Comments on: Larry Summers on Piketty

By: Arthur

Arthur — Thu, 15 May 2014 17:40:32 +0000

Matt Rognlie on a comment at Marginal Revolution made the point about the confusion of net and gross return:

http://marginalrevolution.com/marginalrevolution/2014/04/more-matt-rognlie-on-piketty.html

By: Jonathan Bechtel

Jonathan Bechtel — Thu, 15 May 2014 17:15:18 +0000

I haven’t read Piketty’s book yet (still on hold at the library), but based on the reviews it strikes me as a book that economists enjoy reading, but don’t ultimately agree with, but don’t want to say as much either due to fear of backlash or ideological sympathies (like Arnold said).

On the layperson’s side, it seems to have come around at just the right time since it provides an intellectual justification for a style of politics that’s dear to many people’s hearts. The fact that its main argument boils down to a statement that’s easy to read and talk aboug (r > g) is all the better.

I’m looking forward to reading it as I’m sure it provides a lot of excellent insight, but I’m going to guess that I’ll think his work is more useful as a diagnosis than a prescription.

By: MG

MG — Thu, 15 May 2014 13:58:08 +0000

Other nominal adjustments that would further temper an inexorable widening of the wealth gap come to mind: profligacy and “non productive” spending among the elite, as well as productive investment returns that increase consumption by others, charity and other spending on public goods (whether for the sake of society or vanity), inheritance splitting, inability of heirs to hit the same investment home runs their benefactors had (simple reversion to the mean), etc..

Additional, to the extent to which the remaining gap reflects excess returns on risky r’s (think of the truly non-diversifiable, ideosynchractic risks so many of the 0.1% had to beat), one really wonders how much net rent remains for government to be compelled to do something about. And one also wonders, then, how much of the political discourse will be about how to redistribute rents and how much about minimizing them by ensuring the government does not serve as a vehicle for rent seeking.