22 March 2017

Wealth Gap Series

This series explores the widening Wealth Gap and its impact on class and race relations, excerpting heavily from Thomas Piketty, Professor at the Paris School of Economics, who has explored the structural cause of the wealth gap in his book Capital in the Twenty-First Century published in 2014. He created quite a stir, getting both rave reviews and harsh critiques. He brought the issue of a widening wealth gap to the limelight and has shown how war mitigated extreme wealth gaps in the past. And without a discussion and resolution, war may again mitigate the current wealth gap extreme.

Capital in the Twenty-First Century by Thomas Piketty, Professor Paris School of Economics, 2014, Excerpts
The central thesis of this book is that a small gap between the return on capital and the rate of income growth can in the long run have powerful and destabilizing effects on the structure and dynamics of social inequality.

The concentration of wealth and prospects for economic growth lie at the heart of political economy. The main driver of inequality – the tendency of returns on capital to exceed the rate of income growth – generates extreme inequalities that stir discontent and undermine democratic values.

There is no fundamental reason why we should believe that growth is automatically balanced. We should put the question of inequality back at the center of economic analysis and begin asking questions first raised in the nineteenth century. For far too long, economists have neglected the distribution of wealth.

Ultra-rich protect wealth with spread of 'family offices'
16 Mar 2017
The ultra-rich in London are increasingly protecting their wealth through the use of "family offices", says research from the London School of Economics. These are teams of professionals - such as lawyers, financiers and psychologists - employed to ensure the "dynastic wealth" of the super-rich, they support a "bunkered" and "fortified" way of life of the "global super-rich". The growth of extreme wealth, alongside poverty and low-income families, means that there needs to be more analysis of how such wealth is perpetuated, the study suggests.

Obama’s Farewell Address, Excerpts
10 Jan 2017
Our democracy won’t work without a sense that everyone has economic opportunity. Our economy doesn’t work as well or grow as fast when a few prosper at the expense of a growing middle class, and ladders for folks who want to get into the middle class.

Stark inequality is corrosive to our democratic idea. While the top 1 percent has amassed a bigger share of wealth and income, too many of our families in inner cities and in rural counties have been left behind. Convinced that the game is fixed against them. That their government only serves the interest of the powerful. That’s a recipe for more cynicism and polarization in our politics.

If every economic issue is framed as a struggle between a hardworking white middle class and an undeserving minority, then workers of all shades are going to be left fighting for scraps while the wealthy withdraw further into their private enclaves.

Britain's inequality map - stark and growing
02 Dec 2016
Andy Haldane, the Bank of England's chief economist is not only worried about the inequality of those on the lowest incomes versus the very rich, but also with those regions which have fallen behind in the race for economic growth since the financial crisis. Most concerning for a government which has pledged to make the economy work "for all" - which presumably means across geographies as well as income bands - is that the issue is becoming more acute.

UK one of the most unequal countries, says Oxfam
13 Sep 2016
The richest 1% of the UK population owns more than 20 times the wealth of the poorest fifth, according to Oxfam. That made Britain one of the most unequal countries in the developed world and contributed to the vote for Brexit, the charity said. The report said many people in the UK felt locked out of politics and economic opportunity. Rachael Orr, head of Oxfam's UK Program, said: "Inequality is a massive barrier to tackling poverty and has created an economy that clearly isn't working for everyone."

Wealth Over Work
23 Mar 2014
It seems safe to say that “Capital in the Twenty-First Century,” the magnum opus of the French economist Thomas Piketty, will be the most important economics book of the year — and maybe of the decade. Mr. Piketty, arguably the world’s leading expert on income and wealth inequality, does more than document the growing concentration of income in the hands of a small economic elite. He also makes a powerful case that we’re on the way back to “patrimonial capitalism,” in which the commanding heights of the economy are dominated not just by wealth, but also by inherited wealth, in which birth matters more than effort and talent.

Wikipedia: Wealth inequality in the United States
The rich are accumulating more assets while the middle and working classes are just getting by. Currently, the richest 1% hold about 38% of all privately held wealth in the United States while the bottom 90% held 73% of all debt. According to the New York Times, the "richest 1 percent in the United States now own more wealth than the bottom 90 percent".

The distributive nature of tax policy has been suggested by some economists and politicians such as Emmanuel Saez, Thomas Piketty, and Barack Obama to perpetuate economic inequality in America by steering large sums of wealth into the hands of the wealthiest Americans. This claim has created much controversy and debate within the academic and political spheres.

Racial disparities: There are many causes, but inheritance might be the most important. Inheritance can directly link the disadvantaged economic position and prospects of today's blacks to the disadvantaged positions of their parents' and grandparents' generations.

In Capital in the Twenty-First Century, French economist Thomas Piketty argues that "extremely high levels" of wealth inequality are "incompatible with the meritocratic values and principles of social justice fundamental to modern democratic societies" and that "the risk of a drift towards oligarchy is real and gives little reason for optimism about where the United States is headed.

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