Inequality in Urban America

Abstract

When the English translation of Thomas Piketty's Le capital au XXIe siècle came out in the spring of 2014, it struck a raw nerve. It is rare for a weighty tome on economic theory to achieve widespread attention, but Piketty, a Parisian researcher known more for sober analysis than any Left Bank outbursts, has produced some conclusions on wealth creation and distribution that are both provocative and disturbing. His research analyses tax records spread over many decades and more than twenty countries, enabling him to study historical patterns and irregularities in the distribution of wealth. His main thesis is based on an economic formula: “The Central Contradiction of Capitalism: r > g.” In this equation, the return on capital (r) grows more rapidly than income or output (g). As a result, this drives relentlessly expanding levels of inequality, whereby “the entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labour.” There is plenty of evidence out there to support this view. Thus, a recent report from Credit Suisse: Although the global economic environment has remained challenging, total global wealth has grown to a new record, rising by USD 20.1 trillion between mid-2013 and mid-2014, an increase of 8.3%, to reach USD 263 trillion – more than twice the USD 117 trillion recorded for the year 2000. With an 11.4% year-on-year increase, wealth creation was particularly strong in North America, where it now stands at USD 91 trillion, or 34.7% of total wealth … capital markets were a key source of wealth growth: equity market capitalization grew by 22.6% in the United States …