The wave of public discussion triggered by a French economist’s best-selling treatise on the dangers of global wealth inequality made its way to Vancouver this week, with members of Clark College’s faculty and area residents grappling with the book’s ramifications.
Three panelists — sociology professor Carlos Castro, economics professor John Fite and economics instructor Shon Kraley, all members of Clark College’s faculty — weighed in on Thomas Piketty’s “Capital in the Twenty-First Century,” released in 2013, at a forum Thursday on the college’s main campus in Vancouver.
Piketty’s central argument, that the growing concentration of wealth in the hands of a few is unsustainable and poses a threat to democratic institutions, is “alarming and well made,” Fite said. But the current distribution of income and wealth are human-made, Fite said, “not ordained by God,” which means people can change the laws that govern capitalism to make it more equitable. “We have to decide how to change them,” he said.
Each of the three panelists, part of a larger conversation dubbed “Contradiction in Capitalism,” took turns distilling Piketty’s 696-page book. They also fielded questions from many members of an audience that packed the seats inside Clark College’s Foster Auditorium.
The panelists addressed everything from inherited wealth and the accumulation of capital (profits, dividends, rents, interest and so on) to various theories of money and employment held by everyone from Greek philosopher Aristotle to influential British economist John Maynard Keynes.
They noted that Piketty isn’t arguing we should do away with capitalism, only that ever increasing levels of inequality are a natural feature of it and that the system needs to be reformed to avoid the rise of oligarchic power and the decline of social stability.
The panelists also differentiated between productive capital — the kind that gets invested in companies, technology, jobs, growth — and non-productive capital — the kind that piles up, and then gets inherited and lived off of without lifting a finger. Non-productive capital can be a bad thing “as Paris Hilton proved to everybody,” Kraley quipped.
It’s desirable to have some level of disparity between wage earners and owners of capital, Kraley said, because it provides incentives to climb the income ladder and helps keep the economy running.
However, he said, as wage earners increasingly lose ground, and as income and wealth increasingly accrue to the owners of capital — a trend Piketty’s gobs of data and historical analysis bear out — “the gap won’t sustain itself, and that’s when you hear terms like revolution.”
While Piketty’s book is a vital contribution to economic and public-policy thinking, the panelists said, they wondered whether the solutions it offers are workable. One solution proposed by Piketty is a progressive global wealth tax. Such a solution would require enormous international cooperation, Fite said, not to mention international transparency to prevent the owners of capital from hiding their piles of cash in off-shore accounts.
The idea behind such a tax, Fite said, is to invest its proceeds in things that benefit societies overall, including education, health care and pensions. One audience member questioned whether the U.S. Congress would ever do anything about inequality, noting the Republican-controlled House’s recent vote to repeal the federal tax on estates. At one point, Fite said U.S. politicians are far wealthier and more removed from the people they represent than their counterparts in Europe.
Another audience member said a global wealth tax would punish people who have money and would hamper entrepreneurial investments in jobs and technological innovation.
Fite said the role of wealth in innovation has been “oversold.” The current private technology entrepreneurs who are making billions from the Internet didn’t invent it, he said, but took advantage of something that was created with public funding.
