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The Staff’s Favorite Books of 2015

It’s hard to imagine a MacLaurinCSF staff member who didn’t read constantly and widely. And we’re always happy to recommend the best of what we’ve read! So here, as 2015 draws to a close, are our favorite books of the year.

Caveat lector: I happen to disagree with, for example, many of the ideas Marilynne Robinson argues for in her book of essays, but I nevertheless recommend that book below. I’m sure each of the staff members would say the same thing about one or more of their recommendations. Which is to say that, although these are our favorite books from the year, these books aren’t in any sense recommended or endorsed by MacLaurinCSF as an organization, or even by any other members of the staff. They’re simply each staff member’s favorite books from the year.

What were your favorite books of the year? We’d love to know what we missed—leave a comment below.

Andrew


Bryan


Cheri


Danica


Martha


Matt

  • Joshua Cohen, The Book of Numbers—This novel, about an obscure writer named Joshua Cohen who meets a bizarre tech tycoon (also named Joshua Cohen) and winds up ghostwriting his autobiography, is a brilliant exploration of both the ethos of Silicon Valley and our obsession with “entrepreneurship.”
  • Neal Stephenson, Quicksilver—Historical fiction about the dawn of the Enlightenment, the birth of calculus and democracy, and much more. The first volume in a mind-bending trilogy by Stephenson.
  • John Lanchester, How to Speak Money: What the Money People Say—And What It Really Means—A brilliant journalist and novelist examines the ways in which language and the economy interact with each other. Lanchester makes a strong case for communication as the fundamental tool of our understanding, and shows how debasing and devaluing our language can have profound, global economic consequences.
  • Scott Cairns, Slow Pilgrim: The Collected Poems—Beautiful poems by one of our great contemporary poets. Cairns’s poems are simultaneously richly theological and wholly embodied, both fleshy and philosophical.
  • Kenneth Grahame, The Wind in the Willows—I had never read this until my daughter received an abridged version. I’ve delighted in it nearly as much as she has, and Toad, Ratty, Mole, and Badger now make frequent appearances in our daily conversations.
  • Marlon James, A Brief History of Seven Killings—Another historical novel, this one about the attempted assassination of Bob Marley and the complex and brutal historical circumstances that lead to the attempt on “the Singer’s” life. James teaches at Macalester and won this year’s Man Booker Prize
  • Marilynne Robinson, The Givenness of Things—The coach of the great soccer player Pelé once said “If you ask me who the best fullback in Brazil is, I’d say Pelé. If you ask me who the best half-back or winger is, I would say Pelé. He is probably even our best goalkeeper.” (Pelé never played goalie.) Similarly, Marilynne Robinson is our best novelist; she’s our best essayist, as these essays underscore; she’s probably even our best poet (even though she has never published any poetry).

What were your favorite books of the year? We’d love to know what we missed—leave a comment below.

New Fall Reading Group on Faith, Culture, and Technology

We’re excited to announce a new fall reading group that is getting started next week. Led by computer science PhD student Michael Tetzlaff, the group will be reading and discussing Shaping a Digital World by Derek Schuurman.

The study group will meet in Keller Hall and is cosponsored by MacLaurinCSF and Graduate Christian Fellowship. Their first meeting will be next Tuesday, October 6 at 1:30pm in Keller 4-131. Feel free to bring your lunch.

Here’s the description of the book from Amazon.com:

Digital technology has become a ubiquitous feature of modern life. Our increasingly fast-paced world seems more and more remote from the world narrated in Scripture. But despite its pervasiveness, there remains a dearth of theological reflection about computer technology and what it means to live as a faithful Christian in a digitally-saturated society. In this thoughtful and timely book, Derek Schuurman provides a brief theology of technology, rooted in the Reformed tradition and oriented around the grand themes of creation, fall, redemption and new creation. He combines a concise, accessible style with penetrating cultural and theological analysis. Building on the work of Jacques Ellul, Marshall McLuhan and Neil Postman, and drawing from a wide range of Reformed thinkers, Schuurman situates computer technology within the big picture of the biblical story. Technology is not neutral, but neither is there an exclusively “Christian” form of technological production and use. Instead, Schuurman guides us to see the digital world as part of God’s good creation, fallen yet redeemable according to the law of God. Responsibly used, technology can become an integral part of God’s shalom for the earth.

Religion, Higher Education, and the Public Sphere, Week One: Brad Gregory on the Secularization of Knowledge

This summer, we’re reading through a number of essays and excerpts of books related to the relationship between religion, higher education, and the public sphere. Take a look at the overview of our readings.

