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Capitalism causes wealth inequality

2014-01-29

Here’s an article that discusses a controversial new book by economist Thomas Pikketty: http://www.nytimes.com/2014/01/29/opinion/capitalism-vs-democracy.html?action=click&contentCollection=Science&module=MostEmailed&version=Full&region=Marginalia&src=me&pgtype=article  In the book, Pikketty argues that worsening inequality is an inevitable outcome of free market capitalism.  Recent work by many scholars has edged around this conclusion, but Pikketty is the first to come right out and say it.

The solution to this problem is equally controversial: a global income tax.  It must be global to prevent wealth from escaping to lax countries.  Of course, being global makes it almost impossible to implement.

The alternative to a restorative income tax is worsening inequality and eventual social revolution.  Most experts agree that really severe inequality is socially unsustainable, and that increasing unrest will result.  In the past, revolutions have occurred in the presence of extreme inequality: the French revolution and the Russian revolution are the two most typical examples.

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