Capitalism in the 21st century by Thomas Piketty examines the nature and the forecasts the consequences of wealth and income inequality.
Thomas Piketty, a French economist has been analyzing two decades data from 20 countries. He suggests that prior the World War I wealth inequalities could be often found in European countries but since the 20th till today, the situation has reversed
‘Piketty observes that inequalities reach "extreme levels" when "returns accrue to owners of capital faster than the economy grows, handing capitalists an ever larger share of the spoils..."’
The wealth of the very richest grew more than three times as fast as the world economy between 1987 and 2013, creating a huge income inequality distribution gap. As we learned in macroeconomics that GDP could not exactly determined the welfare of a country where its GDP is being examined. For example, high GDP may indicate that the country has performed quite efficiently in producing goods and services as the national output rises (GDP = I + G + C + (X-M) ) However, it does not determine whether individual becomes well off or not because these increase in GDP may not affect some groups of people but will only contribute wealth to those top richest people. The poor still remain poor while the riches have got ton of benefits. The poor may find it even harder to fulfill their living as the inflation has risen as well when the GDP rises, meaning that the cost of living rises as well. Another disadvantage for low incomers is that the welfare they should be received because of the automatic contraction fiscal policy from the government. When the economic growth takes place in a country and there is a high inflation, the government will automatically decrease its spending and increase taxes to bring the economy back to its long-term full employment level. Government provided welfare such as healthcare, insurance, education decreases.
His solution to this problem would be to implement a global progressive tax on individual net. Piketty himself states, "U.S. inequality may now be so sharp, and the political process so tightly captured by top earners, that necessary reforms will not happen..."
Here's selected evidence to support that assessment: ( can be found in the following link) http://www.huffingtonpost.com/frank-islam/capitalists-in-the-21st-c_b_5279757.html?utm_hp_ref=business&ir=Business
These are some of the evident of income inequality distribution within the US. People searched to job that require no degree, education is one of the most important factors for a county to become well off. This situation suggests that less people go to college due to the lack of budget. Hence, there should be an increase in tax and the government should increase its spending in order to make low incomers being able to access to these facilities such as education and healthcare.
Thomas Piketty, a French economist has been analyzing two decades data from 20 countries. He suggests that prior the World War I wealth inequalities could be often found in European countries but since the 20th till today, the situation has reversed
‘Piketty observes that inequalities reach "extreme levels" when "returns accrue to owners of capital faster than the economy grows, handing capitalists an ever larger share of the spoils..."’
The wealth of the very richest grew more than three times as fast as the world economy between 1987 and 2013, creating a huge income inequality distribution gap. As we learned in macroeconomics that GDP could not exactly determined the welfare of a country where its GDP is being examined. For example, high GDP may indicate that the country has performed quite efficiently in producing goods and services as the national output rises (GDP = I + G + C + (X-M) ) However, it does not determine whether individual becomes well off or not because these increase in GDP may not affect some groups of people but will only contribute wealth to those top richest people. The poor still remain poor while the riches have got ton of benefits. The poor may find it even harder to fulfill their living as the inflation has risen as well when the GDP rises, meaning that the cost of living rises as well. Another disadvantage for low incomers is that the welfare they should be received because of the automatic contraction fiscal policy from the government. When the economic growth takes place in a country and there is a high inflation, the government will automatically decrease its spending and increase taxes to bring the economy back to its long-term full employment level. Government provided welfare such as healthcare, insurance, education decreases.
His solution to this problem would be to implement a global progressive tax on individual net. Piketty himself states, "U.S. inequality may now be so sharp, and the political process so tightly captured by top earners, that necessary reforms will not happen..."
Here's selected evidence to support that assessment: ( can be found in the following link) http://www.huffingtonpost.com/frank-islam/capitalists-in-the-21st-c_b_5279757.html?utm_hp_ref=business&ir=Business
These are some of the evident of income inequality distribution within the US. People searched to job that require no degree, education is one of the most important factors for a county to become well off. This situation suggests that less people go to college due to the lack of budget. Hence, there should be an increase in tax and the government should increase its spending in order to make low incomers being able to access to these facilities such as education and healthcare.