From Moyers & Company
The median pay for the top 100 highest-paid CEOs at America’s publicly traded companies was a handsome $13.9 million in 2013. That’s a 9 percent increase from the previous year, according to a new Equilar pay study for The New York Times. Will the rise of a new oligarchy mean the end of democracy?
These types of jumps in executive compensation may have more of an effect on our widening income inequality than previously thought. A new book that’s the talk of academia and the media, Capital in the Twenty-First Century by Thomas Piketty, a 42-year-old who teaches at the Paris School of Economics, shows that two-thirds of America’s increase in income inequality over the past four decades is the result of steep raises given to the country’s highest earners.
In this video Bill Moyers talks with Nobel Prize-winning economist and New York Times columnist Paul Krugman, about Piketty’s “magnificent” new book. According to Krugman:
What Piketty’s really done now is he said, ‘Even those of you who talk about the 1 percent, you don’t really get what’s going on.’ He’s telling us that we are on the road not just to a highly unequal society, but to a society of an oligarchy. A society of inherited wealth. We’re seeing inequalities that will be transferred across generations. We are becoming very much the kind of society we imagined we’re nothing like.
The data, which he assembled with various collaborators in several countries, show that over long periods of time, output per person — productivity — tends to grow at an average of 1 to 1.5 percent. The data also show that average return on investment over long periods of time ranges between 4 and 5 percent.
The problem with these two historic trends, Piketty explains, is that whenever the return on financial capital (investment) is higher than the return on human capital (productivity) for an extended period, it is a matter of simple arithmetic that growing inequality will result. (Steven Pearlstein, Washington Post)
One of the better critiques comes from James K. Galbraith Takes on Thomas Piketty’s “Capital in the Twenty-First Century.”
And from, Martin Wolf, writing for the Financial Times:
For me the most convincing argument against the ongoing rise in economic inequality is that it is incompatible with true equality as citizens. If, as the ancient Athenians believed, participation in public life is a fundamental aspect of human self-realisation, huge inequalities cannot but destroy it. In a society dominated by wealth, money will buy power. Inequality cannot be eliminated. It is inevitable and to a degree even desirable. But, as the Greeks argued, there needs to be moderation in all things. We are not seeing moderate rises in inequality. We should take notice.
My own opinion is that Wolf is correct, huge inequalities have driven the average citizen to think there is no point in participating in public life, in politics, because their vote will not be heard. So far, calls for moderation have gone largely unheeded. In fact, with Citizens United v. Federal Election Commission and McCutcheon, et al. v. Federal Election Commission our sense of powerlessness has only been increasing.
The Economic Policy Institute and the Washington Center for Equitable Growth hosted a presentation by Thomas Piketty—economist from the Paris School of Economics and ground-breaking researcher on income inequality—of the findings in his new book, Capital in the Twenty-First Century. His presentation is followed by a panel discussion moderated by Heather Boushey, Executive Director and Chief Economist of the Washington Center for Equitable Growth, with Josh Bivens, Research and Policy Director of the Economic Policy Institute, Robert M. Solow, Professor Emeritus at the Massachusetts Institute of Technology and Betsey Stevenson, Member of the White House Council of Economic Advisers, serving as discussants.
While Piketty notes that inequality has different dimensions across countries, he concludes with a recommendation: significantly increase the progressivity of both income and wealth taxation. Given the extraordinarily globalized market for capital, he further argues the reach of such taxes must be global as well.
Harvard Book Store welcomes Paris School of Economics professor Thomas Piketty for a discussion of his seminal new work Capital in the Twenty-First Century. What are the grand dynamics that drive the accumulation and distribution of capital? Questions about the long-term evolution of inequality, the concentration of wealth, and the prospects for economic growth lie at the heart of political economy. But satisfactory answers have been hard to find for lack of adequate data and clear guiding theories. In Capital in the Twenty-First Century, Thomas Piketty analyzes a unique collection of data from twenty countries, ranging as far back as the eighteenth century, to uncover key economic and social patterns. His findings will transform debate and set the agenda for the next generation of thought about wealth and inequality.
Piketty shows that modern economic growth and the diffusion of knowledge have allowed us to avoid inequalities on the apocalyptic scale predicted by Karl Marx. But we have not modified the deep structures of capital and inequality as much as we thought in the optimistic decades following World War II. 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. But economic trends are not acts of God. Political action has curbed dangerous inequalities in the past, Piketty says, and may do so again.
Infographics on the distribution of wealth in America, highlighting both the inequality and the difference between our perception of inequality and the actual numbers. The reality is often not what we think it is.