The Reality of Inequality

Paul Krugman participated in a panel discussion after a talk by Thomas Piketty at the CUNY Graduate Center (Piketty is of late quite famous for his Capital in the 21st Century). Krugman's notes on it in his blog are tantalizing and enlightening. Here's a taste:

This brings me to my second point about Piketty, which is that his work greatly reinforces the notion that we may face a political-economy spiral of inequality, in which great wealth brings great power, which is used to reinforce the concentration of wealth. That was a concern even when we thought we were facing a one-generation dispersion of economic success. But it becomes much more of a concern when one realizes that we’re talking about creating an environment favorable to “patrimonial capitalism”, of sustained dominance by family dynasties.

And let me say that while the core of Piketty’s work is his economic analysis, his discussion of the political economy of dynastic wealth is a major additional highlight. I was especially struck by the somewhat paradoxical contrast between Belle Epoque France and Gilded Age America: a notionally egalitarian society in which anything that might challenge the privileges of inherited wealth was beyond the pale, versus a society that celebrated financial success but in which it was considered reasonable and respectable to advocate high taxation for the explicit purpose of reducing inequality. It seems to me that we want some real scholarship — from political scientists, not (or not just) economists — to figure out that contrast, and learn lessons that might help us break the cycle of rising dynastic power we face today.

When the vastly wealthy can control the political dynamics, it's game over for the masses. And that division -- between capital and labor -- is just another of the divisions that rive our society today.

Note. I've had a bit of an epiphany about division in our society and its implications and multiple iterations. It will be a theme of mine for some time to come. Piketty's explication of income inequality will be a powerful part of what I've discovered -- or believe to have discovered. Stay tuned.

Speaking of tuned, you will be able to tune in to the Piketty talk when the CUNY Graduate Center posts its YouTube of it. You'll find a link to it in the upper right corner of this page. I'll be watching and waiting and then watching, too. (As of now, it's not there yet...)