Thomas Piketty Believes There’s Still Time to Save the Middle Class | Big Think

If you look at a country like the United States, the share of the total income going to the top ten percent of the population used to be about one third of the total income back in the early 1980s, and now in 2015, it is over one half. So it has gone from 30/35 percent to over 50 percent of total income.

Marx, in the 19th century, says that inequality would have to rise forever. Kuznets, in the 20th century, on the contrary, assumes that there were natural forces that would make inequality go down in the long run. My main conclusion is that there are powerful forces going in both directions and that ultimately which one dominates really depends on the institutions and policy that we choose in the area of education, labor market, taxation, corporate governance, and minimum wages.

All of these matter, and there are several possible futures. If your parents are rich, like 100 percent of the generation almost goes to college. If your parents are poor, it's like 20/30 percent going to college, and these are not the same colleges if you're rich. And so there's very unequal access to education, which prevents inequality from going down.

Now, even if you get education policy right, there are other forces which can lead to rising inequality in the long run. In particular, there is a tendency for the rate of return to capital to exceed the economy's growth rate in the very long run, which can act as a powerful force for very high concentration of wealth and property as opposed to income inequality, in particular labor income inequality, which is primarily determined by education and labor market institutions.

So again, it really depends on the institution and policies like progressive taxation of income and wealth that we put in place in order to regulate these dynamics. Sometimes people want just to blame globalization and say that because of globalization, because of the competition with emerging countries, inequality has to increase, and in any case, there's not much we can do about it; that's just globalization.

And I think this is wrong. I believe in globalization, but I believe we also need strong democratic institutions and fiscal and educational policies so as to ensure that more people actually benefit from globalization, so you don't have the same rise in inequality everywhere. For instance, in Europe and Japan, where you also have globalization and competition with the emerging countries, inequality of income or wealth did not increase quite as much as in the United States.

So this shows a different course of action can make a difference.