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Capital in the Twenty-First Century MP3 CD – Unabridged, February 17, 2015

4.5 out of 5 stars 5,573 ratings

What are the grand dynamics that drive the accumulation and distribution of capital? Questions about the long-term evolution of inequality, the concentration of wealth, and the prospects for economic growth lie at the heart of political economy. But satisfactory answers have been hard to find for lack of adequate data and clear guiding theories. In Capital in the Twenty-First Century, Thomas Piketty analyzes a unique collection of data from twenty countries, ranging as far back as the eighteenth century, to uncover key economic and social patterns. His findings will transform debate and set the agenda for the next generation of thought about wealth and inequality.

Piketty shows that modern economic growth and the diffusion of knowledge have allowed us to avoid inequalities on the apocalyptic scale predicted by Karl Marx. But we have not modified the deep structures of capital and inequality as much as we thought in the optimistic decades following World War II. 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. But economic trends are not acts of God. Political action has curbed dangerous inequalities in the past, Piketty says, and may do so again.

A work of extraordinary ambition, originality, and rigor, Capital in the Twenty-First Century reorients our understanding of economic history and confronts us with sobering lessons for today.

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A New York Times #1 Bestseller
An Amazon #1 Bestseller
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Wall Street Journal #1 Bestseller
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USA Today Bestseller
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Sunday Times Bestseller
Winner of the Financial Times and McKinsey Business Book of the Year Award
Winner of the British Academy Medal
Finalist, National Book Critics Circle Award

“It is a great work, a fearsome beast of analysis stuffed with an awesome amount of empirical data, and will surely be a landmark study in economics.” —The Week

“It seems safe to say that Capital in the Twenty-First Century, the magnum opus of the French economist Thomas Piketty, will be the most important economics book of the year—and maybe of the decade. Piketty, arguably the world’s leading expert on income and wealth inequality, does more than document the growing concentration of income in the hands of a small economic elite. He also makes a powerful case that we’re on the way back to ‘patrimonial capitalism,’ in which the commanding heights of the economy are dominated not just by wealth, but also by inherited wealth, in which birth matters more than effort and talent.” —New York Times

“Over the last decade or so, economist Thomas Piketty has made his name central to serious discussions of inequality…. Piketty expands upon his empirical work of the last 10 years, while also setting forth a political theory of inequality. This last element of the book gives special attention to tax policy and makes some provocative suggestions—new and higher taxes on the very rich.” —Forbes

“Essential reading for citizens of the here and now.” —Kirkus, starred review

“An extraordinary sweep of history backed by remarkably detailed data and analysis… Piketty’s economic analysis and historical proofs are breathtaking.” ―The Guardian

“What makes Thomas Piketty’s Capital in the Twenty-First Century such a triumph is that it seems to have been written specifically to demolish the great economic shibboleths of our time…. Piketty’s magnum opus.”―Salon

“[A] 700-page punch in the plutocracy’s pampered gut… It’s been half a century since a book of economic history broke out of its academic silo with such fireworks.” ―The Times

“Thomas Piketty of the Paris School of Economics has done the definitive comparative historical research on income inequality in his Capital in the Twenty-First Century.” ―New York Review of Books

“The book aims to revolutionize the way people think about the economic history of the past two centuries. It may well manage the feat.” ―The Economist

“Piketty’s Capital in the Twenty-First Century is an intellectual tour de force, a triumph of economic history over the theoretical, mathematical modeling that has come to dominate the economics profession in recent years.” ―Washington Post

“Piketty has written an extraordinarily important book…. In its scale and sweep it brings us back to the founders of political economy.” ―Financial Times

“A sweeping account of rising inequality… Piketty has written a book that nobody interested in a defining issue of our era can afford to ignore.” ―New Yorker

“Stands a fair chance of becoming the most influential work of economics yet published in our young century. It is the most important study of inequality in over fifty years.” ―The Nation

About the Author

Thomas Piketty is Professor at the Paris School of Economics and at the École des Hautes Études en Sciences Sociales (EHESS).

Product details

  • Publisher ‏ : ‎ Brilliance Audio; Unabridged edition (February 17, 2015)
  • Language ‏ : ‎ English
  • ISBN-10 ‏ : ‎ 1491591617
  • ISBN-13 ‏ : ‎ 978-1491591611
  • Item Weight ‏ : ‎ 3.5 ounces
  • Dimensions ‏ : ‎ 6.75 x 5.5 x 0.5 inches
  • Customer Reviews:
    4.5 out of 5 stars 5,573 ratings

About the author

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Thomas Piketty
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Thomas Piketty (French: [tɔˈma pikɛˈti]; born on 7 May 1971) is a French economist who works on wealth and income inequality. He is a professor (directeur d'études) at the École des hautes études en sciences sociales (EHESS), professor at the Paris School of Economics and Centennial professor at the London School of Economics new International Inequalities Institute.

