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Piketty argues that if r > g, wealth will accumulate into fewer and fewer hands over time. R is the rate of return of capital (rents, stocks, bonds, etc) and g
by mlsu 4mo ago
Piketty argues that if r > g, wealth will accumulate into fewer and fewer hands over time. R is the rate of return of capital (rents, stocks, bonds, etc) and g is the growth of the economy over time.
If the economy grows at a higher rate than the rate of return, the pie gets bigger at a higher rate than wealth can concentrates. If the rate of return accumulates capital at a higher rate than the growth of the economy, wealth will inevitably concentrate over time.
He uses a lot of examples and economic history to argue that r > g, except for a few small periods. I think given the amount of wealth concentration we are seeing, and the political effects thereof, it is a compelling argument. Taxation (of wealth) is the proposed solution.
- WalterBright 4mo ago[flagged]
- intended 4mo agoThen you are using terms in a manner that is effective for semantic victory, but not the spirit of actual discussion the other users are engaging in.
- WalterBright 4mo ago[flagged]
- intended 4mo agoWhich would matter if you were even arguing markets correctly and the others were arguing marxist points.
- WalterBright 4mo agoWell, we've seen the Labor Theory of Value here, and the idea that people get wealthy by stealing from others, and it is bad that some people have more money than others, and so on.
- salawat 4mo ago...You are using "wealth" in a way completely foreign to how I have ever seen it used linguistically. The abundance of resources available to an individual that we call "wealth" colloquially being transferable or tradable is basically the hallmark of a market economy. It can absolutely concentrate within one, because if it can be traded, it can absolutely be not traded decreasing the velocity of that value transfer to zero. So... Yes. If only one or a handful of people are buying, because everyone else is having to sell to stay alive, then wealth does, in fact, concentrate.
- WalterBright 4mo agoAgain, wealth is created, not "concentrated". The term "wealth" means the dollars you would get if you sold everything. > wealth does, in fact, concentrate Nope, because the people trading with you thought the exchange was of equal value, or they wouldn't have engaged in it.
- stopping 4mo agoThe term you're looking for is "surplus". The consumer sees a surplus of value because the price they paid is below the maximum they're willing to pay, and the producer sees a surplus because the price they charged was more than the cost to produce the good. In this economic system both parties benefit. Economic surplus is the thing that is "created" with every transaction. "Surplus accumulation" as a concept doesn't make any sense, and is isomorphic to what you think people are saying when they use the phrase "wealth accumulation." You should update your definition of "wealth".
- WalterBright 4mo agoWhat's your definition of wealth?
- stopping 4mo agoWhy are you asking? My hope is that you are asking this genuinely from a place of curiosity to better advance this discussion, as there is apparent confusion from people working from different definitions of the same word.
- sfifs 4mo agoPicketty's analysis has been empirical. The assumption that is likely mistaken is there is such a thing as market economy.