Huffington Post reports that inequality in the U.S. is at a wider point than it has been since the Great Depression. Does this mean that we’re on the way to a new crash? I hope not. HuffPo points to the popularity of Thomas Piketty as a reason for hope. The problem I see is that too many Americans have been trained to think all taxes are bad. The super-rich and large corporations have used their lawyers and lobbyists to game the tax system. I don’t see any way that will change any time soon. Americans are too easily distracted by “crisis” stories like Ebola and ISIS. Income inequality affects all of us, especially those under 35. Maybe a crash is the only thing that will wake up Americans.
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.