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Income Inequality Drives Economic Book Into US Best-Seller List

Income Inequality Drives Economic Book Into US Best-Seller Listi
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Mil Arcega
May 16, 2014 11:44 PM
It’s an unlikely best seller -- catapulting a soft-spoken French economist into rock star status and possible Nobel Prize contention. Capital in the 21st Century by Thomas Piketty examines the history of income inequality in the U.S. and Europe since the 18th century. The book has sold more than 100,000 copies in the U.S., but as VOA's Mil Arcega reports, it is not without its critics.

Income Inequality Drives Economic Book Into US Best-Seller List

— It’s an unlikely best seller, catapulting a soft-spoken French economist into rock star status and possible Nobel Prize contention.

Capital in the 21st Century by Thomas Piketty examines the history of income inequality in the U.S. and Europe since the 18th century.

The book is number one in the non-fiction book category of The New York Times and sold out in its first week on Amazon. It presents a compelling case for something many have long suspected - that the rich are getting richer. 

“You know, if two-thirds of this growth goes to the top 1 percent, it’s not clear that this is a good deal for the rest of the population, Piketty said.

Using charts and tax data going back to the start of the industrial age, Piketty’s grand theory is that, over time, capital or wealth grows faster than economic output; but, the controversy centers on the author's policy solutions, among them a global tax on wealth.
 
Critics say such punitive measures would hurt everyone.

“I disagree with pretty much all of his policy recommendations, but, even beyond that, in the sort of purely analytical part, I think he exaggerates how much capital has grown over the last 100 years,” said Stan Veuger, a political economist at the conservative American Enterprise Institute.

Veuger argues much of the wealth accumulation in the U.S. has been due to the rise in home ownership; but, others say that does not account for the growing concentration of wealth among a privileged few.

“Perhaps there’s something more general about a problem where inequality in a democracy is going to lead to the rich prevailing despite the rules that we have on the books that should normally prevent that from being the case,” said New York University's David Stasavage.

And emerging economies are not immune. In China, Piketty says negative population growth will drive a wedge between rich and poor.

“Already, you know, inheritance of assets is becoming a big issue and access to real estate property in larger Chinese cities where you have some people inherit from the property of their parents. And, you know, some migrants will be completely unable to access property."

Piketty hopes the book sparks more discussion. That's a view shared by Yale professor Robert Shiller, who, after winning the Nobel prize for economics, told VOA that rising income inequality is the biggest problem facing the world.

“We should think now about a contingency plan for the possibility of much worse inequality and how do we stop that? Well, it has to be some form of taxation of the rich.”

At nearly 700 pages, Piketty's book is not an easy read, but both fans and critics say it's bound to generate heated discussion in a U.S. election year likely to be dominated by economic issues.

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Comments
     
by: Cranksy from: USA
May 18, 2014 12:57 AM
What is meant by "a global tax on wealth"?

In Response

by: Cranksy from: USA
May 21, 2014 3:42 PM
@marcega Thank you for the specific explanation and the article itself

In Response

by: marcega from: Washington DC
May 19, 2014 2:40 PM
@Cranksy -- The global tax idea may be the most controversial part of Piketty's book, but he says it's just one policy recommendation and not the point of the book. By way of explanation, this is what newrepublic.com had to say regarding Piketty's proposal for a global tax on welath: "The concept is actually pretty straightforward. Taxing capital means taxing net wealth—in other words, taxing the assets a person has rather than the income that person makes. That would include everything from land and houses to patents and software to stocks and bonds to art and yachts, minus all debts.

The tax, in Piketty’s vision, would be progressive: Those with more assets would pay more. For instance, Piketty suggests that the tax would be zero for those with less than a million euros in assets. For those with between one and five million euros, it would be one percent. Above five million euros, it would be two percent. He also proposed a much higher tax (five or ten percent) on fortunes larger than a billion euros. (1 euro = $1.38 right now.)" Whether such a tax would ever come to pass is highly unlikely but it may be enough to get the conversation started on income inequality. Thanks for your comments!
Mil Arcega


by: Hovhannes from: Montevideo
May 17, 2014 2:05 PM
I don't think I'm going to read this book.


by: Donald Fraser Miles from: Elliot Lake, Canada
May 17, 2014 9:15 AM
Picketty is correct in his analysis of the probable implementation of an asset based tax sometime in the future. It would seem logical in tough public finance times to tax the assets as well as income above a certain level of assets. Perhaps a maximum tax could be determined which is fair to all concerned that enables the government to tax either the assets or income of the wealthy. A minimum and maximum tax payment could then be calculated for all based on asset and income levels.

In Response

by: Cranksy from: USA
May 18, 2014 12:52 AM
Mr. Miles, do you know if what you describe in your comment is what is meant in the article by "a global tax on wealth."


by: Major_Original from: USA
May 17, 2014 9:08 AM
A short short summary of historical growth (in US) of "money made on money" -- as compared to money made through employment (wages & benefits) is available on
http://www.bobmeijer.com/sitebuildercontent/IEM_D.htm

It appears to confirm Piketty's thesis.

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