Issue link: https://digital.copcomm.com/i/335006
51 JUL-AUG 14 / CINEMONTAGE several hundred years of data and using computer power unheard of by his predecessors. Capital challenges a fundamental assumption of American and European politics that economic growth will continue to deflect popular anger over the unequal distribution of wealth. Instead, inequality left alone will surely grow. When Piketty spoke on a panel in April at New York's City University New York with three other economists — two of them Nobel Prize winners Joseph Stiglitz and Paul Krugman — the Frenchman was the headliner. Attendance so overwhelmed the venue that the organizers had to create three overflow rooms, adds Moore. The book is a "bona fide phenomenon," writes Krugman in The New York Times. Piketty's book is "serious, discourse-changing scholarship in a way most best sellers aren't." Conservatives have taken note. James Pethokoukis of the American Enterprise Institute writes in The National Review that Piketty's conclusions must be refuted. If not, they "will spread among the clerisy and reshape the political economic landscape on which all future policy battles will be waged." Piketty's central argument, writes Eric Alterman in The Nation, "presents a profound challenge to our political system and its response to the economic crisis of the past decade." As Piketty puts it, an "apparently small gap between the return on capital and the rate of growth can in the long run have powerful and destabilizing effects on the structure and dynamics of social inequality." Further, "there is absolutely no doubt that the increase of inequality in the United States contributed to the nation's financial instability. The reason is simple: One consequence of increasing inequality was virtual stagnation of the purchasing power of the lower and middle classes in the United States, which inevitably made it more likely that modest households would take on debt." "Strong forces in the economy could, if unchecked, lead to an ever greater concentration of wealth," writes Josh Bivens for The Economic Policy Institute. "The fact that income from wealth (capital gains, interest, dividends and so on) goes disproportionately to those with the highest incomes means that rising income from wealth leads to greater income inequality." In the United States, the share of income from wealth going to the top 1 percent has significantly increased in the last few decades, rising from 33.5 percent of all income from wealth in 1979 to 54 percent in 2010. "What's really new about Capital," writes Krugman, "is the way it demolishes that most cherished of conservative myths, the insistence that we're living in a meritocracy in which great wealth is earned and deserved." For decades, conservatives rebutted attempts to make soaring incomes at the top into a political issue by claiming that those lofty incomes "are a justified reward for services rendered. Don't call them the 1 percent, or the wealthy; call them 'job creators.' "But how do you make that defense, if the rich derive much of their income not from the work they do but from the assets they own?" asks Krugman. "And what if great wealth comes increasingly not from enterprise but from inheritance?" The ultimate solution, Piketty writes, is a worldwide progressive tax on private capital and its transactions. Piketty's proposal sets a "realistic marker for the level and scope of radical change necessary to deal with the grim conclusion of his quite credible economic analysis," writes Jeff Faux in The Nation. "The analysis makes hash of the conservative claim that there are 'market solutions' to inequality, as well as the liberal hope that small-bore reforms will eventually achieve social justice on the cheap." AFL-CIO HAILS WARREN BILL Senator Elizabeth Warren (D-Massachusetts) introduced a bill in May that allows borrowers to refinance outstanding student loan debt, writes Sarah Lewis in a piece called "Why Sen. Warren's Refinance Bill Is a Big Deal" for the AFL-CIO blog Now. The Bank on Students Emergency Loan Refinancing Act is "an excellent step toward easing the crushing $1.2 trillion student loan debt borne by graduates and reducing barriers to higher education for working families." BERNIE SANDERS CONSIDERS PRESIDENTIAL RUN Senator Bernie Sanders (I-Vermont) has asked the American The ultimate solution, Piketty writes, is a worldwide progressive tax on private capital and its transactions. Thomas Pikutty. Photo by Charles Platiau/ REUTERS CineMontage_Jul-Aug_14-4.indd 51 6/18/14 5:55 PM