700 PAGES OF POPPY COCK

It’s the new bible of the chattering classes: a bestseller arguing capitalism doesn’t work – and the only answer is eye-watering taxes. Just one small problem, says MAX HASTINGS. It’s . . .

Economists tend to be grey suits who work better than pills if you need a cure for insomnia. But now a new kid on the block has shot to the top of the Amazon bestseller lists in Britain and the United states, who boasts eyelash-fluttering looks, and has been dubbed by new York magazine ‘the rock star economist’.

thomas Piketty, only 42, is the author of a tome entitled capital in the 21st century, which is heavy enough to create a doll’s house rug if dropped on the children’s hamster. Admirers say it is a tract for our times, laying bare the wickedness of the way the Western world manages and distributes its money. since its author quotes authors such as Balzac and Jane Austen a lot, he gains reward points as a supposedly literate sort of chap.

this, then, is the book everyone who likes to think they’re switched on to the zeitgeist is talking about, from Los Angeles to London.

the Guardian treats Piketty’s work with the sort of reverence it usually reserves for tony Benn’s diaries and the collected works of Polly toynbee. the author, writes Paul mason in its pages, ‘has placed an unexploded bomb within mainstream, classical economics’. the paper also gave space this week to that darling of the Left, Unite’s boss Len mccluskey, to offer the book a personal endorsement as ‘manna from heaven for somebody like me’.

the theme of Piketty’s book is that social and economic inequality in Western societies is soaring; that merely tinkering with this scandal by improving education and raising taxes a percentage point or two will not cure the disease. His own remedy is Draconian, even by Ed Balls’s standards: restore confiscatory taxation ‘on incomes deemed to be indecent (and economically useless)’.

He urges that income taxes should be increased to 80pc on earnings in excess of either £300,000 or £500,000 a year — whichever number appeals to a government. more controversial still, he calls for a global wealth tax, imposed at the rate of 1 per cent a year on fortunes of £600,000 to £3 million, up to as much as 10 per cent for those earning more than a billion.

Piketty has dug out of the ideological graveyard ideas we thought that thatcherism had discredited 30 years ago, and which trample with hob-nailed boots upon every conviction and aspiration of the middle classes in Britain and around the world.

if governments adopted his proposed policies, forget about the pain they might or might not impose upon the rich: they would spell doom for the hopes of millions of ordinary families to save for the future through sheer hard work, to accumulate very modest wealth, and to pass on some money to the next generation.

THis book is an attack on capitalism. And yet does not capitalism provide a structure which encourages personal aspiration, the desire to enrich oneself through graft, and the opportunity to keep as much of the money you have earned as possible? it is a simple philosophy which will ring true with most readers of this newspaper.

Even though Piketty is advancing propositions not seriously discussed anywhere in the world, even in communist states, since the demise of chairman mao, his thesis has been respectfully received by numerous commentators in the U.s. and Britain, including several whom one would expect to know better.

the book’s success — not only among the chattering classes, but also among those who write the manifestos for socialist parties in Europe, Britain’s Labour Party prominent among them — tells us that the Left has still not given up on its tawdry old belief that governments know better how to spend most of our money than we do.

the lunatic Left did not die with tony Benn and michael Foot. it is still out there, gazing hungrily at the earnings and bank accounts of the striving middle classes, those who have no hope of establishing offshore trusts or fleeing to switzerland to escape its claws.

Piketty’s cV shows clearly enough where he is coming from. He has taught for years at the Paris institute of Economics, from which he resigned for a time to become an adviser to segolene Royal, former partner and now ministerial colleague of President Francois Hollande, France’s most disastrous leader since King Louis XVi left for the guillotine.

We may assume that Piketty, as a close chum of his country’s top socialists, encouraged Hollande in his brilliant stroke of attempting to introduce a top tax rate of 75 per cent, and other policies which have caused flocks of rich French folk to buy one-way Eurostar tickets to London.

i would not encourage you to read Piketty’s 700-page book — as i did this week — unless you are easily excited by such equations as ‘r’>g’, which apparently means that the return on capital is greater than economic growth. But he is right at least in arguing that rising inequality poses political and economic problems which most governments recognise as both serious and intractable.

the author is especially repelled by inherited wealth — the spectacle of the children of the rich waxing fat on cash they have not earned: ‘in stagnant societies, wealth accumulated in the past naturally takes on considerable importance . . . When the rate of return on capital significantly exceeds the growth rate of the economy, it logically follows that inherited wealth grows faster than output and income.’

