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Saturday, May 31, 2014

An economics book to obsess you

"The core message of this enormous and enormously important book can be delivered in a few lines: Left to its own devices, wealth inevitably tends to concentrate in capitalist economies. There is no "natural" mechanism inherent in the structure of such economies for inhibiting, much less reversing, that tendency. Only crises like war and depression, or political interventions like taxation (which, to the upper classes, would be a crisis), can do the trick. And Thomas Piketty has two centuries of data to prove his point." --economics commentator Doug Henwood
As Annalee Newitz points out on io9, Henwood specializes in talking about the dark side of capitalism.  However, Piketty's thesis is very persuasive. In a word, he says that there will always be a one-per-cent.  Wealth drifts -- or zooms, according to the economic climate -- to a few at the top. World Wars One and Two destroyed a lot of wealth, along with a nasty Great Depression in between, and the years after 1945 gave the rest of the hardworking population a chance to catch up. In the Western world, at any rate, there was a general feeling that there should be some kind of wealth equality. But, since the 1980s, mankind has been reverting to type. The rich get richer and richer .... and richer ... while 75% of the population work incredibly hard to be moderately well-off, and there is that sad, embarrassing 20% who will never make it over the poverty line.
And, as French economist Thomas Piketty says, it really is embarrassing.  With globalization poverty should be left behind, but instead we have a super-wealthy global elite. He argues for a fix by taxing the rich -- heavily taxing the rich. It would not only make the situation more fair, but it would discourage the current craziness for huge pay packets for senior executives, along with all the golden parachutes, handshakes and what have you.
The rich, as Henwood also points out, would consider that another major economic crisis, but hell, this thesis surely is seductive.

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