The rich get richer and the poor get poorer. We all know that. The question is, how do they do it? A couple of years ago I reviewed French economist Thomas Piketty's opus, Capital in the 21st Century . Piketty shows, using an impressive dataset and some simple equations, that the normal state of capitalist economies is that capital generates larger returns than labour, meaning that over time more and more of the resources in a society go to those who have capital. In Western societies this process was reversed in the immediate post-war decades by a combination of factors. Rapid economic growth was driven by the recovery from two world wars and the Great Depression. This led to wages growth and inflation, which redistributed income away from capital and towards labour. To add to this, governments funded the reconstruction through high rates of inheritance tax, limiting the ability of capital to accumulate across generations. Since the end of the resulting boom in the 1
'Contemplating the teeming life of the shore, we have an uneasy sense of the communication of some universal truth that lies just beyond our grasp.' - Rachel Carson