When inequality gets too extreme, then it becomes useless for growth, and it can even become bad because it tends to lead to high perpetuation of inequality over time and low mobility.
Interpretation
Extreme inequality can hinder growth and perpetuate further inequality, limiting social mobility.
This quote by Thomas Piketty illustrates the detrimental impact of severe inequality on economic growth and social mobility. When wealth and resources are disproportionately distributed, it not only stifles development but also creates a cycle that makes it increasingly difficult for individuals to improve their socio-economic status, leading to a stagnation of opportunity and potential.
In practice
In a keynote speech on economic policy, consider using this quote to highlight the risks of ignoring inequality.
Contrary to a tenacious myth, France is not owned by California pension funds or the Bank of China, any more than the United States belongs to Japanese and German investors. The fear of getting into such a predicament is so strong today that fantasy often outstrips reality. The reality is that inequality with respect to capital is a far greater domestic issue than it is an international one.
The main force pushing toward reduction in inequality has always been the diffusion of knowledge and the diffusion of education.
Over a long period of time, the main force in favor of greater equality has been the diffusion of knowledge and skills.
There is one great advantage to being an academic economist in France: here, economists are not highly respected in the academic and intellectual world or by political and financial elites. Hence they must set aside their contempt for other disciplines and their absurd claim to greater scientific legitimacy, despite the fact that they know almost nothing about anything.
When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.
Having a decent share of the national wealth for the middle class is not bad for growth. It is actually useful both for equity and efficiency reasons.
If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional volatility.
The failure of Lehman Brothers demonstrated that liquidity provision by the Federal Reserve would not be sufficient to stop the crisis; substantial fiscal resources were necessary.
There never has been a time in our history when work was so abundant or when wages were as high, whether measured by the currency in which they are paid or by their power to supply the necessaries and comforts of life.
The reason we should do a carbon tax is because it's the right thing to do. It's economics 101, elementary stuff.
How could economics not be behavioral? If it isn't behavioral, what the hell is it?
Mere inflation-that is, the mere issuance of more money, with the consequence of higher wages and prices-may look like the creation of more demand. But in terms of the actual production and exchange of real things it is not.
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