He is the author of the best-selling book Capital in the Twenty-First Century (2013), which emphasises the themes of his work on wealth concentrations and distribution over the past 250 years. The book argues that the rate of capital return in developed countries is persistently greater than the rate of economic growth, and that this will cause wealth inequality to increase in the future. He considers that to be a problem, and to address it, he proposes redistribution through a progressive global tax on wealth.

Bio from Wikipedia, the free encyclopedia. Photo by Gobierno de Chile [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons.

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Customers find the book well-researched and thought-provoking, with clear and detailed explanations that make it accessible to the average reader. They consider it a seminal work on income and wealth distribution, with one review describing it as a cogent treatise on the history of wealth and inequality in western economies. Customers find the book eye-opening and worth the investment, though some find it lengthy. The data quality receives mixed reviews, with several customers questioning its authenticity.

AI-generated from the text of customer reviews

679 customers mention "Information quality"631 positive48 negative

Customers find the book well-researched and thought-provoking, with compelling data and clear lessons and assumptions.

"...It is full of important insight and a true developement that takes us to a level with much more granular detail than what typically is focused on...." Read more

"...The discussion is enlivened by well-chosen references to literature and a sprinkling of sarcastic barbs, both of them techniques that French..." Read more

"...You can enjoy the book by learning allot of history, facts and statistics and then come to your own conclusion on the correct interpretation on all..." Read more

"...This information is used as support for extensive analysis and discussion of the many aspects of historical, present, and likely future inequality..." Read more

481 customers mention "Readability"448 positive33 negative

Customers find the book highly readable, describing it as both interesting and enlightening, with one customer noting it reads more like a history book.

"...off I'd like to state that the data that the author has compiled is very impressive and provides the reader with a new way to look at both the stock..." Read more

"...many who hold less orthodox views about economics will find this book stimulating, valuable and sympathetic in many respects...." Read more

"...You can enjoy the book by learning allot of history, facts and statistics and then come to your own conclusion on the correct interpretation on all..." Read more

"This is a tremendous book! It is a great start to understanding the current state of our global economy...." Read more

390 customers mention "Readable"282 positive108 negative

Customers find the book readable, with the text being relatively simple to understand and accessible to the average reader. They appreciate how the authors show in elegant detail how to construct an argument.

"...9. In addition to the good translation, some other aspects of the book's transition to English succeed...." Read more

"...He has a pleasing style of presenting his point of view without resorting to personal attacks such as calling the 1% or rich evil...." Read more

"...The numerical information is presented in a very well developed series of 97 illustrations and 18 tables...." Read more

"...of the author i think are very suspect and not nearly as insightful as the analysis, but they are where the author's politics come out and are a..." Read more

241 customers mention "Wealth inequality"185 positive56 negative

Customers appreciate the book's analysis of wealth and income distribution, with one customer describing it as a cogent treatise on western economic history, while others highlight its valuable formulas for understanding wealth accumulation and accurate account of economic reality.

"...It includes ideas on taxing capital, in particular a graduating tax on capital to both make sure people are using the capital stock efficiently as..." Read more

"...The central argument being for the global taxation of wealth to restore a world that is becoming less egalitarian by each decade...." Read more

"...the tide did rise, and most boats rose with it, with income inequality falling drastically compared to pre-war levels...." Read more

"...categorizations of wealth in deciles and centiles to better understand the nature of wealth, using national incomes and years of national incomes to..." Read more

93 customers mention "Interest"83 positive10 negative

Customers find the book interesting and eye-opening, appreciating its refreshing approach.

"...This was a great and sobering starting point. Cheers!" Read more

"...in the database development that underlies it and in its ground-breaking insights...." Read more

"...This is not an easy read, but it's an interesting one. Does it live up to the hype?..." Read more

"...I found the suggestions and argument from Thomas Picketty provocatively compelling and no-less robust in it's presentation of data, analysis and..." Read more

78 customers mention "Value for money"68 positive10 negative

Customers find the book well worth its price, providing a comprehensive economic narrative that is accessible to readers with varying levels of economic knowledge.

"...less orthodox views about economics will find this book stimulating, valuable and sympathetic in many respects...." Read more

"...It also is strategically and operationally the safest and most cost-efficient means to counter the outrageous irrational influences we have had to..." Read more

"...But it is well worth the time and effort it demands...." Read more

"...Capital in The 21st Century is well worth a major investment of time." Read more

56 customers mention "Length"17 positive39 negative

Customers have mixed opinions about the book's length, with several noting it is very lengthy and a long read.

