In 2013, Thomas Picketty’s book, Capital in the 21st Century was published in English (from its native French) to much acclaim, debate, and consternation. It is one of the most influential economic books of the young century. For those who have not yet read the book (or for those, who read [or skimmed] but forgot, these are the main findings –
Apart from historical anomalies (namely the 1st and 2nd World Wars and their aftermaths), economic growth per capita, globally, is between 1% and 1.5%, per year, on average. Picketty looked at roughly 200 years of data to show that this holds remarkably consistent over time. He denotes this growth, in his model, as the letter G. 
He also looks at the number of years of GDP held in private hands. This is broken out by country and differs due to the wealth of individual countries, as well as their taxing and redistribution policies. This is known as the capital-to-income ratio. He writes this as a percentage, typically between 300% and 600%. 
Picketty calculates the return on capital, on average, to be 5%. This number holds constant against asset classes and the data for which Picketty examines, again going back roughly 200 years. This is denoted by the letter R, in his model. 
By multiplying a countries’ capital-to-income ratio by the average rate of return on capital, post-inflation, pre-taxes, the product is the percent of GDP owned by capital in a given year, per country. 
Picketty’s main argument is that whenever R, the return on capital, is greater than G, the growth rate, globally, income inequality will grow and, increasingly, a given country’s GDP, will be owned by capital and less will be owned by labor, in the form of wages. Picketty believes that we are entering into a period of relatively low growth, so we should expect wealth inequality to rise. 
Picketty makes a distinction between wealth and income inequality. Wealth inequality is typically expressed as the difference in accumulated assets minus any debts between one group and another – ie. The top 1% of the country owns 16 times the wealth of the bottom 50%. Income inequality is slightly different – an example of income inequality would be the difference between the highest paid person at a company (typically the CEO) and the lowest or average paid worker in that company – ie. Bob Iger, the CEO of Disney, makes 1000 times the median Disney worker’s salary. In this essay, I will mostly focus on wealth inequality, though much of what I say will apply to both forms of inequality. 
It is important to note here that Picketty’s findings and methodology have been debated – many economists bristle at the idea of conflating wealth with capital and believe that this skews Picketty’s data. Others point to the fact that Picketty only looks at pre-tax numbers before the government re-distributes wealth from (mostly) wealthy to (mostly) middle-class and poor people. 
For the sake of this essay, I’m going to assume that Picketty is, at least, directionally correct – that, overtime, absent an extraordinary event and / or governmental intervention, the share of a country’s GDP will increasingly be held by those who own capital and that labor will receive an ever shrinking slice of the economic pie. 
Why does this matter? 
Picketty spends very little time examining the social ramifications of this in his book – he is an economist, after all. Assuming that there is a tipping point where inequality rises to a level to make the current system untenable, we have to consider what steps are justified in order to avoid societal instability.
In my episode on Mandatory National Service, I noted that the social bonds that have kept Americans at, more or less, social stability since the end of the 2nd World War seem to be unraveling. A large part of that is the feeling that it is getting harder and harder to get ahead and that many of the basic touchstones for adults in the past – home ownership, children, retirement savings – seem to be increasingly out of reach for a growing portion of young Americans. The ingrained idea of doing better than ones’ parents will apply to a smaller and smaller pool of people. 
It's true that money isn’t everything and that there have been great technological advances in the last 75 years that have both saved time and increased leisure for hundreds of millions of people. The concept of ephemeralization – coined by Buckminster Fuller – explains the tendency over time for technology to do more and more with less and less. For example, A $800 iPhone replaces a dumb cell phone, a camera, a calculator, etc, etc. They have not, however, reduced anger and frustration at elites – in fact, the opposite has occurred.
Americans are much less comfortable with differences in social classes than our European counterparts. As New York Time columnist David Leonhardt says in his latest book, Ours was the Shining Future, “Progress is embedded in the original definition of the American dream”. Progress, of course, can be absolute as well as positional – many can make more money from one year to the next yet still feel left behind after “keeping up with the Joneses”. 
Regardless, many are neither – Leonhart notes that a typical family in 2019 had a net worth slightly lower than the typical family in 2001. He goes on to write that there has not been such a long period of wealth stagnation since the Great Depression. 
For working class men, it’s even worse – According to a paper by Ariel J. Binder and John Bound from 2019, Between 1973 and 2015, real hourly earnings for the typical 25–54 year-old man with only a high school degree declined by 18.2 percent
This is in contrast with the richest capital holders - Per CBS News, Billionaires got 54% richer during the Pandemic.
The inputs to a successful life – education, affordable housing, and healthcare – are getting increasingly expensive and, if you don’t have access to them from your parents or extended relatives, it puts you at a disadvantage you could work out of, say, fifty years ago.  
In other words, the American Dream is in danger.
