What are the biggest challenges facing Europe? This is how Thomas Piketty sees it

Let’s help Ukraine – you can help too

The author of “The Capital of the Twenty-first Century”, published in 2013, came to Warsaw on the occasion of the Polish edition of his next book “Kapitał i idologia” for the Krytyki Polityczna publishing house. In a former world bestseller, 750 pages long in Polish, he described how inequality has developed in different eras and political systems. In the latest translators among others how it exploded from the 1980s onwards. It suggests solutions. He calls them the “participatory socialism” program.

– The democratic crisis we are witnessing also results from the fact that some economic issues have been closed in specialized circles (…) in history, we can see different solutions taken by states at different times, when they realized that issues of inequality were tense – he said Thomas Piketty at a meeting with Polish readers.

Let’s look at the stats for a moment. What is the distribution of wealth in the most powerful country in the world – the United States of America? The 10 percent of the richest people have 69.8 percent. All net assets (ie less debt). Up to 1 percent Almost a third of this wealth belongs to the super-rich (32.1%, 2021 data). The poorest 50 percent. Of the country’s population only 2%. All assets.

– (…) Wealth is very concentrated, and at the same time many people have negative wealth, and this is debt. If you are in this position, you have to accept everything, poor working and living conditions, etc. (…) you have to To see extreme inequalities as an opportunity Thomas Piketty said that redistribution of wealth is part of the welfare state.

How has the distribution of wealth changed since 1989? Share in assets 1% The proportion of the super-rich in the United States increased from 24 to 32.1 percent. This happened mainly at the expense of the middle class, the people aged 50 to 90 on the income ladder, whose ownership has fallen from 35 to 28 percent. It is not surprising that democracy clashed strongly, and Donald Trump won the US presidential election of 2017, albeit not without the active support of Russia.

How was it in Poland? According to an estimate by Thomas Piketty, 10 percent. The richest have 60 percent. All assets. It happened only in 30 years, when the accumulation of wealth in the countries of the West stretched for decades, even centuries.

Thomas Piketty said: “Poland entered a very rapid wealth concentration path and it was a very uneven path.

It has created nationalism, populism, and anti-immigrant ideology. He added that these are the results of this process.

When we cast the ballot papers on June 4, 1989 with hope, and a few months later watched with tears of joy in our eyes as the Germans tear down the Berlin Wall, we didn’t yet know what lay ahead. The existence of military, political, ideological and social competition in the form of the USSR was decisive for the shape of the social and economic model of the West.

When the Soviet Union collapsed, it turned out that there was no hell. This fueled turbo-capitalism (a concept coined by Edward Luttwak, the economist, military strategist and former advisor to US President George W. Bush the Great), allowing the super-rich to match rising global wealth, and the “welfare state” model was a thing of the past.

Although – from a historical perspective – we have social progress, after the fall of communism we began to see very bad phenomena. The fall of communism was a way for conservatives around the world to undo progressive taxation and many social achievements. Thomas Piketty said that this is the case not only in Eastern Europe, but also in Western Europe.

This historical experience needs to be re-evaluated. He added that this became possible by comparing variables such as the impact of the study on economic growth, productivity and wealth growth.

The study rate, that is, the number of students relative to the total population of the same age, was much higher in the United States in the 1950s than in Western Europe. Thomas Piketty’s hypothesis states that the United States owes – among other things – a very large increase in productivity and economic advantage, which it established in the world in the second half of the twentieth century.

The economist said: – We need to reassess the transformation after the collapse of communism and check the impact of progressive taxation and redistribution of wealth on social improvement.

Progressive taxation is one of the most important points on the “participatory socialism” agenda. Thomas Piketty recalls that in the years 1932-1980 the highest marginal tax rate in the United States was on average 81%, in the United Kingdom – 89%, 58%. In Germany, 60 percent. in France.

Increasing tax progress (higher rates for better earners, lower for lower) is not the end of the recovery agenda. Thomas Piketty believed that it was necessary to introduce a wealth tax and an inheritance tax. Let us add that in different periods such taxes were also in force in many countries and this is nothing new. What does the money redistributed in this way go to? To provide young people who inherit nothing with some kind of seed capital.

From income taxes we can improve the quality of public services, and from property taxes we can give young people some capital to start an independent life – said Thomas Piketty.

One element of the “participatory socialism” program is the 50 per cent supply to corporate employees. Voting rights, which would reduce the concentration of economic power and allow the entire system to be decentralized.

Thomas Piketty is co-author of “Manifesto for European Democracy” (Manifesto for the democratization of Europe), which includes proposals to increase the EU budget to 4 percent. GDP (currently about 1%) to finance research and training, European universities, investment programs, and the admission and integration of immigrants. This budget will come from a tax on multinational corporations (the currently proposed rate of 15 percent. Thomas Piketty sees it as insufficient), on fossil fuels or a carbon footprint.

The biggest challenge for Europe is increased investment in education, new clean energy technologies, individual liberalization and digitization. We have a better system than in the United States (…) but it requires huge investments – he said.

In his view, the Global North should take responsibility and finance the energy transformation of the Global South.

BUSINESS INTERIA is on Facebook and you are up to date with the latest happenings

– The possibility of a global climate catastrophe requires us to change the international economic system much faster than we thought – he said.

For those for whom 750 pages of “Capital of the Twenty-first Century” represented a challenge, and for whom the nearly 1200 pages of Capital and Ideology were greater, the author has good news. He decided to write a shorter version of it. “A Brief History of Equality” (“A Brief History of Equality”) was published last year in French and English in April by Harvard University Press.

Jacek Ramotovsky

Check also: