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Runaway capitalism projected unless preempted

March 13, 2014

‘s NYT article, A Relentless Widening of Disparity in Wealth, on “Capital in the Twenty-First Century,” by Thomas Piketty:

What if inequality were to continue growing years or decades into the future? Say the richest 1 percent of the population amassed a quarter of the nation’s income, up from about a fifth today. What about half? …

To believe Thomas Piketty of the Paris School of Economics, this future is not just possible. It is likely.

Professor Piketty’s description of inexorably rising inequality probably fits many Americans’ intuitive understanding of how the world works today. But it cuts hard against the grain of economic orthodoxy that prevailed throughout the second half of the 20th century and still holds sway today. It was shaped during the early years of the Cold War by the Belorussian-born American economist Simon Kuznets …

Glancing back across history from the present-day United States, it looks as if Kuznets’s curve swerved way off target …

In “Capital in the Twenty-First Century,” Professor Piketty offers a general theory of capitalism that returns distribution to the center of the analysis. Branko Milanovic, an expert on the global distribution of income at the City University of New York’s Graduate Center, called it “one of the watershed books in economic thinking.

And check out the graphs in Porter’s article, “A Relentless Widening of Disparity in Wealth.” Lets hope the wealth of data we have today continues and can help increasingly re-balance the economy, given the political will of the people, before it’s too late. As the description of the book on Amazon.com says,

The main driver of inequality–the tendency of returns on capital to exceed the rate of economic growth–today threatens to generate extreme inequalities that stir discontent and undermine democratic values. But economic trends are not acts of God. Political action has curbed dangerous inequalities in the past, Piketty says, and may do so again.

Update via Mark Thoma: Wealth over Work by Paul Krugman, on the drift towards oligarchy and Thomas Piketty’s “Capital in the Twentt-First Century.”

Further update, Brad DeLong via Washington Center for Equitable Growth: Dialogue: Eleven (so Far) Worthwhile Reviews of and Reflections on Thomas Piketty’s “Capital in the Twenty-First Century”: Wednesday Focus: March 26, 2014

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