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Piketty looked at like ~200 years of econ data (wages, asset values, rents) and allowed for inflation and even depreciation. His thesis is actually that r > g,

Piketty looked at like ~200 years of econ data (wages, asset values, rents) and allowed for inflation and even depreciation. His thesis is actually that r > g, wherein r = ROI of capital and g = the rate of economic growth (gdp). This has to be true, because rich people exist and we can measure that they get richer and richer faster than others. You can gauge faith in the likelihood that it will continue to work that way given that funds like Y Combinator exist and are successful, and because activities like buying and maintaining rental properties "works" in terms of creating personal wealth faster than the rate of economic growth.

ChrisLomont 7y ago
The research has shown multiple other ways to reach the current results without r>g (housing stock is one method, if I recall) and authors have shown r>g leads to results we do not see. Thus it’s not true to claim existence of rich people implies r>g. If it were that simple people before Piketty would have reached that conclusion earlier. The papers linked in this thread show the flaws. It’s also the case the rich don’t get richer, if you mean a rich person gets richer. For any dataset where you can track rich individuals over time, pick a level you call rich, track everyone meeting that definition, and you find they get poorer, reverting to mean. That is why most millionaires are first gen. It’s why the Forbes 400 is mostly first gen; the rich that were top 400 lose wealth. It’s why St. Louis Fed has papers showing the majority of the top quintile or the top 1% are not there 10 years later, or from generation to generation. Sure some rich keep wealth. But for any level called rich, if you track all those in it, that group mostly falls out.
- spinchange 7y ago
  >If it were that simple people before Piketty would have reached that conclusion earlier. Perhaps you've heard the expression, "The rich get richer while the poor get poorer" What Piketty did was put extensive data and a pretty rigorous methodology to work to explain why. I've not read a critique that undermines his main conclusions in a meaningful way. It's no secret that if you already have a pile of money or capital assets you can put those to work for you which will also generate income and you will come out ahead and faster than someone without the same pile of money. Cf https://boingboing.net/2016/08/23/bill-gates-net-worth-hits-9.html https://boingboing.net/2016/08/23/bill-gates-net-worth-hits-...

ChrisLomont 7y ago

The research has shown multiple other ways to reach the current results without r>g (housing stock is one method, if I recall) and authors have shown r>g leads to results we do not see. Thus it’s not true to claim existence of rich people implies r>g. If it were that simple people before Piketty would have reached that conclusion earlier. The papers linked in this thread show the flaws. It’s also the case the rich don’t get richer, if you mean a rich person gets richer. For any dataset where you can track rich individuals over time, pick a level you call rich, track everyone meeting that definition, and you find they get poorer, reverting to mean. That is why most millionaires are first gen. It’s why the Forbes 400 is mostly first gen; the rich that were top 400 lose wealth. It’s why St. Louis Fed has papers showing the majority of the top quintile or the top 1% are not there 10 years later, or from generation to generation. Sure some rich keep wealth. But for any level called rich, if you track all those in it, that group mostly falls out.

spinchange 7y ago
>If it were that simple people before Piketty would have reached that conclusion earlier. Perhaps you've heard the expression, "The rich get richer while the poor get poorer" What Piketty did was put extensive data and a pretty rigorous methodology to work to explain why. I've not read a critique that undermines his main conclusions in a meaningful way. It's no secret that if you already have a pile of money or capital assets you can put those to work for you which will also generate income and you will come out ahead and faster than someone without the same pile of money. Cf https://boingboing.net/2016/08/23/bill-gates-net-worth-hits-9.html https://boingboing.net/2016/08/23/bill-gates-net-worth-hits-...