The moment of economic inequality

It may very well be a zeitgeist moment.

When was the last time that a 685-page US$40 book about economics hit number one on Amazon? Probably (surely) never. Well, it’s happened just recently. The title is Capital in the Twenty-First Century, and it’s by French economist Thomas Piketty.  As I write this, it’s still number two.

The book is so popular that publisher Harvard University Press is having a hard time keeping it in bookshops. Here in Australia, it sells for $60, but all bookshops here in Sydney are out of stock. All this for an economics treatise. So far it has sold more than 300,000 hardcover copies in English (plus more than 50,000 in the original French), well exceeding the originally estimated 20,000. It’s still number one on the New York Times hardcover non-fiction list after five weeks. Even the book’s English translator, Arthur Goldhammer, is famous.

Last week’s Time magazine (that arbiter of middle-of-the-road taste, helping us to find the “cultural middle”) has decided that this is something too big to ignore: see this article by Rana Foroohar.  In short, Foroohar writes, this book:
– Proves, irrefutably and clearly, what we’ve all suspected for some time now—the rich ARE getting richer compared to everyone else, and their wealth isn’t trickling down. In fact, it’s trickling up.
– Is going to be remembered as the economic tome of our era.
– Has finally put to death, with data, the fallacies of trickle down economics and the Laffer curve, as well as the increasingly fantastical notion that we can all just bootstrap our way to the Forbes 400 list.

The thesis that Piketty shows is basically that indeed the rich are getting richer (everyone knew this, but Piketty has shown it definitively) and that debt is now flowing to the poorest. He does not use Australian data, and admittedly the situation in the USA is much worse that Australia (more on that another time; suffice to say we are more like Canada when it comes to income inequality, and less like the USA and the UK, which are both much worse), but there are enough parallels that many in Australia are taking note, starting to reference Piketty in public debates.  For a very detailed look with an Australian perspective, see Christopher Sheil’s review (May 2014) on the Evatt Foundation website:  “Astonishing but true, the biggest intellectual topic of conversation in the world today is social inequality”, he writes – although the Australian uptake has, to date, been slow.

Some helpful reading: This article in Salon relates Piketty’s thesis and Elizabeth Warren’s ideas directly to credit card debt. In this article in the New York Review of Books, economist Paul Krugman analyses where he think Piketty has it right and where he does not.

Want to start reading it now? Here is part of the Introduction of the book, on the publisher’s website.  And like the best of academics, Piketty has posted all of his data sets online so people can check them out themselves, as well as his presentation: have a look here.  Australia’s Evatt Foundation has produced a good page of links to reviews and articles about the book.

Capital in the Twenty-First Century book cover

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