Henri Lepage reviews
Capital in the Twenty-First Century
by Thomas Piketty, translated from the French by Arthur Goldhammer
The concentration of wealth among those with the highest incomes has returned to the levels of the early twentieth century: now, again, they hold roughly 45 to 50 percent of it. “The shape of the curve,” says Piketty, “is rather impressively steep, and it is natural to wonder how long such a rapid increase can continue: if change continues at the same pace, for example, the upper decile will be raking in 60 percent of national income by 2030.”
Piketty takes the analysis further: during the thirty years prior to the Great Recession, he concludes, the richest one percent were the beneficiaries of three-quarters of total American growth. For 90 percent of Americans, average income growth was only 0.5 percent per annum.
If these figures are striking, they must nonetheless be viewed with much caution, especially where they concern the top percentile of the population, which is the most spectacular part of the display. Let us consider the method used to collect and create these data sets. Piketty and his team have aggregated them from a survey of a century’s worth of tax records, income tax having been introduced in the United States in 1910. Given that the analysis is based on tax records that range over such a long period, one has to wonder what effect changes and developments in the tax law might have had on the numbers. How did changes to tax rates, taxpayer categorization, and tax-assessment criteria affect the figures reported in these records, or the way they appear to represent patterns of national income and its distribution?
In reality, economies and markets do not function in the stylized and simplistic fashion they do in Piketty’s book, which reflects throughout his resolutely macroeconomic and deterministic approach.
In a radio program broadcast on France Culture in September 2013, Piketty offered forthrightly that his book was a political book.