Thomas Piketty

Thomas Piketty (French: [tÉ"ˈma pikɛˈti]; born on 7 May 1971) is a French economist who works on wealth and income inequality. He is professor (directeur d'études) at the École des hautes études en sciences sociales (EHESS), professor at the Paris School of Economics and Centennial professor at the London School of Economics.

He is the author of the best-selling book Capital in the Twenty-First Century (2013), which emphasises the themes of his work on wealth concentrations and distribution over the past 250 years. The book argues that the rate of capital return in developed countries is persistently greater than the rate of economic growth, and that this will cause wealth inequality to increase in the future. He considers that to be a problem, and to address it, he proposes redistribution through a progressive global tax on wealth.

Biography

Piketty was born on 7 May 1971, in the Parisian suburb of Clichy, Hauts-de-Seine. His parents had been involved with a Trotskyite group and the May 1968 protests in Paris, but they had moved away from this political position before Piketty was born, and a visit to the Soviet Union in 1991 was enough to make him a firm "believe[r] in capitalism, private property, the market".

Piketty gained a C-stream (scientific) Baccalauréat, and after taking scientific preparatory classes, he entered the École Normale Supérieure (ENS) at the age of 18, where he studied mathematics and economics. At the age of 22, Piketty was awarded his PhD for a thesis on wealth redistribution, which he wrote at the EHESS and the London School of Economics under Roger Guesnerie and winning the French Economics Association's award for the best thesis of the year.

After earning his PhD, Piketty taught from 1993 to 1995 as an assistant professor in the Department of Economics at the Massachusetts Institute of Technology. In 1995, he joined the French National Centre for Scientific Research (CNRS) as a researcher, and in 2000 he became professor (directeur d'études) at EHESS.

Piketty won the 2002 prize for the best young economist in France, and according to a list dated 11 November 2003, he is a member of the scientific orientation board of the association À gauche, en Europe, founded by Michel Rocard and Dominique Strauss-Kahn.

In 2006, Piketty became the first head of the Paris School of Economics, which he helped set up. He left after a few months to serve as an economic advisor to Socialist Party candidate Ségolène Royal during the French presidential campaign. Piketty resumed teaching at the EHESS and Paris School of Economics in 2007.

He was for a time the partner of the socialist politician Aurélie Filippetti who, in 2009, made an official complaint against Piketty for domestic violence; she subsequently dropped the charges, apparently after Piketty apologised to her.

He is a columnist for the French newspaper Libération, and occasionally writes op-eds for Le Monde.

In April 2012, Piketty co-authored along with 42 colleagues an open letter in support of then-PS candidate for the French presidency François Hollande. Hollande won the contest against the incumbent Nicolas Sarkozy in May of that year.

In 2013, Piketty won the biennial Yrjö Jahnsson Award, for the economist under age 45 who has "made a contribution in theoretical and applied research that is significant to the study of economics in Europe."

In January 2015, he rejected the French Legion of Honour order, stating that he refused the nomination because he did not think it was the government's role to decide who is honourable.

Research

Piketty specializes in economic inequality, taking a historic and statistical approach. His work looks at the rate of capital accumulation in relation to economic growth over a two hundred year spread from the nineteenth century to the present. His novel use of tax records enabled him to gather data on the very top economic elite, who had previously been understudied, and to ascertain their rate of accumulation of wealth and how this compared to the rest of society and economy. His most recent book, Capital in the Twenty-First Century, relies on economic data going back 250 years to show that an ever-rising concentration of wealth is not self-correcting. To address this problem, he proposes redistribution through a progressive global tax on wealth.

Study of long-term economic inequalities

A research project on high incomes in France led to the book Les hauts revenus en France au XXe (High incomes in France in the 20th Century, Grasset, 2001), which was based on a survey of statistical series covering the whole of the 20th century, built from data from the fiscal services (particularly income tax declarations). He extended this analysis in his immensely popular book Le Capital au XXIe siècle (Capital in the Twenty-First Century). A study by Emmanuel Saez and Piketty showed that the top 10 percent of earners took more than half of the country’s total income in 2012, the highest level recorded since the government began collecting the relevant data a century ago.

Survey on the evolution of inequalities in France

Piketty's work shows that differences in earnings dropped sharply during the 20th century in France, mostly after World War II. He argues that this was due to a decrease in estate inequalities, while wage inequalities remained stable. The shrinking inequality during this period, Piketty says, resulted from a highly progressive income tax after the war, which upset the dynamics of estate accumulation by reducing the surplus money available for saving by the wealthiest.

