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Friday Five: Is Thomas Piketty Right?

On Fridays we bring you the week’s best from around the web. This week’s round-up features responses to Thomas Piketty’s thesis in his controversial new book “Capital in the Twenty-First Century.”

1. Discussion of Thomas Piketty’s Thesis on PBS’ NewsHour: Kevin Hassett of AEI and Heather Boushey of the Washington Center for Equitable Growth candidly discuss Piketty’s work and the issue of inequality in America.

Watch video here.

2. Our Disconnected Working Class: In the Washington Post, Michael Gerson argues for an approach to income inequality that is non-partisan and that—even more importantly—actually might work.

Proposals focused mainly on reducing income inequality require the political triumph of the left. Conservatives, being conservatives, will not concede leveling as a valid economic goal. But an agenda that increases the rewards of work, encourages stable, engaged families and promotes healthy community institutions could be a shared political enterprise.

3. A Question for Piketty: AEI scholar Andrew Biggs questions Picketty’s central thesis: Does r > g (return on capital exceeds the growth rate of the economy) really mean that inequality is exponentially increasing?

So when you see the hedge fund manager with the $100 million apartment or the entertainment mogul with the even more expensive yacht, you’re seeing Piketty’s thesis not at work, since by spending their wealth on these things rather than just letting it sit the growth of capital is being undermined. In other words, for Piketty’s prediction to come about you need a top 1 percent that doesn’t live like the top 1 percent. Which is fine by me.

4. Income Inequality: You Can’t Handle the Truth: Elise Hilton of the Acton Institute questions who is more responsible for inequality: the wealthy or the government?

The truth about income inequality? It’s not greedy business folks hoarding their money from the rest of us. It’s a carefully constructed political plan meant to serve power-hungry pols.

5. What Subway Teaches Us About the Minimum Wage: Not only will minimum wage increases hurt the poor, they will insulate big businesses from new competition, argues Amy Otto in this Federalist article.

Imagine you start a business with a few workers and you hit a rough patch. The company hasn’t made a profit yet and to keep going the business is going to need to cut somewhere. It’s a tight knit crew so they meet together and decide instead of letting a person go, they’ll all forgo a paycheck or a drop in pay until business picks up again. In a few months things turn around and instead of having to fire someone, they are all back to being paid more and then some. This flexibility is gone if the federal government by setting a minimum wage makes this illegal.