British journalist, Paul Mason, captured it like this, in a piece published in The Guardian in 2014:
“That capitalism is unfair has been said before. But it is the way Thomas Piketty says it – subtly but with relentless logic – that has sent rightwing economics into a frenzy, both here and in the US.”
Piketty’s message, delivered at the annual Nelson Mandela lecture on Saturday, had a similar impact in South Africa.
Writing in Business Day last week, managing partner at John Nicholas & Company, John Catsicas, invoked theghost of the left’s nemesis, Margaret Thatcher, in his critique of Piketty:
“One is reminded of the late Margaret Thatcher, who often quoted the following: ‘You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does notfirst take from somebody else.’
“The likes of Piketty and Stiglitz should rather focus on understanding the real causes of poverty and stop scheming on how governments can introduce innovative “Robin Hood” taxing models. Piketty should be reminded that the rich have, and do, pay back to society their cash gains in a form of substantial endowments.
“The likes of Cecil John Rhodes, Andrew Carnegie, JP Morgan, John D Rockefeller and now Bill Gates dispensed their wealth in meaningful ways that no government can hope to emulate.”
Piketty’s message, which chiefly argues for wealth redistribution to address inequality, is the antithesis of what traditional economics has long assumed to know.
Yet while conservative economists revile at Piketty’s work, his message on Saturday found fertile ground in South Africa. Piketty delivered the lecture at the University of Johannesburg’s Soweto campus on Saturday afternoon.
Piketty is the youngest person to deliver the annual lecture at the age of 44. He is Professor of Economics at the Paris School of Economics and the author of twelve books as well as a number of published articles. But it is his book, Capital in the 21st Century, that catapulted Piketty to stardom, with its searing critique of capitalism.
On at least four occasions, the 2000-strong audience erupted into spontaneous applause. A standing ovation began and ended Piketty’s address.
Piketty’s book begins at Marikana, and goes on to argue for the introduction of a global wealth tax, as one means of redistributing wealth to address inquality.
In terms of inequality, Piketty says South Africa is “top of its class”.
He says that 60 % of all income earned in South Africa is in the hands of ten % of the population.
Piketty’s work also draws on tax records to draw insights into who has owned what during the last two centuries or so. Yet on Saturday he lamented the lack of public records, globally, that would complete this analysis for all countries.
Piketty says a global registry of financial assets is needed to truly understand wealth ownership, and thus begin to address income inequality.
While such a registry might seem “utopian”, he said, it is not impossible: these registries already exist, but they are owned by private corporations, and accessing this data is very difficult for members of the public.
Piketty also argues for “progressive taxation”, which also entails aggressively combatting corporate tax evasion.
He says that up to 50% of all financial assets in Africa are held offshore, robbing the continent of much needed resources.
Africa does not need development aid, he says. It needs companies to pay their fair share of tax.
He also argued against the privatisation of public services.
“I understand that many people, including many business leaders are very skeptical about the capacity of government to deliver this, but on the other hand I think there is no otheroption than to try to improve the functioning, and contribute… to pay the tax that would finance the functioning of public sector education. There’s no other strategy.
“The strategy according to which you do it through privatising the education and health system, and let the business sector do it, will not work. I think what does work historically, in order to have sustainable and equitable growth, is to have a well-functioning publiceducation and health system, and South Africa should go in this direction.”
He said it was critical that there was more data available about “who owns what in South Africa”.
“I think it is very difficult to have a reasonable debate about wealth with so little information,” he said.