We live in a world of unearned income.
We live in a time of unearned capital.
Welcome to the age of Mass Rentiers.
Nowadays working is not enough to make a decent living. Many explanations have been proposed. Income inequalities have been pointed out in particular as the major cause of this phenomenon.
A few years ago, the French economist Thomas Piketty created a sensation with his book Capital in the Twenty-First Century.
As stated on Wikipedia (1) “[t]he book argues that the world today is returning towards “patrimonial capitalism”, in which much of the economy is dominated by inherited wealth: the power of this economic class is increasing, threatening to create an oligarchy.
Piketty bases his argument on a formula that relates the rate of return on capital (r) to economic growth (g), where r includes profits, dividends, interest, rents and other income from capital and g is measured as growth of society’s income or output. He argues that when the rate of growth is low, then wealth tends to accumulate more quickly from r than from labour and tends to accumulate more among the top 10% and 1%, increasing inequality. Thus, the fundamental force for divergence and greater wealth inequality can be summed up in the inequality r > g. He analyses inheritance from the perspective of the same formula.”
In Piketty’s view “inheritance” has a very negative effect on the economy and society.
What is “inheritance”? Broadly speaking, itis any good received from the previous generation. If we do not focus only on money and property, we must recognize that at present, humanity enjoys many inherited immaterial goods that are even more important than money: knowledge, art, nation states, civil liberties.
“We are dwarfs standing on the shoulder of giants”. That was a solid truth in the Middle Ages, a period of humility and trust in authorities.
Is this not much more true today? Now that we have accumulated so many goods thanks to past generations?
There are free countries we did not fight for. Civil liberties that we have not fought for to obtain. Scientific knowledge we have not helped to increase by an inch, but which guarantees us a technological comfort our ancestors would associate with sheer magic.
The first world, the industrialized part of the globe, is definitely a world of “inheritance” in every aspect. “Unearned income” sounds slightly immoral but since most of our income is now unearned, we must deal with that and we must explore every aspect of our “inheritance” to realize what we really are: Mass Rentiers.