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Paul Krugman on Oligarchy in the USA

 

Paul Krugman warns that the United States is becoming an oligarchy in his review of blockbuster Capital in the Twenty-First Century by Thomas Piketty, a 42-year-old French economist who teaches at the Paris School of Economics.

Bill Moyers interviews Krugman about his thoughts on the bombshell book:

“Inheritors of large fortune can live very, very well, and still put a large fraction of the income from that fortune aside, and the fortune will grow faster than the economy, so the big dynastic fortunes tend to take an ever-growing share of total national wealth. So when you have a situation where the returns on capital are pretty high, and the growth rate is not that high, you have a situation in which not only can people live well off inherited wealth, but they can actually pass on to the next generation even more, an even higher share. So it’s all in his terms, r, the rate of return on capital and g, the rate of growth of the economy, and when you have a high r, low g economy, which is what we now have, then you’re talking about a situation in which dynasties come increasingly to dominate the top of the economic spectrum. A tiny fraction of the population ends up very dominant.”

Bill: “Do you agree with him that we are drifting toward oligarchy?”

Paul: “Oh yeah. I don’t see there’s any question of it.”

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