In order for the United States of America to continue to function as a mulit-racial, multi-identity society, prosperity must be shared widely and fairly. 
Using what we know about Picketty’s formula and the current state of the world, what can be done to turn it around, to make a 21st Century where wealth inequality is decreasing? 
My focus, as par usual, will be on the United States. America has the largest economy in the world and is, when compared to most rich countries, more unequal, in both wealth and income. Using technological and social trends, I’ll predict out the next 75 or so years. As always, these predictions will be wrong – how they will be wrong and why they will be wrong is where the interesting part lies. 
Let’s begin. What would have to occur in order for us to reduce wealth inequality? 
One of the implicit arguments in Picketty’s book is that economic growth closely dovetails population growth - While he doesn’t examine the causal relationship between the two, he does note that the last time income inequality shrank, was also a time of high population growth. Since the year 2000, the global population growth rate Year Over Year has gone from 1.34% to .88%, which is a decrease of roughly 40%. In the United States, the decrease was not as drastic but was still down – 14.182 births per 1000 women to roughly 12. This trend is expected to continue into the near future. 
Before we examine what can be done to reverse this trend, a word from our sponsor. 
So, what can be done to increase the birth rate?
The good news - The number of children that women want to have is right around replacement rate, 2.1 per woman, which is the same as they wanted to have in the 1960s - the change then is not the number of children wanted, not in the US, at least. In order for the economy to grow, if we follow Picketty’s logic, we would have to increase both numbers – the number of children women want to have and the number of children women end up having.
How do we increase the number of children women want to have while respecting the choices that women make about family sizes?
In the short term, I don’t think there is much that can be done. 
In a 2020 article from the Institute for Families Studies called Pro-Natal Policies Work, but They Come with a Hefty Price Tag, writer Lyman Stone notes:
We can calculate how large of a program would be necessary to lift American birth rates to replacement-rate around 2.07 children born per woman. In 2020, the total fertility rate is probably around 1.71 children per woman. Thus, to reach 2.07, we would need a 21% increase in birth rates. To accomplish this, we would need the present value of child benefits to increase by somewhere between 52% and 400% of household income. For the median woman, this would mean providing a child benefit for the first 18 years of a child’s life worth approximately $5,300 per year in addition to currently-provided benefits, with the range running from $2,800 more per year to $23,000 more per year. 
Ouch. That’s going to be hellaciously expensive. Unfortunately, we start where we are and not where we want to be. The federal debt levels are expected to hit 2X GDP sometime in the next 20 years, per the Penn Wharton Budget model. The looming military showdown with China over Taiwan has been predicted for the last few years and has not subsided from the American political psyche, unfortunately. Spending on Healthcare and Social Security is not likely to decrease anytime soon, due to the strong political opposition from elderly Americans.
Leonhardt points towards the revitalization of unions as a key component of achieving higher wages for the average worker – he estimates that unions are able to gain raises equivalent to 10 – 20% over a non-unionized worker. Pay transparency laws will also play a role in ensuring that corporations are not able to take advantage of low information employees. A growing political consensus around the importance of blue collar workers should also give rise to low cost training programs that would enable millions of Americans, if done correctly, to move from low wage service roles into middle class jobs. 
However, despite political consensus around the importance of these topics, legislation to enshrine these workers rights have been slow in passing – for example, only 8 states have pay transparency laws, as of April 2023, per NerdWallet. Funding for expanded vocational programs has also been slow in coming. If political gridlock is likely to occur after the 2024 election, which I predicted it will (check out my first episode for more information there), where does that leave us?
Barring great technological leaps forward (breakthroughs in Asteroid Mining, nuclear fusion, improved efficiencies in solar, wind, or carbon capture, etc), it’s unlikely that the economy grows rapidly enough to escape the growing debt to GDP ratio crisis without increasing taxation to levels not seen since the 1930s and 1940s. This is doubly true should a war or other catastrophe occur – part of the justification for tax rates of over 90% for high income earners was to pay for the war economy of WW2. 
Pickety calls for a tax rate of around 80% for the wealthiest, as well as a global wealth tax. While the cooperation requiring a global wealth tax has not materialized since his book was published 10 years ago, calls for a domestic wealth tax have increased over the ensuing years. 
If enacted, a wealth tax would achieve a couple of big things: 1. It would reduce wealth inequality by lowering the returns on capital that make up the bulk of the wealth of the ultrarich 2. Provide funding to the federal government above the typical tax inflows. 
How much more?
A 2% domestic wealth tax on those with wealth over $30M could bring in about 415B a year, per a Business Insider article from 2022. The wealth tax would be a brand new form of taxation in the United States and would require training and additional hiring at the IRS but, assuming it could be done relatively easily, let’s use $400B a year as the likely additional revenues on a wealth tax. 
