Piketty’s socialist manifesto not without flaws

Economist Thomas Piketty's latest book "Capital in the 21st Century" that severely criticizes growing inequality between the poor and the rich has been commended by a number of experts, politicians and academics; but the book is not without flaws.

Piketty predicts in the book that wealth inequality will likely explode in the future, which will force societies to return to the 19th century importance of passing on wealth by inheritance. He stressed on the need to help democracy regain control over capitalism. He suggested implementation of punitive income taxes and a utopian global tax on capital.

The book says that the poorest people are as poor today as they were in the past. But, the book neglects the extraordinary improvements in living standards for masses at large. It also neglects the extensive abolition of absolute poverty, which could not have become possible with capitalism.

It is the industrialism/capitalism that cut down consumption inequality between the poor and rich. Today, even poor people are enjoying access to foods, goods and services that were once available only to the rich.

Piketty failed to understand the role of risk-taking in returns on heavy investments. His prediction that r exceeding g will lead to explode wealth in the future, but he is contradicted by his own data, which shows a comparatively constant capital to income share in the UK in the 18th and 19th centuries, when g was considerably lower.

Moreover while the influencing financial power of lobbyists can be problematic, as Piketty says in the book; it is often the structure of government rather than the wealth of the lobbyists that creates problem.