dunnettreader + piketty   26

Piketty Interview - Potemkin Review - 2015
(Deutsch ) Photo: Potemkin Review Potemkin Review met with Thomas Piketty at his Paris office and talked to him about his book Capital in the 21st Century ,… The more interesting sections deal with critique from the left, and his use of wealth in lieu of classic definitions of capital -- most critiques are answered with "I don't believe in the neoclassical framework that I used to illustrate the problem, but it's the only way that most trained economists can be communicated with -- I see myself as more of an historian and sociologist"
economic_theory  macroeconomics  economic_sociology  social_theory  economic_history  inequality  capital  capitalism  1-percent  Piketty  Instapaper  from instapaper
may 2015 by dunnettreader
Andrew Sprung - Reagan Revolution rollback | xpostfactoid - Jan 2015
Thanks largely to Piketty it's become increasingly clear that in the Reagan Revolution, middle class America sold its birthright for a mess of supply-side pottage. Dems willingness to credit GOP dogma -- raising taxes on high incomes and investment gains inhibits growth, deregulation spurs it -- are melting away. Post midterm losses, Dems are beginning to heighten rather than soft-pedal the policy contrasts between the parties. Wounded politically by perceptions that the ACA helps the poor at the expense of working people, they are looking for proposals attractive to the middle class. Emboldened by accelerating growth and employment gains, they are perhaps shedding inhibitions about leveling the playing field between workers and management. (..)To mess up my timeline a bit, Obama delivered a Pikettian narrative in Dec 2013 ..should have been a landmark speech on inequality (..) if he (and Dems) hadn't (tried to) protect their Senate majority. [In the Dec 2013 soeech] Obama zeroed in on policy choices. "As values of community broke down and competitive pressure increased, businesses lobbied Washington to weaken unions and the value of the minimum wage. As the trickle-down ideology became more prominent, taxes were slashes for the wealthiest while investments in things that make us all richer, like schools and infrastructure, were allowed to wither. And for a certain period of time we could ignore this weakening economic foundation (..) But when the music stopped and the crisis hit, millions of families were stripped of whatever cushion they had left. And the result is an economy that’s become profoundly unequal and families that are more insecure. -- terrific links roundup
US_economy  US_politics  Obama  Obama_administration  Reagan  supply-side  trickle-down  neoliberalism  inequality  middle_class  wages  wages-minimum  labor  labor_law  labor_share  labor_standards  Labor_markets  investment  executive_compensation  1-percent  infrastructure  education  education-higher  civic_virtue  common_good  Piketty  economic_growth  economic_culture  distribution-income  distribution-wealth  unemployment  health_care  public_goods  public_opinion  public_policy  elections  political_culture  political_economy  political_discourse  political_participation  Pocket 
january 2015 by dunnettreader
Bichler, Shimshon and Nitzan, Jonathan - Palan on Piketty - New Left Project, September 2014 | bnarchives
In late August, 2014, we received an invitation from the New Left Project to comment on Ronen Palan’s article ‘Capitalising the Future’. Palan’s piece examines Thomas Piketty’s book ‘Capital in the Twenty-First Century’ (2014), and the editors felt it had strong affinities with our approach. The affinities are certainly there (albeit unmentioned). But they are largely superficial. Palan demonstrates little understanding of our framework, and we very much doubt he has comprehended Piketty’s. His article contains so many elementary errors and fallacies that it is unclear how it got published in the first place. [The NLP piece has been revised to make the text less confrontational. For those interested, we also provide the original unedited version.] -- Keywords: futurity leverage, Sokal Hoax, postism Piketty -- Keywords includes "Sokal Hoax" so looks like B&N have vented their ire at posties on the hapless Palan -- downloaded pdf of unedited version to Note
article  books  review  Piketty  capitalism  inequality  capital_as_power  postmodern  capitalization  political_economy  capital  leverage  downloaded  EF-add 
october 2014 by dunnettreader
Raphaele Chappe - Policy Debates In A Post-Piketty World | Schwartz Center for Economic Policy Research - New School
As the ratio of capital to income (which Piketty terms "beta") increases, Piketty argues there is no natural mechanism that would lead r (the rate of return on capital) to adjust downwards so as to perfectly compensate the impact on the distribution, placing emphasis on policies that might reduce r. Taxation is one way to reduce r and Piketty's proposal is a progressive world-wide tax on wealth although many agree that this may prove politically unfeasible, especially in the absence of international legal cooperation. Other tax possibilities for fighting inequality include increasing tax rates on capital gains and dividends (which have been getting favorable treatment in the tax code as compared with labor income), or simply combating tax evasion for the wealthy (see The Price of Offshore Revisited). [Downloaded] In my own research, I plan to run simulations to test the effectiveness of such tax proposals, and their impact on the wealth distribution. -- According to a study written for the Tax Justice Network by a former chief economist at the consultancy firm McKinsey, a global super-rich elite has accumulated an astronomical amount of financial investments hidden in tax havens, at least $21 trillion and as much as $32 trillion of private offshore wealth (as of the end of 2010).