Back to the federal debt – While there is some disagreement among economist, a federal debt to GDP ratio of 200% is considered a redline for many – Picketty mentions the United Kingdom after the second World War as an example. In other words, it’s likely, given budget projections, short of massive cuts to government spending, that income taxes (and likely capital gains taxes) will have to drastically increase to avoid defaulting on the debt.
President Biden’s proposal to more aggressively target offshore tax havens for the wealthy may also delay default but, given the Congressional Budget Office projections averaging $2T budget deficits from 2023 to 2033, we’ll get there sooner rather than later.
Presuming that this will happen, the wealth tax then becomes imperative. Increasing the birthrate requires stability and predictability – the dropping birthrate is, in some ways, a result of disappointment and disillusionment in the hope for a better future by the youth.
The idea of a wealth tax may be gaining traction - Bill Gates, Abigail Disney, and 250 other ultra wealthy people have called on global governments to enact one in a recent open letter, per a Business Insider article. Disney ties calls for a wealth tax to fight climate change, chiding the ultra-wealthy for having a disproportionate impact on the planet. 
In Robert Pindyck’s book Climate Future, the author clearly lays out what we know, what we don’t know, and why we need to act sooner, rather than later, on climate change. There are also crucial questions that need to be answered – do we aim to get to carbon neutral? Carbon negative? Do we focus on mitigation or adaptation? Are carbon markets the best way to curb the use of fossil fuels or is a more heavy handed, governmental led approach needed?
All these questions have a price tag attached to them. 
From a 2019 article on Yale Environment 360, the price tag of a 100% renewable grid in the US is roughly $4.5 T. If we passed a wealth tax and that money went strictly to the goal of achieving a 100% renewable energy grid, we could do it in 10 years, with the current technology available. 
I realize that a wealth tax as a means to limit the harms of climate change may be controversial – it has never been done before and does have real downsides – if most Americans don’t have “skin in the game”, they’ll be less likely to participate in activities that drive us towards this goal or be motivated to control costs. 
An alternative way to raise the money would be to raise taxes through Congress on all Americans, using progressive tax brackets which place the largest burden on the wealthiest but apply a smaller tax to everyone else. If concerns about the federal government allocation of this spending arose, the money could be doled out to the states based upon their population along with guidelines for the spending but allowing for the states to achieve these goals as they saw fit. 
States that already have a significant amount of their power coming from renewable sources would be in favor of this plan, especially if they were allowed to use unspent funds on other priorities, once they achieve a 100% renewable energy grid.
In a Nasa authored paper entitled Space Based Solar Power, it’s noted that “The International Energy Agency estimates that to reach net-zero, the world will need to reduce its use of fossil fuels from 80% of the total today to slightly over 20% by 2050…. However, the EIA projects that by 2050, 44% of U.S. electricity will still come from fossil fuels. Per a McKinsey Consulting paper entitled An Affordable, reliable, competitive path to net zero, “The remaining…emissions reductions needed by 2050 are expected to come from technologies that are currently in the early market stage (for example, lithium-ion energy storage, onshore wind power, and passenger battery EVs).” 
These are real issues with the movement that calls for the installation of solar, wind, and nuclear power on a massive scale. However, without climate mitigation, it’s unlikely that the stability needed to grow the population will occur. One of the biggest takeaways from Climate Future was that so much of climate change is supposition – not the idea of it being man made (which virtually all knowledgeable scientists agree on) but that we really don’t know what the impact on rising temperatures will be on a localized level, whether or not a “boomerang” effect (going past a 2 degree rise in Celsius only to return to a rate around 1.5 degrees) is feasible, or what the right mixture between mitigation and adaptation should be, from a public policy, cost-benefit standpoint. Climate Change is a pain box – we just don’t know yet how bad the pain will be.
Putting aside the climate change issue, let’s return on what other steps can be taken to raise population levels. Some have put forward additional immigration as a solution to lower fertility rates. This is not a popular policy with a large portion of Americans – in a 2023 Gallup poll, 40% of Americans say they want immigration decreased. If you add the percentage of those polled who want the levels to remain the same or are unsure, 55% of adults either want immigration to decrease or stay at the same levels. 
It’s likely that given where we are in 2024 – a place with high and rising debts, low birth rates, and political gridlock – things will get worse before they get better. 
However, let’s look at areas where, over the next few decades, things could get better.
Let’s suppose, for a moment, that fighting climate change is not a hopeless battle and that either through blind luck or technological breakthrough or climate’s resilience that we are able to retain stability and the world looks very similar to the one we see today. 
With that framework, let’s look at what could happen, given the likely trend of current technologies, as it pertains to productivity and the economy overall. 
I talked about artificial intelligence in the last episode. I was skeptical about short term, large shifts in the economy due to AI. However, when we extend the time horizon, the possibilities change. 
