You don’t have to be an economist to worry about rising inequality (in fact it’s probably better if you’re not an economist, because most of them don’t seem to be much bothered by it). But on the list of existential problems that we apparently cannot solve, inequality ranks even above global warming. And what is really infuriating is the persistent cant of governments everywhere about it. Inequality and social deprivation are, we are told, regrettable and inescapable difficulties that mar an otherwise excellent system, like the exhaust fumes from a 3-litre smooth-running, straight-six BMW engine. They are, in other words, bugs.

No they’re not: they’re features. They are what the capitalist system produces in the course of its normal operation. And inequality is getting worse. In fact, in some countries it’s reached alarming levels — alarming because it frays the social fabric that makes civilised life possible.

But somehow the debate about inequality seems to have stalled. Instead people obsess about the ‘growth’ needed to pull us out of ‘austerity’. All of which makes the publication of a new book by a young French economist, Thomas Piketty, so interesting and timely. It’s entitled Capital in the Twenty-First Century and it examines the dynamics that drive the accumulation and distribution of capital and how those forces have played out since the 18th century. (See the graph above, which is based on one of Piketty’s diagrams.) In his book, Piketty presents and analyzes data painstakingly assembled from twenty countries and going as far back as the eighteenth century. He shows shows that while modern economic growth and the diffusion of knowledge have allowed us to avoid inequalities on the apocalyptic scale predicted by Marx, nevertheless the deep structures of capital and inequality haven’t changed as much as the decades after World War II led us to believe. Piketty shows that inherited wealth is rapidly re-assuming its traditional role as the primary source of economic power. And the main driver of inequality — which is the fact that returns on capital tend to exceed the rate of economic growth — today threatens to generate the extreme inequalities that stir social and political discontent and undermine democracies.

John Cassidy has a terrific long piece about Piketty’s book in this week’s New Yorker. The Berkeley economist and blogger, Brad de Long, has also compiled a useful compendium of reviews of the book that have appeared so far. For me, the really significant aspect of Piketty’s work is that he shows how economics is inextricably bound up with politics — an idea that is anathema to an economics discipline that until recently was busily trying to emulate physics (without bothering to do what physicists have to do, namely to check their work against physical reality). Economics used to be called “political economy”, which was a good description of what the discipline ought to be, even today. Especially today.

The implication is that if we want to do something about inequality, then we have to take political action to bring the rate of return on capital into sync with wages and earned income. This happened briefly in the 20th century because two world wars and a depression destroyed a lot of capital. But the old dynamic has reasserted itself, with a vengeance, and inequality is set to rise to 19th century levels or worse if we don’t do something about it. The obvious way to do it is via a serious, global taxation regime on wealth. The system won’t fix itself, because it can’t. Inequality is one of its products, remember.

There’s a truly astonishing piece by Mark Danner in the New York Review of Books about how the ‘legal’ basis for bulk collection and warrantless wiretapping was laid. The program was originally code-named Stellar Wind. Here’s an excerpt that gives the general flavour; the date is March 10, 2004:

John Ashcroft has been in intensive care for nearly a week. Though Ashcroft is the chief law enforcement officer of the United States—and though it is the attorney general’s signature that is required to recertify Stellar Wind—no one seems to have thought it relevant to tell the commander in chief. No matter; Bush telephones intensive care, insists on speaking to the heavily sedated Ashcroft, and tells him he is sending over his chief of staff and White House counsel “to talk to him about an urgent matter.” What follows is the famous Hospital Room Showdown, the great melodramatic set piece of the Bush administration, which features, as Barton Gellman describes it in the superb Angler: The Cheney Vice Presidency, “men in their forties and fifties, stamping on the brakes, abandoning double-parked vehicles, and running up a hospital stairwell as fast as their legs could pump.”

The White House men were clutching the paper they were determined to persuade the attorney general to sign, and the Justice Department lawyers, led by James Comey, Ashcroft’s deputy, were determined to prevent him from signing it. They converged in a hospital room around the IV-festooned body of the ailing attorney general, who “looked half dead.” Nonetheless, Gellman tells us, in the midst of this coven of lawyers, like some unvanquishable horror movie character, Ashcroft “raised himself up stiffly” off the bed.

He glared at his visitors and said they had no business coming. He gave a lucid account of the reasons that Justice had decided to withhold support. And then he went beyond that. Ashcroft said he never should have certified the program.

…If it were up to him now, he would refuse to approve. But it was not up to him. Gesturing at his deputy, Ashcroft said, “There is the attorney general.” Spent and pale, Ashcroft sank back down.

In the face of this defiance, the White House chief of staff and counsel ignore Comey and stride from the room and then race back to the White House where, Bush informs us rather laconically, “they told me Ashcroft hadn’t signed.” Why not? Apparently they didn’t say and the president doesn’t ask. Instead, he decides to overrule the objections of the Department of Justice and sign “an order keeping the TSP alive based on my authority as head of the executive branch.”

It is, as will soon become clear, a momentous decision, though there is no sign he realizes quite how momentous. Still, the president isn’t happy. “I went to bed irritated,” Bush tells us, “and had a feeling I didn’t know the full story.”

I annoyed a lot of people in the industry in December when I pointed out that the NSA and the Internet companies have the same business model: intensive surveillance. So it’s good to see a real expert, Bruce Schneier, lay it on the line.

We don’t know what sort of pressure the U.S. government has put on Google and the others. We don’t know what secret agreements those companies have reached with the NSA. We do know the NSA’s BULLRUN program to subvert Internet cryptography was successful against many common protocols. Did the NSA demand Google’s keys, as it did with Lavabit? Did its Tailored Access Operations group break into to Google’s servers and steal the keys?

We just don’t know.

The best we have are caveat-laden pseudo-assurances. At SXSW earlier this month, CEO Eric Schmidt tried to reassure the audience by saying that he was “pretty sure that information within Google is now safe from any government’s prying eyes.” A more accurate statement might be, “Your data is safe from governments, except for the ways we don’t know about and the ways we cannot tell you about. And, of course, we still have complete access to it all, and can sell it at will to whomever we want.” That’s a lousy marketing pitch, but as long as the NSA is allowed to operate using secret court orders based on secret interpretations of secret law, it’ll never be any different.