why the world cannot create family wealth. The gospel has restored the link between generations
He will turn the hearts of the parents to their children, and the hearts of the children to their parents (Mal 4:6).We should see this working out in Christian families over several generations.
We have a faith for the future, so we should be accumulating capital to make it better.
God promised that those who obey his word would be blessed with wealth.
Christians should be creating a legacy for their children. Most of this will be a spiritual inheritance, but is should be supported by a material inheritance.
Abraham was the father of many nations. Jacob created twelve great tribes.
Sin creates a barrier between generations. This explains why the world cannot create family wealth. The gospel has restored the link between generations
I once read about the achievements of the descendants of George Whitfield the great evangelist. They had a huge impact on America. He left an amazing inheritance. Yet very few Christians think about leaving a spiritual and material inheritance for the future.
Christians should not seek wealth for wealth sake, but they should have sufficient wealth to support their families in their calling.
There are several reasons why Christians lack capital.
We consume most of what we earn. We have been sucked into the materialism of the world and are trapped in consumerism.
Bad eschatology has destroyed faith and hope. Many Christians assume that Jesus will return at any minute. Until he comes, things will get worse, so there is no sense in accumulating capital, if it will be left behind or stolen by the antichrist. Loss of a kingdom vision has destroyed hope for the future.
Surplus income has been sucked up by churches to support expensive ministries and pay for ministries. Investment in costly but ineffective approaches to evangelism and church growth have destroyed capital.
Christians seem to have taken on a distaste for capital that they have picked up from the socialist world we have lived in.
Wednesday, July 23, 2014
Piketty explains that wealth is unequally distributed. He sees this as a flaw in capitalism, but he does not ask the most important question. Why is wealth so rare? Why do so few families have any wealth?
r>g means that people with capital do better than people without capital. If everyone has some capital, then everyone benefits from r>g. It only creates inequality, if capital is concentrated in the hands of a few people.
The widespread lack of wealth was understandable in a subsistence economy, as it was really hard to escape poverty. However, income has risen amazingly in the last couple of centuries, so it would be expected that the ownership of capital would become more widespread. Yet, income has risen immensely, but wealth and ownership of capital is still rare. There are several reasons”
Most people in the western world have no wealth, because they have chosen to be poor.
While I was reading Piketty, I was also reading Family Fortunes by Bill Bonner. He is a bit obsessed with money, but he makes some important points. He explains how to create a family inheritance. He also explains why so few families do it.
A person on the average wage will earn a million dollars over their lifetime. If they were to save half of what they earned, and get a steady rate of return, they would be a millionaire by the time they retired, but very few people do that.
Paul explains why this is the case for the people of the world. They have no hope.
Let us eat and drink, for tomorrow we die (1 Cor 15:32).If there is no hope for the future, we might as well consume everything. There is no point saving for a future that is uncertain.
Tuesday, July 22, 2014
If a person works hard, and saves some of their earnings, their savings are righteous wealth. If they use their saving to buy assets that make them and other people productive, those assets are righteous wealth.
If a person starts a business that supplies goods and services that people need at a market price, without coercion, deception or manipulation, the retained earnings of the business are righteous wealth.
If the business relies on:
it becomes unrighteous wealth.
Unfortunately, much modern wealth is unrighteous wealth. Christians should understand the difference.
Some Christians have inherited unrighteous wealth. It will blight their lives, because inheritance does not change its character.
There are only two ways to transform unrighteous wealth.
One is to give it away (preferably from those from whom it was taken, but that is not always possible.
The second is judgment (which is compulsory giving).
Monday, July 21, 2014
My greatest concern a about Piketty’s approach is that the does not distinguish between righteous wealth. He considers the possibility, but decides that it is too hard, because the wealth usually have mixed motives (445).
Assessing the morality of wealth is beyond the capability of Piketty or of any democratic government. When governments portray wealthy as unrighteous, it is usually and excuse for one group of people to steal wealth from another.
