Jun
01
2014

Capital Punishment

A book that takes on inequality rallies friends of the 1 Percent

 

Thomas Piketty, Capital

"Less a work of economic analysis than a bizarre ideological screed," declared the Wall Street Journal.

Who would have thought that the way to kick off a media discussion about inequality in the United States would be to publish an English translation of a nearly 700-page book by a French economist?

Yet despite critics—some vociferous—Thomas Piketty’s Capital in the 21st Century has received widespread attention for its sobering take on the problem of widening inequality.

The book’s main theme is that under capitalism, wealth tends to consolidate—which runs contrary to the free-marketers’ conventional wisdom that inequality decreases in a mature capitalist economy. Piketty shows that when the growth of wealth (much of it inherited) outpaces economic growth, inequality increases, with the lion’s share of those gains going to the top 1 percent. The formula r > g—the rate of return on capital compared to the overall growth rate—has come to define the book’s primary lesson.

The post-war growth of the middle-class in the United States and elsewhere, Piketty concludes, is likely a historical aberration. What can be done? One of Piketty’s suggestions is a global wealth tax.

Right-wing media, to no one’s surprise, were ready to pounce. A review in the Wall Street Journal (4/21/14) declared the book “less a work of economic analysis than a bizarre ideological screed.” Fox News pundit Kim Guilfoyle (4/25/14) declared that Capital “is actually based on economic lies,” while Fox Business Network host Neil Cavuto (4/15/14) boomed: “Liberals are seriously talking about a wealth tax and guess where they got that idea? From the French! The French! Need I say more?”

Rush Limbaugh (cc photo: Nicolas Shayko/Wikimedia)

Rush Limbaugh on Piketty: "He's a wuss." (cc photo: Nicolas Shayko/Wikimedia)

Radio blowhard Rush Limbaugh (4/24/14) had trouble pronouncing Piketty’s name—not that it bothered him: “I couldn’t care less. He’s a wuss.” Limbaugh declared that Democrats’ embrace of such a radical text merely confirmed what he’d been warning about the party: “We know they are deeply committed Marxists. They are fascists. We see it. We’re the victims of it.” Limbaugh added that “if this book is opening peoples’ eyes as to just what the current left is, fine. But I’m a little sad that it’s taken six years.”

Opprobrium wasn’t limited to the far right. The Daily Beast (4/23/14) ran a review by conservative columnist James Poulos that scoffed that while Piketty arrived “with progressives’ two favorite things—statistics and a European accent—…his explanatory socialism is a nonstarter for every American except a handful of media, academic and policy elites.” Poulos asserted that “in virtually every chapter...Piketty is not only wrong but glibly and perilously so.”

The New York Times acknowledged the enthusiasm around the book—“Economist Receives Rock Star Treatment” (4/18/14) was one headline—but with a hint that such popularity might imply mere trendiness. “However original Mr. Piketty’s economic argument may be,” the paper’s Sam Tanenhaus (“Hey, Big Thinker,” 4/27/14) argued, “he is the newest version of a familiar if not exactly common specimen: the overnight intellectual sensation whose stardom reflects the fashions and feelings of the moment.”

The paper’s conservative columnists, Ross Douthat and David Brooks, stood up as Piketty critics. Brooks’ piece (4/24/14) was less about Piketty and more about the state of liberalism and class envy: People on the left profess concern for the poor, but the energy is directed at the top. For these intelligent professionals—who seem to be modeled on a certain New York Times columnist—the

inequality you experience most acutely is not inequality down, toward the poor; it’s inequality up, toward the rich. You go to fundraisers or school functions and there are always hedge fund managers and private equity people around. You get more attention than them at parties, but your whole apartment could fit in their dining room.

Brooks is most perturbed that Piketty doesn’t allow enough for individual agency, presenting a world where ambition and drive (“human capital”) don’t matter much. Piketty takes aim at the concentration of family fortunes, a phenomenon he traces in history and predicts will continue. Brooks counters by pointing out that the big family fortunes “in the past have tended to dissipate and families like the Gateses give a lot away.”

The Times’ liberal columnist Paul Krugman, one of the book’s most prominent fans, posted a rejoinder on his blog (4/25/14), noting that Piketty’s isn’t just a Marxist hunch—it’s how the world has already worked—and that the Gates example is the exception, since “the 10 wealthiest Americans include four Waltons and two Kochs.”

