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Who is Thomas Piketty?

In recent weeks, the name Thomas Piketty is being heard everywhere. But who is Thomas Piketty? And what has he done to become so popular?

Thomas Piketty is a 43-year-old French economist who has recently become famous because of his new book: Capital in the Twenty-First Century, which is still only available in English and in French. This book has been widely commented even by people who do not have an economic background, what is quite surprising taking into account that the book has over 700 pages in the English version and nearly 1000 in the French one.

Piketty, who is also professor at the prestigious Paris School of Economics and director of studies at the École des Hautes Études en Sciences Sociales, has needed 15 years of research to come up with the important idea that inequality increases when the returns on capital exceed the rate of economic growth (r>g, where r is the rate of return to wealth and g is the economic growth rate), feature that is intrinsic to capitalism. For that reason, Piketty supports the unpopular idea of setting higher taxes on wealth, what would allow governments to increase the public expenditure and, consequently, reduce the inequality by improving the distribution of wealth. However, to achieve that goal, it is necessary the coordinated action of all the nations. If not, richer people will move their money to tax havens, where tax rates are lower or nonexistent.

The reason why we have not already reached an untenable situation of inequality is because, according to the French economist, the two world wars helped to distribute wealth, avoiding inequalities on the apocalyptic scale predicted by Karl Marx. Notwithstanding, international inequality is growing up to dangerous numbers. Actually, the income share of the richest 1% in USA is as high as it was at the beginning of the 20st century, as we can see in the graph.Income top 1% USA

Despite the fact that Piketty’s thesis is not new for the economic science, his ideas have drawn criticism. Some authors consider that his approach is wrong, as capitalism does not always cause inequality. In this respect, Peru is a good example that economic growth can reduce the differences between rich and poor people.

Be that as it may, what is sure is that Piketty, considered the new Karl Marx, has become a phenomenom, praised by those who consider that capitalism is against social justice and democracy, but reviled by many others, specially rich people who consider him a threat to their way of life. Anyway, at least he has made people to be interested in economy, starting a long debate about the benefits of capitalism in a era in which we have seen the downsides of it.

Source: The Economist

Image: The New Yorker

Author Spotlight

Gonzalo Andreu Candau

gonzaloandreu
Bachelor student in Law and Business Administration by Seville University. Former exchange student in Chile and The Netherlands. Read Full

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