The Occupy Wall Street movement in 2011 sought arguments supporting their position against the wealthiest 1 percent, but nowhere could such data be found.
Thomas Piketty’s book “Capital in the Twenty-first Century” provides a sweeping account of rising inequality, based on 15 years of empirical research conducted with other scholars. It’s worth asking, what’s new?
- Piketty focuses on the tax records of the top 1 percent, instead of median income surveys. In particular, he found “the richest 1 percent appropriated 60 percent of the increase in US national income between 1977 and 2007.”
- The book attributes increasing income inequality to the rise of the “supermanager”, not globalisation or technology. The average American CEO today is paid 200 times as much as the typical employee, compared to 20 to 1 in the 1950s.
- Piketty expands his analysis to countries other than the US. He generally found the share of income going to the 1 percent has risen sharply in other nations too, with the United States the winner of the inequality race.
Capital in the Twenty-first Century will provide inspiration for further research grounded in data, shifting away from abstract, theoretical economic models. Perhaps incorporation of big data sets will show if we really are heading towards what Lawrence Summers calls a Downton Abbey economy, where birth matters more than effort or talent.
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(Image credit: New Yorker)