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I think you'd also agree with this review [1] of the book, concluding Over the course of history, capital accumulation has yielded growth in living standards t

I think you'd also agree with this review [1] of the book, concluding Over the course of history, capital accumulation has yielded growth in living standards that people in earlier centuries could not have imagined, let alone predicted -- and it wasn't just the owners of capital who benefited. Future capital accumulation may or may not increase the capital share of output; it may or may not widen inequality. If it does, that's a bad thing, and governments should act. But even if it does, it won't matter as much as whether and how quickly wages and living standards rise. That is, or ought to be, the defining issue of our era, and it's one on which "Capital in the 21st Century" has almost nothing to say. [1] http://www.bloombergview.com/articles/2014-04-20/the-most-important-book-ever-is-all-wrong http://www.bloombergview.com/articles/2014-04-20/the-most-im... (hat tip:Tyler Cowen)

unclebucknasty 13y ago
>But even if it does, it won't matter as much as whether and how quickly wages and living standards rise. >That is, or ought to be, the defining issue of our era, and it's one on which "Capital in the 21st Century" has almost nothing to say. It seems odd for the Bloomberg review to state that the book says nothing about this issue. In fact, it appears to be the very premise of the book, or at least a primary implication. This Bloomberg review appears to be attempting a de-linking of the two issues. That is, it implies that rising inequality is independent of the rise of wages and living standards. It glosses over the inequality issue by saying that it's essentially unimportant as long as wages rise. In fact, the book itself is making the case that inequality and labor-based living standards are interdependent. It goes through history to show where forces conspired to create more equality--be it destructive to capital (e.g. wars) or beneficial to labor (e.g. unions). It's during those periods of greater equality that wages and living standards tended to rise (or at least track with the overall economy). Here's a key assertion from the book that refutes the Bloomberg review in a nutshell: >The main driver of inequality--the tendency of returns on capital to exceed the rate of economic growth--today threatens to generate extreme inequalities that stir discontent and undermine democratic values. That is, when returns on capital exceed the rate of economic growth, those who depend on growth (laborers) are left with stagnating or declining wages and living standards.
- CWuestefeld 13y ago
  As most of us commenting here, I haven't read the book. That said... Your quote does not support your conclusion. It says that (given Piketty's assumptions) inequality is likely to escalate. This says absolutely nothing about whether the standard of living of the poorest will improve or decline. And as far as I can tell, this whole discussion (not just the book, but the broader complaints of inequality) are founded on a mistaken idea that accelerating growth of the richest somehow means that the poorest will be worse off. All of history shows us that this is false. Even the poorest today enjoy a life that was unimaginable to kings of a couple centuries ago, and rivals in most ways the hyper-rich of just decades ago. If the poorest really were "downtrodden" - that is, that the rich achieved success by actually pushing down the poorest, there's be something to get excited about. But the actual fact, that the poorest are getting rich more slowly than the richest, is morally a non-issue to me.
  - unclebucknasty 13y ago
    >...inequality is likely to escalate. This says absolutely nothing about whether the standard of living of the poorest will improve or decline. I believe you are making the same mistake as the Bloomberg reviewer in separating inequality from the fate of the poorest. To see the connection, you have to look deeper. That is, you must consider the causes of inequality that Piketty offers. You might argue that inequality in itself doesn't produce a negative outcome for the poorest, but that the causes of our current inequality produce those negative outcomes as a side effect. I would say that's semantics, but in any case, what Piketty lays out does support the notion of a rising inequality along with a comcomitant stagnation/slippage for the poorest/others. So, let's say it the other way, if you prefer: some of the primary reasons (increased productivity, automation, etc.) for the rate of wealth-accumulation for the rich that we're seeing also produces negative outcomes for the poorest (unemployment, downward wage pressure, etc.). This has led us to (or, rather, is by definition) the growing inequality that we're seeing. Finally, these arguments of the ilk that "inequality must be OK because the standard of living for the poor has risen even in the face of historical inequality" fall flat. It really is a false equivalence. Firstly, such arguments imply that degree is irrelevant and that no degree of inequality would produce (or represent) a negative outcome for the poor. In fact, there is some point at which capture by one party must come at the expense of others to the extent that the latter parties slip backwards. Secondly--and to the first point--Piketty outlines that the degree of inequality was historically kept in check by various forces in other examples where the outcomes for the poor weren't detrimental. In those cases, the threshold for negative outcomes was simply not crossed. However, this is certainly not proof that they cannot be.

