The Truth About Wealth Inequality: Better or Worse Than We Think?

About this episode:

Once there were princes and peasants and very few between. The extremes of wealth and poverty are still with us, but that shouldn't blind us to the fact our societies have been utterly transformed for the better over the past century. As Daniel Waldenström makes clear in this authoritative account of wealth accumulation and inequality in the modern west, we are today both significantly richer and more equal.

Using cutting-edge research and new, sometimes surprising, data, Waldenström shows that what stands out since the late 1800s is a massive rise in the size of the middle class and its share of society’s total wealth. Unfettered capitalism, it seems, doesn’t have to lead to boundless inequality. The key to progress was political and institutional change that enabled citizens to become educated, better paid, and to amass wealth through housing and pension savings.

Daniel Waldenström is Professor of Economics at the Research Institute of Industrial Economics (IFN) in Stockholm, Sweden, where he directs the Taxation and Society research program. His new book is Richer and More Equal: A New History of Wealth in the West

Shermer and Waldenström discuss:

• What kind of science is economics & how do economists determine causality?

• Why would one’s political leanings influence cause-and-effect economic theories?

• The difference between being rich and being wealthy. What is wealth?

• Income inequality vs. wealth inequality

• Household wealth: homes and pensions

• Wealth disparity throughout history and what changed in the late 20th century

• Other sources of wealth: offshore monies

• Public-Sector wealth

• Inheritance and wealth inequality

• Effects of wars and taxes on wealth accumulation

• Tax policies and their effects

• The Laffer Curve

• Tariffs