Thomas Piketty’s new book ‘Capital in the Twenty First Century’ has been making waves overseas: it’s number one on Amazon, and has been lauded as a book that will transform how we think about society and do economics – by Paul Krugman, no less.
So far, there’s not been much attention on how it will or might affect New Zealand. But Piketty’s basic argument – that concentrations of wealth and inheritance are getting back to their 19th century levels, and that the accumulating returns on those investments will drive spiralling inequality – is as relevant here as anywhere else.
My own review of the book will be posted shortly, but Max Harris, a New Zealand Rhodes Scholar at Oxford, has already posted his own take.
One notable part is here:
… where Piketty’s analysis is fresh and original is in highlighting how progressives need to think beyond incomes and salaries, to how wealth is stored and passed on in other ways. This is relevant to politics today in numerous nations: for example, it should give ammunition to those in New Zealand fighting for a capital gains tax. And Piketty is not shy of giving practical suggestions to countries wrestling with these issues: he calls for a progressive annual tax on capital (of between 0 and 10%), pushes for more regulation of tax havens, and suggests an 80% top income tax rate may be optimal, accepting that these might be politically unrealistic at present. Overall, Piketty encourages harder thinking about wealth more generally…