Are governments just helpless observers?

A book by Prof Thomas Piketty, a French economist, is causing fierce debate, some pretty angry, among interested parties. In the book Prof Piketty seeks to demonstrate that the rich do not deserve the amount of money they make. Capital is inherited and the returns on capital are far higher than that on labor. The earnings of ' supermanagers ' are not deserved, the rich get richer and use their wealth to influence laws to their own advantage. Then there are millions of ' petits rentiers ' who live on their pensions, collected wealth and assets which they pass on to their children. There was a massive destruction of inherited wealth during World War II which led to a prolonged period of growth in which everyone benefited. Therefore, he recommends very high taxes on millionaires. Which is what is causing anger and which is what Francois Hollande has done, resulting in the flight of rich people to other countries. There are others who argue that global capital has imposed discipline on governments so that bad policies result in a flight of capital and a fall in growth. In a democracy such governments will lose elections. The growth in the Indian economy has been parallel to global growth. Hence, there is not much governments can do. This does not explain why foreign investors poured $24 billion into Indian stocks last year when our growth rate fell to 4.6%. Maybe because economists can precisely calculate inflation, interest rates and even effects of bad weather on agriculture but they cannot forecast what human beings will do. Alan Greenspan, Chairman of the Federal Reserve in the US from 1987 to 2006 was an intelligent and erudite man but was influenced by Ayn Rand, who believed in individual freedom without government interference and in the pursuit of wealth, even if it resulted in the death of the poor. Greenspan was responsible for very low interest rates which built up the property price bubble leading to the subprime crisis. Part of this money came to India, stimulating growth. While the economy was growing the Congress gave away vast sums of money in social schemes so that when the growth rate fell there was no money to stimulate the economy. Bill Clinton left behind a budget surplus but as soon as George Bush became president in 2001 he cut taxes which benefited the rich and increased inequality. At the same time he started the wars in Afghanistan and Iraq, leading to massive deficits. Perhaps, governments are not helpless but human beings are unpredictable. Greed and stupidity cannot be calculated.