We enjoyed a great conversation last week to kick off this summer’s reading group. We discussed chapter 6 of Brad Gregory’s The Unintended Reformation, which is a broad survey of the secularization of knowledge since the late middle ages. Here some of the main points we discussed:

  • We questioned the degree to which late medieval Catholicism provided a unified “institutionalized worldview.” On the one hand, Gregory seems overly optimistic about the amount of consensus that existed in late medieval Christendom. On the other hand, it seems reasonable that shared Christian practices may have unified diverse intellectual viewpoints in a way that became impossible once those Christian practices were no longer held in common.
  • We found convincing Gregory’s claim that religious pluralism was a significant driver of secularization: when people disagree on religious matters, there’s an incentive to bracket those areas of disagreement from the other areas (e.g., science) where you pursue a common cause.
  • We were skeptical of the broad claims Gregory made for “the Reformation” as an agent driving history. Consider the following sentence: “By rejecting the authority of the Roman church, the Reformation eliminated any shared framework for the integration of knowledge.” What does it mean to make such overarching claims about the agency of a historical movement as broad as the Reformation? A movement that stands in for such a diverse range of human agents, human institutions (religious, political, both, neither), and other diverse historical forces? Are claims like “the Reformation rejected” and “the Reformation eliminated” helpful in condensing and clarifying such a broad movement, or do they obscure the history?
  • What would a synthetic, integrative approach to higher education—one that resists extreme specialization and fragmentation—look like at a place as large and specialized as the U of M? We thought it would start with having administrators who are concerned for the integration of knowledge, and would likely involve revising requirements for undergraduates so that they all are required to think synthetically across a variety of fields. One idea was for the first year of studies for all students to be focused on moral questions—introduce different ideas about what it means to be human and how knowledge should be used in the world.

Next week we’re continuing the historical section of our reading group by focusing on the changing place of morality within the modern university. We’ll read essays by Julie Reuben and George Marsden from The Hedgehog Review, as well as one exchange among these authors and philosopher Richard Rorty from the same issue.

Also consider reading Max Weber’s classic address, “Science as a Vocation,” which has been a touchstone for later discussions of the purposes of academic knowledge and its relation to morality. (“Science” here is a translation of the German Wissenschaft, which includes all academic knowledge, not just the natural sciences.)

Seeking Wisdom in the University: David Deavel on John Henry Newman and the Pursuit of Wisdom

aquino newman

 

This review is by David Deavel, Adjunct Professor of Catholic Studies, University of St. Thomas and a recent MacLaurinCSF speaker.

Frederick Aquino, An Integrative Habit of Mind: John Henry Newman on the Path to Wisdom

John Henry Newman (1801-1890) is a figure whose stature seems to grow with every passing year. Though he left the Anglican Church and became a Roman Catholic in 1845, his influence in Protestant circles continued and continues to grow. On theology—particularly the theology of the Church—he continues to be loved even by those who strongly disagree with him. Reformed theologian Carl Trueman has recently written, “One [of] my favorite theological writers is John Henry Newman—and he is my favorite precisely because he offers different answers to the most fundamental questions and thereby demands that I refine and sharpen my own thinking. If I read Newman and remain unchanged, I know something is not right.”

Amusingly enough, Newman never actually considered himself a theologian in the technical, professional sense, despite the marvelous contributions he made to the study of doctrinal development, the Arian crisis, and many other subjects. While he was always a Christian and a priest first and foremost, he put his intellectual energy into philosophical questions about the nature of belief, knowledge, and wisdom. To this end his two great works are the collection from his Anglican days known as Oxford University Sermons (1843) and from his Catholic days The Grammar of Assent (1870). But like the ancient philosophers, this pursuit was not simply about a theory, but about life. In his work there was no strict line between the practical and the theoretical because, for creatures, all true wisdom has to be grounded in concrete experience and issue in change to one’s experience and behavior. In other words, philosophy (literally “love of wisdom”) was not a specialized subject for people with advanced degrees, but instead a subject for everybody. Philosophy was about education—what he called “my line.” And his thoughts about that subject have been immortalized in the series of theoretical and practical lectures known as The Idea of a University (1852).

Frederick Aquino, a long-time student of Newman and professor of theology and philosophy at Abilene Christian University, has been probing Newman’s understanding of how and under what conditions we gain knowledge and understanding (what the professional philosophers label epistemology) and how university education can facilitate those gains. His very good short book, An Integrative Habit of Mind, mirrors Newman’s technique of treating theoretical and practical aspects of the path to wisdom side by side, with an eye to showing what Newman can offer the professional philosophers and those involved in educational theory. If they can abide the academic prose, undergraduates and lay readers will gain much from Aquino’s treatments, particularly his third chapter focusing on suggestions for thinking about education as a formation of persons.

Aquino’s contention is that forming and keeping an “integrative habit of mind” is necessary for anyone who seeks wisdom. What is this habit? Aquino describes it as the ability “to grasp how various pieces of data and areas of inquiry fit together in light of one another, thereby acquiring a more comprehensive understanding of the issue at hand” and also to figure out “how this kind of understanding applies to a given situation.” In other words, wisdom involves having the big picture, a good sense of the details and how they relate to each other, but also how to apply that knowledge to given situations. Wisdom requires deep theory and prudent practice.

Aquino’s first main chapter, “Broadening Horizons,” indicates another requirement: the ability to engage others from “radically different points of view” in such a way that, even if one does not finally adopt their views, one can gain from them an even better understanding of the issues at hand. Engagement of others doesn’t mean approaching their thought as if one doesn’t have any convictions of one’s own, either. When paleo-Calvinist Carl Trueman reads the Catholic Newman, he is engaging in precisely the sort of practice that makes for wisdom. But unlike Descartes, who claimed to have doubted everything in order to build a foundation for true knowledge, Trueman no doubt doesn’t simply leave his Reformed convictions behind.

