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McCutcheon and Capital in the 21st century

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An important new book by economist Thomas Piketty points to a pessimistic conclusion . . . Drawing on hundreds of years of economic data (some of which has only recently become available to researchers) Piketty reaches a simple but disturbing conclusion: in the long run, the return on capital tends to be greater than the growth rate of the economies in which that capital is located.

What this means is that in a modern market economy the increasing concentration of wealth in the hands of the already-rich is as natural as water flowing downhill, and can only be ameliorated by powerful political intervention, in the form of wealth redistribution via taxes, and to a lesser extent laws that systematically protect labor from capital. (Piketty argues that, because of historical circumstances which are unlikely to be repeated, this sort of intervention happened in the western world in general, and in America particular, between the first World War and the early 1970s).

Readers can already guess the dire conclusion that flows from combining Piketty’s theory with the plausible assumption that unregulated wealth leads to plutocracy: If the only way to avoid plutocracy would be to employ political processes that the plutocrats themselves will eventually buy lock, stock and barrel, then the only way to avoid being ruled by the Lords of Capital is to become one of them. This, in effect, is the contemporary GOP’s economic creed in a nutshell.

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