The point of R is that it also compounds, much like G. Imagine that B has $2M instead of $1M but needs to spend only $100k/year. For B: first year: $100k spe

The point of R is that it also compounds, much like G. Imagine that B has $2M instead of $1M but needs to spend only $100k/year. For B: first year: $100k spending, $100k extra capital gains, $2.1M total capital second year: $102k spending, $108k extra capital gains, $2.208M total capital third year: $104k spending, $117k extra capital gains, $2.325M total capital. And so on. The real argument against Piketty is that people don't stay rich for long, i.e. they don't really get R, but a crazy volatile version of R. There's a large rotation in the top %. Nassim Taleb is quite vocal on the fact that, in the end, pretty much nobody gets market returns. Most people get below average returns, while very very few outperform a lot. This is the same reason why stocks should outperform bonds - they're more risky, and you need more capital to take more risk. Therefore not everyone can afford stocks, therefore stocks are cheaper (from a return point of view).