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It's very nice to be here tonight.

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So I've been working on the history of income

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and wealth distribution for the past 15 years,

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and one of the interesting lessons

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coming from this historical evidence

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is indeed that, in the long run,

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there is a tendency for 
the rate of return of capital

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to exceed the economy's growth rate,

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and this tends to lead to 
high concentration of wealth.

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Not infinite concentration of wealth,

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but the higher the gap between r and g,

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the higher the level of inequality of wealth

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towards which society tends to converge.

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So this is a key force that
I'm going to talk about today,

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but let me say right away

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that this is not the only important force

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in the dynamics of income 
and wealth distribution,

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and there are many other forces that play

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an important role in the long-run dynamics

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of income and wealth distribution.

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Also there is a lot of data

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that still needs to be collected.

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We know a little bit more today

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than we used to know, 
but we still know too little,

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and certainly there are 
many different processes —

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economic, social, political —

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that need to be studied more.

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And so I'm going to focus today on this simple force,

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but that doesn't mean that other important forces

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do not exist.

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So most of the data I'm going to present

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comes from this database

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that's available online:

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the World Top Incomes Database.

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So this is the largest existing

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historical database on inequality,

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and this comes from the effort

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of over 30 scholars from several dozen countries.

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So let me show you a couple of facts

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coming from this database,

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and then we'll return to r bigger than g.

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So fact number one is that there has been

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a big reversal in the ordering of income inequality

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between the United States and Europe

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over the past century.

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So back in 1900, 1910, income inequality was actually

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much higher in Europe than in the United States,

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whereas today, it is a lot higher in the United States.

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So let me be very clear:

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The main explanation for this is not r bigger than g.

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It has more to do with changing supply and demand

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for skill, the race between education and technology,

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globalization, probably more unequal access

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to skills in the U.S.,

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where you have very good, very top universities

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but where the bottom part of the educational system

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is not as good,

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so very unequal access to skills,

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and also an unprecedented rise

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of top managerial compensation of the United States,

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which is difficult to account for
just on the basis of education.

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So there is more going on here,

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but I'm not going to talk too much about this today,

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because I want to focus on wealth inequality.

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So let me just show you a very simple indicator

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about the income inequality part.

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So this is the share of total income

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going to the top 10 percent.

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So you can see that one century ago,

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it was between 45 and 50 percent in Europe

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and a little bit above 40 percent in the U.S.,

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so there was more inequality in Europe.

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Then there was a sharp decline

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during the first half of the 20th century,

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and in the recent decade, you can see that

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the U.S. has become more unequal than Europe,

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and this is the first fact I just talked about.

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Now, the second fact is more about wealth inequality,

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and here the central fact is that wealth inequality

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is always a lot higher than income inequality,

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and also that wealth inequality,

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although it has also increased in recent decades,

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is still less extreme today

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than what it was a century ago,

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although the total quantity of wealth

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relative to income has now recovered

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from the very large shocks

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caused by World War I, the Great Depression,

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World War II.

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So let me show you two graphs

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illustrating fact number two and fact number three.

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So first, if you look at the level of wealth inequality,

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this is the share of total wealth

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going to the top 10 percent of wealth holders,

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so you can see the same kind of reversal

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between the U.S. and Europe that we had before

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for income inequality.

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So wealth concentration was higher

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in Europe than in the U.S. a century ago,

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and now it is the opposite.

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But you can also show two things:

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First, the general level of wealth inequality

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is always higher than income inequality.

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So remember, for income inequality,

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the share going to the top 10 percent

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was between 30 and 50 percent of total income,

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whereas for wealth, the share is always

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between 60 and 90 percent.

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Okay, so that's fact number one,

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and that's very important for what follows.

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Wealth concentration is always

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a lot higher than income concentration.

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Fact number two is that the rise

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in wealth inequality in recent decades

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is still not enough to get us back to 1910.

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So the big difference today,

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wealth inequality is still very large,

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with 60, 70 percent of total wealth for the top 10,

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but the good news is that it's actually

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better than one century ago,

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where you had 90 percent in
Europe going to the top 10.

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So today what you have

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is what I call the middle 40 percent,

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the people who are not in the top 10

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and who are not in the bottom 50,

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and what you can view as the wealth middle class

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that owns 20 to 30 percent

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of total wealth, national wealth,

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whereas they used to be poor, a century ago,

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when there was basically no wealth middle class.

