On the Occasion of Thomas Piketty’s Capital in the Twenty-First Century… (2)

(continued from Part 1)

My last blog post inspired by the publication of Thomas Piketty’s Capital in the Twenty-First Century ended with a conclusion we all know from the economic inequality around us: Something is wrong.

And, Piketty informs us, it’s going to get worse.

For a while in the 20th Century, wealth was fluid as various economic and political shocks destroyed capital and recreated it, but now that those events are behind us, capital has begun doing what it does: accumulating for some and disappearing for others. Those who have capital pass it on in the form of inheritances to their children, who then begin amassing more, while those without capital don’t pass on shit. The world taking shape is, according to Piketty, a society that looks a lot like 19th Century Europe. You have your class, I have mine, and nothing short of a mysterious benefactor out of the pages of Charles Dickens is going to make me upwardly mobile.

The world isn’t without solutions, but are we prepared to accept them?

I’m reminded of an intriguing essay in Italian philosopher and politician Gianni Vattimo’s Nihilism & Emancipation, in which the author outlines what a robust progressive program might look like in today’s world. It’s part manifesto and part wishful thinking, so there is a sense he doesn’t expect governments to adopt his proposals anytime soon, but one of his prescriptions is the abolishment of inheritances. When the wealthy die, the government would reclaim their wealth and funnel it back to society through government programs, many of which are dedicated to making sure that everyone gets an equal start in life and has certain basics covered throughout their lifetime:

“A serious political program would have to focus on at least three aspects of the problem: first, the circumstances in which individuals start out (hence: limits on the right to inherit and a basic endowment for everyone, for example housing at age twenty, guaranteed education, guaranteed employment); next, emergency situations or natural ones, like illness and old age that make people socially vulnerable . . . ; and finally, security and the quality of life.”

I drew a big exclamation mark in the margin when I read that. Abolishment of inheritances is a radical proposal. Good Americans shift uncomfortably in their seats. We have trouble accepting our own paltry tax that only affects estates worth well over five million dollars. Wouldn’t removing inheritances serve as an incredible disincentive to work hard and get rich since you wouldn’t be able to pass on the excess to your children?

Perhaps, but it might be less of a disincentive than we imagine. People generally want money for their children so they can get a good education, land a decent job, buy a house, put food on the table, and retire comfortably. It’s a lower- to middle-class desire and those classes don’t have outstanding wealth to pass on anyway. They lose nothing and gain exactly what they want. Indeed, the fortunes of the rich would not pass on, but the rich too would know that their children would have lives of opportunity and plenty. For Piketty’s part, he doesn’t recommend abolishing inheritances altogether, but he has discussed optimal inheritance tax rates. (Financial Times article / “A Theory of Optimal Inheritance Taxation” by Piketty and Emmanuel Saez)

As a general rule, I don’t dedicate blog posts to books I haven’t read, but hopefully I have redeemed myself through my own comments and referencing of other sources. In any case, accept this as a few thoughts on Vox’s piece summarizing Piketty’s book and not a review of Piketty’s book itself. If anyone reading this has anything more insightful to offer about Capitalism in the Twenty-First Century, by all means . . .