I wish more people could have Thomas Piketty's balanced view on capitalism. Too often it is treated as some sort of game where you have to pick sides whether you are for or against capitalism.
Especially in America there seems to be a kneejerk reaction to any calls for regulations or moderations of the effects of the free market. Usually it is dismissed without further discussion with "look what happened in the east block countries!"
But I think Thomas Piketty has a very good point in his book that if you in fact favor capitalism, you ought to be open to regulation of it. The alternative is what we have seen again and again in history, inequality gets so bad that we get uprisings and revolutions. Inequality is breeding ground for radical ideas like communism. Otto von Bismarck understood that and gave Germany the beginnings for a welfare system. Not because he really cared about workers but because he understood the dangers of inequality with respect to radicalization of the poor.
Today we can see the same thing starting to play out in America. The US have now been on a path towards ever higher inequality for many years and we can see it reaching a breaking point. Politics is getting ever more radical. Donald Trump and Bernie Sanders would never had gotten the support they got without the economic fundamentals having shifted so much.
We already know what high inequality leads to in modern times, because we have seen it play out in South America again and again. They oscillate between one political extremist or populist after another.
I think if the US doesn't actually seriously try to reduce inequality, the US risks ending up with its own Hugo Chavez character, or alternatively a right wing authoritarian.
And if inequality doesn't cause revolutions, there seems to be a good case for it causing asset bubbles. We saw this in 1929 which market the end of a dramatic wealth inequality increase, just as 2008. I think it will happen again because the fundamental problems have not been solved.
Especially in America there seems to be a kneejerk reaction to any calls for regulations or moderations of the effects of the free market. Usually it is dismissed without further discussion with "look what happened in the east block countries!"
But I think Thomas Piketty has a very good point in his book that if you in fact favor capitalism, you ought to be open to regulation of it. The alternative is what we have seen again and again in history, inequality gets so bad that we get uprisings and revolutions. Inequality is breeding ground for radical ideas like communism. Otto von Bismarck understood that and gave Germany the beginnings for a welfare system. Not because he really cared about workers but because he understood the dangers of inequality with respect to radicalization of the poor.
Today we can see the same thing starting to play out in America. The US have now been on a path towards ever higher inequality for many years and we can see it reaching a breaking point. Politics is getting ever more radical. Donald Trump and Bernie Sanders would never had gotten the support they got without the economic fundamentals having shifted so much.
We already know what high inequality leads to in modern times, because we have seen it play out in South America again and again. They oscillate between one political extremist or populist after another.
I think if the US doesn't actually seriously try to reduce inequality, the US risks ending up with its own Hugo Chavez character, or alternatively a right wing authoritarian.
And if inequality doesn't cause revolutions, there seems to be a good case for it causing asset bubbles. We saw this in 1929 which market the end of a dramatic wealth inequality increase, just as 2008. I think it will happen again because the fundamental problems have not been solved.