French economist brings message of inequality to Stanford

Thomas Piketty
Thomas Piketty

Is inequality rising? Yes, and something can be done about it.

That was the word from French economist THOMAS PIKETTY, who spoke at Stanford on Friday, Oct. 23,  about wealth and income inequality. He is the author of the 2014 bestseller, Capital in the 21st Century, which takes a historical and statistical approach to examining the recent rise in wealth and inequality in the West.

In that work, Piketty explained that the rate of capital return (which tends to benefit the rich) in developed countries is consistently much higher than the rate of economic growth (which tends to reflect the gains of those who are not wealthy). This, he said, will cause wealth inequality to escalate.

A professor at the Paris School of Economics, Piketty told a standing-room-only crowd in Memorial Auditorium that wealth and income inequality in the United States is mostly due to rising inequality of labor income.

Such a gap is due to unequal access to skills training, education and technology, as well as the effects of globalization and a hefty spike in top executive compensation, he said.

Only a comprehensive strategy can address America’s worsening inequality, Piketty said. One measure he supports is redistribution through a progressive global tax on wealth.

“The ideal solution involves a broad combination of institutions, including progressive taxation, education, social and labor laws, financial transparency and economic democracy,” said Piketty, whose lecture was sponsored by Stanford’s Center for Ethics in Society.

Countries like China that rely on authoritarian economic controls are not likely to solve the riddle of wealth inequality over the long term, Piketty added.

“In the long run, you need different groups rising at, more or less, the same speed,” to better encourage economic equality, Piketty said.

Equality in education, Piketty maintained, is critically important to fighting the ill effects of a growing caste of the extremely wealthy and privileged.

In his book, Piketty explains that a key concept is “diffusion,” by which he means that access to high quality education is increased for everyone. In other words, schools are not segregated by neighborhood, class or race. As a result, young people everywhere have pathways to the same high standard of learning.

He spoke at Stanford as part of the Arrow Lecture Series on Ethics and Leadership, which is named in honor of Stanford’s Nobel Laureate KENNETH ARROW, the Joan Kenney Professor of Economics and Professor of Operations Research, emeritus.