Foreign Affairs

227 Pages·2014·2 MB·English

Special Collection
BEST OF PRINT
1. Capital Punishment 1
Why a Global Tax on Wealth Won’t End Inequality
Tyler Cowen
2. The Return of Geopolitics 12
The Revenge of the Revisionist Powers
Walter Russell Mead
3. The Illusion of Geopolitics 24
The Enduring Power of the Liberal Order
G. John Ikenberry
4. Show Them the Money 37
Why Giving Cash Helps Alleviate Poverty
Christopher Blattman and Paul Niehaus
5. New World Order 48
Labor, Capital, and Ideas in
the Power Law Economy
Erik Brynjolfsson, Andrew McAfee, and Michael Spence
6. America in Decay 59
The Sources of Political Dysfunction
Francis Fukuyama
7. Pitchfork Politics 91
The Populist Threat to Liberal Democracy
Yascha Mounk
8. Why the Ukraine Crisis Is the West’s Fault 106
The Liberal Delusions That Provoked Putin
John J. Mearsheimer
9. The Unraveling 120
How to Respond to a Disordered World
By Richard N. Haass
10. China’s Imperial President 132
Xi Jinping Tightens His Grip
Elizabeth C. Economy
BEST OF WEB
11. Bitcoin Goes Boom 145
Will the World’s Favorite Cryptocurrency
Explode or Implode?
Yuri Takhteyev and Mariana Mota Prado
12. Erdogan Loses It 155
How the Islamists Forfeited Turkey
Halil Karaveli
13. Putin’s Brain 160
Alexander Dugin and the Philosophy
Behind Putin’s Invasion of Crimea
Anton Barbashin and Hannah Thoburn
ii foreign affairs
14. Foreign Policy à la Modi 170
India’s Next Worldview
Manjari Chatterjee Miller
15. The Price of Poverty 179
Psychology and the Cycle of Need
Johannes Haushofer
16. Meet Pakistan’s Lady Cadets 188
The Trials and Triumphs of Women in Pakistan’s
Military Academy
Aeyliya Husain
17. Notes From the Underground 194
The Long History of Tunnel Warfare
Arthur Herman
18. Golden Rule 206
Why Beijing Is Buying
Alan Greenspan
19. The Poor and the Sick 210
What Cholera and Ebola Have in Common
Fran Quigley
20. The Myth of the Caliphate 214
The Political History of an Idea
Nick Danforth
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Foreign Affairs Special Collection:
Best of 2014
Editor Gideon Rose Introduces the Collection
We’ve published a ton of great content in 2014, and we’ve picked out ten of our
favorite articles from the print edition and ten from the web to show you just what
we’ve been up to over the last year. We hope you enjoy the collection and come back
for more in 2015.
ON INEQUALITY: ON PAKISTAN’S FEMALE SOLDIERS:
In “Capital Punishment,” Tyler Cohen ex- In “Meet Pakistan’s Lady Cadets,” Aeyliya
plains why French economist Thomas Husain offers an eye-opening account of a
Piketty’s book on economic inequality is small group of women making their way
brilliant but fundamentally flawed. through the Pakistan Military Academy.
ON UKRAINE: ON TUNNELS:
“Why the Ukraine Crisis Is the West’s Fault,” Hamas is only the latest in a long line of
John Mearsheimer’s blockbuster article on groups to use tunnels to wage war. In
Washington and its European allies’ respon- “Notes from the Underground,” Arthur
sibility for the Ukraine crisis, will make you Herman writes that there’s no way to know
rethink your opinion of recent Russian how long drones and the like will last. But
behavior. as long as there is warfare, tunnels will
almost certainly be part of the fight
Visit ForeignAffairs.com for more on these topics—and all our other great content.