Aquino, following Newman, advocates the development of the virtues needed for true engagement—“interest in truth, intellectual honesty, concern for evidence, capacity to listen and to follow counterarguments, the ability to see how things hang together”—but firmly maintains that focusing on those virtues doesn’t “bypass” the very real questions of “authority and autonomy” that lie at the heart of most serious intellectual arguments. Instead, this focus helps one to behave well in situations where one does disagree. And it acknowledges that authority and autonomy are not, as some Enlightenment thinkers had it, implacable enemies. Humans begin with the acceptance of authorities whom they trust—this is neither unreasonable nor bad. It is only by a patient development of one’s own thinking and a probing of what we have been taught that we can come to the point where an autonomous informed judgment is possible. This development is not only a learning of rules or principles, but also an apprenticeship in how to think, whom to trust (and when), and how to persevere in being open-minded enough to gain from others while not being so open-minded that one can never make a critical judgment.

This emphasis on the what and the how of learning is continued in the second chapter, “A Matter of Proper Fit.” While this chapter is the most technical and academic in tone (thinkers are always “cognitive agents” or even “cognizers”—ack!), it is in many ways the most intellectually rewarding. Modern philosophers of knowledge tend to divide into camps of “externalists” and “internalists.” Roughly speaking, the externalists count it as knowledge if you get to the right answer while the internalists make the proper process of getting to the right answer the criterion for knowledge. One side focuses on what, the other side on how. Aquino doesn’t propose that Newman can solve all of the philosophical debates, but he thinks Newman offers hints of a mediating position. To be wise, sometimes it is important to focus only on the answer, while sometimes one has to go back to thinking about how to get there. In bumper sticker terms, it’s not the destination or the journey, dude. It’s both. A batter who focuses too much on anticipating the coming pitch will not be able to hit the outside fastball when it arrives—too much conscious thought is detrimental to his hitting. But if he misses enough of them, he’ll have to spend time in practice thinking through how to detect the signs of fastballs, sliders, and curves. Developing the “proper fit” between conscious knowledge and practice is the name of the game.

Christian readers will understand this chapter as very applicable to the life of faith, and no wonder, since Newman’s Grammar of Assent was written in order to defend unreflective simple reasoning of Christians against cultured despisers who think that believing in something one doesn’t fully understand or can’t explain on paper is simple superstition. But Newman also encouraged religious believers with the capacity and duty for it to explore their worldviews even though it could be dangerous and uncomfortable. Simple believers sometimes need to ask tough questions about how they came to their beliefs, while Christian intellectuals must sometimes tame their own capacity for criticism and complexification in order to believe that they might understand.

Wherever one starts, however, the goal is the same: a connected view of the world, or what some call a worldview. The third chapter is full of hints about how to achieve this connected view and what those involved in university education need to do to encourage its development. Aquino has suggestions about curricular and institutional issues to be sure, but his main focus is on the personal side of education, on educators forming a real “community of inquirers” who not only model how to work in their particular disciplines, but also how to listen and ask questions of others who are treating the same subject from a different discipline. (Here it may have been useful for Aquino to consider Newman’s notion of the “circle of knowledge” that grounds the need for interdisciplinary work in The Idea of the University.) While a syllabus full of good readings and assignments is important, true teachers realize their “embodiment” of a connected view is most important to students. Aquino quotes Newman about how ideas come to life more in “personal documents” than in “dead abstracts and tables.”

For a number of reasons, the modern university is not always the place for finding wisdom. Connected views of things have been damned too long as “metanarratives” that are oppressive. The nature of specialized research has also encouraged scholars to focus ever more narrowly on subjects such that the forest cannot be seen for the trees. Finally, the mass entrance of students into university education has forced changes on to the traditional university structure. But given its resources, the university still has a potential for leading students and faculty to understanding and breadth. Those who see and desire this potential would benefit greatly both from the wisdom of Newman and from Frederick Aquino’s valuable mining of it in this book. If they study Newman and are not changed, they should know, however, that something is not right.

Religion, Higher Education, and the Public Sphere

This summer at MacLaurinCSF, a few of us are reading some of the key works in the broad area of religion, higher education, and the public sphere.

We’ll post brief reports from our discussions as we read; weigh in in the comments with reflections or responses of your own: What place does religion have in higher education? Only as an object of study? Perhaps sequestered in confessional institutions? Present but private at the public university?

Week One

The Secularization of Higher Education

  • Brad Gregory, The Unintended Reformation, chapter 6

For further reading:

  • Jon Roberts and James Turner, The Sacred and the Secular University
  • George Marsden, The Soul of the American University

Week 2

Morality and the Secular University

For further reading:

  • Julie Reuben, The Making of the Modern University: Intellectual Transformation and the Marginalization of Morality

Week 3

What is the Secular?

