"The real danger is when the ultrariches have an excessive political weight"

For the economist, in the United States, the influence of the very fortunate on the programs of the candidates, therefore on their decisions, "is massive".

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Thomas Philippon is a professor of finance at New York University. He was Economic Counselor to the Minister of Finance Pierre Moscovici (in 2012-2013) and has just published The Great Reversal. How America Gave Up on Free Markets edited by Belknap Harvard (368 pages, untranslated).

France has managed to build after the war a social and fiscal system based on solidarity. How did the richest then accept it?

The second world war had two fundamental effects. The stock of capital has been destroyed: families that had a lot of capital have lost a significant part of it, everything has to be rebuilt. The level of inequality is then very low. This creates an almost unique starting point in the history of the world. Equally important, the war effort has meant that from the richest to the poorest, all feel on the same boat.

Again, there are few examples in the history of the world where nations agree on a common goal. This unifying effect allowed liberal democracies to create a welfare state system, social security.

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The citizens said to themselves: we have lived in hell together, we are able to ensure a certain solidarity between us. It was obvious at the time, it is much less today. There was a window of opportunity. The financial and economic crises have not had the same effect, it divides, because most often the culprits are at home.

What are the risks associated with the accumulation of wealth of the ultra-rich?

In liberal democracies, the most harmful inequalities are those that give too much power to the richest. Economic inequalities – of income – are very strong, the richest 1% have a big part of the national wealth, but the political influence is even more unequal. If the richest have 20% of the wealth, they capture 80% of the political weight. The real danger is there, when the most fortunate get an excessive political weight.

The interplay of economic inequality with the political system is the barrier that must not be crossed, and yet that's what happened in the United States. The influence of the very very rich on the candidates' programs is massive, so policies that could have an impact on the richest do not pass.

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There can be no reasonable debate about the taxation of inheritance in a country where inequalities are as delusional as in the United States, because the very rich who do not want to be taxed further can mount press campaigns. Europe has institutions that are much better at resisting lobbying, such as the ECB or the European Commission's Directorate-General for Competition, because they have been given a very strong independence.


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