Toward the end of the Economic Policy Institute’s forum Tuesday featuring economist Thomas Piketty, he was asked what he would consider the most serious consequence of the historic levels of wealth inequality he documents in his new book, “Capital in the 21st Century.” Almost without hesitation, he says, it’s how it affects “the working of our democratic institutions.”
When wealth inequality gets too extreme, as he says it has in the United States, “there is a sense that the political institutions are just captured by the top income and the top class group. Pre-World War I is clearly an example, and I think we need to have a serious discussion about whether we are going to be in the same situation in this country.”
As Paul Krugman writes in his review of Piketty’s book, “Before World War I the one percent received around a fifth of total income in both Britain and the United States. By 1950 that share had been cut by more than half. But since 1980 the one percent has seen its income share surge again—and in the United States it’s back to what it was a century ago.”
And thus, while the solutions to the economic problems working people face are pretty obvious and relatively simple, the politics of actually getting those solutions implemented are increasingly hard. That’s because the solutions involve the beneficiaries of wealth inequality giving up a sliver of their advantage, so that others can share more of the wealth they helped create.
Piketty argued in his talk at EPI that economic growth in and of itself is no assurance that the 99 percent will receive an increasing share of that growth. That can only happen through more progressive and more aggressive tax policies, Piketty said. The panelists who shared the stage with Piketty – Heather Boushey, executive director and chief economist of the Washington Center for Equitable Growth; Josh Bivens, research and policy director of the Economic Policy Institute; Robert M. Solow, professor emeritus at the Massachusetts Institute of Technology, and Betsey Stevenson, member of the White House Council of Economic Advisers – offered their own policy solutions, ranging from restoring power to unions to ensuring children had equal access to such basics as prenatal care, early childhood nutrition and universal preschool.
But the people who have bought and paid for our political system either do not see those policy changes in their interest, or at the very least do not see it as their obligation to share their cost.
The last time the country faced such dominance of its economy and its political institutions by the top 1 percent, it took a depression and two world wars to change that dynamic and make possible the growth of a broad, robust middle class. We don’t want another world war, but Piketty’s insights into today’s economy makes it clear that we do need a political revolution that puts our democracy back into the hands of all of the people.