"An important book on economics. Long and involved." Read more

"...His treatise is long, but not very focused...." Read more

"...On the other hand, the notes didn't fare as well. The notes in this book are long, discursive and informative; you really should read them...." Read more

"...It is a long read, but well written and easy to understand. It would be nice if there were a few (hundred) more scientists in this arena." Read more

41 customers mention "Data quality"10 positive31 negative

Customers criticize the book's data quality, with multiple reviews mentioning that it is faked and based on shaky spreadsheet data.

"...However, there is absolutely no correlation between the data he presents, his analysis about the future, and the recommendations he makes...." Read more

"...Piketty is not a competent technician...." Read more

"...The numerical information is presented in a very well developed series of 97 illustrations and 18 tables...." Read more

"...I think this is unnecessary and distorts the numbers because inflation is almost impossible to measures with any accuracy...." Read more

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Top reviews from the United States

  • Reviewed in the United States on April 22, 2014
    First off I'd like to state that the data that the author has compiled is very impressive and provides the reader with a new way to look at both the stock and flow of wealth of society and its distribution. It is unique and comprehensive and for this aspect of the book it is landmark and hopefully will improve and refine our thinking about capital and inequality going forward. The conclusions of the author i think are very suspect and not nearly as insightful as the analysis, but they are where the author's politics come out and are a relatively smaller portion of the book. The need to move beyond looking at crude measures of inequality like the Gini coefficient and distribution of profits between labour and capital was much needed and the author was able to, through meticulous analysis look at the entire distribution of wealth through society by looking at the bottom 50%, top 10% top 1% and top .1% when possible both from a labour and capital perspective. The dataset is not global, though the author was able to partially reconstruct a broad range of countries, but includes the US, France, UK, Germany aspects of Japan and the Scandinavian countries with a focus on the US and France.

    The book is split into 4 part. The first three parts are both an introduction to the economics as well the accompanying economic analysis of the accompanying datasets. The first part - income and capital start out by defining the basics of what the author will discuss throughout the book namely income, capital and how the output of society is distributed and how that has changed over time. National accounting is discussed, the capital stock and its properties are introduced as well as some key identities that will be used throughout regarding the share of income going to capital which is determined by the return of capital and the size of the capital stock relative to annual output. The author also discusses growth over time documenting global growth rates over time and introduces to the unfamiliar reader the consequences of how small changes in growth compounded can lead to large cumulative changes. The author discusses demographic trends globally through time and some of the dynamics of them (which are largely unpredictable). The author also discusses how growth and demographics can influence the capital intensity of the economy. The author also discusses how the sectors of the economy and output have changed over time with agriculture and its share of both labour and capital much lower but the service sector replacing it and how manufacturing intensity and capital replaced agricultural through the industrial revolution as well. He also discusses modern concerns about growth by discussing Robert Gordon's recent paper on the end of growth and whether techonological innovation has run much of its course, he is relatively optimistic but nonetheless foresees growth following a bell curve for which we are at a peak which will decline but to much higher levels than centuries in the past. The author also discusses inflation and monetary policy and how it has changed over time.

    The second part of the book is called the dynamiocs of the capital/income ratio. It is about precisely that with the author starting out by using novels to introduce the reader to society in the past. In particular the author refers repeatedly to Balzac and at times to Jane Austen to remind the reader what society was like in the 19th century. The core of the data set starts to become apparant in the second section with the author documenting the capital/income ratio over time in Britain peaking at 7x in 1700 falling to 2x post the first world war. The author includes the same information for france as well. The author discusses how foreign capital was important in the 19th and early 20th centuries during the colonial period and discusses the role of government debt and how it does not change national wealth just the distribution of wealth within the population. The author includes the value of national wealth through time by showing both public assets and public debt over time. The author discusses economic theory and how Ricardian equivalence is strictly only true of economies have a representative agent, which they do not hence the principal should be considered suspect. The author discusses the capital stock through the world wars and how it changed dramatically during the 20th century, though the capital stock has had a recent resurgence as economic policy has drifted back toward free market capitalism. The author then moves to look at the New World and in particular the US and repeats the analysis there as well (though the author starts with Germany as well). In the US the capital stock was more stable (it wasnt a colonial power which was a large part of the capital stock of the UK and to a lesse extent France). Canada is also analyzed as another data point. The author also discusses regional differences by including the differences between the South and the North and the repurcussions of Slavery to the capital/income ratio. The south had a much higher capital/income ratio as much of its human capital was effectively consdered part of the capital stock. The author shows the distribution of capital over time in the US from 1770 to today as well as spot distribution of wealth data points for UK and France. The author starts to discuss the dynamics of the capital/income ratio through his second law of capitalism, namely the ratio is equal to savings/growth. This is the result of the differentiam equation that leads to steady state rather than an identity which holds true at any given point of time. The author then moves into discussing the capital stock over the last 40 years and how its been on a resurgent trend that has been catalyzed by the s/g relationship as well as privatizations. The author discusses the components of savings, the resurgence of the value of capital and where the capital/income ratio is going. The author moves on to the Capital/labor split and its evolution through the 21st century. In particular with the resurgence of growth in the capital stock the trend towards growing labor share in the 20th century has reversed itself and we are heading towards the 19th century. There are regional differences with countries like the US being counterexamples with the rise of the supermanager.