  • Stanley Hauerwas, The State of the University
  • John Milbank, Theology and Social Theory, ch. 1

For further reading:

Week 4

Religion and the Public Sphere

  • John Rawls, “The Idea of Public Reason Revisited”
  • Jürgen Habermas, “Religion in the Public Sphere”; “A ‘post-secular’ society: what does it mean?”
  • Eric Gregory, Politics and the Order of Love

Week 5

Contemporary Proposals

  • Hauerwas, The State of the University, chs. 1 & 11
  • Gavin D’Costa, Theology in the Public Square
  • James R. Stoner, Stanley Hauerwas, Paul Griffiths, David Bentley Hart, “Theology as Knowledge: A Symposium,” First Things

Week 6

Contemporary Proposals

  • Readings TBD

Recommended Reading on Faith and Economics – William Cavanaugh

William Cavanaugh - What Do I Want? Augustine and Milton Friedman on Freedom of Choice

On March 10, Dr. William Cavanaugh, a theologian and a Professor of Catholic Studies at DePaul, visited campus to deliver a fascinating lecture on the relationship between desire, freedom, and economics. Entitled “What Do We Want? Augustine and Milton Friedman on Freedom of Choice,” Cavanaugh’s talk contrasted Augustine’s theological anthropology—his Christian vision of the human person—with the assumptions about humanity that informed Friedman’s economic theories.

Cavanaugh’s talk is available on YouTube and Soundcloud. If you’re interested in learning more, Cavanaugh recommends the following books:

Cavanaugh adds:

One way or another, all of these books question the idea that economics is a hard science, and see it rather as a kind of theology.

William Cavanaugh's recommended books on theology and economics

(Also check out our recent blog series on Thomas Piketty’s Capital in the Twenty-First Century, a—yes, it happens from time to time—best-selling book about economics, which explores the relationship between capital accumulation and economic inequality.)

I’d be interested to know what you think about Cavanaugh’s talk and, more broadly, the relationship between theology and social sciences like economics—leave a comment below. A couple of our summer 2015 reading groups will be exploring related topics—particularly the Theology and Economics group and the group reading Christian Smith’s Moral, Believing Animals—if you’re interested and able, we’d love to have you join us.

Recommended Reading on Biotechnology and Bioethics – William Hurlbut

wh 2015-04-09 email

 

In April, Dr. William Hurlbut of Stanford University gave our second annual V. Elving Anderson Lecture in Science and Religion. Hurlbut’s lecture, “Biotechnology, Freedom, and the Pursuit of Happiness,” is now available to watch on YouTube and listen to on Soundcloud.

Dr. Hurlbut suggested the following four books as the best resources if you’re interested in further exploring the issues he raised in his lecture:

If you’d like to read more from Dr. Hurlbut, in addition to his contributions to the Beyond Therapy volume, he is the co-editor of Altruism & Altruistic Love: Science, Philosophy & Religion in Dialogue, to which he contributed several chapters, and the essay “Science, Religion and the Human Spirit” in the Oxford Handbook of Religion and Science.

 

William Hurlbut's book recommendations on biotechnology and bioethics

Recommended Reading on C.S. Lewis – Dave Deavel

David Deavel: The Tao of Jack - C.S. Lewis on the Foundation of Freedom

In March, St. Thomas professor Dave Deavel gave an excellent talk, “The Tao of Jack: C.S. Lewis on the Foundation of Freedom.”

Dave agreed to offer his own recommended reading on Lewis and the Inklings, which complements the previous posts in our series of recommended books on the Inklings—Joseph Pearce on J.R.R. Tolkien and Phil Rolnick’s earlier list on C.S. Lewis.

Here are Deavel’s recommendations:

The Moral Dimensions of Capital: Daryl Koehn on Broadening Piketty’s Conception of Social Goods

piketty-capital-21st-century

Editor’s Note: Today’s entry in our forum on Thomas Piketty’s Capital in the Twenty-First Century is by Daryl Koehn, a professor of ethics and business law at the University of St. Thomas, where her research focuses on the nature of good and evil in the business and professional arenas. This is the seventh post in our forum, which kicked off with an introductory post, where you’ll find an index of all the posts in the forum.


Piketty’s Capital in the Twenty-First Century sets up five key questions:

  1. Is wealth inequality increasing within the US and elsewhere?
  2. If so, what are the causes of the growing inequality?
  3. If inequality is increasing, is that an economically good thing?
  4. If inequality is increasing, is that a morally good thing?
  5. What, if anything, should be done about rising inequality?

1. Is wealth inequality increasing within the US and elsewhere?

In Capital, Piketty presents historical data, arguing that from World War I through the Great Depression and World War II, the wealth-to-income ratio fell rapidly. Income inequality shrank as well, especially during World War II. Piketty explains the data with a model, projects the model into the future, and proposes high taxes to correct for growing inequality. Piketty is primarily focused on wealth inequality, which he defines as concentrated wealth in the hands of a few families, not on income inequality.

I am not an economist and so am not sufficiently versed in statistics and econometrics to assess Piketty’s argument that wealth inequality is indeed increasing (and doing so at an accelerating rate). I would note that a number of other prominent economists and think tanks have recently published studies concurring with Piketty’s basic thesis. So for purposes of my contribution to today’s discussion, I will accept that wealth inequality is, in fact, increasing.

2. So assuming that there is growing inequality, what are its causes?

One cause of inequality or the lack thereof is war and the government’s response to war. The low inequality around WW1 and WW2 was due to the low savings rate during this period (Piketty 7) and European government’s devaluation of rich families’ assets (8).

