Why has inequality increased dramatically since the Great Recession in 2009 when the opposite happened when the Great Depression ended nearly eight decades earlier? The short answer: When investment returns exceed economic growth, the rich get richer, increasing inequality, according to French economist Thomas Piketty in his excellent new book “Capital in the Twenty-First Century.” He predicts the future will be vastly more unequal, thanks to tax laws that allow virtually unlimited inheritances to pass from generation to generation. This sort of out-of-control inequality recalls similar class divides in 18th and 19th century France that were reversed only by sharp-edged popular responses. The good news is that such increasing inequality is not inevitable. The degree of inequality results not from natural forces or individual choices but from government policy. This is comforting to those of us who been making this argument for years, especially since even The Economist, that staid British magazine devoted to the interests of the investor class, has embraced Piketty’s theory.
Posted on: Sun, 23 Mar 2014 16:27:08 +0000
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