Piketty's conclusion

I want to finish my Piketty highlights so they are in proximity to each other.
How wars start

"If you have free trade and free circulation of capital and people but destroy the social state and all forms of progressive taxation, the temptations of defensive nationalism and identity politics will very likely grow stronger than ever in both Europe and the United States."

How to prevent wars

When governments need money, they can either raise taxes or they can issue bonds. All taxpayers repay those bonds (via a regressive system that disproportionally benefits the wealthy), while the wealthiest members of society enjoy the interest on those bonds. It is a huge transfer of wealth.
"Private wealth rests on public poverty, and one particularly unfortunate consequence of this is that we currently spend far more in interest on the debt than we invest in higher education. This has been true, moreover, for a very long time: because growth has been fairly slow since 1970, we are in a period of history in which debt weighs very heavily on our public finances. This is the main reson why the debt must be reduced as quickly as possible, ideally by means of a progressive one-time tax on private capital or, failing that, by inflation. In any event, the decision should be made by a sovereign parliament after democratic debate."

Capital vs. labor

Piketty focuses on France because it has centuries of incredibly good records on taxes and estates. The French Revolution nominally ushered in a period of fairness and meritocracy after the "Let them eat cake" crowd were guillotined. But it was more show than substance. In each country studied, his conclusions were the same:
"A market economy based on private property, if left to itself, contains powerful forces of convergence (income gap narrows) associated in particular with the diffusion of knowledge and skills; but it also contains powerful forces of divergence (income gap widens), which are potentially threatening to democratic societies and to the values of social justice on which they are based.

"The principal destabilizing force has to do with the fact that the private rate of return on capital, r, can be significantly higher for long periods of time than the rate of growth of income and output, g.

"The inequality r > g implies that wealth accumulated in the past grows more rapidly than output and wages. This inequality expresses a fundamental logical contradiction. The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labor. Once constituted, capital reproduces itself faster than output increases. The past devours the future."
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