Debunking Myths About Wealth and Race
It’s not individual behavior that drives the racial wealth divide — it’s a system that many folks pretend doesn’t exist.
Few in the public likely noticed that the 2015 Economics Nobel Prize was recently awarded to Princeton economist Angus Deaton for his contributions to the study of poverty, welfare, and consumption.
You can be excused for missing this news story. Deaton may be a well-regarded academic, but he hardly ranks as a household name. His rigorous work developing new metrics to measure relative poverty in developing countries has seldom attracted much media attention.
That did change somewhat with the Nobel Prize announcement earlier this month. Deaton’s 2013 book, The Great Escape: Health, Wealth, and the Origins of Inequality, has now come in for a great deal of deserved recognition. Still, I do hope that the Nobel committee will consider a more interesting and dynamic selection for 2016.
I’d like to offer up three potential candidates. All three happen to be French, and each has contributed mightily to the global movement against skyrocketing wealth and income inequality.
These three economists — Thomas Piketty, Emmanuel Saez, and Gabriel Zucman — have all worked closely together and could be awarded the Nobel Prize as a group. But all three have also made serious and substantive contributions in their own right.
Let’s consider the Nobel case for each of these engaged — and exemplary — scholars.
The most widely known of the group, this Paris School of Economics analyst authored 2014’s biggest global social sciences blockbuster, Capital in the Twenty First Century, a book that every serious academic and pundit at least claims to have read.
Piketty’s Capital sifts through hundreds of years of tax data to show the trends that have expanded and reduced inequality over time. His key finding: If capital is growing at a rate faster than the rate of growth in the overall economy, wealth will inexorably concentrate at the top.
Over recent centuries, only world war and reconstruction have fundamentally undone this concentration.
Piketty’s book, an admitted brick of a tome at nearly 700 pages, remains incredibly accessible to lay readers and includes both clear-eyed analysis and concrete solutions. Perhaps most importantly, Piketty’s work upends the still commonly held false belief that the free market, left to its own devices, will eventually reduce inequality.
No economist has done more than this University of California at Berkeley researcher to document the rise of extreme income and wealth inequality. Employing an innovative approach developed alongside Piketty and Zucman, Saez uses tax data to accurately estimate wealth at the economic summit. He has documented in excruciating detail just how much the top 1 percent and 0.1 percent — and even 0.01 percent — have accumulated.
Without the work of Saez has published over the last decade, we simply would not have an accurate picture of inequality in the United States today.
Saez has not yet written a bestselling book. But he did win a MacArthur Foundation genius grant in 2010 and the prestigious John Bates Clark award for young economists in 2009. A Nobel would round these honors off nicely.
The youngest of these three, the 28-year-old Zucman recently published The Hidden Wealth of Nations, a comprehensive look at the world’s tax havens and a nod to Adam Smith’s classic text, The Wealth of Nations. The thin book, just 142 pages, clearly lays out how the world’s super wealthy have stashed at least $7.6 trillion in offshore tax havens, a total that equals more than 8 percent of the world’s wealth.
These offshore trillions are costing governments an estimated $200 billion in lost annual revenue.
Zucman, also a University of California at Berkley professor, bases his research into hidden global wealth on a telling statistical reality: Globally today, liabilities far outnumber assets, a mathematically impossible premise.
Zucman has dug into public data on central banks in Switzerland and Luxembourg to unearth those hidden assets, and his pioneering work has massive fiscal and political implications.
We have a full year until the Nobel folks announce their next prize winner in economics. That ought to be enough time for the Nobel committee to consider the immense contributions these three economists have made to the public’s understanding of inequality and economics. I’m hopeful they’ll make the right choice.
Josh Hoxie tracks the debate over the estate tax and other grand divide-related concerns for the Institute for Policy Studies Program on Inequality and the Common Good.