Common Dreams is one of my favorite websites for understanding our world. Today it reposts an article by Jeff Faux that examines a very hot book, Capital in the Twenty-first Century by Thomas Piketty. The book’s thesis is pretty simple: the rewards of capitalism are now flowing to very few people. After WWII, the opposite was true. Economic expansion built the middle class in America and allowed Europe and Japan to rebuild after a terrible war. Poverty in America shrank. Now the opposite is true. Even though workers are more productive, their pay has declined.
Piketty claims that capitalist growth is fueling income inequality. Looking at capitalist societies over 300 years, he finds that most periods of growth increased inequality. The post-war period in the U.S was an outlier. Piketty refutes the claim that markets are self-correcting. Instead, they benefits most often go to those who do not have to work for a living (big investors, capitalists). Faux is careful to point out that Piketty is not a radical, that he is closer to Keynes than Marx. What excites me about a book like this is that it will challenge the way people think. It will force people to reexamine accepted wisdom, which is often the first step to real change.
PS: In Daily Kos, Mark Sumner criticizes Ross Douthat’s attempt to pooh-pooh Pikkety’s book.
Writing in Huffington Post, Dan Froomkin cuts past the political debate to a bigger, looming problem. While politicians demagogue about jobs, the real problem is wages – low wages. He cites the political writer Jeff Faux who has just written a book entitled The Servant Economy: Where America’s Elite is Sending the Middle Class. Faux looks at falling wages and sees a future where the only jobs that pay will be for those who serve the rich.
I’m not as pessimistic, but I do think that depressed wages will bring another recession soon. People can’t go years without a raise, have their pay cut, and pay more for health insurance without some impact on the economy. As Faux would say, the rich won’t care. They’ve got theirs and they’re looking for more.