The news: Rock star economist Thomas Piketty's book Capital in the Twenty-First Century, published last spring, is still making waves and ruffling feathers, including that of a certain billionaire: Bill Gates.
Gates, one of the richest individuals alive, wrote on his blog on Monday that he agreed with Piketty's assertion that income and wealth inequality are bad — but that the current economic situation in America is not nearly as bad as Piketty claims it to be.
"I fully agree that we don't want to live in an aristocratic society in which already-wealthy families get richer simply by sitting on their laurels and collecting what Piketty calls 'rentier income,'" Gates wrote. "But I don't think America is anything close to that."
"Contrary to Piketty's rentier hypothesis, I don't see anyone on the list whose ancestors bought a great parcel of land in 1780 and have been accumulating family wealth by collecting rents ever since," he added.
We'd like to direct Mr. Gates' attention to this graph. If you had any doubts as to the concentration of American wealth, look no further than this graph from a new working paper by economists Emannuel Saez and Gabriel Zucman, past collaborators of Piketty's:
According to Saez and Zucman, around 16,000 families controlled 11% of America's wealth in 2012. That's not even the top 1% — that's the top 0.01%.
And as Piketty has previously pointed out, "It's much easier to spot large entrepreneurial wealth than large inherited wealth. Large inherited wealth typically takes the form of a more diversified portfolio, whereas large entrepreneurial wealth, when you have created a Microsoft or Facebook, it's difficult to hide." In other words, just because you can't see inherited wealth, doesn't mean it isn't there.
As Klein points out, the Walton family of Wal-Mart fame is a prime example of how inherited wealth keeps vast fortunes among a select few: The family's combined wealth equals that of the bottom 42% of Americans combined.
We'll see if Gates can explain that one.