Tags: Piketty | income | inequality | wealth

Economist Piketty: We Know Little About Income Inequality

By    |   Monday, 06 October 2014 01:52 PM

Despite writing a 700-page book on income inequality, renowned French economist Thomas Piketty says we have much more to learn about the issue.

"We know a little bit more than we used to know, but we still know far too little," says Piketty, speaking at New York University, according to CNNMoney. "The book is trying to put together a large quantity of historical data on the evolution of income and wealth distribution."

In his top-selling book, "Capital in the 21st Century," Piketty argues that income inequality has returned to pre-World War I levels and the wealthiest continue to accumulate wealth faster than other income groups do. The wealthy may have higher incomes, but they also frequently get huge inheritances from parents and grandparents, he says.

"I think this very large concentration of wealth also affects the political system," Piketty says, explaining that wealth provides access to political leaders.

The scholarly analysis became an unexpected best seller, selling out on Amazon and remaining on the New York Times bestseller list for 22 weeks. It also became a lightning rod for controversy and disputes between conservatives and liberals.

Chris Giles at the Financial Times accuses Piketty of making errors in his calculations that cast doubt on his findings.

"It also appears that some of the data are cherry-picked or constructed without an original source."

In response, Piketty says the data might not be perfect but that doesn't change the book's basic conclusions.

However, many economists praise his work. Saying his book might be one of the most important of the year, even the decade, Nobel Prize winning economist Paul Krugman says Piketty exposes a trend toward oligarchy. If current trends continue, the richest Americans will get most of their incomes from investments instead of salaries and much of their wealth from inheritances instead of working.

The economy as well as politics will be dominated by and handful of super wealthy, Krugman writes in The New York Times.

"Great wealth buys great political influence — and not just through campaign contributions. Many conservatives live inside an intellectual bubble of think tanks and captive media that is ultimately financed by a handful of megadonors."

Recent Federal Reserve data backs Piketty's findings, CNNMoney notes.

Incomes for most Americans have been flat or even falling in recent years, while the rich are getting richer. The rising stock market is a major factor for their gains, as they hold a disproportionate share of stocks. The top 10 percent has a median of $282,000 in equities, while middle-class households have $14,000.

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Despite writing a 700-page book on income inequality, renowned French economist Thomas Piketty says we have much more to learn about the issue.
Piketty, income, inequality, wealth
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2014-52-06
Monday, 06 October 2014 01:52 PM
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