Macroeconomics Larry Elliot’s Review of Capital Essay

przez | 22 września 2020

In his article, Larry Elliott, an economics editor for The Guardian, analyzes Thomas Piketty’s book Capital in the Twenty-First Century. The article focuses on the books main theme, which suggests that the increase in inequality is eliminating capitalism. Elliot praises Piketty’s ability to utilize empirical evidence to develop a comprehensive historical overview of capitalism and describes the book as the possible answer to the issues resulting from the recent global economic crisis.

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In the article, the author effectively integrates different people’s opinions on the theme of the article. Elliot draws primary sources from different European countries to present his discussions. These opinions shape the analysis of the book and the conclusion of Elliot’s article. Elliot concludes by highlighting the significance of Piketty’s book in economic academia and the global economy. Elliot also supports Piketty’s view that increasing inequality will result in the absence of capitalism.

Elliot’s article offers some thought-provoking points about Piketty’s book. The article reveals the interesting concepts in Piketty’s book. In the article, Piketty is presented as a person concerned for the position of the rich, especially if the social evidence of inequality continued at the pace it is.

The interesting thing about this thematic analysis is that it focuses on a wealthy man, informing other wealthy and influential people, that their wealthy lives would be ruined if they failed to take note of the distressed and pathetic predicament of the underprivileged population.

Elliot correctly hails Piketty’s use of evidence to present the historical transformation of capitalism in the world. Mexico is a significant example Piketty uses to buttress his stance on the need to reduce the gap between the wealthy and the poor. In Mexico, it is easy to observe the growing amount of fencing and exclusive societies for the wealthy, where it appears that their wealth necessitates an increase in their security consciousness.

It is also easy to observe the immense migration of the rural poor, increasing city shantytowns, as the agricultural profession yielded low income, and they all anticipated that migrating to the urban areas may enhance their livelihood. Elliot supports Piketty’s proposal that the poor should stay and succeed in rural areas so that the wealthy class would not need to wander around, not being certain of their continued survival.

The ideas Piketty raises will be more significant if the leaders accept the fact that when the top 5% of the population have consumed 98% of the economy, they will be too scared to enjoy their luxurious resorts in sight of the poor who control the remaining 2% of the economy. However, it is important to accept that a percentage of the rich is so eager to flaunt their affluence that they will flaunt wealth notwithstanding the potential consequences for other members of society.

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It is undeniable that Piketty’s book was successful in Europe and America. It is especially so in America because the average American believed they would become successful in America, and so enthusiastically worked hard throughout their careers, only to be surprised of their lack of sufficient funds to survive. Such disappointment will make many people regret their economic situation, and they will expect Piketty’s book to offer such answers.

It is possible, to contradict the rationality of the major theme in Piketty’s book because a simple reduction in inequality may not be the solution. The increase in the inequality gap is obvious. This gap is most notable in developed countries, where many residents are migrating from full-time employment to freelance employment with reduced was. Subcontracting is the best option. Simultaneously, business owners are richer than before.

Efforts to tax rich people have proven abortive. There is an increase in the level of inequality in developing economies, as well. This is particularly notable in China. Within the last thirty years, numerous people have relocated from severe insufficiency to middle-class. This truth should indicate a reduction in socio-economic variation.

Nevertheless, inequality is on the rise since the country’s large wealth spread to business tycoons and government administrators. These important stakeholders are currently in a dilemma to increase tax for the wealthy and be affected or to impose regular taxes and remain unaffected.

Piketty’s preaching on the need for reduced inequality as a means of preventing economic turmoil is quite feasible. However, it is open to criticism considering the possible conditions under which inequality will be handled. Inequality has reduced in some countries. In Venezuela, for example, Hugo Chavez considered that the private companies were selfish, while government intervention in all things is ideal.

Thus, the government of Venezuela ruined the productive segment and exposed a high amount of individuals to financial deficiency, unemployment, and dependence on government wages, which are significantly low. Despite the reduced inequality, Venezuela suffers widespread inflation, prevalent bribery, and hunger, and this defeats the idea behind Piketty’s propagation of the need for inequality reduction.