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Why They Are Picking On Piketty

thomas piketty

The French economist Thomas Piketty has been likened to a rock star by the commentariat. Some believe that his best-selling book on income inequality, Capital in the Twenty-First Century, is a pivotal event. Others are simply amazed that a practitioner of the dismal science can write a thick book full of statistics and become an international celebrity overnight. What is clear is that the book has touched a nerve in the U.S., unleashing a lot of sound and fury from the right because it argues for the redistribution of excess wealth.

capital pikettyYou might ask, “Why should Piketty’s book matter to Buddhists?” If that isn’t obvious, I will start by citing the Dalai Lama’s dictum that “Buddhism is a religion of kindness.” Kindness (compassion, empathy, “loving kindness”) makes us realize that growing income disparity is an issue with which we must engage. This is because we see how rapid increases in income disparity lead to anxiety, feelings of helplessness, resentment, and anger at the lack of fairness – all potent sources of suffering.

“Engaged Buddhism” requires that we not only “feel the pain” of others, but that we also act to remove the arrow that is causing their pain. In the latest trend of engaged Buddhism as led by BPF, this means more than providing charitable services such as soup kitchens. It also means engaging in the political struggle to change the system that causes this suffering. This does not require us to get embroiled in party politics. Rather, it requires us to find other nonviolent ways to organize ourselves to make our democracy work for those who are suffering.

I do think Piketty’s book is a pivotal event, since it does at a national political level something akin to what our Buddhist practice does for us at a personal spiritual level – it awakens us to a cherished bit of self-deception that blocks a true understanding of who we are and what we should do.

The cherished self-deception Piketty reveals has to do with economic optimism: the conviction that the narrowing of the wealth gap from WWII until the late ‘seventies is a sustainable and progressive arc. In fact, it was an anomaly. The temporary narrowing of the income gap allowed the economist Simon Kuznets to argue in 1954 that capitalism naturally led to a healthy sharing of wealth between the classes. Most economists adopted this assumption and it became part of capitalism’s justification in the public mind during Cold War competition between capitalism and socialism.

Although capitalism “won” the Cold War with socialism, the right wing still clings tenaciously to the assumption that capitalism will, by its intrinsic nature, continue to let us all share equitably in increased prosperity. And why is that assumption so important to them? It is because Kuznets’ hypothesis provides a “scientific” basis for their “trickle down” argument about the distribution of wealth. That argument gives them the political cover they need in a mass democracy to argue that we shouldn’t care how rich a small minority gets. Opulence at the top is not a problem: with patience and hard work, we will all get our share in due time.

Piketty’s book erodes this trickle-down fantasy, providing the historical statistics to prove that the current trend towards income disparity is not a temporary lapse in the supposed permanent trend toward shared prosperity. Piketty’s research reveals that it was Kuznets who mistook a temporary condition for a permanent trend.

Piketty shows that in all other periods of history for which we have data, capitalism has led to the creation of a super-rich elite who then exercise their economic power to ensure that politicians do nothing to prevent the transmission of that power to their heirs. In this way, family dynasties, and by implication, oligarchy, monopolies, gilded ages, and subsequent crashes are intrinsic tendencies of capitalism. So what is to be done?

Well, Piketty has given a credible scientific account showing that the “trickle down” argument is an illusion. He clearly hopes that once this illusion is discredited in the public mind, democratic processes will lead to the re-imposition of higher tax rates on the rich, especially higher rates on inherited wealth. After all, such higher rates undoubtedly helped produce the narrowing of the income gap that right attributes to the invisible hand of capitalism.

trickle down matson

So what can Buddhists do? One nonviolent response to income disparity is clearly offered by Piketty. We can begin by demanding the reestablishment of higher taxes on the wealthy and their estates.

Sadly, we will then find that the role of money in politics is preventing any meaningful response to our demands. Of course, the influence of wealth on politics also stands in the way of other major Buddhist concerns, such as climate change, and the political marginalization of women and minorities. BPF believes that in our quest for a more healthy income distribution, we must unite with activists in those other areas of struggle. I can only add that it’s high time for that to happen.

(Sources that led to this comment include)

Paul Krugman, “The Piketty Panic”

Eduardo Porter, “A Relentless Widening of Disparity in Wealth”

Comments (3)

  • Richard Modiano

    There are some serious omissions in Petty’s analysis discussed by David Harvey. Excerpt: “There is much that is valuable in Piketty’s data sets. But his explanation as to why the inequalities and oligarchic tendencies arise is seriously flawed. His proposals as to the remedies for the inequalities are naïve if not utopian. And he has certainly not produced a working model for capital of the twenty-first century. For that we still need Marx or his modern-day equivalent.” http://davidharvey.org/2014/05/afterthoughts-pikettys-capital/

  • Geoffrey Wood

    The Tibetan houses could lead the charge towards redistribution by giving up some of their billions.

  • Larry

    http://www.nakedcapitalism.com/2014/04/philip-pilkington-galbraith-on-thomas-piketty.html

    “As Galbraith notes in his review Piketty seems to put some weight in the idea that the problems with income inequality that we face today are mainly to do with technology and education. Galbraith and his team, on the other hand, point to something that should be intuitively obvious to anyone following political and economic events in the past decade; namely, finance.”

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