The Piketty effect

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from Eli Cook  

A few years ago, I opened my review of Thomas Piketty’s Capital in the 21^st Century in the Raritan Quarterly Review with this “bait and switch” vignette. I thought the striking similarities between George and Piketty revealed that while history does not repeat itself, the “Pikettymania” that washed over the world in 2014 might bring forth once more an era in which – much like during the “Gilded Age” of Henry George – economic inequality was at the forefront not only of economic thought but political agitation, social anxiety and cultural discourse.[1]

Looking back now to those heady days in 2014, it is clear that Piketty’s groundbreaking study was just the beginning. The floodgates of inequality studies have been opened. The wave ushered in by Piketty has, in the past few years, come in many shapes and sizes: We now have global analyses such as Branko Milanovich’s Global Inequality, centuries-long histories such as Unequal Gains, and a collected volume dedicated entirely to the economic agenda titled After Piketty. The dramatic titles of other recent books reveal the current mood of inquiry, be it Thomas Shapiro’s Toxic Inequality: How America’s Wealth Gap Destorys Mobility, Deepens the Racial Divide, & Threatens Our Future, Dean Baker’s Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer Steven Teles and Lindsay Brink’s The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality or Brian Alexander’s Glass House: The 1% Economy and the Shattering of the All-American Town. It appears, that the “1 percent” have not only been gobbling up much of the wealth and income these past few decades but, in recent years, also the attention of economists, journalists and public intellectuals.[2]  

The “Piketty effect” has spread into political and policymaking circles as well. If there is one constant in the left rhetoric of Bernie Sanders, the most popular politician in the United States in 2017, it is his dogged emphasis on the massive wealth disparities between the super-rich and the “99%”. A visit to inequality.org reveals, moreover, a long list of think tanks, academic centers and public interest groups who now focus on inequality, be it the Economic Policy Institute, the Washington Center for Equitable Growth, or the LSE International Inequality Institute. Inequality has even seeped into the staid world of central banking. U.S. Federal Reserve Chair Janet Yellen spoke at a Fed conference in Boston in the fall of 2014, just as Piketty’s book was taking off. “The extent of and continuing increase in inequality in the United States greatly concern me,” Yellen said. “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.” As the New York Times rightly noted at the time, “by the cautious standards of central bankers,” Yellen’s words were “downright radical.” As we will see, this is not how Fed Chairs spoke about inequality before Thomas Piketty.[3]

Eli Cook, “The great marginalization: why twentieth century economists neglected inequality”, real-world economics review, issue no. 83, 20 March 2018, pp. 20-34, http://www.paecon.net/PAEReview/issue83/Cook83.pdf

[1] Eli Cook, “The Progress and Poverty  0f Thomas Piketty,” Raritan Quarterly Journal 35 (Fall, 2015):
1-19.

[2] Branko Milanovich, Global Inequality: A New Approach for the Age of Globalization (Cambridge, MA: Harvard University Press, 2016); Peter H. Lindert and Jeffery G, Williamson, Unequal Gains: American Growth and Inequality Since 1700 (Princeton: Princeton University Press, 2016); After Piketty: The Agenda for Economics and Inequality, eds. Heather Boushey, J. Bradford DeLong and Marshall Steinbaum (Cambridge, MA: Harvard University Press, 2017); Thomas Shapiro, Toxic Inequality: How America’s Wealth Gap Destorys Mobility, Deepens the Racial Divide, & Threatens Our Future (New York: Basic Books, 2017); Dean Baker, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer (Washington DC: Center for Economic Policy Research, 2016); Steven Teles and Lindsey Brink, The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality (New York: Oxford University Press, 2017); Brian Alexander, Glass House:The 1% Economy and the Shattering of the All-American Town (New York: St. Martin’s Press, 2017).

[3] Drew Schwartz, “Bernie Sanders is the Most Popular Politician in America, Poll Says,” Vice.com, Aug 25^th, 2017; http://www.inequality.org/resources/organizations; Neil Irwin, “What Janet Yellen Said, and Didn’t Say, About Inequality,” New York Times, Oct 17^th, 2014.