It therefore came as a revelation when Piketty and his colleagues showed that incomes of the now famous “one percent”, and of even narrower groups, are actually the big story in rising inequality. And this discovery came with a second revelation: talk of a second Gilded Age, which might have seemed like hyperbole, was nothing of the kind. In America in particular the share of national income going to the top one percent has followed a great U-shaped arc. Before World War I the one percent received around a fifth of total income in both Britain and the United States. By 1950 that share had been cut by more than half. But since 1980 the one percent has seen its income share surge again—and in the United States it’s back to what it was a century ago.
Paul Krugman
While many talk about income inequality, its effects on economic recovery and the widening gap between the 1% and the rest, the book reviewed here has solid research on the subject based on economic data going back a century and more. It also lays out an easy theoretical solution: adjusting tax rates for capital returns and inheritance would improve income distribution considerably and slow further accumulation of capital in the same hands. Unfortunately, as you may imagine, it’s not so easy to apply this in the real world, where political decision-making is heavily influenced by those 1% it’s supposed to tax…