From roughly 2050 to 2075, the full power of AI will likely begin to bloom. If artificial, greater than human intelligence can be achieved by this point, which is 20 years after the upper range of dates Vernor Vinge outlines in his 1993 essay entitled The Coming Technological Singularity, there will be no telling of what technological wonders will be achieved. If laws are enacted that find an equilibrium between human rights and commerce, it’s possible that AI could be a tool that would massively increase productivity. Assuming that this is true, and that this bounty is, due to a global set of laws and enforcement, shared widely, this could radically change what we know of global capitalism. More on that later. 
By this point, we should see advances in green steel and hydrogen, nuclear fusion, carbon capture and sequestration. This will put us on much firmer footing should the Earth warm 2 degrees more than pre-industrial levels by this time. An AI powered Smart Grid would maximize energy efficiency while ensuring that power is available whenever and wherever it is needed. 
By 2075, advances in nanotechnology, biotechnology, predictive sensors, and pharmaceuticals will, barring legal, moral, or ethical concerns, allow for significant de-aging. To be clear, I haven’t seen any research that allows for aging to reverse – I don’t think we’ll ever see this. I think we will see the number of quality years increase – I think 80 may in fact be the new 50, when it comes to productivity. 
To the degree to which human intelligence and capabilities still drive GDP, de-aging would increase productivity significantly. It could also drastically reduce government spending on programs that benefit elderly citizens (Medicare and social security being the two largest). Given concerns about these programs “eating” domestic spending, this would serve as a massive boon to the economy and allow for the government to redirect resources to any remaining bottlenecks (housing being a likely remaining bottleneck).
I also expect to see, around this time, advances in asteroid mining. In a 2022 article in Harvard International Review by Shriya Yarlagadda, The costs are currently cost prohibitive to make asteroid mining more than science fiction but, “Asterank, which measures the potential value of over 6,000 asteroids that NASA currently tracks, has determined that mining just the top 10 most cost-effective asteroids–that is, those that are both closest to Earth and greatest in value–would produce a profit of around US$1.5 trillion. There is also great potential for further expansion. One asteroid, 16 Psyche, has been reported to contain US $700 quintillion worth of gold, enough for every person on earth to receive about US $93 billion.” Cheap asteroid mining, powered by AI nanotechnology, could be used to obtain rare metals and elements at very little cost, given the alternatives – war, upheaval, and environmental destructions – of harvesting them on Earth.
On the energy front, by 2090, I expect to see Solar Based Solar Power, or SBSP, become a much larger part of the clean energy portfolio. For those unfamiliar, per a recent Nasa report, “an SBSP system collects solar energy in space, converts that to microwave or optical laser energy, and transmits that energy to the Earth. A ground station receives the energy, converts it to electricity, and delivers it to the power grid for use. The rate and intensity of worldwide research into SBSP has seen significant growth: The number of publications on the topic nearly doubled from 2018 to 2022, with most of the research concentrated in China, the U.S., the European Union (EU), Japan, and Russia.” Though the paper notes that this is likely not worth examining until 2050, due to high costs of materials and space travel, given America’s long history with space exploration, SBSP could be used to power regions not well suited to wind or solar and to build diplomatic ties with other countries unable to domestically, cleanly power their energy grids.
What if, after all of these technological marvels, the birth rate remains low?
Human cloning is a very controversial topic that raises ethical and religious concerns for many. Regardless, if the number of children born continues to decrease, drastic measures could be taken to achieve a population level that ensures humanity will continue should world war, pandemic, or pestilence occur. Human cloning is a “last gasp” effort to only be considered when other efforts have failed. This is also assuming that a significant portion of humanity has not moved off Earth. If human cloning is used, there would be moral issues – presuming that women would carry the clone, who would pick the donor? Would there be limits to who could be a donor? Would they need to give consent? 
Regardless, by the year 2100, we could be living in something approaching a post-scarcity society, rendering much of Picketty’s formulas obsolete. Robots and nanotechnology, created by Von Neumann machines, powered by renewable energy could do all and any movement of physical goods and services. Information could be, if in the public domain, accessed by all at no cost. AI powered educational software would allow anyone, anywhere, to learn anything. The remaining work needing human labor would be extremely rewarding, both emotionally and monetarily (assuming money still exists). 
All of this assumes, of course, that law makers are up to the task of a world where reward and work are de-coupled.
Hey - It may just be a dream but it’s a nice dream. 
Thank you for listening to this episode of Elegant Ramblings. If you’ve enjoyed what you’ve heard, please consider liking and subscribing to the channel on iTunes or YouTube. I will have show notes below if you’d like to check out our sponsor or any past episodes. We’ll be back in a couple of weeks. Hope you enjoyed. Bye for now.