economic_theory  economic_growth  Piketty  inequality  wealth  taxes  tax_havens  1-percent  labor  wages  profit 
september 2014 by dunnettreader
Structuralist Response to Piketty's Capital in the Twenty-First Century | INET
New School Economist Lance Taylor released a symposium of literature on Thomas Piketty’s Capital in the Twenty-First Century in conjunction with the INET-sponsored research project on Economic Sustainability, Distribution and Stability. It includes papers offering a structuralist response to Piketty's explanation of inequality and advancing alternative theories. **--** Thomas Piketty’s Capital in the Twenty-First Century: Introduction to a Structuralist Symposium - Lance Taylor (The New School) *--* Capitalism, Inequality and Globalization: Thomas Piketty’s Capital in the Twenty-First Century - Prabhat Patnaik (Jawaharlal Nehru University, New Delhi *--* Elasticity of substitution and social conflict: a structuralist note on Piketty’s Capital in the 21st Century - Nelson Barbosa-Filho (São Paulo School of Economics) *--* Piketty’s Elasticity of Substitution: A Critique - Gregor Semieniuk (The New School) *--* The Triumph of the Rentier? Thomas Piketty vs. Luigi Pasinetti and John Maynard Keynes - Lance Taylor (The New School -- downloaded pdf to Note
books  Piketty  economic_history  institutional_economics  class_conflict  rentiers  inequality  globalization  capital  capitalism  downloaded  EF-add 
september 2014 by dunnettreader
JW Mason - The Slack Wire: Piketty and the Money View - September 2014
All the empirical material in the book relates to stocks and flows of money. But when he turns to explain the patterns he finds in this data, he does it in terms of physical inputs to physical production. The money wealth present in a country is assumed to correspond to the physical capital goods, somehow converted to a scalar quantity. And the incomes received by wealth owners is assumed to correspond to a physical product somehow attributable to these capital goods. But the production processes that are supposed to explain these shifts are described without any data at all, purely deductively. You would think that if Piketty believed that the share of property income in total income depends on physical production technologies, returns to scale, depreciation, etc., then at least half the book would be taken up with technological history. In fact, of course, these topics are not discussed at all. Terms like “production” and “depreciation” are black boxes, pure mathematical formalism. -- Unfortunately, discussion of the book has been almost entirely about the irrelevant formalism. I think that is why the conversation has been so noisy yet advanced so little. -- the disconnect between the two different Pikettys shows, in a negative way, why what I've been calling the money view is so important. The historical data assembled in Capital in the 21st Century is a magnificent accomplishment and will be drawn on by economic historians for years to come. Many of the concrete observations he makes about this material are original and insightful. But all of this is lost when translated into Piketty's preferred theoretical framework. To make sense of the historical evolution of money payments and claims, we need an approach that takes those payments and claims as objects of study in themselves.
