What the Debate on Inequality Is Missing
Professor Stiglitz is particularly incensed by the Obama administration’s attempt to include investment pacts in trade agreements it is negotiating with Asia and Europe, which would allow multinationals to sue governments for compensation if regulation hurts their profits.
.. Perhaps it is true, Professor Hsu concedes, that inequality will grow relentlessly because the rate of return to the capital of the rich is higher than the rate of economic growth, as Mr. Piketty proposed.
Still, he notes, “Piketty, his supporters and his critics are all missing a hugepiece of the puzzle: the role of law in distributing wealth.” Subsidies, tax treatment, legal protection and other mechanisms conspire to aid the wealthy while often serving to damp economic gains.