The normative conclusion Piketty draws is that a tax cut and thus a decrease in the financial contribution to society of the wealthy that has been happening in France since the late 1990s will assist in the rebuilding of the earlier large fortunes of the rentier class. This trend will lead to the rise of what he calls patrimonial capitalism, in which a few families control most of the wealth.

Through a statistical survey, Piketty also showed that the Laffer effect, which claims that high marginal tax rates on top incomes are an incentive for the rich to work less, was probably negligible in the case of France.

Comparative work

Piketty has done comparative work on inequality in other developed countries. In collaboration with other economists, particularly Emmanuel Saez, he built a statistical series based on a similar method used in his studies of France. This research led to reports on the evolution of inequalities in the US, and on economic dynamics in the English-speaking world and continental Europe. Saez won the prestigious John Bates Clark prize for this work.

The surveys found that following the Second World War, after initially undergoing a decrease in economic inequality similar to that in continental Europe, English-speaking countries have, over the past thirty years, experienced increasing inequalities.

A critic of the Kuznets curve

Piketty's work has been discussed as a critical continuation of the pioneering work of Simon Kuznets in the 1950s. According to Kuznets, the long-term evolution of earnings inequalities was shaped as a curve (Kuznets curve). Growth started at the beginning of the industrial revolution, and slackened off later due to the reallocation of the labor force from low productivity sectors like agriculture to higher productivity sectors like industry.

According to Piketty, the tendency observed by Kuznets in the early 1950s is not necessarily a product of deep economic forces (e.g. sectoral spillover or the effects of technological progress). Instead, estate values, rather than wage inequalities, decreased, and they did so for reasons that were not specifically economic (for example, the creation of income tax). Consequently, the decrease would not necessarily continue, and in fact, inequalities have grown sharply in the United States over the last thirty years, returning to their 1930s level.

Other work

Besides these surveys, which make up the core of his work, Piketty has published in other areas, often with a connection to economic inequalities. His work on schools, for example, postulates that disparities among different schools, especially class sizes, is a cause for the persistence of inequalities in wages and the economy. He has also published proposals for changes in the French pension system and the French tax system. Speaking with Labour leaders in the United Kingdom, he stated that tax rates could be raised above 50% for earnings over one million pounds without it impacting the economy.

Capital in the Twenty-First Century

Capital in the Twenty-First Century, published in 2014, focuses on wealth and income inequality in Europe and the US since the 18th century. The book's central thesis is that inequality is not an accident but rather a feature of capitalism that can be reversed only through state intervention. The book thus argues that unless capitalism is reformed, the very democratic order will be threatened. The book reached number one on The New York Times bestselling hardcover nonfiction list dated 18 May 2014. Piketty offered a "possible remedy: a global tax on wealth."

Bibliography

• Les hauts revenus face aux modifications des taux marginaux supérieurs de l’impôt sur le revenu en France, 1970â€"1996 (Document de Travail du CEPREMAP, n° 9812, July 1998)
• Inégalités économiques: report to the Counsel of Economic Analysis (14 June 2001) with Tony Atkinson, Michel Godet and Lucile Olier
• Les hauts revenus en France au XXème siècle, Inégalités et redistribution, 1901â€"1998 (ed. Grasset, September 2001)
• Fiscalité et redistribution sociale dans la France du XXe siècle (October 2001)
• L'économie des inégalités (ed. La Découverte, April 2004)
• Vive la gauche américaine ! : Chroniques 1998â€"2004 (Éditions de l'Aube, September 2004)
• Pour un nouveau système de retraite : Des comptes individuels de cotisations financés par répartition (Éditions Rue d'Ulm/CEPREMAP, 2008) with Antoine Bozio
• On the Long run evolution of inheritance. France, 1820â€"2050 (PSE Working Paper, 2010)
• Pour une révolution fiscale (ed. Le Seuil, 2011) with Emmanuel Saez and Camille Landais
• Peut-on sauver l'Europe ? Chroniques 2004â€"2012 (Les Liens qui Libèrent, 2012)
• Le Capital au XXIe siècle (Seuil, 2013)
• Capital in the Twenty-First Century (Cambridge, MA: Belknap Press, 2014)

See also

• Criticism of capitalism

References

External links

• Thomas Piketty, personal page at the website of the Paris School of Economics
• The World Top Incomes Database
• Taking On Adam Smith (and Karl Marx) 19 April 2014 New York Times

Interviews

• WATCH: Elizabeth Warren And Thomas Piketty Discuss Nature, Causes Of Economic Inequality. The Huffington Post. 2 June 2014.
• Piketty calls out GOP hypocrisy on inequality. MSNBC. 11 March 2015