Thomas Picketty, in Capital in the Twenty-First Century (2017) argues, with impressive documentation, that inequality is substantial and is increasing in the U.S. and other countries as a universal human problem.
Today, the post-World War II agreement for the great compression of living standards, bringing everyone into a middle class, has fragmented. The evolving new form of capitalism is currently out of control and governments are currently unwilling and fearful to manage it through effective regulation.
Walter Scheidel in The Great Leveler argues, with impressive historical documentation, that any significant reduction in inequality throughout history is accompanied by violence. Equality and violence go together. Peaceful management and reduction of inequality is not an option. Picketty disagrees.
In a contrary view, The Economist magazine makes the argument that reducing inequality does not require violence. Violence is not necessarily connected to the solution of the problem of inequality of assets. The Economist cites the great U.S. compression in living standards in the post-World War II social agreement that shifted political power from capital to labor. The current experience of Norway, Sweden, and Finland supports this argument in practical terms. For these advocates, managing inequality is a matter of political decision and public implementation. Equality and violence can go together, but they need not do so within practical politics. Peaceful management of inequality is an option, difficult, but doable. Inequality of basic conditions is a real challenge that can be fixed.
The current populism in many countries is a blinding and misdirected reaction to the backwards flow of power, education and financial assets from labor to capital. Populists recognize that Governments are ignoring or avoiding inequality regulation.
Yes, there are practical ways to renew the great compression of living standards and to redistribute wealth for the health of us all. There is talk among economists of using the mechanism of recession recovery for improving equality: Central bank accounts for everyone. Pandemic recovery wealth shifts are also candidates.
When recession strikes, central banks (The Federal Reserve Bank in the U.S.) cut interest rates to encourage investment or they purchase government bonds with newly printed cash (Quantitative Easing or QE) in order to improve the bank reserves through accounts that each bank keeps at the central bank.
The new idea offered for addressing a recession is a public option for the central bank to provide individual citizen accounts at the central bank to which new money can be added, providing a direct, immediate increase in consumer spending. The distribution of money could also be made to contribute toward asset equality in this distribution. Deposit more with people who now have less in order to spur consumption.
There are similar models in Sweden and proposals in Switzerland. There is blockchain technology and digital currency to aid the distribution. Public understanding of Quantitative Easing would improve. The consumption stimulus effects would be immediate. Public order could be strengthened. Incremental financial asset equality would be enhanced. Violence would be avoided.
The combination of individual citizen central bank accounts and a distribution formula to promote financial asset equality improves consumer welfare and practical implementation of macroeconomic policy without violence.
Individual citizen central bank accounts for implementation of macroeconomic policy through Quantitative Easing in response to a looming recession can be a significant and practical part of resolution of the recession and address inequality of distribution of assets.
Quakers: This is a long (700 pages) but a path-making book for Quaker reflection. Quakers have been parts of many innovative public policies. Inequality of conditions is an old challenge worthy of Quaker attention.
- What understanding of equality of conditions is informed by Quaker tradition?
- Are violence and inequality resolution necessarily linked?
- What can Quakers uniquely say about inequality of assets in society?
- How does the Quaker Equality Testimony apply financial asset inequality?
- How does the Quaker Equality Testimony apply to higher education access?
- How does the Quaker Peace Testimony apply to financial asset inequality?
- Thomas Picketty, Capital in the Twenty-First Century (2017)
- Walter Scheidel, The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-first Century (2017)
- “Second time, farce” The Economist (May 5, 2018) p 79f
- “Free Exchange: All the people’s money” The Economist (May 26, 2018) p. 68