unclebucknasty 13y ago

>But even if it does, it won't matter as much as whether and how quickly wages and living standards rise. >That is, or ought to be, the defining issue of our era, and it's one on which "Capital in the 21st Century" has almost nothing to say. It seems odd for the Bloomberg review to state that the book says nothing about this issue. In fact, it appears to be the very premise of the book, or at least a primary implication. This Bloomberg review appears to be attempting a de-linking of the two issues. That is, it implies that rising inequality is independent of the rise of wages and living standards. It glosses over the inequality issue by saying that it's essentially unimportant as long as wages rise. In fact, the book itself is making the case that inequality and labor-based living standards are interdependent. It goes through history to show where forces conspired to create more equality--be it destructive to capital (e.g. wars) or beneficial to labor (e.g. unions). It's during those periods of greater equality that wages and living standards tended to rise (or at least track with the overall economy). Here's a key assertion from the book that refutes the Bloomberg review in a nutshell: >The main driver of inequality--the tendency of returns on capital to exceed the rate of economic growth--today threatens to generate extreme inequalities that stir discontent and undermine democratic values. That is, when returns on capital exceed the rate of economic growth, those who depend on growth (laborers) are left with stagnating or declining wages and living standards.

CWuestefeld 13y ago
As most of us commenting here, I haven't read the book. That said... Your quote does not support your conclusion. It says that (given Piketty's assumptions) inequality is likely to escalate. This says absolutely nothing about whether the standard of living of the poorest will improve or decline. And as far as I can tell, this whole discussion (not just the book, but the broader complaints of inequality) are founded on a mistaken idea that accelerating growth of the richest somehow means that the poorest will be worse off. All of history shows us that this is false. Even the poorest today enjoy a life that was unimaginable to kings of a couple centuries ago, and rivals in most ways the hyper-rich of just decades ago. If the poorest really were "downtrodden" - that is, that the rich achieved success by actually pushing down the poorest, there's be something to get excited about. But the actual fact, that the poorest are getting rich more slowly than the richest, is morally a non-issue to me.
- unclebucknasty 13y ago
  >...inequality is likely to escalate. This says absolutely nothing about whether the standard of living of the poorest will improve or decline. I believe you are making the same mistake as the Bloomberg reviewer in separating inequality from the fate of the poorest. To see the connection, you have to look deeper. That is, you must consider the causes of inequality that Piketty offers. You might argue that inequality in itself doesn't produce a negative outcome for the poorest, but that the causes of our current inequality produce those negative outcomes as a side effect. I would say that's semantics, but in any case, what Piketty lays out does support the notion of a rising inequality along with a comcomitant stagnation/slippage for the poorest/others. So, let's say it the other way, if you prefer: some of the primary reasons (increased productivity, automation, etc.) for the rate of wealth-accumulation for the rich that we're seeing also produces negative outcomes for the poorest (unemployment, downward wage pressure, etc.). This has led us to (or, rather, is by definition) the growing inequality that we're seeing. Finally, these arguments of the ilk that "inequality must be OK because the standard of living for the poor has risen even in the face of historical inequality" fall flat. It really is a false equivalence. Firstly, such arguments imply that degree is irrelevant and that no degree of inequality would produce (or represent) a negative outcome for the poor. In fact, there is some point at which capture by one party must come at the expense of others to the extent that the latter parties slip backwards. Secondly--and to the first point--Piketty outlines that the degree of inequality was historically kept in check by various forces in other examples where the outcomes for the poor weren't detrimental. In those cases, the threshold for negative outcomes was simply not crossed. However, this is certainly not proof that they cannot be.