Thomas Piketty is a pretty famous man right now. A French economist, Piketty catapulted himself into the limelight with his book Capital In The Twenty-First Century, which was published last August in French and in April in English. The book is a data-based discussion of wealth inequality in Europe and the U.S. over the past three centuries, and it makes an argument that strikes at the heart of economic and social policy.
Piketty’s main theme is that income and wealth inequality is not a bug in the capitalist operating system, but a feature. That is, it’s not a mistake that capitalism tends to concentrate wealth in the hands of the skilled, talented, and fortunate. And, as most economists would argue, this is not necessarily a bad thing. After all, monetary incentive is a powerful motivator for entrepreneurs, and the market mechanism is an efficient allocator of resources — the success of the American economy is a testament to the power of free market capitalism, and one of the features of free market capitalism is inequality.
But ending the conversation here would be neglectful. Even a cursory examination of income and wealth distribution in the U.S. shows not just inequality, but gross inequality. And, more to the point, inequality is increasing due in large part to the advantages that wealth (specifically, capital, financial or otherwise) provides the already wealthy. Worst of all, if we assume that Piketty is right and that the over-concentration of wealth is a real and present danger, then all but the super wealthy will suffer if the trend is left unchecked.
Here are a couple of ways that wealth is being concentrated.