Talk about a change of pace! After starting the year with a handful of enjoyable fiction reads, my first non-fiction choice of the new year was certainly not light reading.
Considered a classic economic explainer in some more intellectual circles, Piketty’s late-90s analysis of income inequality is a deep dive into economics and statistics over time and across borders. Highly informative but not especially readable, made worse, I suspect, by the fact that it is a translation rather than an English-language work.
Not a socialist treatise by any means, the book is structured as an evaluation of the available data and literature in the area of income inequality and the various means of addressing it via redistributive efforts. Some of the facets Piketty highlights seem almost prescient for the time in which it was written, with whole sections discussing the substitution of capital for labor (aka automation) and the role of human capital (education) in explaining wage inequality.
The international perspective, contrasting different policies implemented by the US and UK with those embraced by the major economies of the European continent, provides the data for interesting case studies in the causes, effects, and potential solutions for rising inequality. It also illustrates that, while rising inequality today is a global issue, domestic economic policy can have a measurable impact on inequality within a nation.
But what I found most striking about the work as a whole, and what makes me look forward to reading the longer Capital in the 21st Century, is the rational construction of his argument. Piketty makes a case for tax-based transfers as the most efficient means of addressing inequality, rooted not in socialist principles of labor power but rather from a perspective of non-interference in the price-setting functions of capitalism.
Unions, higher minimum wages, and other left-wing crusades are exposed as inefficient alternatives to what Piketty calls “fiscal redistribution”. The right-wing view of the market as above improvement or regulation is similarly eviscerated by data on market failures, including discrimination and human capital development.
The text of the work sometimes bogs down under the data, statistics, and tables used to analyse such a complex issue of economic and social behavior, but the conclusions are convincing. They are also deeply unsettling, when you look at the overall direction of politics in the United States and the nascent right-wing movements across Europe, because the very policies that the data and historical record point to as keys to prosperity are being demonized by leaders all across the developed world.