Can Rock-Star Economist Thomas Piketty Re-Write the American Dream?

Search form

Can Rock-Star Economist Thomas Piketty Re-Write the American Dream?

Can Rock-Star Economist Thomas Piketty Re-Write the American Dream?
Fri, 5/2/2014 - by Heidi Moore
This article originally appeared on The Guardian

When the movie is made about the fall of Western capitalism, Thomas Piketty will be played by Colin Firth. Piketty, whom the Financial Times called a "rock-star economist," isn't a household name – but he should be, and he has a better shot than any other economist. He is the author and researcher behind a 700-page economic manifesto, titled "Capital in the Twenty-First Century," that details the path of income inequality over several hundred years.

This sublime nerdishness is, somehow, a huge hit. It is now number one on Amazon's bestseller list and sold out in many bookstores. When Piketty spoke on a panel this month at New York's CUNY with three other economists – two of them Nobel-prize winners, Joseph Stiglitz and Paul Krugman – the Frenchman was the headliner. The event was so packed that the organizers had to create three overflow rooms. Weeks after the release of Capital, intellectuals are still salivating, even calling Piketty the new de Tocqueville.

This is quite a burst of stardom for a man who, despite his understated Gallic charm, is very much the bearer of bad news. Piketty's sublimely nerdy book, packed with graphs, statistics and history, is all evidence for an immensely depressing theory: that the meritocracy of capitalism is a big, fat lie.

Piketty's research, which is immaculate, reaches back hundreds of years to establish a simple thesis: the American dream – and more broadly, the egalitarian promise of Western-style capitalism – does not, and maybe cannot, deliver on its promises. That, he writes, is because economic growth will always be smaller than the profits from any money that is invested. Economic growth is what we all benefit from, but profits from invested money accrue only to the rich.

The consequences of this are clear: those who have family fortunes are the winners, and everyone else doesn't have much of a shot of being wealthy unless they marry into or inherit money. It's Jane Austen all over again, and we've just fooled ourselves that the complicated financial system has changed a thing.

This is a deep point. Many American households, if they are lucky, will grow their wealth at the same rate as the economy. But, because the wealthy are growing their fortunes at a much faster rate, no one else can ever catch up.

Let's repeat that: No one else can ever catch up.

This is where Piketty adds more nuance: It's not just inequality of wealth and income that we're struggling with, but inequality of opportunity. That's of far more concern. In essence, he is saying, we're lying to ourselves if we believe that hard work will lead to wealth. Mainly, wealth reliably leads to wealth. Everything else is chancy. The middle class is playing the economic lottery to improve their lot in life, while the wealthy have a sure thing.

This is clearly fraught – and to some, like theNew York Times columnist David Brooks, it sounds like class war (he calls it "angry progressivism"). Piketty's purpose is not to point out that inequality exists, or that it's growing – both of which have been established ad nauseum by everyone from President Obama to Pope Francis. Piketty's point is that we are actually doomed to inequality.

It's hard to argue with this, really – Piketty's research is too good, too sprawling, too complete. It's as good as fact. It codifies what many suspected. Piketty's point is accepted wisdom in most of Europe, where, in France and Germany, the morality of capitalism is regularly questioned.

But there remains a lot of controversy anyway. Why? Because Piketty wants to change the lever on income inequality by putting a tax on wealth – not on income, which is the stuff of the middle class, but on fortunes themselves, on the money that is invested and reinvested and compounded and grown.

You can see the problem. Whereas many progressives believe Piketty is the economic Messiah they've been waiting for, many on the right loathe where this is going. They've successfully fought tax hikes for years, especially on the estates of the wealthy (Grover Norquist built his career on it). One struggles to sympathize: the wealthy, like corporations, rarely pay the full burden of tax anyway. The biggest barrier they face is that good accountants are hard to find.

All of this must seem familiar, and that's a good thing. Piketty's book, and his charismatic sweep through the pundit classes, are crystallizing a conversation that America should have already had, seriously, a long time time ago. There are two ways to change a society: from the bottom, and from the top. Occupy Wall Street tried it the first way, and paved the road with populism. Thomas Piketty is going for the second way. He has roiled the pundit classes – as Brookings economist Justin Wolfers observed, Piketty's biggest readers are in New York and Washington D.C.

And, yes, Piketty is already talking to the White House.

That's a limited scope, though, and Piketty isn't looking for endorsements. He's looking for action. This is why it's important that the conversation about him extends beyond the sniping of pundits wrapped up in their own agendas and their own speaking fees.

Piketty has to do what no one else has yet: win over regular citizens, who have long heard patronizing speeches about inequality but seen very little political action. Piketty's goal is as ambitious as his research – to change the way wealth is distributed. So far, it's a message that a lot of people like to talk about, but very few want to hear.

Originally published by The Guardian

Article Tabs

FarmDrop and Open Food Network stress the desire to create positive, systemic social change that disrupts the existing dominance of supermarket provision of food.

Republicans are arguing that Wall Street should have the constitutional right to influence politicians and the investment decisions those politicians make on behalf of pension funds and pensioners.

As the outrage in Ferguson takes on new forms and becomes less openly confrontational, the shooting of Michael Brown has started a nationwide dialogue about race, class and American law enforcement.

The vote on Independence is a moment of unprecedented possibility for Scotland to peacefully reject the U.K.'s failed neoliberal agenda.

Grassroots organizations that once made American democracy strong plummeted in the Reagan era – when political parties stopped representing the views of constituents and turned instead to money.

Charlie Hardy, the 75-year-old former Catholic priest now running for Senate, wants to halt NSA spying on ordinary citizens and overturn Citizens United with a Constitutional amendment.

Posted 6 days 17 hours ago

If we want a healthy society that follows its laws and applies them equally to everyone, we must demand a full investigation and criminal prosecutions for everyone involved in the mortgage backed securities fiasco.

Posted 4 days 8 hours ago

The vote on Independence is a moment of unprecedented possibility for Scotland to peacefully reject the U.K.'s failed neoliberal agenda.

Posted 3 days 13 hours ago

From clashes during the Occupy movement to violence this month in Ferguson, Mo., researchers say protests get ugly when officers use aggressive tactics, dress in riot gear and line up like military.

Posted 6 days 17 hours ago

FarmDrop and Open Food Network stress the desire to create positive, systemic social change that disrupts the existing dominance of supermarket provision of food.

Posted 3 days 13 hours ago
How Lawmakers and Lobbyists Keep a Lock on the Private Prison Business

Of all the public services to be outsourced, incarceration -- where the state deprives a person of liberty and assumes responsibility for his or her mental and physical well-being -- should not be auctioned for campaign contributions.

A Rap News summary of the past week's remarkable series of events. It started off as a slow news day, and a routine update on the state of the Free World Order with NSA Director General.

200,000 Greeks March on Parliament to Condemn Austerity

A general strike brought the country to a halt on Wednesday as hundreds of thousands of anti-austerity protesters took to the streets in the first mass confrontation with Athens's three-month-old coalition government.

Attacking Oppression with Laughter

The recent spate of right-wing attacks against reproductive rights, the ongoing foreclosure crisis propagated by Wall Street banks, racist police actions that never seem to end - the injustices can

The Nobel-winning economist Paul Krugman explains how the U.S. is becoming an oligarchy.

Sign Up