2 ms·

I mean exactly what I said - r > g does not have any intrinsic relationship with inequality. All it means is that (capital stock) / (yearly income) will grow.

• jgalt212 13y ago
  I definitely think there is. The bigger the difference between r and g with r > g the more wealth gets concentrated in the hands of a few as time increases (as long as there is some variability in income levels at t0). If everyone earns the same exact money, it makes no difference what the return on capital is--everyone's income and wealth will be exactly the same for all t (as long as savings rates are equal). I will attempt to google an answer for you
  • riffraff 13y ago
    it depends on how the r is distributed doesn't it? Suppose there is Alice who owns 1M in bonds and doesn't work while Barbara and Charlie own a 100K house and are blue collars. If the houses price goes up ten times while the bonds pay only 110% than total inequality goes down even if Alice still hasn't worked a day.
    • jgalt212 13y ago
      yes, that's definitely true, but if there's only 1 r and all assets return r, I'd say the bigger r is relative to g, the higher the wealth concentration as t increases. most of this math is above me (differential equations and finite difference methods), but the models are pretty easy to experiment with if you employ Monte Carlo methods. In fact, that would be a nice side project: Piketty web app where the user can mess with various permutations of r and g and their distributions.