Harvard economist Greg Mankiw has been a vocal critic of Thomas Piketty's Capital in the Twenty-First Century since its release. His paper for this weekend's Allied Social Sciences Association (ASSA) meeting contains his most recent response. Most of the paper is spent challenging Piketty's argument that a rate of return on capital that exceeds the growth rate of the economy will lead to a return to 19th century conditions in which wealth was primarily inherited rather than earned. But toward the end he challenges Piketty's claim that wealth inequality threatens democracy (emphasis added):
A final possibility is that wealth inequality is somehow a threat to democracy. Piketty alludes to this worry throughout his book. I am less concerned. The wealthy includes supporters of both the right (the Koch brothers, Sheldon Adelson) and the left (George Soros, Tom Steyer), and despite high levels of inequality, in 2008 and 2012 the United States managed to elect a left-leaning president committed to increasing taxes on the rich. The fathers of American democracy, including George Washington, Thomas Jefferson, John Adams, and James Madison, were very rich men. With estimated net worth (in today’s dollars) ranging from $20 million to $500 million, they were likely all in the top 0.1 percent of the wealth distribution, demonstrating that the accumulation of capital is perfectly compatible with democratic values. Yet, to the extent that wealth inequality undermines political ideals, reform of the electoral system is a better solution than a growth-depressing tax on capital.
Contra Mankiw, the Founding Fathers are a vivid illustration of Piketty's point, not a refutation of it.
The United States in the 1780s was controlled by economic elites that were universally white and male and owned considerable capital, much of it (as in the cases of Washington, Jefferson, and Madison) in the form of slaves. So they then created a political system in which power was concentrated among property-holding white men such as themselves, and in which slavery was allowed to flourish. The slave-holding class was able to translate its wealth into political influence, enough to maintain the institution for 77 years after the Constitution was ratified. And the economic power of white men helped keep in place a system in which a substantial majority of the US population was denied suffrage for over a century. They kept in place a system that was, by any reasonable definition, not a democracy.
There's still considerable debate among historians about the relative importance of republican ideology versus the class interests of the founders in shaping the American Revolution and the writing of the Constitution. But no one denies the latter were a factor. And it'd be preposterous to argue that the staggering wealth gap between white men and women and African Americans played no role in the latter's systematic exclusion from political life for most of American history. There was enormous wealth inequality, and the result was a massive betrayal of democratic values in favor of an apartheid system. This is exactly the kind of thing Piketty is concerned about.