Now, however, wealth inequality is once again increasing. Why? Piketty’s key argument, as I understand it, is that when r, the rate of return on capital, is greater than an economy’s growth rate—g—then high levels of wealth engender still higher levels of wealth because the investments of the rich are far more lucrative than any wage increases labor is getting via economic growth. Insofar as this wealth gets inherited, countries veer toward plutocracies or what Piketty calls “patrimonial capitalism” (154; passim).

There are, however, a number of points to make about this assertion. First, Piketty does not establish that r will necessarily remain greater than g. r might fall faster than g at some point. Second, this claim does not state the cause of growing inequality. It shows at best why those who start off with a stash of capital may be able to increase their wealth far faster than those who depend upon salaried labor. The claim that r has been greater than g by itself does not explain how certain parties obtained their initial stash of capital: “Piketty isn’t saying that r > g is why inequality has increased so far. It’s why he thinks inequality will keep increasing along hereditary lines in the future. Nor does the r greater than g equation tell us anything about how and why those who are becoming wealthy have been able to preserve ownership in their capital (e.g,, that they live in country that respects property rights).

So why, according to Piketty, is wealth inequality increasing? Piketty offers several theories. One answer is that governments’ taxation rates are not as confiscatory as they were during earlier eras. Second, rubber-stamping boards (staffed with interlocking CEOs) are paying executives astronomical salaries. This claim is crucial for Piketty’s argument because wealth cannot breed wealth unless and until individuals have money to invest in the first place. The claim then is that it has become easier during the prior decades for business executives to amass fortunes. And that fact fuels wealth inequality, which supposedly gets ever greater and becomes inheritable because of the r greater than g dynamic.

But it seems to me that other factors affecting individuals’ wealth level have been at work as well. On the one hand, many middle class Americans have started to save an ever-greater portion of their income because they fear that social security will not be around when they retire. Money that once was spent is now saved; such savings count as accumulated wealth. So fear-based savings presumably is creating some wealth. On the other hand, generous defined benefit pensions have traditionally supported the middle class, enabling them both to spend and save at reasonably high levels even after retirement. The poor do not work jobs that have defined benefit plans. So defined benefit pensions have historically been available only to certain groups of people and thus likely contributed to wealth inequality. These defined benefit plans have gone away as firms have replaced defined benefit plans with defined contribution plans. The latter are far less generous in their payouts so the rise of these plans is likely also leading to income and wealth disparity during recent years.

Labor unions have been weakened in part because workers saw during the 1980s that the union leaders took care of themselves and long-time employees while doing little for less tenured rank and file members. In other cases, firms (e.g., Walmart and Starbucks, and many universities) have fought tooth and nail to prevent unions from getting a toehold in their operations. The eviscerating of unions means that labor has lost bargaining power and, as a result, has not been as well positioned to demand the salary increases and benefits they had been able to secure in the past. That factor has tended to suppress wages and probably savings as well.

The lessening of taxes on dividends and on estates has allowed wealth that does exist to maintain itself. However, given that most fortunes are spent within three generations, we need to identify other factors that are at work in contributing to income inequality. Part of the answer surely is the shift from public sector to private sector jobs in the financial industry—a point I will return to shortly.

I suspect that another reason for the increase in wealth disparity is the increasing number of very successful, innovative entrepreneurs. Many of the wealthiest people in America made their wealth by inventing something new and very disruptive—think of the products offered by Apple, Google, Facebook, Uber, and eBay. This list of lucrative inventions goes on and on. These disrupters would have pursued these inventions regardless of the tax rate; America has a long history of nurturing innovation. The growing ability of innovators to gain easy access to capital (think of Kickstarter and the other crowd-sourcing funding mechanisms) and to draw upon the wisdom of crowds to perfect designs and to do marketing has made it possible for ever larger numbers of individuals to become entrepreneurs. Customers flock to these inventions and that dynamic has made those individuals hugely wealthy.

I doubt then whether astronomical CEO salaries has been the main driver of inequality.

3. Is Growing Inequality Necessarily Bad for Business?

Nobel prize winner Paul Krugman has made the point that New York City has done pretty well for years because very wealthy traders and bankers have spent heavily on fine dining, cars, services, etc. So it would seem that pockets of intense economic activity can occur even with extreme wealth and income inequality. We are not justified then in claiming that growing wealth inequality is always or necessarily bad for business. Piketty himself notes, “The history of income and wealth is always deeply political, chaotic, and unpredictable” (35).

Moreover, the prospect of being able to become very wealthy may motivate entrepreneurs. In some respects, we clearly are moving within the US toward an entrepreneurial economy. Of course, the prospect of others succeeding can fuel envy; but it may also inspire others to try their hand at offering new products and services. Crowd-sourced funding and inventions have exploded; small businesses are the primary engine for job growth so becoming a successful entrepreneur is not as impossible as it might have seemed even ten years ago. If we see more entrepreneurs who succeed in offering new services and products, then wealth inequality might be the result of business being very good.

Conversely, growing wealth and income inequality may be bad for business if we have a consumption economy rather than a production economy. When folks don’t have money to spend, consumption flattens or declines.