books  Piketty  wealth  capitalism  capital  macroeconomics  economic_theory  economic_models  economic_growth  money  investment  investors  profit  technology  production  productivity  political_economy  financial_economics  financial_system  EF-add 
september 2014 by dunnettreader
Squarely Rooted - I Wrote Way Too Much About “Capital in the Twenty-First Century” — Medium - July 2014
Very thought provoking re changes in the composition and returns to capital -- Depreciation is the great systemic regulator — absent productivity/technology growth, depreciation is an absolute limit on our ability to accumulate capital ad infinitum. Or is it? Depreciation is a law of the physical world, and therefore a limit on the accumulation of physical capital, which many people intensely associate with “capital” in their minds. But it is extremely important not to do so in this context, as Piketty uses capital synonymously with all wealth. And the nature of capital itself is changing What does this mean? It means that the focus on capital as stuff is fundamentally off-base — capital, at least as defined by Piketty, is at least to some degree detached from stuff. This makes more sense when you look at the Q-ratio of many of today’s most valuable firms [Apple et al]. These are all vastly above not just the current national average but the highest the national average has ever been, and by an astonishing amount. But investors believe that these tech companies, which have rapidly become a vast part of the economy, are worth way, way more than the sum of their parts. -- ... all these claims [against assets] are, on a fundamental level, determined by legal and political systems that are mutable by humans. They are not laws of nature. This is most clear in Piketty’s discussion of “Rhenish capitalism,” specifically in the curious phenomenon of the relatively-low levels of German capital relative to income - which vanishes when you compare book value instead of market value of capital - overwhelmingly a Tobin’s Q issue. -- Land, in fact, may be the key to explaining why the returns to capital decline much more slowly than models with traditional assumptions would predict. If you confuse “capital” as Piketty defines it with “machines,” even subconsciously, this would make much less sense. -- Oh, and one last thing — land doesn’t depreciate.
books  reviews  Piketty  economic_history  economic_theory  economic_models  economic_growth  investment  profit  capitalism  inequality  rentiers  landowners  capital  wealth  sovereign_wealth_funds  plutocracy  1-percent  capital_markets  investors  manufacturing  technology  EF-add 
september 2014 by dunnettreader
Brad DeLong - The Four Big Valid Issues People Have with Thomas Piketty's Grand Argument: Friday Focus for June 27, 2014 (Brad DeLong's Grasping Reality...)
I think there are four big valid issues with Thomas Piketty's grand argument: [they're all pretty feeble or wishful thinking unfortunately - DeLong puts too heavy a weight on several of them, producing a guesstimate of 50:50 we will have Piketty world if things left on autopilot] -- see comments, especially Dan Kervick who once again challenges Piketty critics for not reading the last chapters (which don't readily translate into mainstream macro models, so their criticism is generally nonresponsive to Piketty’s historical data and explanations)
Piketty  economic_history  economic_theory  economic_models  capital  wealth  profit  savings  charity  1-percent  economic_culture  status  elite_culture  inequality  political_culture  political_economy  moral_economy  capitalism 
june 2014 by dunnettreader
JW Mason - The Slack Wire: Mehrling on Black on Capital - June 2014
From Mehrking - downloaded pdf to Note -- Black’s emphasis is on the market value of wealth calculated as the expected present value of future income flows, rather than on the quantity of wealth calculated as the historical accumulation of savings minus depreciation. This allows Black to treat knowledge and technology as forms of capital, since their expected effects are included when we measure capital at market value. For Black, the standard aggregative neoclassical production function is inadequate because it obscures sectoral and temporal detail by attributing current output to current inputs of capital and labor, -- It’s familiar math, but the meaning it expresses remains very far from familiar to the trained economist. For one, the labor input has been replaced by human capital so there is no fixed factor. For another, both physical and human capital are measured at market values, and so are supposed to include technological change. This means that the A coefficient is not the usual technology shift factor (the familiar “Solow residual”) but only a multiplier, indeed a kind of inverse price earnings ratio, that converts the stock of effective composite capital into a flow of composite output. -- In retrospect, the most fundamental source of misunderstanding came (and comes still) from the difference between an economics and a finance vision of the nature of the economy. The classical economists habitually thought of the present as determined by the past. The financial point of view, by contrast, sees the present as determined by the future, or rather by our ideas about the future...and the quantity of capital can therefore change without prior saving.
economic_theory  economic_models  economic_growth  macroeconomics  Piketty  neoclassical_economics  financial_economics  capital  wealth  investment  savings  interest_rates  profit  productivity  human_capital  technology  labor  downloaded  EF-add 
june 2014 by dunnettreader
Clarles Andrews Professor Piketty Fights Orthodoxy and Attacks Inequality | Marxist-Leninist thought today - May 2014
First, the world wars were themselves not accidental. WWI was an inevitable outcome of early monopoly capitalism, and WWII was a continuation of the first as well as capital's attempt to obliterate the first socialist society. -- Second, Piketty's almost exclusive metrics are inequality of income and wealth. They are important, to be sure. Let us remember, though, that despite less inequality, most of the period 1913-1950 was hellish for the masses in the capitalist world. They died by millions in WWI, made little economic progress in the 1920s, suffered the hunger of the Great Depression in the 1930s, and died by millions more in WWII. On the other hand, while inequality was high in the late 19thC and up to 1913, the working class did make advances, by militant class struggle largely under the socialist banner, in obtaining fruits of industrial progress.And there is justified nostalgia today for the era after Piketty's exceptional period. In the 1950s and 1960s life got better for a majority of the working people in the US, Britain, and western Europe. The peak of working-class progress was 1973 – after Piketty's focus and years before neoliberalism, financialization, and globalization. Since 1973, real median earnings in the US have stagnated and fallen. That turning point is the fact that demands explanation and action. Piketty recalls the two world wars often. He buries the fact that WWI triggered the first successful socialist revolution in Russia, and WWII provided openings for anti-imperialist and sometimes socialist revolutions, ...
