The Distrubing Thesis of Capital in the Twenty First Century.

I haven't read it yet, but I've been reading a lot about Thomas Piketty's new book, Capital In The Twenty First Century.

The book sounds pretty complicated in some ways, and of course we'd expect any book on economics to be just that. But the basic thesis isn't that complicated, and may be even a bit self evident.  Pikety, an economist, argues that over time the entire Western World is returning to an oligarchic economic structure. That is, wealth is going to be very much concentrated at the top, and inherited.

That ought to be extremely distressing to capitalist, which it seems most Americans claim to be.  If Piketty is correct, and even the observed evidence strongly suggest he is, we're entering an era when real economic power and wealth will be strongly concentrated in the top 10% of the population, who will maintain that status simply by inheritance, rather than by their industry.

What I don't know is whether Piketty conducts any analysis in regard to the land aspect of this, but if he does, I think his thesis will seem all the stronger.  In Europe the rise of industrialism heavily disrupted the traditional land owning structure, as did the rise of political parties that were dominated by the working class.  That broke the land inheritance system that had existed for centuries, allowing industry to acquire land, and also allowing small farmers to own the land they farmed.  In the US, the lack of land availability was a driver of immigration, and up until mid 20th Century acquiring land in the US was fairly easy.

Now all of this is no longer true. According to Piketty, and at least partially evident, we're entering an era in which resource ownership is increasingly concentrated and inherited.

This doesn't mean that the Middle Class will cease to exist, but it does mean that the Middle Class will become increasingly marginalized, if this trend continues, and that the Middle Class will own a diminishing share of the economy. All in all, this is a disturbing trend.

As this blog seeks to track long term trends, its interesting to look at this over a long period of time, in regards to the US.  It's now 2014, let's go back two centuries to 1814.  In 1814, we'd fine wealth very evenly distributed in the US, as a rule, with some really significant wealth here and there and some desperate poverty here and there.  Some significant wealth would be found in the South, in which case we have the corruption of slavery creating a bizarre oligarchic structure there, with a high concentration of wealth in planters and accordingly real severe poverty on the part of blacks.  For whites everywhere, obtaining ownership in the economy was not too difficult to obtain, however.

A century later, in 1914, obtaining ownership in the economy was still not too difficult for most Americans.  Trades generally paid well, and land was still readily available.  There were pockets of real poverty, however, based upon region or immigration.  And there were industrial pockets of very great wealth.

Now, in 2014, obtaining ownership in the economy is much more difficult, and obtaining agricultural and essentially impossible.  Piketty's trend seems well established, and by extension, that's a serious long term concern. There are still industries and occupations which generate wealth, to be sure, of course.