Opinion

Nicholas Wapshott

The surprise success of Thomas Piketty

Nicholas Wapshott
Apr 30, 2014 17:02 UTC

The surprise success of the French economist Thomas Piketty’s income disparity blockbuster Capital in the 21st Century has forced battlelines to be drawn in the world of political economics.

Piketty’s unremarkable contention, after having crawled through two centuries of data, is that the inequitable distribution of wealth in Western society has now led to an intolerable state of affairs. The super-rich have arranged matters so that almost all of a nation’s economic growth is delivered into their bank accounts.

If you do not read anything else from Piketty’s tome, read this: “From 1977 to 2007, the richest 10 percent appropriated three-quarters of the growth. The richest 1 percent alone absorbed nearly 60 percent of the total increase of U.S. national income in this period.”

It is hardly surprising, considering the economic policies put into effect by both Republicans and Democrats, that the rich are becoming richer. Aggressive, highly funded lobbying on behalf of big business, those who run big business and those who benefit from big business has ensured that progressive taxation, where the rich pay more tax than the poor to make society more fair, has been largely abandoned. Increasing the fortunes of a few individuals at the cost of those who make the wealth has become not just an economic imperative, but a political credo, too.

I have no reason to doubt Piketty’s research. There have been few methodical attempts to discover what economic data suggest over the last two centuries. He appears to have crunched the numbers appropriately and found a pattern of behavior that he believes is both immoral and is holding back economic growth.

Putin learning what U.S. didn’t

Nicholas Wapshott
Apr 23, 2014 19:55 UTC

After America’s ignominious defeat and hurried departure from Vietnam in 1973 — when the world’s richest and mightiest nation was humbled by the stolid determination of ill-equipped, ideologically inspired peasants — it was generally assumed the United States would not wage war again until the lessons of the Viet Cong victory were taken to heart.

When Soviet forces hastily retreated with a bloody nose from their nine-year occupation of Afghanistan in 1989, similar lessons were suggested about the impossibility of militarily holding a country with a universally hostile population.

In his stealth occupation of Crimea and eastern Ukraine, President Vladimir Putin of Russia appears to have learned the lessons of both Vietnam and Afghanistan.

Yellen shows her hand

Nicholas Wapshott
Apr 19, 2014 05:19 UTC

The difference between the Federal Reserve Board of Chairwoman Janet Yellen and that of her immediate predecessor Ben Bernanke is becoming clear. No more so than in their approach to the problem of joblessness.

Bernanke made clear that in the post-2008 economy, his principal goal was the creation of jobs, not curbing inflation. He settled on a figure, 6.5 percent unemployment, as the threshold that would guide his actions.

While remaining true to the spirit of Bernanke’s principal goal, Yellen and the rest of her board refined the target in their meeting on March 18 and 19, a change in approach that at first sent the wrong signal to the stock and bond markets. At the press conference following the meeting, Yellen said she would not be raising interest rates “for a considerable time,” which could mean “something on the order of around six months.”

The EU-U.S. love-hate relationship

Nicholas Wapshott
Apr 11, 2014 17:51 UTC

The elaborate gavotte between the American and European economies continues.

While the Federal Reserve has begun to wind down its controversial quantitative easing (QE) program, the European Central Bank (ECB) the federal reserve of the eurozone, has announced it is considering a QE program of its own.

It is a belated acknowledgement, if not an outright admission, from Mario Draghi, president of the ECB, that five years of the European Union’s austerity policy has failed to lift the eurozone nations out of the economic mire. The ECB has presided over a wholly unnecessary triple-dip recession in the eurozone and sparked a bitter rift between the German-dominated European Union bureaucracy and the Mediterranean nations that must endure the rigors imposed from Brussels. All to little avail.

If there are any “austerians” left standing, let them explain this. Ignoring the cries of the unemployed and those pressing for urgent measures to promote growth in Europe, the ECB blithely imposed its punishing creed, arguing that there would be no gain without pain. The result? Little gain, endless pain.

Crimea: Too small to matter

Nicholas Wapshott
Apr 1, 2014 16:41 UTC

Crimea is permanently lost to Russia.

That is implicit in President Barack Obama’s remarks about where the Ukraine crisis heads next; the terms of the Paris talks between Secretary of State John Kerry and the Russian Foreign Minister Sergey Lavrov, and the West’s rejection of military action to hurl back the occupying Russian forces.

That Crimea is gone forever is also the view of former Defense Secretary Robert Gates, who declared, “I do not believe that Crimea will slip out of Russia’s hand.”

It is now generally accepted in Washington that short of sparking a shooting war, Crimea is lost and will now always be Russian. President Vladimir Putin, presiding over an economy of $2 trillion, barely equal to California, has roundly defeated the United States and the European Union, with a combined worth of more than $34 trillion.

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