3 ms·

"it’s important to realize that such a state of affairs doesn’t just happen by itself, or even through the actions of individual wealthy people" Wait, wasn't t

• yummyfajitas 11y ago
  Differences between returns on capital and economic growth alone will not result in any increase in inequality. If everyone achieves the same rate of return, inequality can only remain flat - bignum x exp(rt) / smallnum x exp(rt) = bignum / smallnum = const. If some people have income and save it inequality will go down: bignum x exp(rt) / smallnum x exp(rt) < (bignum x exp(rt) + k) / (smallnum x exp(rt) + k). All r > g directly implies is that the ratio of capital stock to income will increase. I.e., we'll move from a situation with one factory (worth $1M) producing $1000/month in income to a situation with two factories (worth $2M) producing $1500/month in income. In this case, r=100% but g = 50%.