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Piketty's charge: How a French economist 'rock star' is 'freaking out' the super rich

Published: Thursday, April 24 2014 2:00 p.m. MDT

Thomas Piketty, a French economist, talks about his new book, "Capital in the Twenty-First Century," at the Graduate Center, City University of New York. Screen capture from YouTube.com.

The Graduate Center, CUNY via YouTube

Just looking at the headlines about Thomas Picketty shows that something is up. The Wall Street Journal says he "Revives Marx."

The New York Times calls him a "Rock Star."

MarketWatch says he is a "policy challenge."

Salon calls him "The right's new public enemy No. 1" who has "conservatives terrified."

Time says Piketty's best-selling book, "Capital in the Twenty-First Century" is "Freaking Out the Super Wealthy."

Mediapart, a French newspaper, says, "C'est un bulldozer." It is a bulldozer. (Who knew that French for "bulldozer" was "bulldozer?")

Bloomberg, tongue-in-an-ironic-cheek, calls his tome "The Most Important Book Ever." Then Bloomberg adds how the book "Is All Wrong."

Wealth gap

What Piketty has done, according to the official book description on Amazon, is look at the growing economic inequality and concentration of wealth. He examines data from the 1700s and forward and finds social and economic patterns that he says show what is at fault.

Modern economics has stopped the nightmare inequality predictions of Karl Marx, but the inherent structures of capitalism are still going to produce huge inequality — and have today. "The main driver of inequality — the tendency of returns on capital to exceed the rate of economic growth — today threatens to generate extreme inequalities that stir discontent and undermine democratic values," the book description says.

In other words, capital (investments and the ability to invest) usually grows faster than economic growth, and since the rich are the ones with the most wealth to invest, they will get richer and richer. "But economic trends are not acts of God. Political action has curbed dangerous inequalities in the past, Piketty says, and may do so again."

Or, as Thomas B. Edsall in the New York Times puts it, "worsening inequality is an inevitable outcome of free market capitalism." Capitalism always leads to inequality.

Edsall also summarizes Piketty's next conclusion: "(Piketty) contends that capitalism's inherent dynamic propels powerful forces that threaten democratic societies." How does capitalism threaten democracy? Entrepreneurs, who own the businesses (i.e. control capital), dominate those who only own their own labor (workers).

Edsall then quotes Piketty: “ ‘When pay setters set their own pay, there's no limit,' unless 'confiscatory tax rates' are imposed." Or, in other words, the rich will make sure they get all the money unless the government stops them.

Piketty says, according to Edsall, a "global wealth tax" is a solution.

Liberal love

As Jordan Weissmann writes in Slate, Piketty has "handed liberals a coherent framework that justifies the discomfort that they probably already felt about the wealth gap."

Piketty doesn't focus on income but on wealth, Weissmann says. It isn't about what people make, but about how much they own. The wealthy are not getting rich from their work or talent, but from their wealth, Weissmann says.

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