God has a different perspective. Jesus introduced the concept of unrighteous wealth in the parable of the shrewd manager (Luke 16). He described some wealth as righteous, but he expanded on the dangers of unrighteous wealth in the parable of the Rich man and Lazarus. He explained that the soul of the person who owns unrighteous wealth is in serious danger. It is almost impossible to get into the kingdom.
Jesus did not give governments responsibility for confiscating unrighteous wealth. Confiscated wealth remains unrighteous wealth.
Unrighteous wealth that Government transfers to another person remains unrighteous wealth. The only way to escape the clutches of unrighteous wealth is to give it away. Zacchaeus understood Jesus teaching so he gave most of his wealth away.
When a person becomes a Christian, one of the first things that we should expect is that the Holy Spirit will convict them about the unrighteous wealth that they own. They should be encouraged to give it away.
When unrighteous wealth is given away, it is transformed into righteous wealth. In the book of Acts, people sol their property and laid the proceeds at the apostle’s feet. They were most likely getting rid of unrighteous wealth. That fact that Ananias and Saphira had trouble giving up their wealth indicates that it was probably unrighteous wealth.
The nature of unrighteous wealth is described in God's Instructions for Economic Life given in the Torah. If we are not clear about whether our wealth is righteous or unrighteous, the Holy Spirit can show us. Discerning unrighteous wealth was too difficult for Piketty, but it is easy for the Holy Spirit.
Much of the wealth held in the western world is unrighteous wealth. If there is a gospel advance in the next few decades, we should see a massive amount of unrighteous wealth being given away. This would do more to reduce inequality than Piketty’s wealth tax.
Large holdings of unrighteous wealth, and a few people with righteous wealth. are a consequence of gospel failure.
I will post on Jesus parables and on unrighteous wealth when I am finished with Piketty.
Saturday, July 19, 2014
Piketty thinks that he has found a flaw in capitalism: the fact that the return on capital is greater than the growth rate of the economy. He attributes the increasing inequality to a flaw in capitalism. The key is r>g. He writes,
The overall conclusion of this study is that a market economy based on private property, if left to itself contains... powerful forces of divergence, which are potentially threatening to democratic societies and to the values of social justice on which they are based.r>g is not a flaw of capitalism. It reflects the nature of the world. Capital makes people more productive. This makes everyone better offer off, including labour.
The principal destabilising force has to do with the fact that the private rate of return on capital, r, can be significantly higher for long periods of time than the rate of growth of income and output, g.
The inequality r>g implies that wealth accumulated in the past grows more rapidly than output and wages. This inequality expresses a fundamental local contradiction. The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labour. Once constituted, capital reproduces itself faster than output increases. The past devours the future.
The consequences for the long-term dynamics of the wealth distribution are potentially terrifying, especially when one adds that the return on capital varies directly with the size of the initial stake and that the divergence in the wealth distribution is occurring on a global scale.
Therefore increasing the capital income ratio is good. The question is who benefits. It seems reasonable that those who do the saving should benefit most. They should benefit more than those who did not save.
Piketty grudgingly seems to accept this reality, but then moves quickly on to attacking inheritances.
Friday, July 18, 2014
Piketty uses the terms capital and wealth interchangeably. I think that his is a serious problem with his thinking. For an economist, capital is productive stuff like factories, machinery, and computers. The purpose of capital is production.
Wealth is a broader concept. It includes all assets that give a rate of return. Many of these are financial assets, which represent the ownership of real capital (eg shares). Others are loans that are only loosely linked to assets. The focus of wealth is income, which is Piketty’s concern. He is not interested in production. He focuses on understanding how wealth gives people control of income. This is a legitimate concern, but his interest is in wealth, not in capital. Therefore, his use of the word capital to describe wealth is not helpful.
For example, Piketty says that the Industrial Revolution allowed European nations to claim a huge share of world income (59). He ignores the fact that the accumulation of capital enabled them to expand production extensively, which created enormous wealth.
