The fundamental problem is that over time, the return on capital (r) tends to be greater than a country’s rate of economic growth (g), and as long as r > g the wealth of the wealthy will inevitably compound upwards towards an ever-rising income inequality gap.
Piketty suggests that the problem was already underway in the 19th century, but that two World Wars and the Great Depression in the early 20th century (along with extremely high levels of taxation and/or inflation in many countries) broke the trend for a period of time, but it is now underway again.
Ultimately, Piketty suggests that the best solution is a concerted globally-coordinated effort to tax (extreme) wealth, and that ignoring the problem will just lead to ever greater compounding of inequality (as long as the r > g dynamic holds).
This book is not a light read — weighing in at a whopping 696 pages — but if you want to be up to speed on the latest thinking about income inequality and the potential solutions that may be proposed in the future (as Piketty has been on a “rock star” world tour with world leaders and policy influencers), you can’t do better than go right to the source.
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