Thomas Piketty, a French economist trained at MIT and a professor at the Paris School of Economics, recently published a book two decades in the making, titled Capital in the 21st Century. The book has gone viral the old-fashioned way; the publishing house in Harvard is clean out of copies and is frantically printing more, and Amazon’s limitless warehouses are out of stock, too.
It’s not often that a book from the dour, obscure discipline of economics becomes a sensation, but each generation seems to receive one. The 1980s had Milton Friedman, the 1930s had John Maynard Keynes, the mid- and late-19th century had Karl Marx, the early 19th century had David Ricardo, and the late 18th century had Adam Smith.
These names are emblazoned in political history as a result of hard-nosed dedication and opportune timing. Marx would have likely remained obscure were it not for the revolutions of 1848, which forced him and Friedrich Engels to quickly churn out their manifesto. Keynes’ research on the nature of unemployment was all too relevant for millions during the Great Depression.
Now, Piketty stands atop the rubble of the 2008 financial crisis (and the still ongoing depression) and confirms what the vast majority of Americans have long suspected, but until now have had difficulty articulating: the ultra-rich have continued accumulating vast amounts of wealth from capital while most everyone else is relying on stagnating incomes.
Piketty’s findings are as damning as they are uncontroversial; the United States is massively, dangerously unequal. In this sense, Piketty’s book is a swelling culmination of political events, academic findings, and the spreading realization among the majority of Americans that their country’s economic and, consequently, political systems are not benefiting them.The consequences of economic inequality have been obvious to the growing ranks of independent voters for years. The real problem in American politics is not that the two parties “can’t get along.” The real problem is that they are utterly
unrepresentative of the actual American populace and favor the interests of the very few, wealthy elite at the expense of the many.
The consequences of Citizens United and its recent reaffirmation in the Supreme Court’s McCutcheon ruling will, with Piketty’s book as a lens, graduate from being a disgrace to outright criminal recklessness.
Just prior to the release of Piketty’s book, Princeton researchers looked at data comparing how politicians vote with the desires of wealthy donors versus the desires of the non-wealthy. Their conclusion: the United States can no longer be described as a democracy or a republic in any meaningful way. The only classification that is appropriate is oligarchy.
The conclusions of Piketty and Princeton’s academics are, to put it delicately, related.
Additionally, Piketty articulates what very few in the Occupy Wall Street movement could muster. For the vast majority of Millennials (Generation Rent), Piketty’s thesis has long been a foregone conclusion: most of us will not be able to comfortably live the same lifestyles as our parents. The upward economic mobility we were promised if we did “all the right things” is now best reserved for derisive irony.
At the same time, Piketty’s work will also serve as an impetus for a new consensus. American political discourse will and already is dramatically shifting as a result. That’s not to say it wasn’t already on its way.
President Obama highlighted economic inequality in his last State of the Union. Yet, in the immediate term, Piketty will do what the communicator-in-chief could not: totally and finally end the long expired debate over whether economic inequality is even worth talking about. The old conservative trope that economic inequality does not matter is already being vacated by its former preachers. Now begins the more dire, consequential debate: what are we going to do about it?
Piketty’s central policy proposal is a global tax on wealth. Less grandiosely, at the national level, the U.S. should institute an 80 percent tax on wealth. Wealth, of course, is not to be confused with income. Piketty thinks taxation on income is a detrimental waste of time because it does not address the central problem at hand: the returns of capital are outpacing economic growth.
Return on capital is unearned income from investments. For Piketty, this is the source of the massive economic gulf between the very, very rich (not the 1% but the .001%) and the rest of society, and it should be -- it must be -- reduced if American capitalism and democracy are to return to health. Piketty’s proposal has been widely dismissed as “unrealistic” and “unlikely to happen anytime soon,” but the fact that such a timid, subdued economist is proffering it in this book shows the urgency with which the United States must confront this problem.
Independent voters need to decide where they stand on this issue because it has direct consequences on the viability of any independent political movement.
Photo Credit: Reuters / Charles Platiau