books  reviews  Piketty  political_economy  economic_history  19thC  20thC  21stC  capitalism  WWI  WWII  Great_Depression  labor  class_conflict  unions  revolutions  post-WWII  post-Cold_War  neoliberalism  inequality  wages  Marxist  social_order  EF-add 
june 2014 by dunnettreader
BofA Merrill Lynch Backs Piketty - Business Insider June 2014
Ajay Kapur and his team said this in a lengthy report titled, "Piketty and Plutonomy: The revenge of inequality," outlining the impacts of plutonomists, or the super rich, on investors. The skew toward the super-rich makes looking at averages an incomplete exercise: "When wealth and income are as concentrated as they are, and expected (a la Piketty) to get even more so, examining the 'average' consumer or 'average' investor makes little sense. Examining the fat tail – the behavior of the plutonomists, rather than that of the multitudinous many – is more advantageous to investors. Plutonomists determine and dominate spending and investment decisions and their magnitudes. Any analysis that does not tease out the skewed global income and wealth distribution, but focuses on the average is flawed from the start and is incomplete, as we step into its deeper extremes." "Economic and earnings surprises are linked to their behavior," they write. -- charts show the biggest wealth gains in US have been made mostly among the super rich. -- see Kapur papers from 2005 & 2006 on Plutonomy -- downloaded pdfs to Note
Piketty  US_economy  economic_history  economic_growth  economic_sociology  economic_culture  plutocracy  inequality  investment  investors  profit  finance_capital  wealth  downloaded  EF-add 
june 2014 by dunnettreader
Branko Milanovic - globalinequality: Limits of neoclassical economics - June 2014
Great summary of the obvious that unfortunately needs to be said -- When people criticize Piketty for elevating a mere economic identity... to a Fundamental Law of Capitalism they show their inability to go back to economics as a social science [and] transcend neoclassical economics. The share of capital income in total income is not only a reflection of the fact that people with a factor of production B have so much, and people with the factor of production A have the rest.. We are basically saying: 20% of people ..claim 1/2 of national output and they do so without having to work. If it were a question of changing the distribution in favor of factor A (donuts) and against factor B (pecan pies), there would be no reason to be concerned. But here you change the distribution in favor of those who do not need to work, and against those that do. You thereby affect the entire social structure of society. This is where social science comes in, and neoclassical economics goes away. The entire 100 years of neoclassical economics [has made us] us forget this key distinction: between having or not having to work for a living. Hence neoclassicists like to treat capital (and labor) as basically the same thing: factors of production: a donut and a pecan pie...Thence also the attempt to treat labor as human capital. We are all capitalists now: a guy who works at Walmart for less than the minimum wage is a capitalist since he is using his human capital; a broker who makes a million in a day is also a capitalist, he just works with a different type of capital.The true social reality was thus entirely hidden. [Picketty returns us to] social science and you ask yourself questions like, would a society where 20% of non-workers earn 70% of total income be okay? What are the values that such a society would promote? (..more political, moral philosophy Qs)
Piketty  19thC  20thC  21stC  intellectual_history  intellectual_history-distorted  social_theory  social_sciences  political_economy  social_order  political_philosophy  moral_philosophy  moral_psychology  economic_history  economic_theory  macroeconomics  neoclassical_economics  classical_economics  Marx  inequality  distribution-income  capitalism  capital  labor  human_capital  markets_in_everything  class_conflict  economic_culture  political_culture  economic_sociology  bad_economics  memory-group 
june 2014 by dunnettreader
Branko Milanovic - globalinequality: Where I disagree and agree with Debraj Ray’s critique of Piketty’s Capital in the 21s Century - June 2014
Debraj’s error consists...in not realizing that normal capitalist relations of production (where capitalists tend to be rich) are forgotten when we look at economic laws in an abstract manner. Not doing that is precisely a great virtue of Piketty’s book. Surely, (a) if capital/labor proportions were the same across income distribution; (b) if, more extremely, capitalists were poor and workers rich; (c) if capital were state-owned, all of these contradictions would disappear. But none of (a)-(c) conditions holds in contemporary capitalism. So Piketty’s economic laws and contradictions of capitalism do exist. Where do I agree wit Debraj? That Kuznets curve cannot be easily dismissed. I am currently working on the idea that we are now witnessing the upswing of the 2nd Kuznets curve since the Industrial revolution. Moreover I believe this is not only the 2nd but perhaps 5th, 6th or 10th curve over the past 1000 years in the West. Does this agreement on Kuznets then, by itself, imply that my defense of Piketty’s mechanism cannot be right or consistent? Not at all. Piketty isolated the key features of capitalist inequality trends when they are left to themselves: the forces of divergence (inequality) will win. But there are also other forces: capital destruction, wars, confiscatory taxation, hyperinflation, pressure of trade unions, high taxation of capital, rising importance of labor and higher wages, that at different times go the other way, and, in a Kuznets-like fashion, drive inequality down. So, I believe, Piketty has beautifully uncovered the forces of divergence, mentioned some of the forces of convergence, but did not lay to rest the ghost of Kuznets inverted U shaped curve