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So this is an important change,

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and it's interesting to see that wealth inequality

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has not fully recovered to pre-World War I levels,

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although the total quantity of wealth has recovered.

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Okay? So this is the total value

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of wealth relative to income,

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and you can see that in particular in Europe,

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we are almost back to the pre-World War I level.

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So there are really two

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different parts of the story here.

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One has to do with

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the total quantity of wealth that we accumulate,

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and there is nothing bad per se, of course,

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in accumulating a lot of wealth,

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and in particular if it is more diffuse

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and less concentrated.

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So what we really want to focus on

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is the long-run evolution of wealth inequality,

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and what's going to happen in the future.

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How can we account for the fact that

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until World War I, wealth inequality was so high

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and, if anything, was rising to even higher levels,

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and how can we think about the future?

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So let me come to some of the explanations

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and speculations about the future.

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Let me first say that

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probably the best model to explain

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why wealth is so much

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more concentrated than income

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is a dynamic, dynastic model

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where individuals have a long horizon

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and accumulate wealth for all sorts of reasons.

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If people were accumulating wealth

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only for life cycle reasons,

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you know, to be able to consume

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when they are old,

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then the level of wealth inequality

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should be more or less in line

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with the level of income inequality.

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But it will be very difficult to explain

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why you have so much more wealth inequality

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than income inequality

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with a pure a life cycle model,

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so you need a story

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where people also care

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about wealth accumulation for other reasons.

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So typically, they want to transmit

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wealth to the next generation, to their children,

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or sometimes they want to accumulate wealth

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because of the prestige, the
power that goes with wealth.

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So there must be other reasons

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for accumulating wealth than just life cycle

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to explain what we see in the data.

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Now, in a large class of dynamic models

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of wealth accumulation

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with such dynastic motive for accumulating wealth,

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you will have all sorts of random,

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multiplicative shocks.

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So for instance, some families

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have a very large number of children,

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so the wealth will be divided.

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Some families have fewer children.

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You also have shocks to rates of return.

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Some families make huge capital gains.

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Some made bad investments.

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So you will always have some mobility

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in the wealth process.

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Some people will move up,
some people will move down.

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The important point is that,

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in any such model,

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for a given variance of such shocks,

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the equilibrium level of wealth inequality

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will be a steeply rising function of r minus g.

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And intuitively, the reason why the difference

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between the rate of return to wealth

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and the growth rate is important

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is that initial wealth inequalities

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will be amplified at a faster pace

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with a bigger r minus g.

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So take a simple example,

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with r equals five percent and g equals one percent,

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wealth holders only need to reinvest

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one fifth of their capital income to ensure

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that their wealth rises as fast

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as the size of the economy.

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So this makes it easier

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to build and perpetuate large fortunes

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because you can consume four fifths,

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assuming zero tax,

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and you can just reinvest one fifth.

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So of course some families
will consume more than that,

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some will consume less, so there will be

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some mobility in the distribution,

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but on average, they only need to reinvest one fifth,

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so this allows high wealth inequalities to be sustained.

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Now, you should not be surprised

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by the statement that r can be bigger than g forever,

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because, in fact, this is what happened

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during most of the history of mankind.

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And this was in a way very obvious to everybody

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for a simple reason, which is that growth

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was close to zero percent

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during most of the history of mankind.

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Growth was maybe 0.1, 0.2, 0.3 percent,

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but very slow growth of population

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and output per capita,

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whereas the rate of return on capital

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of course was not zero percent.

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It was, for land assets, which was

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the traditional form

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of assets in preindustrial societies,

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it was typically five percent.

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Any reader of Jane Austen would know that.

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If you want an annual income of 1,000 pounds,

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you should have a capital value

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of 20,000 pounds so that

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five percent of 20,000 is 1,000.

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And in a way, this was

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the very foundation of society,

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because r bigger than g

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was what allowed holders of wealth and assets

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to live off their capital income

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and to do something else in life

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than just to care about their own survival.

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Now, one important conclusion

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of my historical research is that

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modern industrial growth did not change

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this basic fact as much as one might have expected.

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Of course, the growth rate

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following the Industrial Revolution

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rose, typically from zero to one to two percent,

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but at the same time, the rate of return

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to capital also rose

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so that the gap between the two

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did not really change.

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So during the 20th century,

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you had a very unique combination of events.

