By Henry Engler, Compliance Complete
NEW YORK – May 8, 2014 (Thomson Reuters Accelus) - How much of a role have corporate boards played in rising income inequality in the United States, the UK and elsewhere?
If one reads between the lines of French economist Thomas Piketty’s best-selling blockbuster book on capitalism and inequality – “Capital in the Twenty-First Century” – the answer might be: quite a bit.
The core of Piketty’s thesis and empirical evidence focuses on the long-term relationship between returns on capital and economic growth. Specifically, over long periods of time, when the return on capital exceeds the rate of economic growth, inequality tends to ensue. On the other hand, when growth exceeds capital’s return, income equality tends to improve as wealth is driven more by wage growth. Since 1970, according to Piketty, we have been living in world dominated by the former, with rising returns to holders of capital the primary force behind widening income gaps in the United States and certain European economies. In economic terms “r” – the return on capital – has been greater than “g” – the rate of growth – for some time. (more…)