4. Is Increasing Wealth Inequality a Morally Bad Thing?

Whether growing wealth inequality is immoral depends, in part, upon its causes and effects. As Aristotle argued long ago, inequality per se is not unjust. Milo the wrestler may need to consume four times the amount of food you or I do because he needs more calories to sustain his level of activity. In times of great scarcity, Milo might not merit this larger share of calories. But if and when a society has the resources to distribute to according to his or her due, then perhaps inequalities should not merely be tolerated but even encouraged. It is right that Milo get the food that he needs.

Injustice arises when people do not receive returns commensurate with their contributions. To quote Plato, there must be justice even among thieves. For his part,

Piketty not only concedes, but documents himself, most . . . inequality arises from labor income, not capital income—from compensation earned by executives at big firms, entrepreneurs, and financial wizards. Almost none of these ultra-high income earners are the teachers, engineers, and academics that, according to data collected by Harvard economists, used to be the core of a modest-income social elite in the 1960s and 1970s . . . Economic research shows that the medical advances sparked by the research done by medical academics added $3.2 trillion to the value in the economy, in terms of improved health, each year, since 1970. Yet all academics in the United States—including all the researchers in other fields—were paid less than $100 billion. Financial workers earned five times that amount. A system that delivers rewards in such poor proportion to the benefits society derives will stifle economic growth as well as sharpen inequality. Thus, the fundamental problem facing American capitalism is not the high rate of return on capital relative to economic growth that Piketty highlights, but the radical deviation from the just rewards of the marketplace that have crept into our society and increasingly drives talented students out of innovation and into finance. (Eric A. Posner and Glen Weyl, “Thomas Piketty Is Wrong: America Will Never Look Like a Jane Austen Novel”)

This excessive financialization of the US economy and the accompanying loss of manufacturing jobs somehow needs to be addressed if justice is to be seen to be done. It is hard to see how that will occur, given that the wealthy are able to use their vast resources to lobby politicians to create and skew rules that favor their activities, many of which are rooted in the financial sector.

In the meantime, we seem to be witnessing some hollowing out of the middle class. To the extent that is so, we ought to be, if not alarmed, at least on guard. Some evidence suggests that we have evolved from being an industrial economy into a consumption economy. The middle class drives much of this consumption. In addition, the middle class has traditionally done a fine job of educating its children. These children become the innovators and educators needed to keep America strong. Seventy percent of America’s entrepreneurs have come from the middle class. So the loss of the middle class would be serious indeed. It would threaten the very ability of the economy to meet citizens’ needs. We collectively would not be able to render to each party his or her due. Other virtues cultivated by the middle class—thrift, charity—might disappear as well.

When we shift our attention from the middle class to the lower class, a related concern emerges. Inequality becomes unjust when all members of the body politic do not obtain what they need in order to survive because some citizens are taking too much for themselves. Piketty contends that we are returning to a kind of “patrimonial capitalism.” In such a system, class and especially inherited wealth matter far more than individual effort and talent. America has historically been relatively stable because individuals believed that they could—through hard work—share in the good life and give their children the skills needed for the children to be similarly successful. When a society ceases to be able to persuade its lower class citizens to believe in this kind of future, inequality can become very worrisome. The Arab Spring occurred in part because so many educated young people throughout the Middle East have few job prospects. The rise of European neo-Nazis who encourage citizens to attack others who supposedly leach off the body politic should give us pause; these extreme parties have realized gains primarily in those states with economies that have imploded since 2007, devastating the lower and middle classes.

Part of the reason for the increasing dominance of inherited wealth has been the changes in the tax law mentioned above. George W. Bush cut taxes not primarily on high salaries but upon interest, dividends, capital gains and estates. We are moving toward a state in which some people in theory will never have to pay federal income taxes because all of their money comes not from salaries but in the form of a non-taxed return on assets that are passed from generation to generation. The tax burden on the middle class, however, has steadily increased. Progressive taxation is arguably the most just system, but in the US we have moved away from such a system.

But taxation policy, as I noted above, does not tell the whole story. The hollowing out of the middle class is due (I suspect) in part to the loss of significant pensions, especially pensions in the public sector. Insofar as these pensions were not sustainable; and insofar as the current generation was paying itself generous retirement benefits that would have to be funded by future generations who are smaller than the baby boom generation, the loss of these pensions is perhaps not unjust. No one has a moral right to benefits that come at the expense of young people’s ability to make a life for themselves. In that sense, Piketty’s book can be read as providing a salutary warning to the American populace as a whole to think twice about pension promises that cannot and should not be kept. Some of the touted prosperity and strength of the middle class in America and in Europe may have been a mirage.

5. What, If Anything, Should Be Done about Rising Inequality?

Let us assume that rising wealth inequality is both bad for the economy and morally reprehensible. One response is to keep on doing what we already are doing—namely, reducing consumption inequality by redistributing monies through the various welfare state programs. In the 18th and 19th century, wealth inequality translated into huge consumption disparities. Such disparities are less apparent in the 21st century largely because of various state subsidies and programs (e.g., nationalized health in the UK; social security in the US). As Tim Worstall has noted, “Wealth inequality in Sweden is higher than it is in either the US or the UK. [But] [i]ncome inequality, after taxes and after benefits, is significantly lower in Sweden and consumption inequality even more so” (“Yet Another Reason Why Thomas Piketty Is Wrong”). The problem with this response is that welfare states all over Europe are in danger of collapsing, in part because the tax base of middle class people is shrinking and in part because the burden has proven to be too onerous.

