This post in the Financial Times (via Doug Hendren) describes the rockstar reception given to Thomas Piketty in the US. Much of the information that Piketty wrote about in his book was already known, largely because of his own research in collaboration with other economists. His book has raised everyone's level of understanding about the growth in inequality and its consequences.
One the consequences of Piketty's book is that it elevated the level of cognitive dissonance in America. One of the eternal myths in America is about everyone's opportunity to get rich based upon merit and hard work. Cognitive dissonance is elevated when we encounter evidence that causes us to question firmly held beliefs. Piketty argues that super-managers in America are over compensated by compliant boards. The growth in their income cannot be justified by an appeal to their productivity which is almost impossible to measure. We do not live in a simple meritocracy. Moreover, the concentration of wealth and income will be passed on to future generations which will be able to live very well off of inherited wealth without the need to become productive. This is another blow to the myth of meritocracy, and getting ahead as a result of productive labor. Another blow to this myth is delivered by another source. Social mobility in America is below that of many European countries. Growing inequality and limited social mobility is not good for cognitive dissonance in America. The US has the highest level of income inequality relative to its peer group and it has the lowest level of social mobility.
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