Inequality Explained: The Shocking Video
Numerous economists, pundits, journalists and public intellectuals have been highlighting the growing levels of inequality in the United States. Former Secretary of Labor Robert Reich, journalist Ezra Klein and French economist Thomas Piketty have written extensively on this subject. Robert Reich recently starred in a documentary entitled Inequality For All, in order to help bring the issue into the limelight. This video highlights the findings of Piketty, which were published earlier this year in his Meisterwerk, entitled Capital in the 21st Century.
Piketty studied income tax return, estate tax information and other data from Europe and America (primarily, although other countries were discussed) from the 19th, 20th and early 21st Centuries. This video focuses solely on the modern United States. As explained in the video, inequality can be broken down into two forms: income inequality and wealth inequality.
The wealthiest 1% of the population currently take home roughly 22.5% of overall income before taxes and 40% of overall wealth.
Wealth income is often inherited and not earned, unlike labor income. The rate of return on wealth is high (currently 5%) and the overall growth of the economy is much lower. This is the exact opposite of what happened when the middle class flourished during the 1950’s to the 1970’s…and exactly what happened during the nation’s Gilded Age. Piketty believes we may be headed into a new Gilded Age…what do you think? Would Piketty’s proposed 2% global wealth tax serve as a viable solution?