One key difference between today and the Gilded Age is the extent to which income inequality is driven by wages. Back in those days, you needed a huge amount of wealth to attain a huge income, but today, having the right job can also do the trick.

Jim Manzi at The National Review thinks this deep-sixes Thomas Piketty's theory of economic history. He argues that Piketty's main thesis is that top managers have been gaming the compensation system, and therefore confiscatory taxes can be imposed on them without damaging the economy. When it comes to the U.S., the rest of the book, he says, "is just a sound and light show." Manzi then attacks every aspect of this reconstructed case to show that supermanagers are being unfairly maligned.

You can read the full argument here — but I'm pretty much going to ignore it because I don't think he has earned his first move sweeping most of Piketty's thesis aside. Since the book came out, conservatives (with a few exceptions) have been searching for ways to dismiss Piketty without engaging with his major points. This effort is no more justified than the others.

In fact, the composition of the top of the income distribution is largely irrelevant to Piketty's arguments. There are two prongs to his thesis, both about the ownership of capital (which basically means wealth). Let's label them the "share effect" and the "concentration effect."

The "share effect" argues that the percentage of national income going to the owners of capital is going to increase. The "concentration effect" says that the ownership of capital is going to be in ever-fewer hands. They both mean more inequality of income, but can operate independently. Whether it's supermanagers or some other type of person making up the ultrarich doesn't matter — the point is he predicts those people will end up with more and more of the national income.

Piketty buttresses this case with a sweeping historical database of income and wealth statistics that make it seem quite plausible that these effects are the natural result of a capitalist economy, and the relative equality of the mid-20th century a historical aberration driven by dislocation and war. In fact, Piketty argues, our current grim economy, where the middle class stagnates and basically all economic growth is sucked up by the ultrarich, is capitalism's natural state, absent policies to lean against it.

You can look over the mathematical reasoning in detail here, but the important thing is that both of these things fit recent U.S. history well. Capital is already distributed highly unequally in the United States, and so is income. Both have been increasing since the mid-’70s and show no sign of stopping, consistent with Piketty's argument. Current income inequality driven by wages, and the extent to which that is driven by hyperpaid executives, is an important question, but simply not a major part of Piketty's thesis.

So in the end, I don't think Manzi is justified in tossing all that aside as a "sound and light show." As Piketty notes in his book, capital income accounts for about a third of the increase in income inequality since 1980, and I see no reason to think that proportion won't increase. Absent some kind of action, an American future of patrimonial capitalism looks likely.