 

Karl Marx

Karl Marx: "back from the dead," according to Ross Douthat.

Though Douthat’s April 25 column included the line “Karl Marx is back from the dead,” he didn’t so much quibble with Piketty’s analysis as argue that the public would choose to do little about widening inequality:

The future he envisions might be much more stable and sustainable than many on the left tend to assume.... Even if the income and wealth distributions look more Victorian, that is, the 99 percent may still be doing well enough to be wary of any political movement that seems too radical, too utopian, too inclined to rock the boat.

For Douthat, it is evident that “the far left remains, for now, politically weak even as it enjoys a miniature intellectual renaissance.” The fix, the conservative columnist wrote, would be to take a page from right-wing Tea Partiers and make a broader, cultural appeal: “While the Marxist revival is interesting enough, to become more relevant it needs to become a little more...reactionary.”

Douthat joked that Capital was “the one book this year that everyone in my profession will be required to pretend to have diligently read.” But not everyone.

Take Bloomberg columnist Megan McArdle (4/22/14), who wrote: “I apologize in advance, because I am going to talk about a book that I have not yet read.” McArdle knew, though, what she thought about it. Concern with inequality, she echoed David Brooks, is “concentrated not among the poor, but among the upper-middle class, which competes with the very rich for status goods and elite opportunities.”

McArdle counsels that “writing checks to the bottom 70 percent would not fix the social breakdown among those without a college diploma—the pattern of marital breakdown showed up early, and strong, among welfare mothers.” Redistributing wealth would harm not just those who have made poor family choices; as she put it, “An unemployment check eases the financial stress of joblessness, but not the psychological pain of being out of work.” It’s not even clear that Piketty’s plan involves any such redistribution, but McArdle has nonetheless spotted the problem in that book she’ll eventually get around to reading.

 

 

Robert Samuelson

Robert Samuelson: If the rich are so powerful, how come they don't get food stamps?

Some objections sought to score more substantive points. Washington Post columnist Robert Samuelson (4/20/14) isn’t sold on the idea that the wealthy exert too much political power:

As for the power of the super-rich, they hardly control most democracies. In the United States, where about 70 percent of federal spending goes to the poor and middle class, the richest 1 percent pay nearly a quarter of federal taxes.

The top 1 percent, though, own 54 percent of the nation’s capital—income-producing wealth (EPI, 4/23/14)—so to pay only a quarter of the taxes is something of an achievement. The low tax rates paid by the very wealthiest are nothing if not a demonstration of that group’s political power; Samuelson isn’t debunking the argument, he’s confirming it.

Samuelson adds, “Class warfare is bruising; today, it would degrade the confidence needed for a stronger recovery.” Of course, that suggests that what is happening now does not qualify as class war.

For all the acclaim for the book that came pouring in from left-liberal quarters, some of the liveliest critiques of the book came from the left—a reminder that while Piketty’s analysis might feel radical by corporate media standards, he most certainly is not. As a Vox.com headline (4/24/14) put it, “Thomas Piketty Doesn’t Hate Capitalism. He Just Wants to Fix It.”

Left Business Observer’s Doug Henwood (Book Forum, 4-5/14) appreciated the book’s historical and analytical rigor, but faulted the author for being “distressingly moderate” when it came to developing solutions. And left-leaning economist James Galbraith (Dissent, Spring/14) pointed out that the book’s revelations about the history of inequality weren’t necessarily new: “In a paper published back in 1999, Thomas Ferguson and I tracked such measures for the United States to 1920—and we found roughly the same pattern as Piketty finds now.”

Nor would the findings surprise most Americans. As the New York Times’ Eduardo Porter (3/12/14) put it, “Piketty’s description of inexorably rising inequality probably fits many Americans’ intuitive understanding of how the world works today.”

Indeed, a 2013 Pew Research Center poll (12/5/13) found that 65 percent of Americans think the gap between rich and poor has gotten larger; by a stunning 76–23 percent, they believe that it is generally true that the rich get richer while the poor get poorer.

Some of the same issues Piketty raises were put on the national media radar by the Occupy Wall Street movement—before the press lost interest (Extra!, 5/12). One suspects that news outlets that are mostly owned by the prime beneficiaries of the forces Piketty describes will not have a longer attention span this time.

Extra! June 2014