Another argument in favor of the status quo is that, yes, we have a growing number of ultra-rich individuals but these folks are part of the solution, not the problem. In his review of Piketty’s book, Bill Gates has conceded that “capitalism does not self-correct toward greater equality”; like Piketty, Gates thinks government needs to “play a constructive role” in ameliorating the effects of wealth inequality. However, Gates goes on to make a case for the ability of philanthropy to help with social ills. Rich philanthropists, in Gates’s view, contribute to the social good in ways that, say, rich spendthrifts do not. Of course, that response by itself does not justify paying CEOs hundreds of times what the average worker in their firms make. Nor does it consider to whom the rich tend to make their donations—art museums, etc. It is the middle class and poor who give a far greater percentage of their income to the poor and favor donations to the social service agencies that are trying to deal directly with the debilitating consequences of poverty. This difference persisted during the Great Recession: “A 2012 study by the Chronicle showed that while middle income citizens gave 7.6 percent of their incomes to charity on average, the figure was just 2.8 percent for those earning more than $200,000 per year” (“Study: Rich give less to charity as low and middle income people give more”).

Piketty himself and many liberals reject the status quo, favoring a global wealth tax. The tax in theory would prevent or at least slow the accumulation of inheritable capital. However, much would depend on how easily the wealthy could evade such a tax. Moreover, I suspect that the real problem does not lie with wealth inequality per se but with a fundamental shift in how Americans and Europeans think about their working lives. Well-educated, ambitious and talented individuals now prefer to go into business and finance rather than to spend their lives working at less remunerative jobs in education, the public sector, etc. If so, then “the right solution . . . is not to shackle capitalism with a blunt wealth tax but to channel its energies into more productive, diverse activities. . . . But broad taxes, while useful absent better policy in other areas, are poorly targeted, because they do not distinguish clearly between people who are under-compensated for their social contributions (researchers, teachers, engineers) and those who receive excessive pay (financiers, lawyers)” (Posner and Weyl).

In the language of Michael Naughton and Ken Goodpaster, the real issue is that we as a society are failing collectively to focus on genuinely “good goods and useful services” (“Where Philosophy, Theology, and Ethical Leadership Intersect: Is Stakeholder Thinking Enough?” Unpublished). For example, high frequency trading churns the market, and there is nothing that traders like more (apart from astronomically large bonuses!) than market volatility, which creates the opportunity for great scores. However, such volatility is far less desirable in the eyes of consumers and businesses. These groups may suffer from wild swings in interest rates, commodity prices, etc. In this case, the real problem is not that HFT traders are getting rich but that the activity itself is suspect.

Distinguishing genuinely good goods and truly beneficial services from merely hedonic goods can be tricky. However, unless we begin to think about this distinction, our societies will likely continue not merely to tolerate but even to applaud activities that are very risky and that do not further the common good in the long run. Imposing draconian wealth taxes does not deal with this underlying problem of the goods we choose to pursue.

We should also encourage individuals to think about this crucial distinction between things and “good goods.” Although it seems that stagnant wages coupled with rising health and education costs have stressed the middle class, it is also true that many people now go into debt to acquire consumer goods that they do not need. We seem to be finding it harder and harder to defer gratification; the savings rate has been declining for generations. Yet saving money is key to being able to pay for truly good goods such as preventive care and a college education. I do wonder whether part of the rising income inequality is due to many folks saving less throughout their lives because they feel that they must have the latest phone, watch, car, etc. If so, then redistributing wealth will do little to prevent those who are able to save capital to start a business from earning far more than peers who spend every tax rebate or windfall on the latest hot item. Hedonic goods, although pleasant at the moment of consumption, tend to distract people from the task at hand and do not foster habits of concentration, persistence, etc. needed to build a business or to rise to the top of a profession.

The Moral Dimensions of Capital: Matthew Kim provides an economist’s perspective

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Editor’s Note: Today’s entry in our forum on Thomas Piketty’s Capital in the Twenty-First Century is by Matthew Kim, Professor of Economics at the University of St. Thomas. Kim’s remarks were written for a discussion on economic justice that took place on February 5 at the Terrence J. Murphy Institute for Catholic Thought, Law, and Public Policy. Panelists were asked to respond to Piketty’s book from from their specific disciplinary concerns—in this case, Kim’s perspective as an economist—rather than to respond more broadly.

Please do not cite these remarks without the explicit permission of their author.

This is the sixth post in our forum, which kicked off with an introductory post, where you’ll find an index of all the posts in the forum.


For the benefit of those who may not have found time to read all 700 pages of the book, let me provide a very brief overview of some of Piketty’s argument, which I will follow with an even briefer summary of a few praises and critiques of Piketty’s work from my perspective as an academic economist.

Summary

Piketty is concerned about many things in his book, but arguably, chief among them is the evolution of “capital” within a nation’s economy and how the capital evolution can explain income inequality both across nations and over time. (Piketty uses the terms “capital” and “wealth” interchangeably.)

