Apr 24, 2014
You might have heard the buzz about Thomas Piketty and his book "Capital in the Twenty-First Century." Piketty is a 42-year-old French economist who just wrote a nearly 700-page book on capitalism, wealth and rising inequality. And he's getting rock star treatment.
Piketty "has scared the pants off the American Right," writes AlterNet.
Why? Because he "undermines the hallowed tenets of the capitalist catechism," says Jeff Faux in The Nation.
Piketty dispels some of the long-held principles about capitalism, for example, that "a rising tide lifts all boats," or that when workers' productivity rises, so does their economic mobility.
As working people know too well, starting in the 1970s, workers' productivity continued to rise, but wages and benefits flattened. Almost all of the gains from the increased productivity of the last three and a half decades went to corporate investors and the 1 percent.
Piketty analyzed data as far back as the 18th century from the largest developed countries and determined that contrary to the traditional economic belief that economic growth produced more economic benefit for more people, the opposite actually is true: economic growth in these countries resulted in greater inequality. He argues it's not income, but overall wealth that we should be concerned about.
There was just one period in the U.S. when inequality lessened, from the 1930s to 1975. Piketty cites government spending, increased taxes on the very wealthy and estates, and the government's encouragement of and support for workers' bargaining rights as the contributing factors to several decades of shared economic gains. Clearly workers' ability to bargain provided a means to share in the wealth they had created.
With the effective loss of workers' rights – just 6 percent of U.S. private sector workers today have bargaining rights – inequality is greater today than in the gilded age of the 1920s. And according to Piketty, it will get worse.
He writes that the gap between the rich and everyone else will continue to widen, and one day the future will look a lot like the 19th century, where the very rich inherit their wealth rather than working for it. The danger is that the super rich won't be the CEOs who founded companies, but rather their grandchildren who have simply been handed that money.
Piketty proposes a global tax on wealth, in addition to supporting more traditional progressive responses like financial regulation, public investment in education and aid to the poor.
But CWA knows we must do more. The destruction of workers' bargaining rights and two decades of trade deals that have been negotiated by and for the investor class and multinationals are the principal drivers of today's income inequality. That also must change. We're working with allies to restore workers' voices in the political process, because as Piketty makes clear, "economic and political changes are inextricably intertwined."