Am I missing something? Isn't this part of socialist analysis of capitalism from at least back to Marx?
The Marxist thesis is essentially that the bourgeoisie (the rich) exploit the bourgeoisie because they generate more value from the proletariat's work than they pay in wages. Even if one accepts this line of reasoning, it is sort of orthogonal to Piketty's argument. One could imagine a society where the bourgeoisie exploit the proletariat, but, with intelligence, vision, hard work, whatever, the workers can still become members of the bourgeoisie, i.e., the "American dream." Piketty says that, under certain economic conditions, even this becomes impossible.
Marx was espousing a theory. He wrote a manifesto. This is based on data that no one else has bothered to look into.
Yes, Marx argued this; Piketty has an elegant new analysis supported by a lot of newly collected data. The book is in part a rebuttal to Simon Kuznets and others, who argue (plausibly) that capitalism tends to decrease inequality in the long run.
And imagine a philosophical man or woman, gazing up at the clear blue sky and being filled with wondrous thoughts that bring her or him great utility. Thoughts that no amount of money can buy. A simpleton can see nothing there. How can we call this equal? The very blue sky above us is unequal.
But that is the sky - the thoughts come from within. True, but what is a javascript console, just some pale blue sky, to be filled with whatever you want. The simpleton can not derive any utility. A programmer can create anything. How can we call that equal?
But that is just some writing.
And if we let this person publish those thoughts, that script, that site? Then the simpleton can have nothing - the programmer, anything. How can that be equal?
There is no such thing as equality. There is only equal opportunity. Today, more than ever, nobody needs vast riches to achieve that. Perhaps everyone should have the chance to be well-educated, to learn whatever is within their capabilities, to choose to train for the best profession they can qualify for. But that is not "equality", in the sense discussed here.
Mark my words: so long as man can gaze up at a clear blue sky, as long as people are allowed to be friends and to talk, to think and to learn, to create, to share, to communicate - actual equality is a silly, misguided notion.
Look at opportunities - rather than capital results. Forget equality of capital, and look at equality of opportunity.
So imagine if you can't even earn money through a good invention because the money would go to the project's financiers instead of you. This is the sort of world Piketty is worried will return and stifle invention.
You're still drawing lines in the sand whether you're talking about capital or opportunity equality. 'How much inequality is tolerable to the economy?' and other such questions. I haven't studied American capitalism much, but any system becomes weird when you can use/abuse the rules of the system to change the rules of the system. Eventually you start calling it something else.
One of the major points in the interview/book is the amount of inherited wealth, so to turn your example around, the programmer gets decent pay after building something of value while the simpleton who has contributed nothing has a mansion, several vacation homes and a fleet of vehicles. There can be some natural resentment when hearing that story and it's going to be a focus of the inequality debate.
That said, if the main point of a huge book, even among many other smaller points, is an observation so ho-hum that it would make a college freshman's eyes roll, something else is going on. Maybe he proved his obvious thesis in an unusually gripping way. Maybe he proved the obvious threat to democracy in an unusually gripping way. (But why would it matter? Does anyone still think this is a democracy?)
Or maybe all the lefty economists decided implicitly to push this particular warmed-over cliche as a great innovation. Who knows.
What I'm trying to point out with the above is that: We are already assuming that the wealthy have a selfish or non-altruistic motive behind their actions, simply by virtue of them having wealth. If we go down that route, then we essentially need to admit that the problem isn't that the wealthy are selfish, but that their wealth enables them to exert that selfishness much more.
You are most certainly right that this is a flaw of government, or democracy in general. However, it is not a flaw of capitalism. It is, in fact, a virtue of capitalism: that money represents our "vote". But that vote doesn't magically stay with us, it get's transferred every time we "vote", or buy things.
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What difference do their goals make if their suggestions are always the same and guaranteed to turn out badly?
It's not a threat in that sense. Income inequality has existed since the concept of income was relevant. Democracy, as viewed through economics, is part of the long march towards removing that inequality. It's less accurate to say that democracy is threatened by income inequality as it is to say that income inequality is threatened by a well-implemented democracy.
A well-implemented democracy--and I use this qualifier emphatically because I hardly consider America to be one; I barely consider Scandinavian countries well-implemented--depends on equal voice. Equal voice depends on two things: minimum thresholds of education and the strong dissemination and accessibility of information. Or shorter, understanding proposed policy and being able to talk about it.
These dependencies do not function cooperatively with income inequality. Look for people who argue that laws are overly arcane and complex precisely in order to keep lawyers in business. They have a point. Notice that tax code reform is opposed by companies making software to simplify it. Notice the sheer quantity of disillusionment among the population for the ability to do anything. Look at that iconic Tea Party sign demanding that the government leave a government program alone. Keeping income inequality in place is an important profit driver; it is rational to become a monopoly, to have full control over supply of a product, to gouge prices. The paradox of the price mechanism is that, when you subvert it, it reinforces that subversion. It only becomes rational to encourage competition when you look outside of your own self-interest.
The practice of maintaining any income inequality is, at the end of the day, kicking the feet out from underneath democracy. It's by no means a direct attack; it's just intelligent self-defense.
It's the difference between "it sure looks as though the lord of the manor is earning more than he deserves" and, "here are the books showing the lord of the manor took in 2 pounds of rent for every pound that was his by right.".
And Piketty is not even touching on the fact that we know that our financial elites basically rigged the game in 2008.