books  reviews  economic_history  economic_theory  political_economy  Piketty  capitalism  wealth  labor  wages  Marx  macroeconomics  economic_growth  inequality  cliometrics  Kuznets_curve  savings  investment  profit  rentiers  consumers  Medieval  Renaissance  Europe-Early_Modern  Great_Divergence  EF-add 
june 2014 by dunnettreader
Per Krusell, Tony Smith - Piketty’s ‘Second Law of Capitalism’ vs. standard macro theory | vox , 1 June 2014
Thomas Piketty’s new book has been widely praised for its empirical contribution, but his prediction of rising inequality rests on economic theory. This column argues that Piketty’s pessimistic forecast is based on an extreme – and unrealistic – assumption about households’ saving behaviour. According to standard theory, the wealth–income ratio would increase only modestly as growth falls, so declining growth would not be a powerful force for generating high inequality. -- my 1st Q does standard theory adequately separate the savings patterns of those with extreme wealth before the advent of slower growth? 2nd Q are they assuming wealth = capital?
Piketty  economic_growth  economic_theory  economic_models  macroeconomics  wealth  savings  profit  inequality  wages 
june 2014 by dunnettreader
Thomas Palley » The flimflam defense of mainstream economics - May 2014
The teaching of economics has recently been in the news. One reason is the activities of Manchester University undergraduates who have formed the Post-Crash Economics Society -- 2nd is criticism of the neoclassical reasoning in Piketty’s runaway best seller. This criticism and calls for including heterodox economic theory in the curriculum have prompted a defense of mainstream economics from Krugman and Wren-Lewis. -- let us be clear there is near-uniform agreement among the critics that Piketty’s book makes a huge constructive contribution to exposing the scale of today’s inequality. However, the books’ mainstream theoretical foundation is subject to legitimate critique. First, it makes a very big difference for politics and policy if extreme inequality is explained as the result of the technical marginal productivity conditions of production versus economic and political power determining ownership patterns and capital’s share of total income. Second, the marginal productivity approach to income distribution is subject to a host of objections that, collectively, show mainstream theory is logically flawed and implausible as a description of reality. This critique of Piketty feeds into a much more important and fundamental critique of mainstream economics that has existed for years but has only gained traction following the global economic crisis of 2008. It is that larger critique which is the focus of the Manchester students
economic_theory  economic_models  macroeconomics  neoclassical_economics  Keynesianism  New_Keynesian  heterodox_economics  productivity  marginalists  Piketty  political_economy  Leftist 
june 2014 by dunnettreader
Thomas Palley » The accidental controversialist: deeper reflections on Thomas Piketty’s “Capital” - April 2014
Using a conventional marginal productivity framework, Piketty provides an explanation of rising inequality based on increases in the gap between the marginal product of capital, which determines the rate of profit (r), and the rate of growth (g). Because capital ownership is so concentrated, a higher profit rate or slower growth rate increases inequality as the incomes of the wealthy grow faster than the overall economy. The conventional character of Piketty’s theoretical thinking rears its head in his policy prescriptions. -- Mainstream economists will assert the conventional story about the profit rate being technologically determined. However, as Piketty occasionally hints, in reality the profit rate is politically and socially determined by factors influencing the distribution of economic and political power. Growth is also influenced by policy and institutional choices. That is the place to push the argument....My prediction is “r minus g” arithmetic will make its way into the curriculum, with the profit rate explained as the marginal product of capital; Chicago School economists will counter the economy has mechanisms limiting prolonged wide divergence of r and g; and Harvard and MIT graduate students will have opportunities to do market failure research arguing the opposite. The net result is economics will be left essentially unchanged and even more difficult to change.
