The world has in fact moved on, a long way, in the last 25 years, and not in a direction people are going to like. Why not? Because we are now seeing not only immense disparities in income and wealth, but we're seeing them get solidly entrenched in ways that make upward mobility a permanent thing of the past , for ever more Americans. We're seeing fixed inequalities that will, for the first time in many decades, be transferred and preserved across generations. In short, we are becoming the kind of society that many people still imagine we are nothing like. And such people are in for a rude awakening.
Piketty's key point
Invested capital tends to produce real returns of at least 6%, while our economic growth is always much slower.
What that means is that if a family has a large fortune, the inheritors of that large fortune can not only live very, very well. But quite beyond their extraordinarily lavish standard of living they will increasingly be able to put a large fraction of the income from that fortune into investments that will bring them at least 6% in the way of a return. Therefore that fortune will grow faster than the economy, and much faster than wages -- which will continue to shrink (in terms of their buying power), as dynastic wealth grows steadily larger.
It will then eventually become obvious to one and all that the big dynastic fortunes are taking an ever-growing share of total, national wealth. And these fortunes will then pass on to the next generation an even larger share than they would have been able to pass on, in decades past.
What's the realistic impact of this on working people?
While part of the nation's total income is always going to go to labor, we now know (by the logic outlined above) that it is certain to be an ever diminishing fraction of that total national income. Meanwhile, the part of the nation's income that comes from capital is going to not just get ever larger, but will be ever more confined to the hands of a very few.
The other critically important thing Piketty talks about, towards the end of the book, is that when you have (as Teddy Roosevelt pointed out long ago) a few people who are so wealthy they can effectively buy the political system ever more completely, then that political system is going to end up serving their interests ever more completely and ever more exclusively. And that will of course reinforce and replenish, ever more, this shift of income and wealth from the rest of us to the very top.
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