For decades discussions have focused on "capital" as though that is the definition of capitalism. "Capital" would be lame without "labor" and "resources" in the production of goods necessary for consumer driven economies. The U.S. had a very viable middle class after WWII when labor had a negotiating voice in setting policy. Those who control capital have succeeded in eroding the value and voice of working people, using the red menace as a weapon on working people. Witness today's hysteria over raising the minimum wage. The blind or arrogant ignorance of those with wealth to suggest that minimum wage workers somehow get an education and work harder to pull themselves out of poverty is shameful. This is trickle down at its worst. Capitalism depends upon consumers. If consumers are not paid what they are worth as labor, consumerism is threatened. So far this discussion continues to focus on the manipulation of capital via taxes, etc., although there is much to gain from understanding what Piketty describes. When will economists recognize that a well-paid labor force at the lowest levels is vital to the success of capitalism? And what about the sustainable use of resources and energy? They are all necessary for capitalism to succeed, not just "capital."

Good points all. As to the ability of mega-conglomerates and their owners ( who are internationally "raping" resources, using cheap labor, fighting off attempts to get generic drugs into the free marketplace and deregulate our archaic patent laws, failing to self-regulate and benchmark their CEOs to a level of income commensurate with what % of wage increases they give their employees, attune themselves to the FACT of global warming that's about to put us all in a world of s***, etc.) to foresee the future and take precautionary steps to correct the inevitable....don't hold your breath. The history doesn't embrace farsightedness with these people. Somehow the "bottom line" and the lust for the almighty $ just gets in their way.
It's up to people like you and I to "remind" them of their social, ethical, moral, legal, and fiscal responsibility to the people who, indirectly, pay their wages. It's the consumers who make them rich; and, if well-marshaled, it's the consumers who can make them feel; that is, if any of them can "feel."
The other side of this is in the people who we put in Congress who now spend the majority of their time raising money through PACs, fund-raising dinners, honorariums, special-interest events, lobbyist "tutorials", etc. and seem to ignore the "little" people who put them in Congress in the first place. What did we vote them into office to do? Can they read: "represent the people?" It doesn't say: "represent a few people." So, if they aren't doing the job, vote them out of office. It's one "freedom" we still have the right to exercise.

Thanks, JC While living in Oklahoma, I ran for an office in 1996. My "platform" was very progressive regarding the working people and the evaporating middle class, due in large part because of the diminished value of labor and, thus, reduced resources to spend as consumers. I was anti-WalMart, anti-industrial farming and such. Our Democratic Party Chairman, nice guy, told me I could not say those things, that I would not get elected on those issues. I responded with that's what I believe and why I am running for office. And he replied with "So, what good is that if you cannot get elected?" DUH! And I did not get elected but I did get support from working people. We must do something about the race to raise money that a candidate, once elected, immediately has to take on. And we must give negotiating power back to working people and balance the sharing of profits if capitalism is to survive. It is not just about money and investor profits!

Actually Steve Jobs took the idea of the "mouse" from computer engineers at Xerox Park.

Mr. Baker should know that all it will take is a reversal of the USD/RMB exchange rate to find a new source of cheap labor. Once the banks have built their clearing infrastructure and privatized the Chinese Central Bank, they can pull the plug here. There is plenty of base money in the Fed newly created by QE to let 'er rip when the time comes! Returns are high because the current money system is global and can move money around ex nihilo in pursuit of the highest returns from extraction and primitive accumulation, while starving the developed (expensive) economies with decades of deflation. None of the current economists really have the vocabulary to really analyze what is going on here. It is up to us the people to connect all the dots and put the pieces together here.

The article uses two industries as examples. Drugs and high tech. I would note that these are two of the industries that are also continually brow beaten for not paying taxes on "overseas" profits. Instead allowing them to build to multiples of hundreds of billions of dollars.

However in most of the rest of the industrialized world, (excluding Mexico and South Korea among a small few), the rest of the world uses a territorial tax system and those same type of corporate profits are brought back home tax free. Year in and year out.

So Americans view such profits as "corporate greed" while the rest of the world looks at it as "taxpayer greed". If those hundreds of billions of dollars in overseas profits were coming home, year after year, tax free, no matter how they are initially used they are still home and entering the much wider national market. That money rolling over transaction after transaction and paying local taxes would amount to multiple billions of dollars in a very short amount of time. They are instead sitting in overseas banks earning small amounts of interest and providing no current domestic tax revenue. .