books  reviews  Piketty  economic_theory  economic_models  macroeconomics  neoclassical_economics  productivity  capital  labor  technology  inequality  wealth  political_economy  profit  capitalism  institutional_economics  laisser-faire  information-asymmetric  competition  education-higher  economic_culture  sociology_of_knowledge  heterodox_economics  EF-add 
june 2014 by dunnettreader
Seth Ackerman - Piketty’s Fair-Weather Friends | Jacobin May 2014
Re Piketty not fitting in MIT-liberal economics -- Piketty “misreads the literature by conflating gross and net returns to capital,” Summers wrote. “I know of no study suggesting that measuring output in net terms, the elasticity of substitution is greater than 1, and I know of quite a few suggesting the contrary.” A reader at this point could be forgiven for feeling confused. Didn’t Piketty gather his own data? He did, of course. --As Piketty makes clear, those data — which he’s made freely available on the internet for anyone to check — are indeed “explained” by a net elasticity of 1.3-1.6, which would indicate an extremely weak force of diminishing returns to capital. Yet it’s also true that this figure is far higher than any found in the existing literature — probably more than twice as high as the highest typical estimates. -- Piketty’s estimate of the elasticity of substitution can’t really be compared with those in the literature. His is based on economy-wide data covering decades and centuries while estimates in the literature typically cover only a few years, and often just a few industries. Moreover, his pertain to all private wealth, while the literature focuses narrowly on production capital. -- But most importantly, given the flawed marginalist theory behind it, and its even more flawed basis of measurement... the elasticity of substitution simply cannot be regarded as a meaningful measure of an economy’s technology (or anything else), or as providing any clue to its future. What’s essential, rather, is Piketty’s empirical demonstration that the rate of return on wealth has been remarkably stable over centuries — and, contra Summers, with no visible tendency to vary in any consistent way against the “supply of capital.”
books  reviews  Piketty  economic_history  economic_theory  economic_models  macroeconomics  heterodox_economics  productivity  capital  labor  profit  wages  technology  economic_growth  savings  inheritance  1-percent  inequality  meritocracy  wealth  supermanagers  corporate_governance  corporate_finance  political_economy  economic_culture  economic_sociology  EF-add 
june 2014 by dunnettreader
Suresh Naidu - Capital Eats the World | Jacobin May 2014
A first step could be a multisector model with both a productive sector and an extractive, rent-seeking outlet for investment, so that the rate of return on capital has the potential to be unanchored from the growth of the economy. This model could potentially do a better job of explaining r > g in a world where capital has highly profitable opportunities in rent-seeking ....More fundamentally, a model that started with the financial and firm-level institutions underneath the supply and demand curves for capital, rather than blackboxing them in production and utility functions, could illuminate complementarities among the host of other political demands that would claw back the share taken by capital and lower the amount paid out as profits before the fiscal system gets its take. This is putting meat on what Brad Delong calls the “wedge” between the actual and warranted rate of profit. -- We need even more and even better economics to figure out which of these may get undone via market responses and which won’t, and to think about them jointly with the politics that make each feasible or not. While Piketty’s book diagnoses the problem of capital’s voracious appetite, it would require a different kind of model to take our focus off the nominal quantities registered by state fiscal systems, and instead onto the broader distribution of political power in the world economy.
