6. Thomas Piketty at the 13th Nelson Mandela Lecture

Just as Jeffrey Sachs was the last celebrity Economist, the time has come for another and it is none other than Prof Thomas Piketty who has written one of the greatest Economic tomes of our lifetime. I had the opportunity to listen to him speak at the 13th Annual Nelson Mandela Lecture at the historic UJ Soweto Campus. Below I summarise some his talking points.


Piketty begun by generally stating that inequality in South Africa is higher now than 20 years back stemming from both domestic and internationally influenced reasons. Wowza!! Further, that equality and human rights are not enough, more is still required in the form of secure and effective rights. He also raised the fact that Economists often talk of inequality and some of these issues as being too technical for the common man to understand, yet, when broken down, all people can understand it and many often have an opinion and/or solution. The talk was done in three parts: history of inequality, domestic and then international solutions to some of these issues.

History of inequality
  • Capitalism or market-based solutions are not the only solution to inequality. In the West, changes stemmed primarily from the First World War, the Great Depression and the Second World War.
  • Before 1914, the French Leaders felt that the French Revolution had generated in “sufficient” equality and nothing further was required of them.
  • This statement reminds me so much of the post-liberation African political parties that feel that after “winning” independence for the masses, that nothing further was required except to enrich themselves at the populace’s expense. Over time, this has come to explode in their faces as the masses get angry and start to demand more.
Domestic solutions


Proportion of the wealth owned by the Top 10% of the population (in %)

South Africa

60 – 65


50 – 55


40 – 45


30 – 35

  • High unemployment is partly to blame but more as a symptom of deeper structural issues. Here he threw in the example of Greece and Spain that despite having high unemployment levels, have low inequality levels.
  • This inequality then has to stem from the Apartheid system. For instance, of the top 10% that own 60 – 65% of the total wealth in SA, 80% of that list consists of mainly Whites who benefited from the previous system and continue to do so even now. (Aside: never knew hearing the word apartheid could be sexy until Piketty said it Disappointed smile )
    • This reminds me of a comment that my workmate always makes of the fact that Middle class in SA starts with a monthly income level of R4000. Which proves the point that it’s fairly important to interrogate the data particularly when phrases such as “the Black Middle class in South Africa is constantly growing”.
    • Also, race in South Africa is often an indicator for other variables and should not be viewed in and of itself otherwise it can be misread.
  • Possible solutions:
    • National Minimum Wage – set it an adequate level and roll it out across the sectors.
    • Despite (free) primary and high school education, the quality is still inadequate and more must be done (clap, clap, clap as you can imagine from the audience)
    • Property rights – difficult and sensitive topic. Requires far-reaching land reforms and meaningful Broad-based Black Economic Empowerment (B-BBEE), Transparency in terms of who-owns-what in RSA (Side note: Did you see that former president, Mothlanthe neither clapped nor cheered?)
    • Improve the Estate Tax Register in order to better monitor gains and declines in wealth levels. Also, consider an annual progressive tax on net wealth – this could start small and gradually build up.
    • Transparency, transparency, transparency, transparency particularly for the Business Sector.
    • Piketty also talked of considering an employee representative on Company Boards. South Africa does have employee rights to protect its workers, still, there is a feeling that workers often take advantage of this and that employers do not have any rights at all. I can say from my personal experience that wily employers do find ways around these labour regulations and that it is easy to run roughshod over employees. However, this proposal might be an important thing to consider to improve labour relations within the Company.
Lessons from the World
  • Talking through the example of Haiti  and France, Piketty called out the Western nations for their historical amnesia as to how they contributed to today’s inequality. Also, for the double language that they tend to often employ in their dealings with Developing nations.
  • More than aid, this is what Developing nations require:
    • One, international legal systems that force Multi-national CorporatIons to declare their earnings from doing business in developing nations and how much they pay in corporate taxes. This comes back to his whole theme of greater transparency from the Business sector.
    • He also gave an interesting anecdote that if we tested aid levels V. the official taxes paid, we would be surprised to learn that the latter far exceeds the former and that this increases significantly when the unofficial tax outflows are included. This is immoral and must be stopped.
    • Two, develop a World Financial Register for Financial Assets. Although currently in place, it is privately owned and highly decentralised.
Overall thoughts

The talk was not particularly earth-shattering i.e. there wasn’t anything in particular that I had never heard of BUT, you cannot discount how much data work he has done to be able to make some of the assertions he does. His work is based on data collected across 50+ countries for over 100 years. So he does know what he is talking about. I liked though that he gave solutions because often times you go to a talk and ask yourself later, so now what? It was a lovely way to spend my Saturday afternoon and I guess it forced me to write about Economic hard core stuff again after yonks!

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