Viewed in this way, wealth becomes a bad thing. This means that by association capital is a bad thing too. For example, Piketty sees 1914-1945 as a good period, because inequality decreased. It was actually a really bad period, because massive capital destruction occurred all over the world. Immense resources went in the production of armaments, where then blown up. That loss of capital made everyone worse off.
Piketty is wrong. Capital is really important. That reason that so many people in the world have escaped from subsistence is the last few centuries has been the accumulation of capital equipment. Capital makes people more productive. Most of the world needs more capital.
Wealth is a different issue. It may be distributed unfairly and obtained illegally. However, we must be careful that we do not destroy capital in an attempt to eliminate unequal distributions of wealth. That would make everyone worse off.
Thursday, July 17, 2014
Piketty shows that r is usually greater than g. This might be true on average, but averages cover a multitude of sins.
People involved in business know how easy it is to get a negative rate of return, and even lose capital. Piketty makes it seem like a 4 percent rate of return is automatic. This is misleading. Getting a good rate of return on assets is extremely difficult. It takes a lot of energy, diligence and wisdom.
Wednesday, July 16, 2014
Piketty says that the big change in the twentieth century was the emergence of the middle class. In 1910, this group held very little wealth. Their share increased significantly during the century. This was achieved mainly through the ownership of residential housing and superannuation.
The overall importance of capital today, as noted, is not very different from what it was in the eightieth century. Only its form has changed: capital was once mainly land but is now industrial, financial, and real estate. We know that the concentration of wealth remains high, although it is noticeably less extreme than it was a century ago. The poorest half of the population still owns nothing, but there is now a patrimonial middle class that owns between a quarter and a third of total wealth, and the wealthiest 10 percent now own only two-thirds of what there is to own rather than nine tenths (377).
Tuesday, July 15, 2014
Piketty admits that his proposed solution, a universal tax on capital is unlikely to be adopted. This means that he does not have a workable to his perceived problem.
He assumes that all solutions must be provided by the state. Unless there is an international organisation with the power to overcome national states, any solution that depends on state power is unworkable, because the wealth can motive their wealth from one state to another to avoid taxes.
Piketty sees inequality as an affront to democracy.
Our democratic societies rest on a meritocratic worldview, or at any rate a meritocratic hope, by which I mean a belief in society in which inequality is based on merit an effort than on kinship and rents. This belief and this hope play a very crucial role in modern society, for a simple reason: in a democracy, the professed equality of rights of all citizens contrast sharply with the very real inequality of living conditions, and in order to overcome this contradiction it is vital to make sure that social inequalities from rational and universal principles rather than arbitrary contingencies (422).In my view, democracy is not the solution. It can make it possible for the majority to appropriate the wealth of a minority. But in the process it will destroy capital, and in the long run that will destroy wealth.
Today the rents produced by an asset are nothing other than the income on capital, whether in the form of rent, interest, dividends, profits, royalties, or any other legal category of revenue, provided that such income is simply remuneration for ownership of the asset , independent of any labour.(422)
There is something astonishing about the notion that capital yields rent, or income that the owner of capital obtains without working. There is something in this nation that is an affront commons sense that has in fact perturbed any number of civilisation, which have responded various ways, not always benign (423).
Monday, July 14, 2014
Piketty shows that the distribution of wealth is changing. Wealth grew during the 19th century. It collapsed between 1910 and 1945 and was flat until 1974. Wealth is now growing again.
Piketty assumes that inequality will increase. He says that the 20th century was abnormal, because capital/income ratios declined, as two wars and the great depression destroyed capital. Following 1945, shortages of skilled labour shifted the balance towards labour. At the same time, unions and labour laws increased the share going to labour. That trend ended in about 1973, and since then the capital/income ratio has been increasing, and inequality along with it.
Piketty says we are coming back the 19th century situation. The twentieth century was abnormal. The 19th century was more normal, so we are reverting the norm.
This does not make sense. Most the wealth in 1800 was land. The aristocracy were allocated their land holdings by William the Conqueror and the winners of various civil wars. Renting land was mostly money for nothing, but the land has to be developed to get better returns.
