As I write this, Thomas Piketty's book Capital in the Twenty-First Century is the number one seller on Amazon.com. It's been deemed an "important book" by a bunch of smart people. Why not? It validates many of the preconceived notions progressives have about capitalism: Inequality is growing. Mobility is shrinking. Meritocracy is dead. We all live in a sprawling zero-sum fallacy.
The book has also sparked nonstop conversation in political and media circles. Though it's best to let economists debunk Piketty's methodology and data, it is worth pointing out that liberal pundits and writers have enthusiastically and unconditionally embraced not only a book on economics but a hard-left manifesto.
Now, I realize we're all supposed to accept the fact that conservatives are alone in embracing fringe economic ideas. But how does a book that evokes Karl Marx and talks about tweaking the Soviet experiment find so much love from people who consider themselves rational, evidence-driven moderates?
Put it this way: It's unlikely that Democrats would have praised a book like this 20 years ago—or even 10. Nowadays, Jack Lew—better known as the treasury secretary of the United States of America—takes time to chitchat with the author.
Piketty, a professor at the Paris School of Economics, argues that capitalism allocates resources efficiently but unfairly apportions income. And the excessive accumulation of wealth by the 1 percent—nay, the 0.01 percent—is not only corrupt but an inequality that makes democracy unsustainable. And it's going to get worse. So only a massive transfer of wealth could make our nation whole again.
I'd ask whether there are any historical examples that prove that skewed wealth in a generally prosperous nation is more damaging to its democratic institutions than the reallocation of wealth by a coercive state. But then I realize that as with any Marxist revival, the answer is: This time, we're gonna do it right!
Judging from the political rhetoric of the day, liberals already believe that higher taxes on the wealthy can create more opportunity for the poor and middle class. Though some of us would argue that the nexus between high taxes and economic growth is tenuous, debating whether the top marginal tax rate should be 25 or 33 or 35 percent is well within the boundaries of a centrist debate. But that's not Piketty's position.
Here's how Daniel Shuchman put it in a recent Wall Street Journal review:
"Mr. Piketty urges an 80 percent tax rate on incomes starting at '$500,000 or $1 million.' This is not to raise money for education or to increase unemployment benefits. Quite the contrary, he does not expect such a tax to bring in much revenue, because its purpose is simply 'to put an end to such incomes.'"
Imagine there are no rich people. You can say he's a dreamer, but he's not the only one.
Piketty also advocates a 60 percent tax rate on those making $200,000 and an additional worldwide tax on wealth. Do his fans want to eliminate high-wage earners to create a fairer society? Is $1 million too low? How about anyone making $5 million a year? Or $10 million? Does that sound crazy?
The fact is that the tax hikes offered by even the most progressive elected Democrats wouldn't alter the dynamics of "fairness" in a society with a $16 trillion gross domestic product. To put it into perspective, ending Bush-era cuts may net the treasury $80 billion yearly. If Piketty's clairvoyance is to be trusted—and I'm assured it can—we will need to transfer trillions of dollars from one class to another just to save our society from disaster. And none of this, according to the author, will destroy economic growth.
Like many progressives, Piketty doesn't really believe that most people deserve their wealth anyway, so confiscating it presents no real moral dilemma. He also argues that we can measure a person's productivity and the value of a worker (namely, low-skilled laborers) while arguing that other groups of workers (namely, the kind of people he doesn't admire) are bequeathed undeserved, "arbitrary" salaries. What tangible benefit does a stockbroker or a kulak or an explanatory journalist offer society, after all?
The thing is that some of us still believe that capitalism fosters meritocratic values. Or I should say, we believe that free markets are the best game in town. Not that long ago, this was a nearly universal position. A lot of people used to believe that even the disruptions of capitalism—the "caprices of technology," as Piketty dismisses them—that rattle "social order" also happen to generate mobility, dynamism, and growth. Today this probably qualifies as Ayn Rand-style extremism.
Then again, I haven't read Rand since college (or maybe it was high school), but if I still believed she was the most prophetic writer of her generation, I might feel compelled to defend her ideas. But Piketty's utopian notions and authoritarian inclinations—ones that I'm pretty sure most Americans (and probably most Democrats) would still find off-putting—do not seem to rattle the left-wing press one bit. Though Piketty's economic data might be worth studying and debating, his political ideas are unworthy of discussion.