July 16, 2016The Hindubookseconomics

New narratives of economic inequality

Thomas Piketty’s collection of columns does not have quite the impact of his bestselling Capital, but does pick up speed in the latter half when he leaves the European Union

Co-authored with Anupam Manur

The Hindu This is from my column in The Hindu (2015-2016)

Ideas travel across borders much faster than their consequences. One of the challenges for policymakers and analysts is to be able to triage elements of current international intellectual fashion ahead of elite zeal to implement them. It remains puzzling how societies that reject some Western ideas” are oblivious to other ideas from the same geography that they unconsciously accept. Which of these two categories Thomas Piketty’s new narratives on economic inequality will ultimately fall into remains to be seen. In any event, it behoves us to carefully examine the crucible of their birth.

Chronicles: On Our Troubled Times is a collection of Piketty’s newspaper op-ed columns, whose importance follows the acclaim of his heavyweight magnum opus, Capital in the Twenty-first Century. Unlike Capital, the slim Chronicles is actually a volume most people can read and complete.

The book is almost unilaterally dedicated to the financial crisis of 2007 and the ensuing Eurozone crisis, though there are a few pieces outside of this realm. Largely, Piketty argues for a stronger European Union and strongly recommends the federal structure of the United States. Eurosceptics will undoubtedly find this hard to digest, especially in the light of Brexit. If bureaucratic controls from the European Parliament, along with unfettered immigration, was seen as a strong enough reason for a country to exit the EU, a federal European governmental authority, as suggested by Piketty, to whom European members must submit their budget documents, would be seen as antithetical to the sovereignty of member nations.

To be fair, several prominent economists agree that a monetary union without a proper fiscal authority is untenable in the long run. This, in short, is the biggest issue that Europe is grappling with. Yet, the repudiation of the European Union and the rise of far-right nationalist politics elsewhere in the federation calls into question such a scenario.

The book consists of essays arranged chronologically and divided into three sub-categories: Why save the bankers’ (2008-10), No, the Greeks aren’t lazy!’ (2010-12), and Can growth save us?’ (2012-15). The book is thematically united by Piketty’s unapologetic and emphatic egalitarian stand, reflected in many of the author’s other works.

The biggest risk of converting a collection of articles to a book is to keep it relevant to the reader and Chronicles suffers here. Opinion pieces are more often than not tied to news pegs in order to be timely and relevant, while a book has to be timeless in nature. Many articles detail Piketty thoughts regarding an event occurring at the time of writing, which readers might not readily relate with or, worse still, not have an interest in anymore as the consequences of the event have all been played out and become known.

The other drawback of an omnibus of this sort is repetition. In newspaper articles, written with a significant time gap, it makes sense to rehash an idea to refresh the reader’s mind. In the book, however, reading the same idea every few pages can get rather tedious.

At one point in the book, readers are exposed to Germany’s plan of Redemption Funds in consecutive essays, which can prove to be taxing. Indeed, some of the ideas that Piketty proposes occur repeatedly in the book: debts must be mutualised; Europe should move from a flat tax rate to a progressive tax rate; European institutions must be democratised and parliament given higher powers; Europe should have uniform and high corporate tax rates; and tax havens and tax dumping are crippling the European economies.

Some of these ideas will pique the interest of readers, but cannot satiate their curiosity for more details. It is not until the last third of the book that readers get a glimpse of Piketty’s idea for a stronger federal European parliament. Other ideas are left unattended and, thus, remain unconvincing. For example, Piketty argues that there should be a uniform corporate tax rate of 25 per cent in all EU member nations and a further 10 per cent European surtax. What are the implications of such high tax rates when private investments are the need of the hour? How will the surtax be collected and who will be the recipient and what will it be used for?

Elsewhere, Piketty makes the claim that Europe’s social model is the best in the world without defining what the social model is or providing any evidence for making such a grand claim. Both the long-time reluctance to admit Turkey and the more recent backlash against immigration, not least from Islamic West Asia, call into question any claims of a superior social model.

The articles outside the realm of the European crises are the ones that are most enjoyable. They are genuinely informative and filled with new ideas. There are essays on how France has to deal with the descendents of those subjected to slavery in its colonies like Reunion. The latter part of the book deals with a few more topics that are interesting to read and which break the monotony of European politics. These include Hong Kong’s Occupy protests, Russian incursions into Ukraine, American elections, South Africa’s problems with inequality, and even an essay on saving the newspaper Liberation, the one in which these essays appear, from dramatic changes.

The rest of my The Hindu columns are here

That said, any attempt to universalise Piketty’s policy arguments must consider the fact that he writes in the particular circumstances of the early 21st century crisis in Europe. It is important to resist the temptation to adopt them wholesale, or even use them rhetorically in public discourse.

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