4 ms·
Good point. Doubling in 7 years means around 10% growth per year. So, if someone took out 10% of their stock nest-egg per year, it wouldn't have grown at all.
by FabHK 1y ago
Good point. Doubling in 7 years means around 10% growth per year. So, if someone took out 10% of their stock nest-egg per year, it wouldn't have grown at all.
Having said that, GP does illustrate Picketty's point in Capital in the Twenty-First Century that r>g, that is return on capital is greater than economic growth, and Picketty did theorise that this would inevitably lead to concentration of wealth (unless war or other calamities reset the scale).
- bluecalm 1y agoI am sure the point must be more sophisticated as even with 0% growth there would still be significant return on capital (risk free rate + acceptable risk premium). That is to say the world where return on capital is not greater than economic growth doesn't make any sense.
- carlob 1y agoThe point is not whether or not it makes sense. The point is that it is fairly natural for a capitalist system to have r>g and that causes concentration of wealth. If you look historically the increasing concentration of wealth only really gets reversed by wars or revolutions. So what Piketty is arguing for is a more gentle way of redistributing wealth, because typically when one gets to 1914 levels of inequality, well… we know what happens.
- gopher_space 1y ago> because typically when one gets to 1914 levels of inequality, well… we know what happens. When it comes to resource sequestration this is a fundamental law of nature. There's no safety in a world where random people on the street see your death as a biological imperative.