Princeton Trained Political Scientist Savors Thomas Piketty

 

 

ART LERMANPICKETTY, THOMASJANE AUSTEN

Our own Prof. Arthur Lerman! I would add as a preface to his concise book notes, that Piketty translated into English is remarkable in 2 ways: 1. he is very light on economic jargon, 2. is is thick with references to literature and history–as Art says– and not exactly the trend in economic writing these days on this side of the Atlantic.~~ f.l.s.

I just finished Thomas Piketty, Capital in the Twenty-First Century (2014). This is what I understand to be (some of) his basic argument:
The free market system automatically moves towards economic inequality.
 
The more wealth one has, from inheritance or other income, the better the advice on how to invest it one can afford. So  the wealthier fortunes almost always grow more rapidly–and more securely– than their lesser counterparts.
 
Concerning salaries and other compensation for work, income inequality is encouraged by CEOs who–in conjunction with docile boards of directors–have the power to set their own incomes. (One way to counter the setting of obscenely high salaries is a progressive tax–which becomes confiscatory as incomes become too high. In such cases the CEO finds that all his/her extra salary will go to the government, so there will be no incentive for sky high compensation.)
Only something like progressive taxes (on wealth better than income) can make for a fair distribution of economic resources in society.
And the tax system has to be international–regionally, or better,globally–so that wealth cannot be transferred to other countries to avoid the taxes.
 
And Piketty backs this up with voluminous statistical date–enhanced by all sorts of other sources, even fascinating references to the economic circumstances of the characters in Jane Austen’s Sense and Sensibility.

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