Thomas PikettyThomas Piketty has been called a ‘rock-star French economist’ and wrote a very large book on global inequality, which became a New York Times bestseller at the end of last year.

You may not personally care too much about the topic of inequality, but what is for sure is that it has the potential to be the most destructive social force facing the future of the world. So getting a basic grip of how to reduce it, is probably a good idea – especially when considering complex issues like ‘how to fix South Africa’.

Thomas Piketty was recently invited to South Africa to deliver the Annual Nelson Mandela lecture at the University of Johannesburg. This is his full keynote presentation:

Some points which really stood out for us:

– We know from historical experience, that extreme inequality of the kind of levels we observe in South Africa is not good for development and growth, and it can also lead to violent reactions and violent events.

– I think it is important to realise that issues of inequality, income, wealth, capital, public debt are not technical issues – these are issues in which everybody must have an opinion because ultimately they are what determine political change.

– So if you look at this historical database that we have collected, probably the most important finding is that we cannot simply rely on market forces and “trickle-down” mechanisms in order to deliver the right level of inequality.

– I think unemployment is more a symptom of inequality, unequal skills, unequal distribution across the territories, where people cannot move to where the jobs are and have not have access to the right skills.

– I think there are domestic solutions to the inequality in South Africa, there are four areas of rights where we need to turn to a policy of effective rights – rights to labour, work for a decent wage, right to high-quality education, right of access to property, and right to economic and political democracy.

– I think it is in the interest of the business community to promote transparency about wealth. If you refuse transparency, it must be there is something to hide. That’s not good. In order to build trust in a country I think it’s very important to have that kind of transparency about income and wealth dynamics.

– I think it’s clear that Europe and North America have a strong responsibility if we want to encourage financial transparency in the world. I think Europe and North America should stop having a double language with Africa, which is on the one hand they always give lessons about governance and transparency etcetera, and on the other hand, their own multinational companies and their own wealthy citizens are the very ones who are benefiting from financial opacity and they are doing nothing at all about it. So it’s really a double language, which I think is absolutely terrible.

– What Africa needs is an international legal system that allows African countries to make multinational companies and wealthy citizens pay their fair tax.

– I don’t think what Africa needs is a new form of foreign aid which, in any case, let me remind you of this basic fact: all aid flows going to Africa are less than the official outgoing profit flows going out of Africa that are paid to owners, in particular in Europe and North America.

– South Africa and Africa are not going to disappear, and I think if these challenges that we have referred to today are addressed adequately, I think that Africa and South Africa are the future of the world.

Needless to say, it is well worth your time [45mins] to watch the whole of Thomas Piketty’s lecture.

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