Who’s flying this thing?

“CAPITAL in the 21st Century“by French economist Thomas Piketty has attracted praise and invective on its way to the top of the bestseller list. The scope of Piketty’s book also references the clashes between the police and miners at Marikana two years ago.

Mark John asked Piketty:

Is inequality a fact of life?

The main conclusion of the book is that there are many forces going in all directions. History shows you have forces pushing in the direction of reducing inequalities, such as the transmission of skills and knowledge.

But you also have forces in the direction of rising inequality, notably because of the tendency of the rate of return to exceed the growth rate in the very long run. This is particularly likely to happen if we have a slowdown in the growth rate, especially due to a slowdown in population growth.

What must be done?

We need to set up a system with more transparency about wealth so that we can adapt our tax system and our tax rate to what we observe.

If, after all that, we don’t need very progressive taxation, then fine. But we shouldn’t wait for this to happen — there’s no pilot in the plane and we need to put one there.

Some call you a “modern Marx”. What do you say?

Marx’s main conclusion was that the rate of return would ultimately tend towards zero — that there would be a final catastrophe with a falling rate of profit.

I don’t think there is any good historical evidence for this claim and there is no logic behind it either. —