Here is an ad from September, 1975, click to enlarge.
It advertises a smallish, analog television that could get four channels here in Iowa. It was $599 with a trade-in. According to the online, inflation calculator, that is $2,563 in today’s dollars.
At Walmart, you can get a RCA 32″ Class LED-LCD 720p 60Hz HDTV with Built-In DVD Player for $199; no trade-in required. $199 is equal to $46.58 in 1975.
So, there you have it. $46/$199 vs $599/$2,563.
In 1975, federal minimum wage was $2.10 per hour. At that rate, you would need to work about 285 hours – or a little over seven 40 hour weeks – to gross enough to buy that low quality Sylvania television.
In 2014, the federal minimum wage is $7.25 per hour. At that rate, you need to work 27 hours, or a little over half a week to gross enough to buy the larger, hugely improved, digital television with the built in DVD player at Walmart.
All that is worth remembering as you read this…
“Capital in the Twenty-First Century” is Mr. Piketty’s dense exploration of the history of wages and wealth over the past three centuries. He presents a blizzard of data about income distribution in many countries, claiming to show that inequality has widened dramatically in recent decades and will soon get dangerously worse.
Mr. Piketty urges an 80% tax rate on incomes starting at “$500,000 or $1 million.” This is not to raise money for education or to increase unemployment benefits. Quite the contrary, he does not expect such a tax to bring in much revenue, because its purpose is simply “to put an end to such incomes.” It will also be necessary to impose a 50%-60% tax rate on incomes as low as $200,000 to develop “the meager US social state.” There must be an annual wealth tax as high as 10% on the largest fortunes and a one-time assessment as high as 20% on much lower levels of existing wealth. He breezily assures us that none of this would reduce economic growth, productivity, entrepreneurship or innovation.
This economist understands the Lafffer Curve and he understands that an 80% tax rate won’t raise much revenue from the rich. It will just destroy the rich.
Why destroy wealth? Because he knows he can’t make everyone rich so he prefers to make everyone poorer. Wealth disparities must be ended because they are growing, he says. To improve the world, he calls for the elimination high incomes and to reduce existing wealth through taxation, even if it doesn’t raise tax revenues.
If disparities are growing, I wonder how it is that a minimum wage worker in 1975 had to work more than seven weeks to purchase a low quality television and a minimum wage worker in 2014 can buy an unimaginably improved television after three days of work.
The reality is that, in terms of buying power, everyone is getting richer. Much, much richer. There is a disparity of wealth. Piketty, like all leftists, would prefer an equality of poverty. I doubt, however, that he would have it apply to published economists.