Daniel Waldenström in Aeon:
Recent decades have seen private wealth multiply around the Western world, making us richer than ever before. A hasty glance at the soaring number of billionaires – some doubling as international celebrities – prompts the question: are we also living in a time of unparalleled wealth inequality? Influential scholars have argued that indeed we are. Their narrative of a new gilded age paints wealth as an instrument of power and inequality. The 19th-century era with low taxes and minimal market regulation allowed for unchecked capital accumulation and then, in the 20th century, the two world wars and progressive taxation policies diminished the fortunes of the wealthy and reduced wealth gaps. Since 1980, the orthodoxy continues, a wave of market-friendly policies reversed this equalising historical trend, boosting capital values and sending wealth inequality back towards historic highs.
The trouble with the powerful new orthodoxy that tries to explain the history of wealth is that it doesn’t fully square with reality. New research studies, and more careful inspection of the previous historical data, paint a picture where the main catalysts for wealth equalisation are neither the devastations of war nor progressive tax regimes. War and progressive taxation have had influence, but they cannot count as the main forces that led to wealth inequality falling dramatically over the past century. The real influences are instead the expansion from below of asset ownership among everyday citizens, constituted by the rise of homeownership and pension savings. This popular ownership movement was made possible by institutional changes, most important democracy, and followed suit by educational reforms and labour laws, and the technological advancements lifting everyone’s income.
More here.
Enjoying the content on 3QD? Help keep us going by donating now.