The Inequality Hoax (Encounter Broadsides)
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In this Broadside, James Piereson explains how Piketty’s book is flawed and advances a narrow understanding of the market system. While misjudging the era in which we are living and misunderstanding the sources of inequality, Piketty’s book proposes solutions that will make matters worse for everyone – the wealthy, the middle class, and the poor alike.
the intellectual ammunition with which to fight back. It documents their belief that inequalities of income and wealth have grown rapidly in recent decades in the United States and across the industrial world, and it portrays our era as a new “gilded age” of concentrated wealth and out-of-control capitalism. It suggests that things are getting worse for nearly everyone, save for a narrow slice of the population – the “I percent” – that lives off exploding returns on capital, and it pointedly
left to its own devices and absent government intervention, creates a situation in which returns on capital grow more rapidly than returns on labor and the overall growth in the economy. This is Piketty’s central point, which he takes to be a basic descriptive theorem of the capitalist order. He tries to show that when returns on capital exceed growth in the economy for many decades or generations, owners of capital disproportionately accrue wealth and income, and capital assets gradually claim
inequality has increased since 1980, especially in the United States and Great Britain, that this kind of inequality is built into the nature of capitalism, and that it has been exacerbated by new tax policies that have cut the levies on high incomes and great wealth. These claims are greatly exaggerated. The inequality that he measures is essentially a by-product of the stock-market boom of the past three decades. Since the early 1980s the U.S. stock market, measured by the Dow Jones Industrial
century, and then began to rise again after 1980. This argument makes sense only if one accepts the one-eyed premise that these multifaceted regimes can be assessed on the basis of the single criterion of wealth and income distribution or that the essence of the capitalist order is found solely in returns on capital and in the distribution of wealth and incomes rather than in rising living standards, innovation, and the spread of modern civilization. In each of these three eras, there was much
times in the past, most recently in the 1930s. It may be inevitable that our “golden age” will end sooner or later – but it will be much sooner if Professor Piketty and his supporters have their way. 1 David Gratzer: Why Obama’s Government Takeover of Health Care Will Be a Disaster 2 Michael A. Ledeen: Obama’s Betrayal of Israel 3 John Fund: How the Obama Administration Threatens to Undermine Our Elections 4 Stephen Moore: How Barack Obama is Bankrupting the U.S. Economy 5 Victor