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Capital in the 21st Century by Thomas Piketty

September 21, 2018


This was another reco from David Plotz on the Slate Political Gabfest. A little tougher to get through than most of his selections, even as an audiobook. To be expected, I guess, from a 25-hour book on economics. It’s not boring (relatively—it is a book about economics), it’s just dense. I wish I could find the article I recently read arguing that it’s good to read things that are over your head.

As the title clearly suggests, this is a book about capital. Wealth. In a sentence, the rich are getting richer and we should tax them more. The first part is backed by abundant research that leads to Picketty’s conclusion that capital wealth increases faster than wage-driven growth (expressed by the author as r > g). Said plainly, if you have money (savings, investments, etc.), it will grow faster than the typical wages will grow. Which leads to a widening wealth gap, widening inequality, etc.

I’m not an economist, but the concepts in the book are presented simply, in a straightforward manner. And they make sense. For all kinds of reasons—inheritance, the rising cost of education, the tax code, corporate pay structures—the rich get richer.

There’s little to dispute in the observation that the wealth gap is widening. Still, it’s hard to fully comprehend how extreme inequality has become. The world’s richest 1% own more than half the world’s wealth. Eight of the world’s richest people (six Americans) own more wealth than the half the globe’s population. Eight people are richer than 3.7 billion. Moral questions aside, there’s ample evidence to suggest that inequality is politically and, at some point, economically destabilizing. It’s hard to make an argument that it’s good thing.



That said, there’s plenty to argue about when it comes to solutions. Piketty’s solution is a dramatically progressive income tax and a modest global tax on capital. I’m not qualified to argue either way on taxes, but something about Piketty’s solution feels like it’s a remedy for the symptom but not the cause. At the very least, I’d like to see a proposal for how that tax revenue would be used. What underlying cause would it help remedy?

My own audacious proposal would start with a Manhattan Project-level investment in education, including public pre-school, tuition-free college and higher (in the magnitude of 2x) salaries for public school teachers. Then I think you’re starting to attack the opportunity gap.

The English translation of Capital in the 21st Century (Piketty first published the book in French) was a surprise hit when it was released in 2014. It drew a heaping of superlatives (as well as a fair number of critiques) from economists and sold over a million copies. That’s pretty impressive for a brick of a book on economics. It’s well-written, engaging and provocative. And the audiobook is well-performed. Maybe not a candidate for a binge-listen, but pretty decent in small doses.

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