The success of Thomas Piketty’s Capital in the Twenty-First invited comparisons to Henry George and his own surprise, runaway bestseller Progress and Poverty, which was published in 1879 and sold more than 3 million copies. Aside from their shared status of becoming unlikely bestselling authors, Piketty and George’s work focuses, in part, on the relationship between capitalism and inequality. Moreover, both are advocates of the market but worry that a concentration of wealth corrupts it and is a threat to democracy. George’s life and writings are, of course, the subject of Edward T. O’Donnell’s new intellectual biography, Henry George and the Crisis of Inequality: Progress and Poverty in the Gilded Age.
In an essay on the two Charles Lane, writing in The Washington Post, comments:
To Piketty, like George an admirer of market efficiency and opponent of protectionism, the resulting accumulation of wealth in relatively few hands threatens economic fairness, economic dynamism — and democracy. “Extreme inequality makes it impossible to have proper working of democratic institutions,” Piketty told a recent meeting at Washington’s Urban Institute.
And so, updating Henry George’s single tax, Piketty proposes a global wealth tax, making similar claims about its benefits for both equality and growth.
For Piketty and George, the bottom line, both moral and economic, is to socialize “rent” — rent, that is, not in the colloquial sense but in the economic sense of income disconnected from productivity.
It’s an attractive vision: an egalitarian, productive society, purged of parasitical rent-seeking through the expedient of well-aimed taxes.
Meanwhile, Michael Kinsely wrote an article in Vanity Fair, which looked at how Piketty and George share both conservative and radical attitudes toward capitalism:
Piketty and his book remind me of my favorite economist, the 19th-century American Henry George, and his best-selling book, Progress and Poverty (1879). Both men’s books offer a comprehensive explanation of the world, in particular the problem of poverty. Both men acknowledge the importance of market incentives and entrepreneurship and the evils of protectionism and all of that good conservative stuff, even as they rail against the plutocrats. Both think we can end or reduce inequality without giving up the benefits of capitalism. And both see the answer in a new tax on capital. Henry George advocated a land tax that would supposedly eliminate the need for any other revenue source. That’s why members of his briefly influential movement were called “single-taxers.” There are still a few of them around.
Piketty expands that notion to a global tax on all assets, not just land. It would start at 0.1 percent and top out at 10 percent on assets over several hundred million dollars. He notes correctly that even the growing income-inequality figures we see today are wild underestimates of the problem. Capital—that is, wealth—is larger and even more concentrated than annual income is, and most of it grows completely untaxed, year after year, because you don’t pay taxes on an investment until you sell it, which the very richest people never need to do. They live off the interest.