Capital in the Twenty-First Century by
Thomas Piketty, 2014, Excerpts
Inherited wealth is a long
term process. The advantage of owning things is that one can continue to
consume and accumulate without having to work. It is not an insignificant thing
when one country works for another and pays out a substantial share of its
output as dividends and rent to foreigners over a long period of time.
When the rate of return on
capital significantly exceeds the growth rate of the economy, then inherited
wealth grows faster than output and income. It is inevitable that inherited
wealth will dominate wealth amassed from a lifetime’s labor by a wide margin,
and the concentration of wealth will attain extremely high levels – levels
incompatible with the meritocratic values and principles of social justice
fundamental to modern democratic societies.
Wealthy people are constantly
coming up with new and ever more sophisticated legal structures to house their
fortunes. Trust funds, foundations, and the like often serve to avoid taxes,
but they also constrain the freedom of future generations to do as they please
with the associated assets.
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