{"id":61995,"date":"2014-03-23T09:00:39","date_gmt":"2014-03-23T14:00:39","guid":{"rendered":"http:\/\/blogs.lclark.edu\/hart-landsberg\/?p=2014"},"modified":"2014-03-21T00:40:53","modified_gmt":"2014-03-21T05:40:53","slug":"why-income-inequality-might-get-even-worse","status":"publish","type":"post","link":"https:\/\/thesocietypages.org\/socimages\/2014\/03\/23\/why-income-inequality-might-get-even-worse\/","title":{"rendered":"Why Income Inequality Will Likely Keep Getting Worse"},"content":{"rendered":"

Thomas\u00a0Piketty has just published a massive new book\u00a0tackling the explosive growth in income inequality. \u00a0Here’s what it looked like in Europe and the United States in 2010 (source<\/a>):
\n\"14\"<\/a>
\nA New York Times<\/em> review of the book,\u00a0Capital in the Twenty-First Century<\/em>,\u00a0begins<\/a> as follows:<\/p>\n

What if inequality were to continue growing years or decades into the future? Say the richest 1 percent of the population amassed a quarter of the nation\u2019s income,\u00a0up from about a fifth today<\/a>. What about half?<\/p>\n

To believe Thomas Piketty of the Paris School of Economics, this future is not just possible. It is likely…<\/p>\n

His most startling news is that the belief that inequality will eventually stabilize and subside on its own, a long-held tenet of free market capitalism, is wrong. Rather, the economic forces concentrating more and more wealth into the hands of the fortunate few are almost sure to prevail for a very long time.<\/p>\n

Piketty\u2019s pessimistic view is based on his argument that income generated from capital normally grows faster than the economy or income from wages.\u00a0 This means that the private owners of capital benefit disproportionately from growth, which makes it easier for them to increase their asset holdings and by extension future income.\u00a0 And, since wealth and income translate into political power, we face a self-reinforcing dynamic leading to ever growing inequality.<\/p>\n

This suggests that embracing a system based on maximizing the returns to private owners of capital is a mistake for the great majority of working people.\u00a0A recent study by the investment bank Credit Suisse provides more evidence for this conclusion.\u00a0 As Michael Burke explains<\/a>,<\/p>\n

The study… shows that long-term growth rates of GDP in selected industrialized economies are negatively correlated with financial returns to shareholders.<\/p>\n

That is, the best returns for shareholders are from countries where GDP growth has been slowest, and vice versa. Where growth has been strongest, shareholder returns are weakest…<\/p>\n

The negative correlation [seen in the chart below] does not prove negative causality. But it does support the theory which suggests that the interests of shareholders are contrary to the interests of economic growth and the well-being of the population.<\/p>\n

\"mb\"<\/a><\/p>\n

All this information is worth keeping in mind the next time business and political leaders tell us that the key to our well-being is boosting business confidence, the market, or private returns on investment.<\/p>\n

Cross-posted at Reports from the Economic Front<\/a>.<\/em><\/p>\nMartin Hart-Landsberg is a professor of economics at Lewis and Clark College<\/a>. You can follow him at Reports from the Economic Front<\/a>.<\/span>","protected":false},"excerpt":{"rendered":"

Thomas Piketty is an expert on income inequality.  He and Emmanuel Saez have produced some of the best work measuring its explosive growth. Piketty has just published a massive new book on the subject called “Capital in the Twenty-First Century.”  A New York Times review of it by Eduardo Porter begins as follows: What if […]<\/p>\n","protected":false},"author":1853,"featured_media":62080,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[29,36,98,2127,3920],"class_list":["post-61995","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-class","tag-economics","tag-capitalism","tag-nation-european-union","tag-nation-united-states"],"jetpack_featured_media_url":"https:\/\/thesocietypages.org\/socimages\/files\/2014\/03\/15.jpg","_links":{"self":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/61995","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/users\/1853"}],"replies":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/comments?post=61995"}],"version-history":[{"count":5,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/61995\/revisions"}],"predecessor-version":[{"id":62090,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/61995\/revisions\/62090"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/media\/62080"}],"wp:attachment":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/media?parent=61995"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/categories?post=61995"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/tags?post=61995"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}