Wages constitute the lowest share of U.S. GDP, and profits the highest, since the end of World War II. And with heightened accumulations of wealth come heightened accumulations of political power — a shift toward plutocracy to which last week’s Supreme Court decision, permitting the wealthy to contribute to as many electoral campaigns as they wish, adds a helpful push.
Piketty’s primary contention is that it is inherent to capitalism that the returns on capital generally exceed the growth of nations’ economies, save in times of epochal population growth or rare technological breakthroughs, and that this leads to ever-rising concentrations of wealth and power.
"No self-corrective mechanism exists" within capitalism to retard this descent into plutocracy, he writes. Rather, he concludes, its prevention requires political action: He suggests a global tax on capital, which, he admits, is a utopian solution, though others — empowering workers again, increasing the social provision of goods and services — are more readily attainable.
Lewis gives us a great read on today’s latest scam. Piketty gives us the most important work of economics since John Maynard Keynes’ “General Theory.”