Two years ago, I wrote, “Inequality will be the central theme of 2012. It has always existed and is not going away, but this year it will top the global agenda of voters, protesters and politicians…. In 2012, peaceful coexistence with inequality will end and demands and promises to fight it will become fiercer and more widespread than they have been since the end of the Cold War.”
And that’s what happened. The 1 percent versus the 99 percent became a global catchphrase. In 2012, there were 25 percent more academic articles about inequality than in the previous year (and 237 percent more than in 2004).
Notable world figures like Pope Francis and Barack Obama declared inequality the defining issue of our time. And how to fight it became an unavoidable topic in electoral debates everywhere, even in countries like Brazil where, over the past decade, income inequality has steadily declined.
And now comes Thomas Piketty. To say he’s a French economist who recently published a dense, 700-page tome titled, Capital in the Twenty-First Century that quickly became an international bestseller does not do justice to the impact of this book and author. Piketty is a social, intellectual, and media phenomenon as well as an editorial success. His main thesis is that economic inequality is the inevitable collateral effect of capitalism—and that if governments don’t act decisively to contain it (mostly through higher taxes on wealth and incomes), it will steadily grow until it seriously threatens democracy and economic stability. According to Piketty, inequality grows when the rate of return on capital (“r”) is larger than the rate of growth in the economy (“g”); or, in his already well-known formulation, inequality grows when “r > g.”