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First, a very low rate of return

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due to the 1914 and 1945 war shocks,

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destruction of wealth, inflation,

271
00:10:47,868 --> 00:10:49,848
bankruptcy during the Great Depression,

272
00:10:49,848 --> 00:10:51,513
and all of this reduced

273
00:10:51,513 --> 00:10:53,263
the private rate of return to wealth

274
00:10:53,263 --> 00:10:55,158
to unusually low levels

275
00:10:55,158 --> 00:10:57,497
between 1914 and 1945.

276
00:10:57,497 --> 00:10:59,333
And then, in the postwar period,

277
00:10:59,333 --> 00:11:02,570
you had unusually high growth rate,

278
00:11:02,570 --> 00:11:04,944
partly due to the reconstruction.

279
00:11:04,944 --> 00:11:06,869
You know, in Germany, in France, in Japan,

280
00:11:06,869 --> 00:11:08,420
you had five percent growth rate

281
00:11:08,420 --> 00:11:11,570
between 1950 and 1980

282
00:11:11,570 --> 00:11:13,213
largely due to reconstruction,

283
00:11:13,213 --> 00:11:15,564
and also due to very large demographic growth,

284
00:11:15,564 --> 00:11:17,705
the Baby Boom Cohort effect.

285
00:11:17,705 --> 00:11:20,143
Now, apparently that's not going to last for very long,

286
00:11:20,143 --> 00:11:21,818
or at least the population growth

287
00:11:21,818 --> 00:11:24,586
is supposed to decline in the future,

288
00:11:24,586 --> 00:11:28,242
and the best projections we have is that

289
00:11:28,242 --> 00:11:30,070
the long-run growth is going to be closer

290
00:11:30,070 --> 00:11:31,493
to one to two percent

291
00:11:31,493 --> 00:11:33,439
rather than four to five percent.

292
00:11:33,439 --> 00:11:36,116
So if you look at this,

293
00:11:36,116 --> 00:11:38,257
these are the best estimates we have

294
00:11:38,257 --> 00:11:39,913
of world GDP growth

295
00:11:39,913 --> 00:11:42,272
and rate of return on capital,

296
00:11:42,272 --> 00:11:44,360
average rates of return on capital,

297
00:11:44,360 --> 00:11:45,428
so you can see that during most

298
00:11:45,428 --> 00:11:46,945
of the history of mankind,

299
00:11:46,945 --> 00:11:48,558
the growth rate was very small,

300
00:11:48,558 --> 00:11:50,392
much lower than the rate of return,

301
00:11:50,392 --> 00:11:52,754
and then during the 20th century,

302
00:11:52,754 --> 00:11:54,925
it is really the population growth,

303
00:11:54,925 --> 00:11:57,197
very high in the postwar period,

304
00:11:57,197 --> 00:11:58,797
and the reconstruction process

305
00:11:58,797 --> 00:12:00,370
that brought growth

306
00:12:00,370 --> 00:12:03,441
to a smaller gap with the rate of return.

307
00:12:03,441 --> 00:12:06,964
Here I use the United Nations population projections,

308
00:12:06,964 --> 00:12:09,440
so of course they are uncertain.

309
00:12:09,440 --> 00:12:10,831
It could be that we all start

310
00:12:10,831 --> 00:12:12,937
having a lot of children in the future,

311
00:12:12,937 --> 00:12:15,702
and the growth rates are going to be higher,

312
00:12:15,702 --> 00:12:16,951
but from now on,

313
00:12:16,951 --> 00:12:19,753
these are the best projections we have,

314
00:12:19,753 --> 00:12:21,687
and this will make global growth

315
00:12:21,687 --> 00:12:24,443
decline and the gap between

316
00:12:24,443 --> 00:12:26,446
the rate of return go up.

317
00:12:26,446 --> 00:12:29,308
Now, the other unusual event

318
00:12:29,308 --> 00:12:30,979
during the 20th century

319
00:12:30,979 --> 00:12:32,308
was, as I said,

320
00:12:32,308 --> 00:12:34,624
destruction, taxation of capital,

321
00:12:34,624 --> 00:12:37,359
so this is the pre-tax rate of return.

322
00:12:37,359 --> 00:12:40,338
This is the after-tax rate of return,

323
00:12:40,338 --> 00:12:41,904
and after destruction,

324
00:12:41,904 --> 00:12:43,681
and this is what brought

325
00:12:43,681 --> 00:12:45,369
the average rate of return

326
00:12:45,369 --> 00:12:47,158
after tax, after destruction,

327
00:12:47,158 --> 00:12:49,578
below the growth rate during a long time period.

