Capital in the 21st Century

[MachineGhost]

This book is ranked #4 on Amazon and was #1 at one time.  From a reviewer:

While Capital in the 21st Century has raised a lot of eyebrows it has not been put into the proper perspective. Piketty's book makes one interesting claim, that r grows faster then g. In other words, the return on capital grows faster than the economy. Because wages almost never grow faster than the economy or productivity income inequality is always on the rise. This is not an important issue in an autocratic or feudal society. The peasants have no real income or wealth and little political power and in communism they may not be democratic societies.

However, in a pluralistic liberal democracy the rising income inequality is a real issue. It is because inequality has the potential to undermine democracy as the wealthy increasingly find ways to "buy" elections on the one hand and to maintain economic and political power on the other. We are witnessing this today right in front of our eyes. However, what is really at issue here is not that wealth and income are concentrated, but that the concentration of wealth undermines capitalism as rent seeking flourishes and entrepreneurial activity and innovation lags. Piketty's answer to the dilemma of having r > g was inadequate and everyone knows it. However, that does not underestimate the underlying problem of what to do about it because it is not sustainable in the long run.

http://www.amazon.com/Capital-Twenty-Fi ... 67443000X/

[MachineGhost]

The data underpinning Professor Piketty’s 577-page tome, which has dominated best-seller lists in recent weeks, contain a series of errors that skew his findings. The FT found mistakes and unexplained entries in his spreadsheets, similar to those that last year undermined the work on public debt and growth of Carmen Reinhart and Kenneth Rogoff.

http://www.ft.com/intl/cms/s/2/e1f343ca ... abdc0.html

[gizmo_rat]

FT's hatchet job was too hasty...

http://www.theguardian.com/business/eco ... y-takedown

and the takeaway (via slashdot), don't use spreadsheets for complex modelling!

http://lemire.me/blog/archives/2014/05/ ... i-mean-it/

[MachineGhost]

Man, this reminds me of that dude from the UK's asset tax plan.  Was he prescient?

Still, Piketty’s global tax has features that make it worth pondering as a thought experiment if nothing else. For one thing, it gets the incentives right. If a global tax on capital were imposed, owners of valuable assets such as empty lots might be more likely to put them to good use, or sell them to someone who could, to cover the tax bill. (American writer Henry George had the same idea in the 19th century with his famous single tax on land, designed to reward development but not speculation.) For another, a wealth tax captures resources that other taxes miss. The income tax doesn’t cover unrealized capital gains, which represent the bulk of the wealth of people such as Gates, Warren Buffett, and Carlos Slim. Stanford University economist Ronald McKinnon wrote a 2012 Wall Street Journal op-ed called “The Conservative Case for a Wealth Tax.”? (He now says his tax would be lower than Piketty’s, and flat, not rising with wealth.)

http://www.businessweek.com/articles/20 ... crazy-idea