Piketty notes that, in getting a return on savings and investments, the dice are heavily loaded in favour of the rich, because they can employ smarter financial advisers. Even rich universities and foundations profit from this: Harvard can afford to pay its investment managers £60 million a year, because its endowment fund is worth £20 billion. many of the most lucrative investments have a high entry threshold which excludes ordinary small savers.

on this point at least, he is supported by an oEcD report this week which suggests that in the past 30 years, the share of national income the top 1 per cent richest Americans take in has more than doubled. the story is similar here in Britain.

He asserts the importance of creating a level playing field for both corporate and personal taxes, so that neither companies nor individuals can shelter their wealth

from governments who follow his high-taxation prescription.

He is committed to European political union, without which ‘it is highly likely that tax competition will continue to wreak havoc’. He speaks warmly of immigration from poor countries to rich ones, as a means of ‘ensuring that the economic benefits of globalisation are shared by everyone’. In other words, every Somali drawing benefits in London, or Moroccan comfortably ensconced in Paris, represents a fraction of the just retribution for past imperial pillaging.

Now, most of us reading the above would laugh heartily and suggest that Monsieur Piketty would be happiest living in Cuba, or serving as economics correspondent of Channel 4 News. But it is sobering to consider that France already has a government which thinks its sexy author guru is dead right.

It is hard to doubt that Ed Miliband is privately of the same opinion, whatever he does or does not dare to say publicly before next year’s General Election. Most of what Piketty writes about the iniquities of capitalism will have Miliband — who wants to bring back socialism — muttering ‘hear, hear’ as he turns the pages.

only this week, Labour’s leader pledged a return to the Neolithic policy of statutory rent controls for tenants. He makes no secret of his belief in higher taxation — he is committed to returning the top rate to 50 per cent — and in swingeing inheritance taxes. The latter in particular are especially punitive now that so many more ordinary people in Britain are being dragged into the net.

once, inheritance taxes were the bane only of the rich, but with the £325,000 threshold frozen since 2009 while house prices rocket, ever more families face losing a small fortune to the greedy arms of the Treasury. Yes, some of the ills Piketty identifies are absolutely real. It is a scandal that corporate chief executives, and for that matter bankers, are paid grotesque sums of money, heedless of their abilities and even when they fail. Global businesses must be made to pay taxes in the countries in which they reap profits. It is depressing that the super-rich forfeit a far lower proportion of their incomes in tax than you and I do. But the notion that the appropriate remedy for any or all of these problems is confiscatory taxation — theft by the state — is beyond barking, or rather, discredited years ago.

one of the foremost lessons of the 20th century is that governments are rotten judges of how best to safeguard and spend our money. Capitalism is a flawed system, but in our lifetimes we have seen socialism — and communism — in action, and they have failed abysmally, in France as in Britain as in Cuba as in Russia.

Piketty hates privatisations of state-owned industries. But he should have noticed that privatisations make utilities vastly more efficient, and generally allow ordinary people to share in the wealth that comes with successful private enterprise. The huge loss-making Air France, to name but one surviving drain on France’s exchequer, is hardly an advertisement for public ownership.

The author calls for much increased investment in education and training. This is sensible enough, because it is the only effective means of lifting the children of the underclass out of poverty.

BuT he says nothing of the role of the Left in crippling many state education systems. In his obsession with punishing the ‘haves’, he casually dismisses the vital role of reward and low taxation — in which we should include inheritance levies — as drivers of achievement.

The vast middle class, to which most of us now belong, inhabit a world of dreams, foremost among which is an aspiration to accumulate a little money — or even, if we work hard and get lucky — a lot of money, some of which we can pass on to our children.

Piketty treats returns on investment as a form of unearned rewards for the undeserving. But I think instead — as maybe you do, too — of the injustice that after investing my savings from taxed income, we are taxed a second time on everything that money produces.

In his fixation with the superrich, spoilt darlings like the daughters of Bernie Ecclestone, or the human crocodiles who direct the world’s investment banks, Piketty forgets the tens of millions of middle- class people who operate and live by a capitalist system which remains the least bad mankind has yet devised.

The man is an ass, of course, or rather a 19th- century Marxist utopian. It is hardly surprising that France’s President Hollande is drowning politically after pursuing some of the author’s recipes. what should worry us more is the chorus of praise heaped on Piketty’s book by the Left here in Britain, who talk as if he had found the philosopher’s stone.

Should Ed Miliband make it to Downing Street next year, some version of the author’s crazy ideas for reforming capitalism is likely to be road-tested on the British people, and we shall be front- seat passengers for the inevitable crash.