Piketty identifies what he calls the “Fundamental Force for Divergence,” the mechanism that generates a concentration of wealth (and, in turn, income) among the economic elite in society. That mechanism is characterized by the mathematical inequality r > g, where r denotes the average annual rate of return on capital (including profits, dividends, interest, and other income, that flows from capital) and g denotes the rate of growth of the economy (that is, the annual increase in national income or output).

With respect to the logic of r > g, Piketty explains,

When the rate of return on capital [r] significantly exceeds the growth rate of the economy [g] . . . then it logically follows that inherited wealth grows faster than output and income. People with inherited wealth need save only a portion of their income from capital to see that capital grow more quickly than the economy as a whole. Under such conditions, it is almost inevitable that inherited wealth will dominate wealth amassed from a lifetime’s labor by a wide margin, and the concentration of capital will attain extremely high levels… What is more, this basic force for divergence can be reinforced by other mechanisms. For instance, the savings rate may increase sharply with wealth. Or, even more important, the average effective rate of return on capital may be higher when the individual’s initial capital endowment is higher. [In other words, the divergent force may be even stronger at higher levels of wealth.] (26)

In summary, Piketty’s central thesis is that periods of increasing inequality occurred when r > g, whereas periods of decreasing inequality occurred when r < g. He argues that r > g is the historical norm for most of antiquity to the present; for a relatively brief period of decreasing inequality (during the middle of the 20th century), r < g. Piketty argues that moving into the 21st century, we should fully expect r > g again—and, if his thesis is correct, a corresponding return to increasing inequality of income and wealth.

One of Piketty’s boldest proclamations is his prescription for how a society could avoid the deleterious effects of r > g . . . and that is basically to impose a global progressive tax on capital, which would effectively reduce the magnitude of r.

Praises

First, Piketty’s book is very well written. Comparing Piketty’s writing to that of the typical economist is like comparing a Shakespearean sonnet to a refrigerator owner’s manual.

Second, Piketty rightly encourages economics, as a discipline, to migrate back toward questions of social importance. To be clear, there are plenty of economists that have already migrated (or never left in the first place), but there is also a non-negligible number of economists that still need to get the memo.

Third, Piketty undertakes a monumental and laudable task of compiling and analyzing reams of historical data to carefully document the evolution of income and wealth distributions spanning both time and space.

Fourth, Piketty is a great theorist in his own right—yet his book contains little to no formal theory. That Piketty is able to exposit the formal theory but chooses not to is a testament both to his ability to extract the merest essential components from complex ideas and to his ability to communicate those complex ideas using non-technical language. (However, the lack of formal theory, in some instances, could be construed as a liability, which I will briefly discuss shortly.)

Critiques

First, virtually all economists (including Piketty) believe in a regularity called the “law of diminishing returns”: that is, as the quantity of some resource increases, the incremental return on an additional unit of the resource is expected to decrease.

For example, suppose my wife and I want to shovel snow off our driveway. The return on obtaining our first snow shovel is relatively high, as is the return on obtaining a second shovel. However, at some point, obtaining an additional shovel will generate a smaller return than the previous shovel—in this case, it would probably occur with the third shovel. Even though this may be an extreme example, the same logic applies to most, if not all, resources.

Therefore, as capital accumulates in society, the return on capital (r) is expected to decrease, which would create a natural counter-pressure to the divergent force of inequality implied by the r > g logic. Piketty acknowledges the law of diminishing returns, but claims that as capital accumulates, r will decrease so slowly that capital will continue to accumulate and concentrate among the wealthy. Piketty devotes a fair amount of non-technical prose to discuss his assertion; however, in technical parlance, the assertion’s validity wholly depends upon the value of the elasticity of substitution between capital and labor. A reader who is interested in evaluating Piketty’s claim regarding the elasticity of substitution is referred to an endnote that, in turn, simply refers the reader to an online appendix (see page 37 and following). Without getting technical, the evidence Piketty’s cites to support his claim is arguably tenuous.

However, the validity of his technical argument is not my concern here. Rather, given 1) the centrality of the law of diminishing returns in economic reasoning, and 2) that Piketty’s central thesis rests upon the “slowness” of the diminishing returns to capital, I would have expected Piketty to anticipate a large amount of push-back on this part of his logic. Thus, regardless of whether Piketty’s technical argument is correct, his choice to relegate such an important argument to an online appendix and provide (arguably) questionable evidence left himself exposed to substantial criticism that presumably could have been avoided.

Second, regarding Piketty’s policy prescription of taxing wealth: he calls his proposal “utopian” in its political viability. This is not my chief concern. Rather, my concern is that, on one hand, Piketty affirms that r and g are not static parameters, but rather are dynamic outcomes of a complex system of choices, institutions, chance events, etc.; yet, on the other hand, Piketty offers no explanation for how r and g might be related in an economy. (This is one instance that a formal theory of wealth inequality would be helpful.)

The concern is that if a national government (or a supranational government) attempts to artificially depress the value of r, say through a global progressive tax on capital, could it generate unintended consequences? For instance, could a tax on capital actually widen the gap between r and g? I am not claiming that this would necessarily happen; rather, I simply emphasize that economists are often concerned with attempting to understand the mechanisms for relationships among economic variables—so the absence of any discussion of how r and g could be related is, to me, a notable omission.