Thomas Piketty: “Time for the EU to move forward, further and stronger, with a small number of countries”

Voxeurop: You co-direct the World Inequality Database. What impact will the pandemic have on inequality? 

Thomas Piketty: The pandemic will increase inequality, and even if we don’t have all the data, we already see that low income and precarious workers have taken huge losses, while the more wealthy have reduced consumption and increased their savings capacity. Wealth inequality will be on the rise again. 

In itself, the free movement of investments, goods and services is no bad thing — on the condition that there already exists a system of common rules, especially a common regulation and taxation system for capital income and corporate earnings. The mistake was to go ahead with free trade agreements without considering such things as information sharing or a fair tax rule for those unable to simply change location and evade any obligations. We’ve built a machine which allows only the most mobile and powerful economic actors to evade taxes at the push of a button, after they enrich themselves while enjoying a country’s infrastructure, healthcare, etc. 

It’s a machine that ensures Europe — and globalisation more generally — is hated by the least mobile classes, the working and lower-middle classes. As a European and social-federalist, it is deeply saddening to see, poll after poll, referendum after referendum, that it’s the working classes who exhibit the strongest scepticism.

The political consequences are terrible. The idea that it’s some unique folly of the British that led them to Brexit seems an illusion. The European institutional system was originally conceived as a free-trade area for goods and services. No real need for budgets or taxation. And therefore no real need to go any further in terms of political integration, especially not by a majority vote.

In relation to what you develop in your last two books, Capital and Ideology and Socialism at Last, how would you analyse those promises of equality broken by social democratic parties?

This brings us back to the European question. One limitation for the social democrats in Germany, France, Sweden, etc. is that from the 1950s up the 80s and 90s they managed to create welfare states — systems facilitating access to healthcare, pensions and education, among the most successful in the world, and still very robust — but since the 80s and 90s they’ve been hampered by a lack of any international vision beyond the nation state. In a globalised economy, it is very hard to maintain the social and fiscal consensus to finance such welfare states, while member countries engage in a tax competition, each fighting their corner. Nobody is going to join all these welfare states together. But when it comes to the global financial system, and new challenges, especially energy and climate change, and then funding the whole thing and imposing rules on the world’s most powerful economic actors — in order to redefine itself for the 21st century, social democracy absolutely needs this international focus.