Time There are many reasons why French academic Thomas Piketty’s 685-page tome, “Capital in the 21st
Century,” has vaulted to the top of the Amazon.com best seller list and
is being discussed with equal fervor by the world’s top economic policy
makers and middle class Americans who wonder why they haven’t gotten a
raise in years. The main reason is that it proves, irrefutably and
clearly, what we’ve all suspected for some time now —the rich ARE
getting richer compared to everyone else, and their wealth isn’t
trickling down. In fact, it’s trickling up.
Piketty’s 15 years of painstaking data collection—he poured over
centuries worth of tax records in places like France, the U.S., Germany,
Japan and the U.K—provides clear proof that in lieu of major events
like World Wars or government interventions like the New Deal, the rich
take a greater and greater share of the world’s economic pie. That’s
because the gains on capital (meaning, investments) outpace those on
GDP. Result: people with lots of investments take a bigger chunk of the
world’s wealth, relative to everyone else, with every passing year. The
only time that really changes is when the rich lose a bundle (as they
often do in times of global conflict) or growth gets jump started via
rebuilding (as it sometimes does after wars).[...]
That’s one of Piketty’s biggest messages–inequality will slowly but
surely undermine the population’s faith in the system. He doesn’t
believe, as Marx did, that capitalism would simply burn itself out over
time. In fact, he says that the more perfect and advanced markets become
(at least, in economic terms), the better they work and the more fully
they serve the rich. But he does believe that rising inequality leads to
a less perfect union, and a likelihood of major social unrest that
mirrors the sort that his native France went through in the late 1700s.
Indeed, the subsequent detailed collection of wealth data in the form of
elaborate income and tax records made France a particularly rich data
collection ground for his book. (Bureaucracy is good for something!)[...]