Saturday, April 19, 2014

Krugman Loves Piketty on the Distribution of Wealth

Quotations from "Piketty Day Notes" by Paul Krugman"

  • “Oh, yeah? Guess what.” The evidence for a sharp rise in inequality, a definitive break with the three postwar decades, was overwhelming.
  • “Oh, yeah? Guess what.” Actually, rising inequality was in large part about the rise of a tiny elite, the one percent and within that the 0.1 percent.
  • “Oh, yeah? Guess what.” We don’t have Gilded Age survey data, but we do have tax records back to the early 20th century, and top income shares are right back at late-Gilded-Age levels.
  • “Oh, yeah? Guess what.” What Piketty shows is that inherited wealth has been making a comeback, that it’s already a much bigger factor than most people even on the left realize, and that it’s on track to become much larger still.
  • (S)ix of the ten wealthiest Americans, according to Forbes, are Walton and Koch heirs; further down the list are a lot of old men, who will soon be passing their wealth on.
  • (W)e may face a political-economy spiral of inequality, in which great wealth brings great power, which is used to reinforce the concentration of wealth.
  • (T)his analysis isn’t just important, it’s beautiful. Piketty gives us something we didn’t know we needed — a sweeping, elegant integration of growth theory, the factor distribution of income, and the personal distribution of income and wealth.
The book generating this enthusiasm is Capital in the Twenty-First Century by Thomas Piketty.

1 comment:

John Daly said...

Adair Turner has an article in Project Syndicate that cites Piketty and goes beyond Krugman.

He notes that robots and software are likely to automate a great number of jobs. Presumably they will do so increasing productivity and thus providing return to capital with a reduction in labor inputs.

He also notes that there will be still more demand for real estate in prime locations, leading to increased wealth from property (the 5 richest families in Britain include two aristocratic families with London property that has been in their family for centuries.)

He notes that the fastest growing occupations in the USA are McJobs, hands on services with low wages.

On the other hand, there will be jobs for software experts, engineers, and people in the creative fields.

Thus Turner's analysis also suggests that the rich will get richer and the rest will be left behind.