328
00:12:49,578 --> 00:12:51,252
But without the destruction,

329
00:12:51,252 --> 00:12:53,727
without the taxation, this 
would not have happened.

330
00:12:53,727 --> 00:12:56,970
So let me say that the balance between

331
00:12:56,970 --> 00:12:59,326
returns on capital and growth

332
00:12:59,326 --> 00:13:01,188
depends on many different factors

333
00:13:01,188 --> 00:13:03,273
that are very difficult to predict:

334
00:13:03,273 --> 00:13:05,388
technology and the development

335
00:13:05,388 --> 00:13:07,972
of capital-intensive techniques.

336
00:13:07,972 --> 00:13:10,991
So right now, the most capital-intensive sectors

337
00:13:10,991 --> 00:13:14,367
in the economy are the real estate sector, housing,

338
00:13:14,367 --> 00:13:17,229
the energy sector, but it could be in the future

339
00:13:17,229 --> 00:13:20,941
that we have a lot more robots in a number of sectors

340
00:13:20,941 --> 00:13:22,830
and that this would be a bigger share

341
00:13:22,830 --> 00:13:24,740
of the total capital stock that it is today.

342
00:13:24,740 --> 00:13:26,734
Well, we are very far from this,

343
00:13:26,734 --> 00:13:28,500
and from now, what's going on

344
00:13:28,500 --> 00:13:30,289
in the real estate sector, the energy sector,

345
00:13:30,289 --> 00:13:32,415
is much more important for the total capital stock

346
00:13:32,415 --> 00:13:33,549
and capital share.

347
00:13:33,549 --> 00:13:35,582
The other important issue

348
00:13:35,582 --> 00:13:37,732
is that there are scale effects
in portfolio management,

349
00:13:37,732 --> 00:13:40,151
together with financial complexity,

350
00:13:40,151 --> 00:13:41,601
financial deregulation,

351
00:13:41,601 --> 00:13:44,310
that make it easier to get higher rates of return

352
00:13:44,310 --> 00:13:45,937
for a large portfolio,

353
00:13:45,937 --> 00:13:48,600
and this seems to be particularly strong

354
00:13:48,600 --> 00:13:50,582
for billionaires, large capital endowments.

355
00:13:50,582 --> 00:13:52,872
Just to give you one example,

356
00:13:52,872 --> 00:13:56,205
this comes from the Forbes billionaire rankings

357
00:13:56,205 --> 00:13:59,535
over the 1987-2013 period,

358
00:13:59,535 --> 00:14:02,323
and you can see the very top wealth holders

359
00:14:02,323 --> 00:14:05,440
have been going up at six, seven percent per year

360
00:14:05,440 --> 00:14:07,831
in real terms above inflation,

361
00:14:07,831 --> 00:14:10,203
whereas average income in the world,

362
00:14:10,203 --> 00:14:11,566
average wealth in the world,

363
00:14:11,566 --> 00:14:14,949
have increased at only two percent per year.

364
00:14:14,949 --> 00:14:16,678
And you find the same

365
00:14:16,678 --> 00:14:17,954
for large university endowments —

366
00:14:17,954 --> 00:14:20,222
the bigger the initial endowments,

367
00:14:20,222 --> 00:14:22,290
the bigger the rate of return.

368
00:14:22,290 --> 00:14:23,968
Now, what could be done?

369
00:14:23,968 --> 00:14:26,364
The first thing is that I think we need

370
00:14:26,364 --> 00:14:28,479
more financial transparency.

371
00:14:28,479 --> 00:14:32,320
We know too little about global wealth dynamics,

372
00:14:32,320 --> 00:14:34,220
so we need international transmission

373
00:14:34,220 --> 00:14:35,482
of bank information.

374
00:14:35,482 --> 00:14:38,168
We need a global registry of financial assets,

375
00:14:38,168 --> 00:14:40,659
more coordination on wealth taxation,

376
00:14:40,659 --> 00:14:43,771
and even wealth tax with a small tax rate

377
00:14:43,771 --> 00:14:45,987
will be a way to produce information

378
00:14:45,987 --> 00:14:48,669
so that then we can adapt our policies

379
00:14:48,669 --> 00:14:50,505
to whatever we observe.

