Thomas Picketty on inequalities, the future of Europe and… real estate

A presentation with a "scent of housing" at the 2015 Progressive Economy Forum

Brussels, 4 June 2015 | Published in Economy

The author of the "Capital in the 21st Century", the first-ever economics bestseller to go “viral”, held a presentation at the 2015 Progressive Economy Forum, highlighting housing as a key policy challenge...

Thomas Piketty reflected on long-term trends in inequality, the fragility of the European project and possibilities for institutional reform towards a stronger political and economic union - and in particular to support the Eurozone. He calls for a stronger investment in education, innovation and green technologies, as well as a fairer and more harmonious taxation system across the EU.

While referring to key new policy challenges for Europe Piketty also mentioned the importance of housing and in particular “the access to property for young generations”. The latter has been also identified as part of the so called contemporary “housing trap” in our latest “State of Housing in the EU 2015” report.

To put it very simply, the ratio between wealth and income keeps increasing (i.e. wealth including real estate assets has been increasing much more than the level of incomes over the past decades), and wealth inequality has also been increasing in Europe since the '80s contrary to previous decades.

Housing policies and housing markets have been an important element in these trends. In the current economic context, today there's a sort of problem of 'insiders' vs 'outsiders', and high house prices will contribute to increasing inequalities because within the young generations only those with family wealth will be able to access property.

This poses new policy challenges and calls for changes in taxation and regulation. He also highlights how the transfer from public to private wealth through the privatization of public assets at low prices (including public housing), is proving dangerous in a context of public debt crisis. Interestingly, housing wealth and inequalities is also the theme of the latest ENHR Newsletter editorial, inspired by Piketty’s work.