Academic journal article Michigan Law Review

Be Careful What You Wish for? Reducing Inequality in the Twenty-First Century

Academic journal article Michigan Law Review

Be Careful What You Wish for? Reducing Inequality in the Twenty-First Century

Article excerpt

BE CAREFUL WHAT YOU WISH FOR? REDUCING INEQUALITY IN THE TWENTY-FIRST CENTURY

THE GREAT LEVELER: VIOLENCE AND THE HISTORY OF INEQUALITY FROM THE STONE AGE TO THE TWENTY-FIRST CENTURY. By Walter Scheidel. Princeton and Oxford: Princeton University Press. 2017. Pp. xvii, 444. $35.

INTRODUCTION

In 2014, a surprising best seller swept the United States. Capital in the Twenty-First Century by the French economist Thomas Piketty was published in English translation in April 2014.1 Less than two months later, the English edition climbed to number one on the New York Times list for hardcover fiction while becoming the greatest sales success in the history of the Harvard University Press.2 By January 2015, the book had sold 1.5 million copies in French, English, German, Chinese, and Spanish.3

The success of Piketty's book stemmed from the aftermath of the Great Recession of 2008-2009. The recession focused public attention on the increasing inequality in the United States since the early 1970s. The "Occupy Wall Street" movement, as well as the Tea Party movement, were both responses to the realization that, while the recession was over by 2009, over 95% of the subsequent growth in the U.S. economy inured to the benefit of the top 1% of the income distribution.4

Piketty explained this phenomenon in detail. Moreover, he posited that it was a historical constant.5 The main driver of inequality, he argued, was the tendency of returns on capital to exceed the rate of economic growth (r>g):

In slowly growing economies, past wealth naturally takes on disproportionate importance, because it takes only a small flow of new savings to increase the stock of wealth steadily and substantially. If, moreover, the rate of return on capital remains significantly above the growth rate for an extended period of time . . . then the risk of divergence in the distribution of wealth is very high.6

Moreover, Piketty did not just pose the problem-he proposed a solution. In the last part of the book, Piketty advocated several steps to remedy inequality by regulating capital: strengthening the welfare state, dramatically increasing income tax rates on the rich, and imposing a new global tax on capital.7 While none of these steps were taken, several of them were influential in shaping the Democratic platform for the 2016 presidential campaign, especially through the impact of Senator Bernie Sanders (I-VT).8

But, of course, the Democrats lost. The Republicans took the White House, retained both houses of Congress, and immediately proceeded to propose policies that went in the opposite direction of Piketty's proposals.9 These policies consisted of first, abolishing the tax increases on wealthy Americans that helped fund the Affordable Care Act (ACA);10 second, rolling back the welfare state, as embodied in the ACA, and especially converting Medicaid from an entitlement to a capped program;11 and third, proposing an extremely regressive tax reform, including cutting the top marginal individual and corporate rates, abolishing the estate tax, and converting the corporate tax (which falls primarily on capital) to a consumption tax (which falls primarily on consumers).12

In this environment, a new book appeared. Stanford historian Walter Scheidel's The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century,13 is, in some respects, the anti-Piketty. Scheidel accepts Piketty's view that inequality tends to grow over time, but adds a crucial caveat than runs directly opposite to Piketty's optimistic proposals. Scheidel argues that the historical record demonstrates that inequality can only be reduced by violent means.14 Therefore, Piketty's proposals to reduce inequality peacefully are unrealistic. Scheidel concludes his book by arguing that we should accept inequality as the price of peace: "All of us who prize greater economic equality would do well to remember that with the rarest of exceptions, it was only ever brought forth in sorrow. …

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