380
00:14:50,505 --> 00:14:52,343
And to some extent, the fight

381
00:14:52,343 --> 00:14:53,824
against tax havens

382
00:14:53,824 --> 00:14:55,639
and automatic transmission of information

383
00:14:55,639 --> 00:14:57,490
is pushing us in this direction.

384
00:14:57,490 --> 00:14:59,814
Now, there are other ways to redistribute wealth,

385
00:14:59,814 --> 00:15:02,771
which it can be tempting to use.

386
00:15:02,771 --> 00:15:04,127
Inflation:

387
00:15:04,127 --> 00:15:05,826
it's much easier to print money

388
00:15:05,826 --> 00:15:07,981
than to write a tax code, so that's very tempting,

389
00:15:07,981 --> 00:15:10,101
but sometimes you don't know
what you do with the money.

390
00:15:10,101 --> 00:15:11,748
This is a problem.

391
00:15:11,748 --> 00:15:13,611
Expropriation is very tempting.

392
00:15:13,611 --> 00:15:15,872
Just when you feel some people get too wealthy,

393
00:15:15,872 --> 00:15:17,166
you just expropriate them.

394
00:15:17,166 --> 00:15:18,878
But this is not a very efficient way

395
00:15:18,878 --> 00:15:21,711
to organize a regulation of wealth dynamics.

396
00:15:21,711 --> 00:15:24,190
So war is an even less efficient way,

397
00:15:24,190 --> 00:15:26,526
so I tend to prefer progressive taxation,

398
00:15:26,526 --> 00:15:29,100
but of course, history — (Laughter) —

399
00:15:29,100 --> 00:15:30,835
history will invent its own best ways,

400
00:15:30,835 --> 00:15:32,533
and it will probably involve

401
00:15:32,533 --> 00:15:34,267
a combination of all of these.

402
00:15:34,267 --> 00:15:36,133
Thank you.

403
00:15:36,133 --> 00:15:38,270
(Applause)

404
00:15:38,270 --> 00:15:43,829
Bruno Giussani: Thomas Piketty. Thank you.

405
00:15:43,829 --> 00:15:45,708
Thomas, I want to ask you two or three questions,

406
00:15:45,708 --> 00:15:49,567
because it's impressive how you're
in command of your data, of course,

407
00:15:49,567 --> 00:15:53,361
but basically what you suggest is

408
00:15:53,361 --> 00:15:54,934
growing wealth concentration is kind of

409
00:15:54,934 --> 00:15:56,858
a natural tendency of capitalism,

410
00:15:56,858 --> 00:16:00,396
and if we leave it to its own devices,

411
00:16:00,396 --> 00:16:02,636
it may threaten the system itself,

412
00:16:02,636 --> 00:16:04,362
so you're suggesting that we need to act

413
00:16:04,362 --> 00:16:07,400
to implement policies that redistribute wealth,

414
00:16:07,400 --> 00:16:09,121
including the ones we just saw:

415
00:16:09,121 --> 00:16:10,592
progressive taxation, etc.

416
00:16:10,592 --> 00:16:12,731
In the current political context,

417
00:16:12,731 --> 00:16:14,722
how realistic are those?

418
00:16:14,722 --> 00:16:16,533
How likely do you think that it is

419
00:16:16,533 --> 00:16:18,277
that they will be implemented?

420
00:16:18,277 --> 00:16:19,488
Thomas Piketty: Well, you know, I think

421
00:16:19,488 --> 00:16:21,269
if you look back through time,

422
00:16:21,269 --> 00:16:23,920
the history of income, wealth and taxation

423
00:16:23,920 --> 00:16:25,522
is full of surprise.

424
00:16:25,522 --> 00:16:28,127
So I am not terribly impressed

425
00:16:28,127 --> 00:16:29,695
by those who know in advance

426
00:16:29,695 --> 00:16:31,326
what will or will not happen.

427
00:16:31,326 --> 00:16:33,030
I think one century ago,

428
00:16:33,030 --> 00:16:34,599
many people would have said

429
00:16:34,599 --> 00:16:36,737
that progressive income taxation would never happen

430
00:16:36,737 --> 00:16:38,257
and then it happened.

