Feb
5
Blog Post #3 Andrew Chen
February 5, 2015 | Leave a Comment
The articles given revolved around Thomas Piketty and his economics book “Capital in the Twenty-First Century.” It does seem to invoke the same feeling as hearing Karl Marx’s “The Communist Manifesto” – one may suspect Piketty as denouncing capitalism. Inequality is something that unintentionally gets derived from capitalism. With free trade, and little government intervention on the market, of course a small percentage will hold most of the wealth, at the expense of the majority.
The book took the world by storm, leading to debates on the outlook for global inequality. Piketty uses a large amount of data, over a decade’s worth of research, to draw out map of inequality, since the Industrial Revolution. With all of this research, it adds a level of experience and renown for Piketty, who states that the importance of wealth is reasserting back to levels before the first world war. This drew criticism from those who do not share Piketty’s views that the future will look like the past, whereas others say Piketty’s views are more ideologically driven.
However, because of Piketty’s book, the focus of inequality has been shed on the top one percent, where they had been previously ignored in the debate of inequality. I think this shift from focusing on the gap between the poor and the well-off to the one percent brings more ideas and possible policy revisions to the table. I noticed that more than once, the articles have stated that the elite today have earned the tremendous amount of money, rather than inherited it, as it was in the nineteenth century. As much as this notion is true, the fact that the wealth is being controlled by families of the wealthy corporations also ring some alarms. As a solution, Piketty calls for a form of taxation on wealth and inheritance to limit inequality. However, this may be hard to implement as the already wealthy will be sure to resist such policies. Who doesn’t like getting/having money?
I thought John Cassidy’s article on Piketty’s novel was interesting, as it uses charts to display Piketty’s points. Piketty and his group wasn’t the first to look at inequality through the use of charts, but they did use different sources of data, such as tax records and other countries. Looking at the first chart in the article, the reader can see the changes of income inequality in the United States from 1910-2010. It rose from 1910-1930, but declined during the time period of World War I and World War II. However, it’s been on the rise since 1980 – leading the the visual of the famous “U” shape. The same “U” shape can be seen when looking at the graphs of the top one percent in the United States and in Anglo-Saxon countries during the same time period. Does this suggest that everyone is effected by events that alter the economy? Though more roughly, the graph for developing countries also displays the same “U” shape, which leads me to question and rethink inequality altogether. Is inequality something that can’t be helped, no matter where in the world one resides in? This is what the data suggests, but just purely looking at data doesn’t make it sufficient either.
One point from the Economist that I’d like to refute is Piketty’s belief that an 80% tax rate on incomes above $500,000 as incredulous, and preposterous. There will be no way that policy will pass, with the shape of the government as of now. Not only will the wealthy dissent, but protesters of the progressive global tax that Piketty wants to implement will want to shoot down the policy as well. Because there’s no supporting evidence to why we should concentrate on curbing wealth concentration, the author of this article states that Piketty dismisses the argument that entrepreneurship and risk taking is undermined due to a redistribution point of view. One question that sticks out to me while reading these articles is how can the topic of inequality be tackled within the government, for all those who support policies aimed from redistribution and wealth equality?
