Warnings About Inequality
Historically, economic returns have accrued faster to the wealthy than they have for everyone else
Since its release in March, the English translation of Thomas Piketty’s book Capital in the Twenty-First Century has caused a major splash in economic and political circles in the United States. Several reviewers and commentators have said that it is most important economics book in years.
Mr. Piketty, a French economist who is considered one of the world’s leading experts on income inequality, used data from 20 countries over the past three centuries to examine the distribution of wealth and income. Over the course of nearly 700 pages, he argues that the underlying forces of capitalism naturally produce a concentration of wealth, and that periods of broadly shared economic prosperity — such as the period following World War II in the United States — are historical anomalies.
According to Mr. Piketty, inequality is driven by what he refers to as “the central contradiction of capitalism.” Historically, economic returns have accrued faster to the wealthy than they have for everyone else. He also argues that the trend of capital producing high returns amid periods of economic stagnation was dominant in the 19th century, and that the trend seems to be resuming in the 21st century. “The past devours the future,” Mr. Piketty wrote in his book.
“Those with the highest incomes will save and invest,” explained the Washington Post economics columnist Steven Pearlstein in a review of Mr. Piketty’s book last month, “generating capital income that will allow them to pull away from those relying solely on wages and salaries. It takes only a few generations before this accumulating and accumulated wealth becomes a dominant factor in the economy and the social and political structure.”
© 2014 The New York Times
