In his surprise best-seller, Thomas Piketty warns that growing wealth inequality will have a corrosive impact on our democratic institutions.
By
Don’t
feel bad if you were busy and missed the buzz around the new book, Capital in the Twenty-First
Century.
It’s not
every day that a 685-page book about wealth inequality written by a French
economist lands on best-seller lists next to Danielle Steele’s steamy new
novel, First Sight.
The
New York Timescrowd is so excited that
they put its author, Thomas Piketty, on the front page of the Sunday Style
section alongside celebrity photos and spring fashion tips.
Capital is a surprisingly readable tome. Realizing that 106 of
the 685 pages are footnotes makes it easier to bear. In it, Piketty weaves the
economic story of our times through history and literature. His decades of
impeccable research make it indispensable to anyone concerned about growing
economic inequality.
You’ve
probably heard that the rich are growing richer. But Piketty reports that the
concentration of wealth is more extreme than we imagined. The focus on the
wealthiest 1 percent is distracting us from the dizzying concentration of
wealth among the top one-tenth of 1 percent.
The
largest wealth gains are flowing to the top one-in-a-thousand households. For
example, the 400 richest Americans possess combined assets of over $2 trillion.
They now have as much wealth as all 41 million
African Americans.
Piketty
warns us that growing wealth inequality will have a corrosive impact on our
democratic institutions. A new generation of wealth dynasties is emerging,
similar to what our nation witnessed a century ago during the first Gilded Age.
Imagine what we could see 20 years from now: a country whose politics and
culture is dominated by the offspring of families with familiar names.
The
oligarchs of tomorrow are likely to have names like Walton, Zuckerberg, Soros,
Adelson, Trump, and Koch, even if they never work a day in their lives.
Piketty
has his critics, but most of them don’t seem to have read his book at all or
done more than skim its many pages. A Wall Street Journal review
equated Piketty’s work to the “evils of Stalinism.” Most of his critics proffer
the kinds of empty complaints that arise in any discussion about inequality and
taxation, dismissing his observations as socialist, anti-business, or both.
The
French economist is no proponent of Marxist-style state ownership. He admires
the dynamism of the private sector in the United States and the entrepreneurial
spirit. But he worries that unfettered capitalism, left to its own natural
tendencies, will widen disparities in wealth and power.
So,
what’s the best solution to growing inequality? Piketty calls for a global tax
on wealth to put a brake on the build-up of wealth dynasties. Taxes, he
explains, go to the heart of reducing extreme wealth inequality.
“Without
taxes, society has no common destiny, and collective action is
impossible,” he writes.
Here in
the United States, the federal estate tax is our only meaningful levy on the
inherited wealth of multi-millionaires and billionaires. Only couples with over $10.5 million in wealth are technically required to
pay it. Yet our estate tax is riddled with loopholes
In 2013,
casino mogul Sheldon Adelson engineered 30 complicated trusts to escape $2.8
billion in estate taxes and hand his heirs $8 billion of his fortune tax-free.
The Walton family pioneered the use of these billionaire loopholes to place its
treasure chests outside the reach of the IRS for generations to come.
The
first implication here in the United States of Piketty’s work is for us to
demand that Congress plug the holes undermining America’s estate tax. Without
timely action, we’ll see the rich become dynasties and everyone else robbed of
any opportunity to rise above the social station to which we were born.
Chuck Collins is a senior scholar at the Institute for
Policy Studies and co-editor of www.inequality.org. He is co-author, with Bill
Gates Sr., of Wealth and Our
Commonwealth: Why America Should Tax Accumulated Fortunes. Distributed via
OtherWords.org