Two years ago, Thomas Piketty jumped with his book “The Capital in the XXI Century” to the forefront of global economic debate. On the left-applauded how put his finger on inequality. To the right was placed into question the methodology and solutions, which included strongly raise taxes on the rich. Even after being subjected to one of the tightest elections ever made an economist, Piketty goes on to say that nothing would change in its conclusions.
This Monday was in Portugal. Attended a conference at the Calouste Gulbenkian Foundation and met with several political leaders. Everyone left, including António Costa and Sampaio of Nóvoa. Publico said raising taxes on the rich is not the priority for Europe, argued that the concern should be fighting unemployment and moving towards a common tax on businesses. With regard to Greece and Portugal, says that the way forward to solve the debt problem is more inflation and restructuring.
It became a pop star of the night for the day, your book The capital in the XXI century sold over 1.5 million copies. What does your life change?
My life has not changed much, I’m just another academic, I continue to teach in Paris, to write books. The success of my book shows that there is a great demand in many countries for the democratization of economic knowledge. Many people in Portugal, France, Japan, Brazil, China, are tired of hearing that “this is too complicated” and that the issues of economics and finances should be in the hands of a small group of experts who know what to do . What I try to show is that the story of wealth, inequality and public debt is not only economic history, but also political history, social, cultural. There are always alternatives. When you look at the history of public debt, there are many examples of public debt even higher than today, 200% of GDP in Germany and France in the twentieth century in the United Kingdom in the nineteenth century. There was always different ways of dealing with it. It is not true that there is no alternative. There are no easy solutions. All solutions are difficult.
magazine Time considered him one of the most influential people in the world, at the foot of Marine Le Pen, Obama and the Pope. He feels that is changing the world?
I prefer the comparison to Obama, and between the Pope and Le Pen, the Pope! This is only a book, be modest. The democratization of economic knowledge can contribute to the democratization of the economy and society, but this is just a book.
Have you seen some of his ideas are put into practice by governments?
We are all part of the political debate. When I was in Chile, President Michelle Bachelet said to me: “Tax reform that I’m doing is directly inspired by his book.” I do not think. Bachelet is doing a good reform, but probably would have it done with or without my book. The book is not: “Here is the solution!” The book wants each draw your conclusions. We must have a more informed opinion.
Even now, the British Labour leader, Ed Miliband, “Keynes replaced by Piketty”. Had a direct role in this change?
More time is needed to books have that kind of effect. I am part of the global conversation. What I write can contribute, but these discussions have existed in these countries before the book comes out. The UK is an interesting case: when the previous Labour government introduced a “mansion tax” five years ago, Cameron’s Conservatives, who were in opposition, began by saying it was a mistake. But when they went to the power introduced an even higher tax than that of labor. There are issues that are beyond the left and right. When we have properties worth millions and people “sitting” on them and on the other side of society, young people with very high levels of unemployment, it is a matter of common good to say that we will try to reduce the taxes of those people and raise taxes of the great owners.
met with Miliband recently?
Last year.
This recent change in labor was born there?
I do not think. We all have a little influence. This is one of the beautiful things of democracy. Never know who had that influence. And I’m not looking for that. Do not write a book for a prime minister or leaders. Write books for those who read books. If politicians read books, great. It is good for them and good for us. The most important thing is when I hear people say to me that normally do not read academic books, great, full of tables and footnotes, and who understood everything they read.
Educate political …
Politicians are slaves of public opinion. So the important thing is to help transform the dominant public opinion, rather than convince politicians.
Your book was widely read and generated a huge debate in the US about inequality. Are there new presidential. Believes that America will ever change in this respect?
In the US there is a great concern about the growing inequality. America has a more complex history of inequality than is commonly thought, the US invented very progressive forms of wealth tax in the period between the world wars. Between 1930 and 1980 the highest tax rate for rich averaged 82%. This did not end the American capitalism. After Reagan this changed and the US no longer progressive in this area. Now they are at a stage perhaps similar to the phase between the wars and feel that inequality has gone too far. Each country has its own history. These things can change faster than we think. We all agree that it is justifiable to be some kind of inequality. The question is when inequality becomes excessive. The US may be coming to a turning point.
Have met with the team of Hillary Clinton?
Yes, I met with people working with Hillary Clinton and also with Elizabeth Warren, another possible Democratic presidential candidate. One of the major issues in which it is working, and that can be grasped by Hillary is the debt of students: restructure the debts of tuition. We must restructure the debt of Greece or Portugal? And the people?
In France, President Hollande applied its idea of tax on the rich, but followed dropped it. What failed, politicians or politics?
The government, which had no clear and coherent plan for tax reform. The problem is that during Hollande campaign was very vague about what he would do in terms of taxes if he won the elections. Then there was, in short, a lot of improvisation. In the first two years in power, greatly increased taxes. Not so much in relation to VAT of 75% – because it affects only a small part of the population – but the VAT, which previously said it never would have, and the income tax, which had not announced that they would do. What happened was that taxes increased significantly between 2012 and 2013 and the result was a very low economic growth. It started with Sarkozy and Hollande continued. Both have chosen to excessive increases in tax revenues. We know why: both wanted to reduce the deficit too quickly, following the austerity ideas that dominated Europe in 2011/2012. The consequence was killing growth. That in France and the euro area was close to zero. And what we saw is that when we have low growth and high unemployment can not reduce the deficit and public debt. Today the situation in the euro area is very bad because we took wrong decisions in 2011 and 2012. If we compare with the US, the difference is very clear: in 2010, the US and Europe had the same rate of unemployment, deficit and debt. Five years later, unemployment has declined in the US and has greatly increased in Europe. Why? Because we tried to reduce the public debt too quickly. Of course we have to reduce debt, but if we do very quickly, kill growth.
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