Few French economists have achieved the kind of adulation Thomas Piketty has experienced recently from the media and the left. Within the context of the American political scene, Piketty’s dour predictions for the future of capitalism and his call for a “utopian” global wealth tax fit perfectly with the left’s frame of an inequality message.
This political frame glosses over much of the subtlety of Mr. Piketty’s book, but it plays to the strengths of the old-school class-warfare terminology used by Paul Krugman and others. It’s a message that ABC News’s George Stephanopoulos suggested this weekend is catching conservatives “flat-footed.”
But the left faces several challenges to its message on income inequality: First, the Democratic Party largely owns the current regulatory system and the relationship between government and Wall Street (not just with Dodd-Frank but with a host of policies under President Barack Obama); second, the left offers few politically realistic answers to the inequality challenge it frames (proposals to raise the minimum wage and enact crushing, anti-growth taxes on high earners and inheritances are provocative but unlikely to go anywhere); third, their most public champion after the coming election cycle is not the populist Elizabeth Warren but Hillary Clinton, a presidential candidate as closely tied to America’s 1% as, well, Mitt Romney.
And when it comes to measuring the health of America’s economy, the truth is that income inequality is simply not a significant problem.
Several recent studies have shown that U.S. economic mobility is very good: Most Americans will move up and down the income ladder over the course of their lives, reflecting little to none of the class stratification and inheritance concerns warned about by inequality mavens.
But as a political matter, it’s certainly possible that Republicans could be flat-footed in responding to these charges.
What the right should learn from the Piketty pother is that it needs an updated economic message that speaks to the challenges of the times. For decades, the GOP economic agenda has amounted to “lower taxes” – but for many Americans, high taxes are less of a concern than anti-growth economic policies. Those on the right should be prepared to make the case that the warped relationship between Wall Street and Washington needs to be fixed, that socialized risks and privatized profits are fundamentally unfair, and that Mr. Piketty’s equality-focused policy solutions, and those of the left, would hurt income mobility and systematically destroy wealth and growth.
There is an enormous opportunity here for a message of free-market fairness — if the right has the wherewithal to seize it. Otherwise, Republicans could slide into the trap of debating new entitlements and renewed redistribution, the kind where the left will always outbid them. As Friedrich Hayek wrote, “There is all the difference in the world between treating people equally and attempting to make them equal.” The former, not cheaper versions of the latter, represents the way forward for the right.
[Originally published by the Wall Street Journal]