Piketty is cultured and high-minded in his prose style, but that doesn't prevent him from writing paragraphs like the one in which he describes the United States as "on the one hand ... A country of egalitarian promise, a land of opportunity for millions of immigrants of modest background; (and) on the other ... a land of extremely brutal inequality, especially in relation to race, whose effects are still quite visible."
He is also capable of displaying an extremely dry wit, as when he points out that US academic economists are upper-income earners, "many of whom believe that the economy of the United States is working fairly well and ... That it rewards talent and merit accurately and precisely."
"This," Piketty adds wryly, "is a very comprehensible human reaction."
With so much of our policy debate dominated by such economists, Piketty's pointed observations can be an extremely useful tool for shifting the terms of debate. He is generous towards economists of earlier generations like Simon Kuznets, who he suggests may have overstated (even if subconsciously) the egalitarian merits of capitalism out of anti-Communist fervor during the Cold War.
But Piketty rightly targets his profession's obsession with abstract theorems, noting that his colleagues' methods "rely on an immoderate use of mathematical models, which are frequently no more than an excuse for occupying the terrain and masking the vacuity of the content."
As the young people reportedly say: Snap!
These preoccupations, Piketty suggests, have led to the rise of executive "super-salaries," tolerated by shareholders and board members who wrongly believe they reflect executives' genuine market value. They have also led policymakers to wrongly conclude that the extremely wealthy, even those who are wealthy through inheritance, can only be described as "deserving."
Presumably the economics profession's tendency towards mathematical abstraction, combined with the "enlightened self-interest" of some of its members, has led it to participate in crafting the ideological justification for increasingly extreme wealth inequality. In addition, as Piketty points out, "the way one tries to measure inequality is never neutral."
Nor are his concerns strictly methodological. He is especially concerned by those who, whether economists are not, argue against the evidence that wealth in present-day capitalism is based on merit. He characterizes this as "meritocratic extremism," of which he says:
"This kind of argument could well laid the groundwork for greater and more violent inequality in the future. The world to come may well combine the worst of two past worlds: both very large inequality of inherited wealth and very high wage inequalities justified in terms of merit and productivity (claims with very little factual basis ...)."
Concludes Piketty: "Meritocratic extremism can thus lead to a race between super managers and rentiers, to the detriment of those who are neither."
And "detriment" is putting it mildly.
What Is To Be Done?
Piketty doesn't just analyze the problem of global capitalism. He also prescribes solutions, and he does so with a scrupulous aversion toward ideological assumptions of any kind. That approach undoubtedly helped him come up with creative solutions for the inequality problem, the most noted of which has been the "global wealth tax."
That is, as Piketty concedes, a "utopian idea." The fact that it's utopian doesn't make it any less important, and the concept gives us a new way to look at the national and global economy. If nothing else, it's an important thought experiment. Throughout the book, Piketty is enthusiastic about taxation as a source of valuable data. For that reason alone, even a modest global wealth tax would create the most informative map of the world's wealth in history.
As Piketty also notes, a wealth tax -- which he proposes to impose only on the very wealthy -- could also be used to solve the problem of public debt. As an example, he writes that "a flat tax of 15 percent on private wealth would yield nearly a year's worth of national income and thus allow for immediate reimbursement of all outstanding public debt."
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