WASHINGTON, D.C. - If you think you’ve noticed a lot of talk about inequality of wealth and income lately, you’re absolutely right. Especially if you read The New York Times.
There has been a real surge of interest in the topic of economic inequality since the financial meltdown in 2008-9, as you would expect. The Occupy Wall St. movement gave some political and rhetorical oomph to the issue with its well-honed focus emphasis on the 1% -- the people at the tiptop of the income and wealth charts.
The 1% became a political moniker, a buzzword, because of two economists, Emmanuel Saenz and Thomas Pikkety. They figured out a way to calculate the distribution of income and wealth in the U.S. population historically. Their work showed that the gap between the top 1% and the 99% was wider beginning in the early 2000s than at any point since the Roaring Twenties. There have been a lot of charts. Here’s one:
So, in 2007, the top 1 percent of earners in America received 23.5 percent of all the money earned in the country that year, the highest slice since 1928.
Inequality the Issue is surging again in the news and in Google searches because of the unexpected and whopping popularity of Piketty’s new book, “Capital in the 21st Century.” Despite its 696 pages of academic erudition, it made The New York Times bestseller list and, as I type these words, it is #2 on all of Amazon – a genuine phenom. The book predicts that economic growth is going to be slow globally for a long time and says inequality of wealth will continue and extend to future generations of the currently wealthy unless there is some kind of global tax on wealth, not just income.
Full disclosure: I haven’t read the book yet, though I have read the earlier work he did with Saenz; I hope I have the brains and bandwidth to tackle what is snarkily being called The Most Important Book Ever.
But I have read a ton of interesting stuff that is spinning around the book, which is inspiring a great batch of arguments, insights and analysis. The New York Times in particular seems to have fallen in love, absolutely gorging and binging on the book.
A few morsels, all very good reads:
Fairly rich vs. mega rich
Some commentators seem to think economic inequality isn’t an increasingly important issue for most people, but it is a really huge and irritating issue for the fairly rich who resent the mega rich. The 2 percent are resentful of the 1 percent and the 1 percent are outraged by the .01 percent. And so on.
“The reaction to Piketty is an amazing cultural phenomenon. But it says more about class rivalry within the educated classes than it does about how to really expand opportunity,” writes David Brooks in The New York Times.
If you are a young professional in a major city, you experience inequality firsthand. But the inequality you experience most acutely is not inequality down, toward the poor; it’s inequality up, toward the rich.
You go to fund-raisers or school functions and there are always hedge fund managers and private equity people around. You get more attention than them at parties, but your whole apartment could fit in their dining room. You struggle with tuition, but their kids go off on ski weekends. You wait in line at the post office, but they have staff to do it for them.
Hmmm. Could this be a case of what psychologists call “projection”? Maybe not, as Brooks’ colleague at the Times, the more liberal Eduardo Porter, makes a similar point in his column. “The American political system may eventually act against the interests of the fortunate few at the very top of the pyramid of success,” Porter writes. “But that may be only because many affluent, powerful people just below the topnotch see themselves as losers from the nation’s economic dynamics.”
Global tax on wealth
Tom Edsall, sympathetically surveys the reaction to “Capital” among liberals. In particular he notes the negative response to the idea of a global tax on wealth, which is almost universally seen as impractical and impossible.
But Edsall concludes that Piketty has focused attention in a useful way on wealth as opposed to income, and to inheritance taxes:
Both the shift of attention to wealth and the seriousness with which a proposal to constrain the accumulation of wealth is being taken represent a major change in the contemporary debate over inequality. Few Americans appear to begrudge the multimillion dollar annual compensation of entrepreneurial executives like Steve Jobs or Bill Gates. But inherited and unearned wealth does not command the same legitimacy.
In fact, the emergence of what Piketty calls “patrimonial capitalism” — concentrated wealth and political power passed on from generation to generation in a class-based social order — runs directly counter to the longstanding American commitment to equality of opportunity. Piketty has laid the intellectual groundwork for a challenge to a social and political order based on socioeconomic ranking by wealth stratification.
Now we need effective politicians to articulate this challenge in ways that resonate with a striving electorate determined to achieve a higher standard of living through grit and hard work. Where is the level playing field? Politicians who seek to gain traction on these issues face high hurdles, but only those willing to risk confrontation can address the depth of public discontent, anger and resentment.
Finally, if you want to see a really long list, here’s what comes up when you search “Thomas Piketty review” on the Times site.
Maybe later we’ll take a look at what all-the-news-that-isn’t-the-Times thinks.
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