12 January 2017

Wealth Gap

Capital in the Twenty-First Century by Thomas Piketty, 2014, Excerpts

Physical reality of inequality is visible to the naked eye. Peasant and noble, worker and factory owner, waiter and banker: each has his or her own unique vantage point and sees important aspects of how other people live and what relations of power and domination exist between social groups, and these observations shape each person’s judgment of what is and is not just. There is a fundamentally subjective and psychological dimension to inequality, which inevitably gives rise to political conflict.

From 1977 to 2007, the richest 10 percent appropriated three-quarters of the growth. The richest 1 percent alone absorbed nearly 60 percent of the total increase in US national income in this period. In the United States, income inequality in 2000-2010 regained the record levels observed in 1910-1920. Capital ownership is increasingly concentrated once again today.

An economy and society cannot continue functioning indefinitely with such extreme divergence between social groups. The widening wealth gap raises many questions as to its long term consequences. The way this large divergence of income distribution has evolved demands an explanation.

The unlimited growth of global wealth inequality, which is currently increasing at a rate that cannot be sustained in the long run, ought to worry even the most fervent champions of the self-regulated market. It is an illusion to think that the laws of the market economy ensure that inequality of wealth will decrease and harmonious stability will be achieved.


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