It is US taxpayer short sided greed that is a major long term road block in the economic cycle that should be investment, profit, reinvestment. Again the tax amounts currently lost in the normal course of the economic cycle here in the US are staggering on an annual basis.

As for patents. In the case of Pharma I would suggest a trade off. Either keep the current patent time frame and disallow general advertising of prescription drugs or allow general advertising and cut patent time in half. The portion drug companies spend to advertise prescription drugs is higher than R & D costs. It is those R & D costs that pharma brings front and center to justify both patent time and high retail cost. Higher advertising costs are never mentioned.

Another option would be to divide the world into say top 50 national economies, or the top tier, in which the patent time would remain the same and then the bottom tier would be allowed to cut that patent time in half.

You are leaving out a big part of the story. Most countries with territorial tax systems also have strong anti-abuse rules. In other words, for foreign profits to be tax-free, they actually would have to be made abroad. Apple's Irish subsidiaries' profits overwhelmingly come from owning patents developed in the U.S., and these would not be considered "foreign" profits under reasonable anti-abuse rules.

I don't know if you are unaware this or are trying to hide the fact, but the U.S. can't go to a territorial system successfully unless it stops the rich from gaming the system with fictitious "foreign" profits.

I agree that my comments did not go into great depth about many changes that would have to be considered in changing to the territorial system. In fact places such as Ireland, Jersey, Isle of Man, the Cayman's, Luxembourg, British Virgin Islands, Bermuda etc make a huge industry of catering to such companies.

Of course there is much to be said about the State to State tax bidding wars done here in the US to lure even domestic companies to relocate or establish business totally based upon tax and accounting benefits allow by an individual state or city. This is only considered a crime by the loosing entity on purely a case by case scenario.

As for it being only the wealthy, in my younger days in rural Colorado I was aware of a number of families who had their personal and business related automobiles and trucks registered in the state of Missouri to avoid much higher local taxation.

In the long term however, the huge blockage that is created economically in a complete business cycle by profits earned overseas not returning home year in and year out have created a huge deficit that has not been used to create domestic tax revenues, jobs and further economic creativity.

To just not move towards that because it would create the need for further tax reform is beyond belief.

Eliminating the home mortgage deduction, for example, is another major flaw in US tax system. But that is for another time.

Dean Baker presents a wonderful critique of the Piketty book. The thesis that Piketty presents is in my view correct based on fairly restrictive assumptions, which Baker is able offer reasonable counters. Having studied economic history for many years and with access to all the studies performed at the IMF, I am amazed at how far Piketty has advanced the world's most complicated science / art. Seasoned economists will know that it is impossible for an economist to scope ahead very far into the future and get it right. Ronald Brech, one Britain's finest real economists, tried it for one country, the UK, in his book Britain 1984 and realized how immense the task was. It's just not possible without an enormous amount of simplification which becomes the undoing of any story of the economic future no matter how sophisticated the growth model used. Lord Kaldor and Professor Frank Hahn, Professor Joan Robinson at Cambridge all produced fascinating models with different degrees of sophistication, but none came close to capturing the real dynamics of economic growth and income distribution. The world's finest economic mind, that of Joseph Schumpeter of Harvard came closest in my view to the underlying trend in the dynamics of capitalist growth embodying innovation and a popular rebellion against capitalism arising from inequality and oligopolization of market structures, and even his sociology is proving more accurate over the long term than any one ever thought possible. Economics on the macro scale is not just a dismal science it is an impossible science. The tools are just not there. Mathematicians and econometricians will tell you that the economic system is over determined too many variables with too few reliable equations. However, what is apparent is that financial markets are excessively inefficient and for the most part need to be cleared of rubbish banking. Innovations could bring this about, but far better to have the political process say, enough is enough, and restructure international banking from the ground up eliminating the enormous waste and privilege. Perhaps Bitcoins will do just that.

Xerox created the GUI and the mouse. Msft and appl "borrowed" the idea.....

In order for the common man to prosper govt needs to be separated from the currency printing presses and wall st needs to be separated from politcs . No more revolving door!!! Corporations are not people they are legal constructs and money is not speech... start growing your own food people start community owned businesses and gift stuff to each other. Eventually the currency will be utterly worthless because the politicians lack the political will to do anything but keep up the status quo and are in constant reelection mode... the whole thing is rigged and does not benefit the common man. Eventually the biggest ponzi scheme in history will collapse. ceos for the most part are narcissistic sociopaths who didn't invent anything. They are fall guys that tow the line for the quarterly profit and as soon as some stuff hits the fan they get kicked out and the company keeps on making money... the pay gap is outrageous and only getting worse...