Rising inequality in the EU : the elephant in the room: Chapter 2

Rising inequality is the elephant in the European room: everybody knows it is there and that it is an obvious problem, but no one wants to either discuss the problem or address it. Macroeconomic issues have taken the front seat, andinequality might be dropped in the conversation when it has relevance from a macroeconomic perspective: maybe we should reduce inequality to fight secular stagnation (Fitoussi and Saraceno, 2011), especially because inequality can be self-reinforcing through secular stagnation; maybe we should reduce inequality toenhance growth in a world of credit-constraint households, because growth is the final goal of our policies (Birdsall et al. 1996). The fact that, maybe, we should aim for socio-economic equality for itself and not for some other macroeconomic objective seems to have disappeared in th epresence of other urgencies. Paradoxically, Thomas Piketty’s Capital in the 21st Century has spurred a global debate, but not a European one. The Capital is on everybody’s lips from New-York to Hong-Kong through Rio, but not in Brussels—although it is in everybody’s mind, hence the Elephant in the Room. But, perhaps it is so because Piketty has placed attention on high and very high income, which is less of a subject in stagnatingeconomies.