3 ms·

I wonder what Thomas Pickety would say about this. If I understand correctly, this would mean that r is tending towards zero, while g may or may not be affected

I wonder what Thomas Pickety would say about this. If I understand correctly, this would mean that r is tending towards zero, while g may or may not be affected, but it could conceivably lead to a long term r<g situation, meaning more equality in society.

danharaj 8y ago
It's hard to imagine how. I think more likely g<r but it will also stagnate, leading to instability of the entire system. I suppose r<g could be the case if economic growth is no longer driven by capital investment, perhaps because it is too costly to figure out where to allocate capital to get returns. But such a situation is so different from the past that you ought not call it capitalism anymore. I don't think capitalism is at it's structural limit quite yet. The world is still yet big enough that there are markets to develop and capture.
- 5DFractalTetris 8y ago
  I agree that capitalism is not at its structural limit, I imagine within the next 50 years ideological descriptions of resource management (capitalism, communism, syndicalism, etc.) will begin disappearing in favor of something like "Keep feeding the replicators." The human and environmental costs of competing economic ideologies don't have much tangible payoff, and discussions of capital are illusory compared to real measures of human happiness. If a guy was like "I can't grow grain here but with a small material surplus the people here can live happily and have families and exhaust the local mineral reserve for whomever needs it," at least to me the answer would be, "Provide them with a small material surplus." I program computers but would have to take a pay cut and assume large debts, etc., to begin operating a fruit orchard and wood mill. I might become happier, but the economic value of that decision and whether or not I would survive it economically is unclear. However, this seems to have nothing to do with economic systems, at least to me.
- cinquemb 8y ago
  Yeah, I think "r > g" is more likely. The article talks about the "risk-free rate" (ie. bonds/CD's etc) which is not really "r" (which could vary widely for individuals/groups/institutions). The "risk-free rate" seems like it has alot more in common with g than r. I think the problem is that our nations are having globally is that "g" (refers to the growth in the national income) is declining, which to me says that governments/nations are becoming increasingly inefficient at allocating capital overall compared to the likes of rentec, two-sigma, etc.(especially as capital becomes less sticky to a particular nation).

danharaj 8y ago

It's hard to imagine how. I think more likely g<r but it will also stagnate, leading to instability of the entire system. I suppose r<g could be the case if economic growth is no longer driven by capital investment, perhaps because it is too costly to figure out where to allocate capital to get returns. But such a situation is so different from the past that you ought not call it capitalism anymore. I don't think capitalism is at it's structural limit quite yet. The world is still yet big enough that there are markets to develop and capture.

5DFractalTetris 8y ago
I agree that capitalism is not at its structural limit, I imagine within the next 50 years ideological descriptions of resource management (capitalism, communism, syndicalism, etc.) will begin disappearing in favor of something like "Keep feeding the replicators." The human and environmental costs of competing economic ideologies don't have much tangible payoff, and discussions of capital are illusory compared to real measures of human happiness. If a guy was like "I can't grow grain here but with a small material surplus the people here can live happily and have families and exhaust the local mineral reserve for whomever needs it," at least to me the answer would be, "Provide them with a small material surplus." I program computers but would have to take a pay cut and assume large debts, etc., to begin operating a fruit orchard and wood mill. I might become happier, but the economic value of that decision and whether or not I would survive it economically is unclear. However, this seems to have nothing to do with economic systems, at least to me.
cinquemb 8y ago
Yeah, I think "r > g" is more likely. The article talks about the "risk-free rate" (ie. bonds/CD's etc) which is not really "r" (which could vary widely for individuals/groups/institutions). The "risk-free rate" seems like it has alot more in common with g than r. I think the problem is that our nations are having globally is that "g" (refers to the growth in the national income) is declining, which to me says that governments/nations are becoming increasingly inefficient at allocating capital overall compared to the likes of rentec, two-sigma, etc.(especially as capital becomes less sticky to a particular nation).