Capital Matters

Last night I finally picked up Piketty's book Capital in the Twenty-first Century.  I'm barely fifty pages into the book now and yet there already  is quite a lot to think about.

The book is something of a phenomenon in the English-speaking world, espcially in the United States.  Why?  I thought that France was that odd country over there with quaint ideas about Liberté, Égalité, Fraternité that have become irrelevant in today's fast moving globalized world. .

What I find fascinating about Americans' view of France (and perhaps of Europe in general) is that it is caught in something of a time warp.  Their views seems to have been formed (and stuck) in the period right after World War II - a vision of a not terribly prosperous but bucolic, rural, traditional, pre-modern society which is either a great virtue or a great vice depending on the political leanings of the individual making the judgement.

Americans should know better to base their views of any country on the last time they had a troop presence or fought a war there.  They should also know better than to flatter themselves by claiming that any changes from that period to the present day are the fault (or the gift) of Americanization. Today France is a modern prosperous country with all sorts of nice (or not so nice) things like universal health care and nuclear submarines.  Explaining how she got here is a task I will leave to historians but as I  travel (as I do quite often) between France and North America, I see  a confirmation of my motto, "The grass is not greener on the other side of the Atlantic."

The sum of American prejudices (positive and negative) about France make the success of Piketty's book in the United States a surprise for me.  What did I miss?  A lot.  Just as it took me a few years to understand a post-911 America, I think it will take just as much time to understand Americans' reaction to the Great Recession.  I wasn't in the United States for either of those events and for all that I can certainly read the headlines on the Internet and read email from family members that isn't enough to understand reactions to them.  It's a bit like listening to a radio broadcast with an awful lot of noise and an intermittent signal that doesn't give enough information to be able to follow the national conversation. I'm listening more attentively these days so allow me to speculate a bit about why Americans are so interested in reading Piketty's book .

The first decade of the twenty-first century was not kind to the United States and the ripples from two national tragedies will be with us for a long time.  From what I can discern Americans came out of 911 feeling less secure and they came out of the Great Recession feeling much poorer.  What people in countries with decent social networks (or those in countries with economies that continued to do well) were able to ride out, lower and middle-class Americans were pretty much left to manage with whatever personal or family resources they had.  To add insult to injury, banks and big companies were deemed worthy of public assistance, but not people.  

The  data on income inequality in the US add another dimension because they seem to suggest that, while the lower and middle-class struggle, there is another class of people in the US who are already ahead in the game and the way that the tax and political systems are structured they are likely to stay there (and their children, too).

Americans are not quite sure what to think about the 1%.  Some say that they need protection and encouragement because they are the "job creators" and if they are treated poorly they will find friendlier places for their precious persons and capital.   Others argue that this class has interests that make the link between their good fortune and the opportunities, decent employment and well-being of their fellow Americans tenuous at best and certainly does not justify their being treated like hothouse flowers.   And if the waters weren't muddy enough, Americans also subscribe to certain myths about their country and themselves - that every American is simply a "temporarily embarassed millionnaire" and "if you just work hard enough, you'll be rich too someday" which implies that the interests of a secretary and her boss Warren Buffett are fundamentally the same in the long run.

Around and around it goes.  From what I can tell (and feel free to disagree with me) there is a real desire on the part of America's Other Classes to understand what the hell happened and what is likely to happen in the future.  Who is right here and should something be done? Or is no action required because things will resolve themselves eventually? (Though I note that no one from the Occupy movement to the Tea Party really has a coherent vision for what kind of resolution is needed or desired.)

Enter Piketty's book.  It is well-written, engaging and, above all, clear.  As one of those he mentions who does not know the first thing about economics, I'm not having any trouble following his arguments.  In fact, it is a rather refreshing read.  Here is an academic who understands one of Rutherford's rules:   "A theory that you can't explain to a bartender is probably no damn good."

Back to the book.  Have a great day, everyone.