We may now have a new “most unread best-seller of all time.”
Data from Amazon Kindles suggests that that honor may go to Thomas Piketty’s “Capital in the Twenty-First Century,” which reached No. 1 on the best-seller list this year. Jordan Ellenberg, a professor of mathematics at the University of Wisconsin, Madison, wrote in The Wall Street Journal that Piketty’s book seems to eclipse its rivals in losing readers: All five of the passages that readers on Kindle have highlighted most are in the first 26 pages of a tome that runs 685 pages.
The rush to purchase Piketty’s book suggested that Americans must have wanted to understand inequality. The apparent rush to put it down suggests that, well, we’re human.
So let me satisfy this demand with my own “Idiot’s Guide to Inequality.” Here are five points:
The situation might be tolerable if a rising tide were lifting all boats. But it’s lifting mostly the yachts. In 2010, 93 percent of the additional income created in America went to the top 1 percent.
Certainly, the nation grew more quickly in periods when we were more equal, including in the golden decades after World War II when growth was strong and inequality actually diminished. Likewise, a major research paper from the International Monetary Fund in April found that more equitable societies tend to enjoy more rapid economic growth.
Indeed, even Lloyd Blankfein, the chief executive of Goldman Sachs, warns that “too much … has gone to too few” and that inequality in America is now “very destabilizing.”
Inequality causes problems by creating fissures in societies, leaving those at the bottom feeling marginalized or disenfranchised. That has been a classic problem in “banana republic” countries in Latin America, and the U.S. now has a Gini coefficient (a standard measure of inequality) approaching some traditionally poor and dysfunctional Latin countries.
For example, financiers are wealthy partly because they’re highly educated and hardworking - and also because they’ve successfully lobbied for the carried interest tax loophole that lets their pay be taxed at much lower rates than other people’s.
Likewise, if you’re a pharmaceutical executive, one way to create profits is to generate new products. Another is to lobby Congress to bar the government’s Medicare program from bargaining for drug prices. That amounts to a $50 billion annual gift to pharmaceutical companies.
The problem is that there can only be one hottest car on the block. So the lawyer who buys a Porsche is foiled by the CEO who buys a Ferrari, who in turn is foiled by the hedge fund manager who buys a Lamborghini. This arms race leaves these desires unsated; there’s still only one at the top of the heap.
Unfortunately, equal opportunity is now a mirage. Indeed, researchers find that there is less economic mobility in America than in class-conscious Europe.
We know some of the tools, including job incentives and better schools, that can reduce this opportunity gap. But the U.S. is one of the few advanced countries that spends less educating the average poor child than the average rich one. As an escalator of mobility, the American education system is broken.
There’s still a great deal we don’t understand about inequality. But whether or not you read Piketty, there’s one overwhelming lesson you should be aware of: Inequality and lack of opportunity today constitute a national infirmity and vulnerability - and there are policy tools that can make a difference.