Must-Read: Martin Wolf: Inequality is a threat to our democracies

Must-Read: Martin Wolf writes a better version of my appeals than I have managed to: Martin Wolf: Inequality is a threat to our democracies: “Between 1980 and 2016, the top 1 per cent captured 28 per cent of the aggregate increase in real incomes in the US, Canada and western Europe, while the bottom 50 per cent captured just 9 per cent of it…

…But these aggregates conceal huge differences: in western Europe, the top 1 per cent captured “only” as much as the bottom 51 per cent. In North America, however, the top 1 per cent captured as much as the bottom 88 per cent….

After agriculture (and the agrarian state) was invented, elites were amazingly successful in extracting all the surplus the economy created. The limit on predation was set by the need to let the producers survive. Remarkably, many desperately poor agrarian societies approached this limit….

In the 20th century… when revolutionary regimes softened (or collapsed) or the exigencies of war faded from memory, quite similar processes to those of the old agrarian states took hold. Vastly wealthy new elites emerged, gained political power, and again used it for their own ends. Those who doubt this should look closely at the politics and economics of the tax bill now going through the US Congress. The implication of this parallel would be that, barring some catastrophic event, we are now on the way back to ever-rising inequality….

The big question,,, is whether the pressures for inequality will go on rising and the willingness to offset them generally decline. On the former, it is quite hard to be optimistic. The market value of the work of relatively unskilled people in high-income countries seems very unlikely to rise. On the latter, one can point, optimistically, to a desire to enjoy some degree of social harmony and the material abundance of modern economies, as reasons to believe the wealthy might be prepared to share their abundance…. [But] elites may become more determined to seize whatever they can for themselves. If so, that would augur badly, not just for social peace, but even for the survival of the stable universal-suffrage democracies that emerged in today’s high-income countries in the 19th and 20th centuries… “plutocratic populism”….

Mr Scheidel suggests that inequality is sure to rise. We must prove him wrong. If we fail to do so, soaring inequality might slay democracy, too, in the end.