I have been on the SA Library waiting list for many weeks waiting on “Capital in the Twenty-First Century,” a really hot economics book on income inequality. Currently, I am #6 out of 87, so my wait is soon over. But this week, Time magazine provided an excellent review of the book and author, and after reading the article, I feel like I cheated a bit with Cliff Notes. In any event, this is what I learned:
- Based on his review of historical records going back hundreds of years in 30 countries, Piketty has concluded that income inequality almost always gets worse because, “Since the rate of return on capital is naturally greater than the rate of growth in the economy as a whole, people who get most of their wealth from investments inevitably grow richer compared with those who get their money from economy and wages.” The only exceptions are war or direct governmental intervention. That makes sense.
- Reform in the tax code must do more than tinker with progressivity; rather, it must consider wealth as a whole, such as real property and intangible assets. Warren Buffet’s tax rate should not be less than his secretary’s. That makes sense.
- Other measures to reduce inequality include boosting access to education, increasing capital-gains taxes, and closing corporate tax loopholes. That makes sense.
The book is 685-pages long; I wonder if it will be as enjoyable as the Time article.