I‘m bogging down on page 335. Slow going because of work. But it remains fascinating. Piketty toggles back and forth between numbers and speculation (often political and sociological) with enough frequency to hold the lay reader’s interest. I see now why the book has been a hit.
One thing to say is that Piketty works in a bubble. When discussing the rapid rise of “super manager” pay he observes that social norms play a big role in what we tolerate and don’t tolerate in the way of income inequality. But in the Introduction he allows that since age twenty-five he has rarely left the city of Paris. Why, then, should we have any confidence in his thoughts about income inequality, given that he has told us it depends a great deal on social norms—ones he implicitly admits not having any experience with?
Another thing to say is that the economic data and his “laws of capitalism” theory doesn’t do much work in this book. Take, for example, his strong recommendation that we invest more in higher education in order to reduce income inequality. More than we’re currently spending? So that more than 50 percent of high school graduates can go to college? Everybody is going to be a computer programmer?
He seems unable to grasp the crushingly obvious point that half the population has a below average IQ—and that the benefits of education, technical or otherwise, decline as IQ declines.
He’s also blind to a more subtle point. Increased emphasis on education feeds a meritocratic ideology: I deserve what I get because I’ve achieved this or that degree. Later in the book he observes that American companies provide super pay for supposed super managers, and that this may reflect social norms distorted by a “meritocratic extremism.” But that extremism is encouraged by the goofy idea that we can raise incomes at the lower levels of society by getting all of their children to go to college, which of course they won’t do—after which we can say that they deserve their low pay because they failed to take advantage of the opportunities of higher education we provide for them.
Still another example of why we’re moving toward a “meritocratic extremism” is plain for the eye to see in one of his telling charts. In America today, the top percentile received more income from labor than capital. That’s very different from 1910 when returns on capital provided most of the income for the top one percent.
This is a dramatic and consequential social change, and it’s bound to influence the way we see income inequality—and the way we think about the “meritocratic values” he champions elsewhere. Today’s super-rich work, unlike yesteryear’s super-rich, who cashed dividend checks. And so we can see them—and they can see themselves—as meritocrats, not plutocrats; hard-working managers, not cigar-smoking factory owners.
Perhaps Piketty should be a bit more skeptical about his claim that liberal democratic culture is base on “meritocratic values.”
Again, more later as I plow forward.
