So You've Read (or Read About) Piketty. Now What?

While that idea is not likely to be adopted either, its inclusion in the policy debate would likely have the laudable effect of discouraging hedge fund billionaire Pete Peterson and the Wall Street CEOs behind Fix the Debt from ever talking about government deficits again.

Piketty also points out that "according to our estimates, the optimal top tax rate in the developed countries is probably above 80 percent." And yet, he doesn't give this thought the same emphasis that he offers to the global wealth tax, even though it is probably less "utopian" and easier to imagine being enacted.

While the global wealth tax is a fascinating mental exercise, Piketty overemphasizes this idea to the detriment of other, more workable solutions. Polling in the United States shows, for example, that most Americans support some additional taxes on the wealthy. So why give such relatively short shrift to progressive taxation? (To be fair, Piketty does describe progressive taxation as "a crucial component of the social state." But while he characterizes it as facing "serious threat," he never offers it a forceful defense.)

Piketty also misstates the actuarial conditions under which today's pension plans operate, arguing that "in a world where people die between 80 and 90, it is difficult to maintain parameters that were chosen when the life expectancy was between 60 and 70." In fact, most of that change in life expectancy is due to lower infant mortality, a shift that does not affect the financing of pension programs.

You've Read Piketty. Now What?

American economist Dean Baker has written an important reaction to Piketty's book entitled "Economic Policy in a Post-Piketty World." Baker describes the "full bag of policy tools" that are available today. These include a robust financial transactions tax; an end to government-sanctioned monopolies in drug patents; a higher minimum wage; a carbon tax; and an end to monopoly rents in a variety of industries.

"If this post-Piketty agenda sounds a great deal like the pre-Piketty agenda," Baker writes, "it's because the book probably did not change the way most progressives think about the world."

That's true. But Piketty's masterful work provides the populist movement with a new vocabulary, along with a powerful data resource with which to make its arguments.

"Capital" offers activists, analysts and lawmakers a new pair of glasses with which to view our economic landscape. If some of that landscape already looks familiar, that's to be expected. And even when we choose to plot a slightly different course than the one Piketty recommends, he has provided a valuable service.

Thomas Piketty navigates his terrain with three stars to guide him: economics, history and a deep grasp of Enlightenment ethics. That has brought him, and us, to a deeper understanding of inequality's genuinely "terrifying" implications.

Where we go from here is up to us.