431
00:16:38,257 --> 00:16:40,246
And even five years ago,

432
00:16:40,246 --> 00:16:42,598
many people would have said that bank secrecy

433
00:16:42,598 --> 00:16:44,623
will be with us forever in Switzerland,

434
00:16:44,623 --> 00:16:46,411
that Switzerland was too powerful

435
00:16:46,411 --> 00:16:47,900
for the rest of the world,

436
00:16:47,900 --> 00:16:50,861
and then suddenly it took a few U.S. sanctions

437
00:16:50,861 --> 00:16:53,483
against Swiss banks for a big change to happen,

438
00:16:53,483 --> 00:16:55,186
and now we are moving toward

439
00:16:55,186 --> 00:16:56,862
more financial transparency.

440
00:16:56,862 --> 00:17:01,143
So I think it's not that difficult

441
00:17:01,143 --> 00:17:03,612
to better coordinate politically.

442
00:17:03,612 --> 00:17:05,670
We are going to have a treaty

443
00:17:05,670 --> 00:17:08,719
with half of the world GDP around the table

444
00:17:08,719 --> 00:17:10,721
with the U.S. and the European Union,

445
00:17:10,721 --> 00:17:12,847
so if half of the world GDP is not enough

446
00:17:12,847 --> 00:17:15,513
to make progress on financial transparency

447
00:17:15,513 --> 00:17:19,597
and minimal tax for multinational corporate profits,

448
00:17:19,597 --> 00:17:21,261
what does it take?

449
00:17:21,261 --> 00:17:24,884
So I think these are not technical difficulties.

450
00:17:24,884 --> 00:17:26,808
I think we can make progress

451
00:17:26,808 --> 00:17:29,395
if we have a more pragmatic
approach to these questions

452
00:17:29,395 --> 00:17:31,296
and we have the proper sanctions

453
00:17:31,296 --> 00:17:34,287
on those who benefit from financial opacity.

454
00:17:34,287 --> 00:17:35,940
BG: One of the arguments

455
00:17:35,940 --> 00:17:37,373
against your point of view

456
00:17:37,373 --> 00:17:38,815
is that economic inequality

457
00:17:38,815 --> 00:17:42,452
is not only a feature of capitalism
but is actually one of its engines.

458
00:17:42,452 --> 00:17:45,253
So we take measures to lower inequality,

459
00:17:45,253 --> 00:17:47,660
and at the same time we lower growth, potentially.

460
00:17:47,660 --> 00:17:49,220
What do you answer to that?

461
00:17:49,220 --> 00:17:50,949
TP: Yeah, I think inequality

462
00:17:50,949 --> 00:17:52,838
is not a problem per se.

463
00:17:52,838 --> 00:17:54,878
I think inequality up to a point

464
00:17:54,878 --> 00:17:57,530
can actually be useful for innovation and growth.

465
00:17:57,530 --> 00:17:59,723
The problem is, it's a question of degree.

466
00:17:59,723 --> 00:18:02,267
When inequality gets too extreme,

467
00:18:02,267 --> 00:18:05,156
then it becomes useless for growth

468
00:18:05,156 --> 00:18:06,618
and it can even become bad

469
00:18:06,618 --> 00:18:09,675
because it tends to lead to high perpetuation

470
00:18:09,675 --> 00:18:11,311
of inequality over time

471
00:18:11,311 --> 00:18:13,177
and low mobility.

472
00:18:13,177 --> 00:18:16,463
And for instance, the kind of wealth concentrations

473
00:18:16,463 --> 00:18:19,340
that we had in the 19th century

474
00:18:19,340 --> 00:18:21,265
and pretty much until World War I

475
00:18:21,265 --> 00:18:23,030
in every European country

476
00:18:23,030 --> 00:18:25,124
was, I think, not useful for growth.

477
00:18:25,124 --> 00:18:27,226
This was destroyed by a combination

478
00:18:27,226 --> 00:18:29,567
of tragic events and policy changes,

479
00:18:29,567 --> 00:18:31,839
and this did not prevent growth from happening.

480
00:18:31,839 --> 00:18:35,282
And also, extreme inequality can be bad

481
00:18:35,282 --> 00:18:37,480
for our democratic institutions

482
00:18:37,480 --> 00:18:39,863
if it creates very unequal access to political voice,

483
00:18:39,863 --> 00:18:41,728
and the influence of private money

484
00:18:41,728 --> 00:18:43,730
in U.S. politics, I think,

485
00:18:43,730 --> 00:18:46,270
is a matter of concern right now.