The industrial revolution favoured capital. A huge army of labourers moving from the country to the cities kept wages down until the middle of the century. At the same time, the landed aristocracy declined.
By 1900, wealth was dominated by industrial capital. Land was a tiny share of wealth. Some of the industrial wealth like the railways was gained through political privilege. Most was gained through innovation and saving to produce what people wanted.
Piketty says that the situation that prevailed in the 19th century is a more normal situation, and that we are going back to that. This does not make sense to me. The 19th century was a very different. During this century, the wealth of the landed gentry declined, and the industrial revolution produced rapid economic growth. There is no reason why our future should be like that.
The nineteenth century was a period of relative peace. Between the defeat of Napoleon and the First World War, a hundred years later, many wars occurred, but they were relatively minor. The gold standard meant that inflation was almost non-existent for the entire century. Recessions occurred, but they mostly resolved quickly.
There is no reason to expect these conditions will prevail in the twenty-first century. We are more likely to see serious wars and economic disaster.
Saturday, July 12, 2014
One of the best critiques of Piketty’s theoretical explanation has been presented by Robert Rowthorn from the University of Cambridge (UK) in his Note on Thomas Piketty. He explains that Piketty uses the standard neoclassical theory of factor shares.
This theory establishes a link between the capital intensity of production and the share of profits in total output. The nature of this link depends on the elasticity of substitution between capital and labour. When this elasticity is greater than unity, an increase in the capital-output ratio leads to an increase in the share of profits. This, in essence, is Piketty's explanation for the increased share of wealth-owners in national income. Thus, the shift in income distribution is due to the over-accumulation of capital: there has been too much real investment. The increase in the capital/income ratio measured by Piketty is the result of price effects.
The above explanation has two related flaws. Piketty's assumption regarding the elasticity of substitution is not correct. There is considerable evidence that this elasticity is less than unity. Moreover, Piketty's method for measuring changes in the capital-output ratio is misleading. He fails to allow for the disproportionate increase in the market value of certain real assets, especially housing, in recent decades. This leads him to conclude, mistakenly, that the capital-output ratio has risen by a considerable amount. In fact, conventional measures of this ratio indicate that it has been either stationary or has fallen in most advanced economies during the period in question. This would suggest that the basic problem is not the over-accumulation of capital, but just the opposite. There has been too little real investment.
Piketty documents how α and β have both risen by a considerable amount in recent decades. He argues that this is not mere correlation, but reflects a causal link. It is the rise in β which is responsible for the rise in α. To reach this conclusion, he first assumes that β is equal to the capital-output ratio K/Y, as conventionally understood. From his empirical finding that β has risen, he concludes that K/Y has also risen by a similar amount. According to the neoclassical theory of factor shares, an increase in K/Y will only lead to an increase in α when the elasticity of substitution between capital and labour σ is greater than unity. Piketty asserts that this is the case. Indeed, based on movements α and β, he estimates that σ is between 1.3 and 1.6 (page 221).Rowthorn shows that K/Y has been falling in the United States since 1981 and has been roughly constant in most of Europe. This implies that the income share of wealth owners is rising because of a low rate of real investment and a falling capital–output ratio.
Thus, Piketty's argument rests on two crucial assumptions: β = K/Y and σ > 1. Once these assumptions are granted, the neoclassical theory of factor shares ensures that an increase in β will lead to an increase in α. In fact, neither of these assumptions is supported by the empirical evidence which is surveyed briefly in the appendix. This evidence implies that the large observed rise in β in recent decades is not the result of a big rise in K/Y but is primarily a valuation effect.
Piketty argues that the higher income share of wealth-owners is due to an increase in the capital-output ratio resulting from a high rate of capital accumulation. The evidence suggests just the contrary. The capital-output ratio, as conventionally measured has either fallen or been constant in recent decades. The apparent increase in the capital-output ratio identified by Piketty is a valuation effect reflecting a disproportionate increase in the market value of certain real assets. A more plausible explanation for the increased income share of wealth-owners is an unduly low rate of investment in real capital.