It is now well known that Thomas Piketty — author of “Capital in the Twenty-First Century” — argues that free markets tend to produce inequalities of wealth that become dynastic and anti-meritocratic.
The solution that everyone is talking about is taxing the rich.
But in reading the book, it’s clear that Piketty recognizes that “over a long period of time, the main force in favor of greater equality has been the diffusion of knowledge and skills.”
After all, countries such as India and Brazil had extremely high tax rates in the 1970s and 1980s without creating broadly shared growth.
East Asian countries, by contrast, with high literacy rates and an increasingly skilled workforce, managed to achieve both growth and equity.
This is not an argument against higher taxes but rather one emphasizing that for the best long-term results, education remains crucial. Alas, it is an area in which the U.S. is failing.