On the Occasion of Thomas Piketty’s Capital in the Twenty-First Century… (1)

I would love to read French economist Thomas Piketty’s recent bestseller Capital in the Twenty-First Century, but I most likely won’t. I don’t take well to hard economics, so nearly 700 pages of economic concepts, jargon, math and graphs would be a forced march I might not survive. Nonetheless, journalist Ezra Klein’s news website Vox calls the book the “most important economics book of the year, if not the decade” and has a substantial summary of it on which I would like to hazard some thoughts.

Piketty’s book has been all over the news the past few weeks, and the consensus seems to be that the true value of the book lies in the nuts and bolts--the unprecedented amount of data that backs up his conclusions--but we have all heard much about one of the main themes: economic inequality. Capital in the Twenty-First Century reminds us that income inequality is bad enough, but wealth inequality is even worse, and it’s worsening in developed nations around the globe.

From Vox:

 

Most of us have seen some version of the above presented countless times in a staggering array of visual forms on the Internet. Yet this stark inequality doesn't seem to sink in with many people. The piece on Vox asks why more people don't notice. I usually phrase it slightly differently to myself: Why don't more people care about this? 

I have always suspected there is something generational in this. While baby boomers spent their youth in the affluent post-War years, they became adults in the 1970s when the slide for America’s middle class was just beginning to pick up speed. Then they spent their middle years in the 1980s when the situation began to get heavy. Their experiences in youth told them things are better in America than elsewhere and their experiences as adults have, with each passing decade, told them economic inequality is simply a constant you can’t do anything about. Both beliefs tend to undercut the drive to protest.

Many of the economic changes in question are so gradual over time that many people have never had a good view of the big picture: They aren’t aware of how things used to be different or of how drastically they have worsened even during their own lifetime. You have to broaden your perspective through learning in history, politics and economics to grasp anything beyond sound bites, and that isn’t easy, especially when working to pay the bills takes about every ounce of energy you’ve got. It’s easier to keep believing in the American dream. It may not exist anymore, but it helps ease the pain.

According to Vox, Piketty’s data shows there's something to my generational approach:

“The life experience of the non-Millenials alive today contradicted this narrative [of inequality]. World War I directly destroyed some wealth, and also led to very high levels of taxation and inflation as wartime finance measures. Then came the Great Depression in which many fortunes were wiped out. Then came World War II which directly destroyed even more wealth (as in cities were literally burned to the ground) and was associated with even more extreme wartime finance measures. Then came a fast period of postwar growth associated with European reconstruction and the unleashing of long-suppressed consumption impulses. It's only over the past 20 or 30 years that the underlying dynamic has reasserted itself.”

Younger generations were raised on the dogmas of former generations, but their life experiences have been different. Many in my own generation graduated university only to find it suited them for little more than getting another degree. Living with Mom and Dad after graduation, working part-time jobs and whittling down crushing student debt is common. In the end, you get a job for which you’re overeducated--a job you’re likely to lose when the next financial crisis strikes. Meanwhile, your parents are elderly, living in poverty, and wondering wft, only they’re old enough to spell it out.

Perhaps that partially accounts for why so many anti-establishment voices are gaining strength, whether it’s Occupy Wall Street, the Tea Party or Anonymous. Many are now coming to realize what wasn’t as easily discernible before:

Something is wrong.

 

(more to follow)