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At its simplest, the groundbreaking work by French economist Thomas Piketty proves no more than what we thought we already knew: the rich get richer.
Whether the poor also get poorer is another matter.
What would the taxi driver who took me across Beijing last year in a Toyota tricked out with three smartphones have said?
Not so long ago, he was driving a three-wheeled, pedal-powered rickshaw.
It’s more a case of the poor getting richer too – but without political intervention, they’ll never catch the rich.
In the English-speaking world particularly, still reeling from the global financial crisis and growing tired of a managerial elite whose salaries appear unstoppably stratospheric, Piketty’s new, best-selling doorstop of a book – Capital in the Twenty-First Century – is altering the debate about wealth, income and the future of capitalism and is set to be Harvard University Press’s all-time best-seller.
Piketty has reframed the discussion by combining, for the first time, data sources spanning more than three centuries to prove that those with accumulated wealth are almost guaranteed always to become richer than those who work for a living.
The distinction between wealth and income is important.
Although excessively high incomes for chief executives is a live political issue, and Piketty would tax them at a rate as high as 80%, the bigger issue is the inter-generational impact of wealth accumulation.
He proposes taxing such wealth at a rate of 0.1-0.5% for fortunes of less than €1 million ($1.6 million), 1% for fortunes from €1-5 million, 2% for €5-10 million and from 5-10% for fortunes in the hundreds of billions of euros.
Critics note that if he’s calling $1.6 million a fortune, then Piketty is putting many of the developed world’s homeowners in the same boat as the “one per cent” global elite.
However, most of the attacks on his findings focus on the proposed solutions rather than the quality of the research that animates his conclusions. Continue reading.
Source: The Listener
Image: Emmanuelle Marchadour/AP in The Guardian
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