Capital Punishment
Why a Global Tax on Wealth
Won’t End Inequality
Tyler Cowen
FROM OUR MAY/JUNE 2014 ISSUE
A model gets a 24- carat gold leaf facial at the Beautyworld Japan 2007 trade
fair in Tokyo, May 7, 2007. (Toru Hanai / Courtesy Reuters)
Capital in the Twenty- first Century. BY THOMAS PIKETTY.
TRANSLATED BY ARTHUR GOLDHAMMER. Belknap
Press, 2014, 696 pp. $39.95.
Every now and then, the field of economics produces an important
book; this is one of them. Thomas Piketty’s tome will put capitalist
wealth back at the center of public debate, resurrect interest in the
subject of wealth distribution, and revolutionize how people view
the history of income inequality. On top of that, although the
book’s prose (translated from the original French) might not
11
Tyler Cowen
qualify as scintillating, any educated person will be able to under-
stand it— which sets the book apart from the vast majority of works
by high- level economic theorists.
Piketty is best known for his collaborations during the past de-
cade with his fellow French economist Emmanuel Saez, in which
they used historical census data and archival tax records to demon-
strate that present levels of income inequality in the United States
resemble those of the era before World War II. Their revelations
concerning the wealth concentrated among the richest one percent
of Americans— and, perhaps even more striking, among the richest
0.1 percent— have provided statistical and intellectual ammunition
to the left in recent years, especially during the debates sparked by
the 2011 Occupy Wall Street protests and the 2012 U.S. presiden-
tial election.
In this book, Piketty keeps his focus on inequality but attempts
something grander than a mere diagnosis of capitalism’s ill effects.
The book presents a general theory of capitalism intended to an-
swer a basic but profoundly important question. As Piketty puts it:
“Do the dynamics of private capital accumulation inevitably
lead to the concentration of wealth in ever fewer hands, as Karl
Marx believed in the nineteenth century? Or do the balancing
forces of growth, competition, and technological progress lead in
later stages of development to reduced inequality and greater har-
mony among the classes, as Simon Kuznets thought in the twenti-
eth century?”
Although he stops short of embracing Marx’s baleful vision,
Piketty ultimately lands on the pessimistic end of the spectrum.
He believes that in capitalist systems, powerful forces can push at
various times toward either equality or inequality and that, there-
fore, “one should be wary of any economic determinism.” But in
the end, he concludes that, contrary to the arguments of Kuznets
and other mainstream thinkers, “there is no natural, spontaneous
process to prevent destabilizing, inegalitarian forces from prevail-
ing permanently.” To forestall such an outcome, Piketty proposes,
among other things, a far-f etched plan for the global taxation of
2 foreign affairs
Capital Punishment
wealth— a call to radically redistribute the fruits of capitalism to
ensure the system’s survival. This is an unsatisfying conclusion to a
groundbreaking work of analysis that is frequently brilliant— but
flawed, as well.
THE RICH ARE DIFFERENT
Piketty derives much of his analysis from a close examination of an
important but generally overlooked driver of economic inequality:
in contemporary market economies, the rate of return on invest-
ment frequently outstrips the overall growth rate, an imbalance
that Piketty renders as r > g. Thanks to the effect of compounding,
if that discrepancy persists over time, the wealth held by capitalists
increases far more rapidly than other kinds of earnings, eventually
outstripping them by a wide margin. To measure this effect, Pik-
etty focuses on the annual capital-t o- income ratio, which expresses
the size of a country’s total stock of wealth relative to the income
generated by its economy in a single year. Capital wealth is gener-
ally much larger than yearly national income— in the case of to-
day’s developed economies, about five to six times as large.
Piketty expertly narrates the story of how that gap has played a
major role in economic history since the dawn of the modern era.
The peace and relative stability enjoyed by western Europe during
the second half of the nineteenth century allowed for enormous
capital accumulation. Unprecedented concentrations of wealth
arose, boosting inequality. But two world wars and the Great De-
pression destroyed capital and interrupted that trend. Those cata-
clysms led to a new, more egalitarian era, shaped by postwar
rebuilding, a strong demand for labor, rapidly growing populations,
and technological innovation. The three decades between 1950 and
1980 were truly unusual; the constellation of economic and demo-
graphic variables that produced prosperity during that period will
probably not be re- created anytime soon.
After 1980, ongoing capital accumulation, slower technological
progress, and rising inequality heralded a regression to something
akin to the conditions of the nineteenth century. But few notice the
33