books  reviews  kindle-available  Piketty  political_economy  economic_theory  heterodox_economics  neoclassical_economics  economic_models  economic_growth  wealth  capital  finance_capital  capitalism  labor  Labor_markets  unemployment  markets_in_everything  tax_havens  investment  investors  savings  inheritance  profit  corporate_governance  corporate_citizenship  inequality  technology  1-percent  rent-seeking  rentiers  class_conflict  oligarchy  taxes  productivity  corporate_finance  property  property_rights  neoliberalism 
june 2014 by dunnettreader
Chris Dillow - Stumbling and Mumbling: Housing vs financial wealth - May 2014
Chris Giles deserves great credit for his careful scrutiny of Thomas Piketty's data, and Piketty also deserves credit for the openness of that data and for his generous response to Chris. Like Justin Wolfers and Paul Krugman, though, I wonder just how damaging Chris's critique is of Piketty's central thesis. Chris says that, in the UK, "there seems to be little consistent evidence of any upward trend in wealth inequality of the top 1 percent." He points to ONS data showing that the top 1% owned 12.5% of all wealth in 2010-12. However, this proportion is depressed because house prices are high. These mean that the owner of quite a modest home has substantial wealth which naturally depresses the proportion of wealth held by the really well-off. If we look only at financial wealth, we see a different picture. The top 1% owns 36.4% of all financial wealth, and the top 10% owns 75.9% (table 2.6b of this Excel file). As the ONS points out, the Lorenz curve for financial wealth is much steeper than that for property wealth. If you believe the ONS is under-counting offshore wealth, inequality is even greater. This poses the question: should we conflate housing and financial wealth as Chris and Thomas both do? Perhaps not, because housing wealth might not have as much "wealthiness" as financial wealth, in four senses: [interesting discussion and links]
economic_history  economic_theory  political_economy  Piketty  inequality  UK_economy  wealth  housing  1-percent  capitalism  power  plutocracy  links  EF-add 
may 2014 by dunnettreader
Washington Equitable Center for Growth | The Honest Broker: Mr. Piketty and the “Neoclassicists”: A Suggested Interpretation: For the Week of May 17, 2014
An important, sprawling book of economic analysis. A complex and nonobvious relationship to a previous economics literature. Large political economy and policy stakes at hazard. Is this John Maynard Keynes’s General Theory of Employment, Interest, and Money? Or is this Thomas Piketty’s Capital in the Twenty-First Century? I find the parallels intriguing. And so I am taking my task to be the task that John Hicks took upon himself back in 1937 with his “Mr. Keynes and the ‘Classics’: A Suggested Interpretation”: to build a bridge between Piketty’s formulations of the big issues and other, previous formulations that may be more standard and more familiar. Like Hicks’s, this bridge-building is immensely powerful but also immensely limited. My reference is meant both as an endorsement of the power of the Hicks (1937) research project and as a recognition of its limitations. But to those who say they do not like the architecture of my bridge, I say: go build your own.
economic_history  political_economy  economic_theory  economic_models  macroeconomics  Piketty  inequality  EF-add 
may 2014 by dunnettreader
Matt Bruening - On Piketty's Capital: r, g, and s | Demos - April 28 2014
The mechanics of how this work don't just involve r and g though. They also involve, as few reviewers except Robert Solow have pointed out, savings, or s. This should be obvious. After all, if wealthy people consumed all their r-derived income each year and laborers saved at least some of their wages, eventually laborers would pile up more wealth than the super-capitalists have. The longevity of the the super-capitalists' advantage is not determined solely by r. It is determined by r multipled by s, i.e. the rate of return on capital multiplied by the savings rate.
Piketty  capital  savings  wages  economic_growth  inequality  EF-add 
may 2014 by dunnettreader
Matt Bruening - What Larry Summers Gets Wrong On Piketty's 'Capital' | Demos May 15 2014
Does Piketty argue that if r > g , then the wealth-to-income ratio will rise? Or does Piketty argue that the wealth-to-income ratio moves towards s/g (savings rate divided by the growth rate)? Summers has him saying both! Despite Summers' first sentence, Piketty does not use "r > g" to explain the wealth-to-income ratio. He explains the wealth-to-income ratio solely by s/g. If the savings rate of an economy is 5% and the growth rate is 1%, then the wealth-to-income ratio will go to 5-to-1 and stay there at equilibrium. This is true whether r > g or not. Piketty does claim that the wealth-to-income ratio will increase, but it is based on this s/g logic. More specifically, he thinks the savings rate will probably stay where it is and growth will decline, and this will therefore cause s/g to get bigger.
capital  savings  economic_growth  investment  economic_models  Piketty  inequality  EF-add 
may 2014 by dunnettreader

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