The economic potboiler of the season is Thomas Piketty’s Capital, a look at how income inquality is shoving the United States into the dustbin of history. Here’s an interview from sharp CBS MoneyWatch reporter Alain Sherter that serves as an introduction to Piketty, if you’re new to this party. Enjoy your Sunday reading!
First, “Capital in the Twenty-First Century” is based on an unusually sturdy foundation of cold, hard facts — specifically, two centuries’ worth of income and estate tax records covering 20 countries. This has proved vital for a work of economics, a field in which theoretical and ideological disputes often hinder the task of getting concrete answers to difficult questions.
As Piketty writes in the 685-page “Capital,” “Intellectual and political debate about the distribution of wealth has long been based on an abundance of prejudice and a paucity of fact.”
His book has landed on that debate like a bomb. Piketty’s thesis: that the rate of return on capital, such as real estate, dividends and other financial assets, is racing away from the rate of growth required to maintain a healthy economy. If that trend continues for an extended period of time — if wealth becomes ever more concentrated in the hands of a few — then inequality is likely to get worse, says Piketty, 43, who started his academic career as an assistant professor at the Massachusetts Institute of Technology and who now teaches at the Paris School of Economics.
Another reason “Capital” has caught the public’s attention is that inequality is evident in what are by now a host of familiar symptoms. Stagnant pay, except among the super-rich. Soaring health care and education costs. The diminished expectations commonly found in young, especially those lacking college degrees, and old alike, as retirement becomes something to endure rather than to enjoy. And at the bottom of the income distribution, a road to nowhere as the avenues of upward mobility that once led to the American Dream are closed off.
In the U.S., the gap between rich and poor has today reached “spectacular” heights, Piketty says in an interview, rising to levels not seen in a hundred years. And America, a self-described classless society, has been revealed as far more socioeconomically stratified than “old Europe,” notwithstanding its ancient history of inherited wealth.
Click the link for more. It’s depressing, but it’s good for you too!