Since the 1980s, Western governments have turned from focusing on measures aimed at fostering near-full employment and strengthening safety net programs for the majority to those that favor business and wealthy interests. Among the most significant measures benefiting the wealthy have been: substantial reductions in progressive income taxes, and the virtual elimination of inheritance and estate taxes. I concur with Piketty when he observes that a “reasonably democratic” society cannot long coexist with conditions of extreme wealth concentration.

What, if anything, can be done? Two different kinds of policy initiatives are necessary: first, to diminish, even halt, the rapid re-concentration of wealth; and second, to re-invigorate the nation’s “public goods” so that the struggling middle class — and all suffering from poverty or long-term unemployment — may have an equal chance to enjoy the benefits of American citizenship. (For space reasons, I address only the first now.)

Piketty suggests that the following will be of greatest effect in halting and diminishing extremes of wealth ownership:

1. Instituting an annual progressive tax on total wealth. This levy would be assessed on all forms of wealth ownership. This proposal would not work unless it is applied to all of the US. Similarly, it would require continent-wide agreement in Europe.

2. Re-invigorating truly progressive income taxes with higher rates for the wealthiest. This would help blunt the advantage of the new class of “super-earners” (such as company CEOs and the brokers and hierarchies in the financial markets), whose annual “income” is hundreds to thousands of times greater than the average worker’s.

3. Reinstating meaningful taxes on estates or inheritance. This is essential if we wish to limit the further aggregation of wealth by those who have not “earned” it. (Piketty estimates that at least 60 percent of the wealth of the upper 10 percent comes through inheritance and not earned income.)

Broader implications

While the basis for Piketty’s study has been the West, his study suggests that the processes by which wealth accumulation and national economic growth operate are endemic to capitalistic systems, however moderated by cultural form.

I know that China is struggling with how to balance rapid advances in industrialization and urbanization with a fair distribution of benefits to all. The goals announced by your leadership are quite inspiring, but the ways of the wealthy — wherever they are — are both persistent and insidious.

Perhaps Piketty’s book will provide Chinese leadership with new tools in molding an even more just and prosperous China for the future!

The author has been a college teacher of American history and political science and the director of the US National Catholic Rural Life Conference. He served as a member of the Iowa State House of Representatives, and retired from public service in the Iowa executive branch in 2004.