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A NEW LOOK AT AN OLD PROBLEM – WAGE INEQUALITY (PART III)

May 16, 2014

A NEW LOOK AT AN OLD PROBLEM – WAGE INEQUALITY (PART III)
As I read deeper and deeper into Piketty’s big and much appreciated book, Capital in the Twenty-First Century, I am almost ready to pronounce his insights in economics to be on a par with Einstein’s celebrated insight of E = mc2 in physics. There is, of course, a difference when citing and comparing relative success in different disciplines. Among other such differences, Einstein’s efforts had scant history to draw from, whereas Piketty’s conclusions are based on some three centuries of economic history in over twenty different countries – thus Einstein (whose biography by Isaacson I am also reading at present) was a genius in contemplative thought while Piketty proceeds to his brilliant conclusions via massive research of facts drawn from economic history over time.
Piketty is a careful academic; he admits weaknesses in some of the research he visited (e.g., Russian and Nazi statistics during their respective tours of horror in which economic statistics were incomplete and fragmentary). He is, as the reader will note later in a quote I will provide, arguably the world’s leading expert on income and wealth inequality. As I have written before, that just happens to be the leading economic and political issue of this day – and which should have been ever since man first came up with the idea of capitalism as an undergirding principle for organizing economies within societies – since it appears (with a few exceptions which may be called anomalies) from economic history that capitalists have taken advantage of their positions to mistreat and under-pay their workers in order to enhance their own wealth and status, thus giving rise to class distinctions, and, as Piketty shows, their relative wealth is directly proportionate to their degree of success in reducing labor’s share of the new wealth created in the productive process. (I finally have factual proof of what I have been arguing anecdotally!)
Piketty’s conclusions, based as they are on painstaking research over fifteen years that covers over twenty countries and three hundred years, cannot be challenged by either left or right wing political hacks who have their own fish to fry with their anecdotal fables designed to maintain the status quo, one in which the superrich would continue to “hog” virtually all new wealth created by the economy (an area he treats brilliantly with findings that should end any so-called “factual issues” between capital and labor). We now have “the goods” on such phony advocates (paid hacks) and now that Piketty has identified the problem with unassailable proof and proposed pragmatic solutions to correct it, the party is (or should be) over, but the superrich will not go quietly into the night. Since they cannot now argue the facts, they will be relegated to arguing the proposed solutions with a new cadre of “advocates.”
I will be writing several more parts to this essay with more specificity as to precisely what Piketty found, his proposed solutions and implications for the future. Till then, I conclude this part with a quote from Paul Krugman: “It seems safe to say that Capital in the Twenty-First Century, the magnum opus of the French economist Thomas Piketty, will be the most important economics book of the year – and maybe of the decade. Piketty, arguably the world’s leading expert on income and wealth, does more than document the growing concentration of income in the hands of a small economic elite. He also makes as powerful case that we’re on the way back to ‘patrimonial capitalism,’ in which the commanding heights of the economy are dominated not just by wealth, but by inherited wealth, in which birth matters more than effort and talent.” John Cassidy, of the New Yorker: “Piketty has written a book that nobody interested in a defining effort of our era can afford to ignore.” I agree. In a word – WOW! GERALD E

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