486
00:18:46,270 --> 00:18:49,346
So we don't want to return to that kind of extreme,

487
00:18:49,346 --> 00:18:51,436
pre-World War I inequality.

488
00:18:51,436 --> 00:18:55,110
Having a decent share of the national wealth

489
00:18:55,110 --> 00:18:58,500
for the middle class is not bad for growth.

490
00:18:58,500 --> 00:18:59,781
It is actually useful

491
00:18:59,781 --> 00:19:02,865
both for equity and efficiency reasons.

492
00:19:02,865 --> 00:19:04,530
BG: I said at the beginning

493
00:19:04,530 --> 00:19:06,639
that your book has been criticized.

494
00:19:06,639 --> 00:19:07,880
Some of your data has been criticized.

495
00:19:07,880 --> 00:19:10,346
Some of your choice of data sets has been criticized.

496
00:19:10,346 --> 00:19:12,222
You have been accused of cherry-picking data

497
00:19:12,222 --> 00:19:14,959
to make your case. What do you answer to that?

498
00:19:14,959 --> 00:19:16,886
TP: Well, I answer that I am very happy

499
00:19:16,886 --> 00:19:19,353
that this book is stimulating debate.

500
00:19:19,353 --> 00:19:21,834
This is part of what it is intended for.

501
00:19:21,834 --> 00:19:25,128
Look, the reason why I put all the data online

502
00:19:25,128 --> 00:19:26,974
with all of the detailed computation

503
00:19:26,974 --> 00:19:29,308
is so that we can have 
an open and transparent

504
00:19:29,308 --> 00:19:30,977
debate about this.

505
00:19:30,977 --> 00:19:32,743
So I have responded point by point

506
00:19:32,743 --> 00:19:34,535
to every concern.

507
00:19:34,535 --> 00:19:37,648
Let me say that if I was to rewrite the book today,

508
00:19:37,648 --> 00:19:39,189
I would actually conclude

509
00:19:39,189 --> 00:19:41,383
that the rise in wealth inequality,

510
00:19:41,383 --> 00:19:43,310
particularly in the United States,

511
00:19:43,310 --> 00:19:45,683
has been actually higher
than what I report in my book.

512
00:19:45,683 --> 00:19:48,928
There is a recent study by Saez and Zucman

513
00:19:48,928 --> 00:19:50,520
showing, with new data

514
00:19:50,520 --> 00:19:52,297
which I didn't have at the time of the book,

515
00:19:52,297 --> 00:19:54,824
that wealth concentration in the U.S. has risen

516
00:19:54,824 --> 00:19:56,760
even more than what I report.

517
00:19:56,760 --> 00:19:58,791
And there will be other data in the future.

518
00:19:58,791 --> 00:20:00,942
Some of it will go in different directions.

519
00:20:00,942 --> 00:20:05,041
Look, we put online almost every week

520
00:20:05,041 --> 00:20:07,975
new, updated series on the
World Top Income Database

521
00:20:07,975 --> 00:20:09,875
and we will keep doing so in the future,

522
00:20:09,875 --> 00:20:12,181
in particular in emerging countries,

523
00:20:12,181 --> 00:20:15,110
and I welcome all of those who want to contribute

524
00:20:15,110 --> 00:20:17,456
to this data collection process.

525
00:20:17,456 --> 00:20:20,264
In fact, I certainly agree

526
00:20:20,264 --> 00:20:21,878
that there is not enough

527
00:20:21,878 --> 00:20:23,756
transparency about wealth dynamics,

528
00:20:23,756 --> 00:20:25,671
and a good way to have better data

529
00:20:25,671 --> 00:20:27,536
would be to have a wealth tax

530
00:20:27,536 --> 00:20:29,107
with a small tax rate to begin with

531
00:20:29,107 --> 00:20:31,446
so that we can all agree

532
00:20:31,446 --> 00:20:33,010
about this important evolution

533
00:20:33,010 --> 00:20:36,337
and adapt our policies to whatever we observe.

534
00:20:36,337 --> 00:20:38,399
So taxation is a source of knowledge,

535
00:20:38,399 --> 00:20:41,335
and that's what we need the most right now.

536
00:20:41,335 --> 00:20:43,150
BG: Thomas Piketty, merci beaucoup.

537
00:20:43,150 --> 00:20:47,150
Thank you.
TP: Thank you. (Applause)