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Why are young people angry?

January 21, 2015


from blog - Professor Joseph J.Y. Sung, 

Before reading, it would be better if you could ask yourself: are you angry with your current status, and why?

"I read Thomas Piketty's book entitled Capital in the Twenty-First Century with great interest and, at the same time, anxiety. From an economist's viewpoint, Piketty sees that the world is approaching a big conflict if nothing is done to rectify the situation: increasingly unequal distribution of wealth. He analyzed the growth of capital of the society versus the growth of income and found that capital (and the wealth it generates) grows much faster than economy and personal income. More importantly, as capital grows, it tends to accumulate at the top of society. Growth of income of the majority in developed countries and urban societies can never catch up with the growth of wealth. As a result, the discrepancy between the wealthy and poor widens. When inequality continues to grow, the majority of the population see unequal distribution of wealth and unfairness. The end result: an increasing likelihood of societal conflicts.

Based on economic figures from over two centuries Piketty pointed out in his book that globally, significant growth of capital only started in the 18th century. It was catalyzed by the Industrial Revolution. Inequality of wealth in Britain, in France and in Germany started to emerge as agrarian societies industrialized, as European empires colonized and as economies globalized. With European immigrants moving to the United States of America, the story of unequal distribution of wealth was repeated. "Thanks" to World War I and World War II, governments tightened the control of capital during the post-war periods in order to pay their debts to rebuild the destroyed cities. They used different measures such as progressive taxation, controlling rent and expansion of social service to regulate the capital. Those measures led to the shrinkage of wealth at the top and the emergence of the middle class. However, in the past 50 years, governments in the developed countries have liberalized their markets, selling off public assets and adopting non-interference policy to the economy. This leads to re-accumulation of capital, and inevitably increased inequality of wealth. Today, there are signs in developed countries that the public is increasingly uneasy with the growing inequality. If Piketty is correct, and the current trends in capital accumulation continues or intensifies, public disapproval is bound to continue and intensify.







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