Lawrence Summers has written an excellent article on the current economics rock star Picketty.
http://www.democracyjournal.org/33/the-inequality-puzzle.php?page=all
http://en.wikipedia.org/wiki/Thomas_Piketty
The Frenchman earned his PhD when he was 22 and became a professor at MIT at 22. He now heads an institute he spurred in France.
Picketty probably will get Nobel Prize for his monumental work in wealth inequality studies.
I haven't yet read his 700-page highly acclaimed recent book Capital in the Twenty-First Century.
Lawrence says "His argument is that capital or wealth grows at the rate of return to capital, a rate that normally exceeds the economic growth rate. Thus, economies will tend to have ever-increasing ratios of wealth to income, barring huge disturbances like wars and depressions. Since wealth is highly concentrated, it follows that inequality will tend to increase without bound until a policy change is introduced or some kind of catastrophe interferes with wealth accumulation."
It is very unlikely that a serious wealth tax is imposed as a policy towards correcting ever increasing inequality in any democracy any time soon but Picketty's theory will be the central analysis for years to come when addressing inequality.
r>g, in which the rate of return on capital exceeds the growth rate
I have never seen such a simple expression (even simpler than e=mc^2) that pinpoints to the cause of a huge global social issue.
Anyone who invests substantial savings in stocks will see the evidence to Picketty's profound statement. I have seen its effect in my own stock portfolio.
This is a chart showing Dow index growth during the last 100 years. The returns to the investor includes dividends and capital appreciation. The chart is only showing the capital appreciation.
Of course, there are ups and downs. A small time investor tends to pull out when the stocks seem to be collapsing and a big investor can afford to wait it out and tends to gobble up more when that happens. The result is even greater returns for capital investor than the chart reflects.
Investing in stocks is a passive activity with enormous perhaps undeserving returns. I don't think capital investing is an intellectual activity; it hardly requires any effort. What it needs is probably guts.
http://www.democracyjournal.org/33/the-inequality-puzzle.php?page=all
http://en.wikipedia.org/wiki/Thomas_Piketty
The Frenchman earned his PhD when he was 22 and became a professor at MIT at 22. He now heads an institute he spurred in France.
Picketty probably will get Nobel Prize for his monumental work in wealth inequality studies.
I haven't yet read his 700-page highly acclaimed recent book Capital in the Twenty-First Century.
Lawrence says "His argument is that capital or wealth grows at the rate of return to capital, a rate that normally exceeds the economic growth rate. Thus, economies will tend to have ever-increasing ratios of wealth to income, barring huge disturbances like wars and depressions. Since wealth is highly concentrated, it follows that inequality will tend to increase without bound until a policy change is introduced or some kind of catastrophe interferes with wealth accumulation."
It is very unlikely that a serious wealth tax is imposed as a policy towards correcting ever increasing inequality in any democracy any time soon but Picketty's theory will be the central analysis for years to come when addressing inequality.
r>g, in which the rate of return on capital exceeds the growth rate
I have never seen such a simple expression (even simpler than e=mc^2) that pinpoints to the cause of a huge global social issue.
This is a chart showing Dow index growth during the last 100 years. The returns to the investor includes dividends and capital appreciation. The chart is only showing the capital appreciation.
Of course, there are ups and downs. A small time investor tends to pull out when the stocks seem to be collapsing and a big investor can afford to wait it out and tends to gobble up more when that happens. The result is even greater returns for capital investor than the chart reflects.
Investing in stocks is a passive activity with enormous perhaps undeserving returns. I don't think capital investing is an intellectual activity; it hardly requires any effort. What it needs is probably guts.
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