Piketty has written a book that nobody interested in a defining issue of our era can afford to ignore.
That is from John Cassidy. Other reviewers often speak of inequality as the defining issue of our time. Brad DeLong has collected many reviews. Clearly, this book is serving as a rallying point for the cause of redistributing rather than creating wealth. Its appeal to academics is particularly strong.
If you had asked me, I would have said that the defining issue of our time is unsustainable government finance. Most major national governments have made promises that they are unlikely to keep. Our state and local governments are cutting back on services, and in a few cases going bankrupt, in order to pay pensions to former employees. The outlook for politics is grim.
And yet we are being told to focus on inequality as the defining problem of our time.
I have not yet read the Piketty book. Perhaps I will find it persuasive. But I do not understand how Larry Summers, who believes that we are in a period of secular stagnation, with an excess of capital and an equilibrium real interest rate that is negative, can give a positive review of a book that says that we have such a capital scarcity that we will see a real interest rate greater than the economic growth rate for the indefinite future.
It seems to me that the development of India and China, along with ongoing technological change, is making the gap in incomes between those countries and ours smaller, while the gap within the United States widens. I am not convinced that this represents a net increase in inequality, much less that it is the defining problem of our time. Twenty years from now, my guess is that the people who are worried about this problem, and not the problem of unsustainable government finance, will not seem particularly astute.