    The third part of the book is The structure of inequality. This is where the value of the books data set gets particularly apparant. The author discusses how the labor share of income has changed over time for the various portions of the population, in particular for the top 10 and top 1%. He discusses how the ownership of the capital stock has become less concentrated and there has been an emerging middle class of owners of capital. The author discusses how different countries have had different evolutions between there ownerships of capital and how the labour share of income is divided with the US having a more distributed capital base but a much more concentrated labour share distribution. The author discusses the "merit" of the distribution of labor income and how there is a conflict of interest now for supermanagers and the growth in the supermanager has coincided with the decline in the progressivity of the income tax. The author discusses the flow of income through inheritance and analyses the dynamics of this flow based on the ownership of the capital stock by age group and mortality rates. This form of analysis is definitely an important addition and goes against conventional wisdom of aging populations spending their savings on lifestyle maintenance. I would be very interested to know how this process is evolving in Japan and Italy for example. The author also discusses inequality at the global level and how there are increasing returns to scale in capital (this is definitely not a fact and much evidence is to the contrary but an empirical observation made by the author on a few examples). The author also looks at the growing share of wealth of the top centile and billionaires in particular. He discusses how Bill Gates and the Bettencourt family have had the same return on their capital over time despite one being self made and the other inherited reinforcing his thesis that growing capital has its own momentum based on the fact that if the return on capital is greather than the growth rate capital continues to accumulate to those who have it- a central point throughout the book.

    The 4th part is Regulating Capital in the 21st century. It is the authors partial solutions to the growing inequality that we see that is due to inherint dynamics and unrelated to the merits of an individuals labour contribution or the foresight of those investing in the future capital stock. It discusses ideas like rethinking progressive tax, increasing the top income bracket to 80% to diffuse the rent seeking behaviour of the super manager. It includes ideas on taxing capital, in particular a graduating tax on capital to both make sure people are using the capital stock efficiently as well as counteracting the benefits of the economies of scale the author has been pointing out. Lastly the author focuses on the pressing problem of public debt with a focus on Europe.

    The data the author has compiled has allowed him to look at the distribution of wealth in much of the Western world through a more refined lense. It is full of important insight and a true developement that takes us to a level with much more granular detail than what typically is focused on. For that reason the book is a must read and is definitely a 5* book. The policy recommendations i put far less value on. The author is focused on the distribution of wealth and the solutions he proposes are designed to get those more in line with politically what he believes is a more fair distribution, thus they are focused on optimizing a distributional outcome. Recommending confiscating capital to pay down national debt is an example of a solution to a problem without considering the consequences of the action on the future dynamics of the economic system. Though the solution might seem fair, it is also insane as funding the flow of capital stock would totally change. Discussing a policy that could have better dealt with preventing the ex ante buildup of national debt is better than discussing one that ex post unwinds it far more dramatically. In addition ideas like just taxing capital at higher rates depending on one's capital base is highly questionable. Imagine each year if an entrepreneur has to give up 5-10% of his equity of his company (as capital has migrated from land to financial capital this is precisely what will be required) then the world would be very different and I am a skeptic it would be a more utopian society. Generation transfer is far more dangerous than capital accumulation through a lifetime and the author's policy perscriptions are political and one gets a sense he is stepping outside his comfort zone of impacting wealth inequality and into impacting economic growth, which is another big factor in decreasing economic inequality. There are many things that are scary- in the UK the top 5 families own more than the bottom 20% with 2 of those 5 are ancestors of those who owned the fields which London was built on. Between the 2 facts above I worry far more about the fact that 2 are from ancient landowning families, a form of capital stock that does not depreciate than the former, which is worrisome, but a more granular analysis of the asset base and its properties would be required. Achieving better distribution of wealth is not about just taxing capital more (though that should be a part of it). We need better policies, this is a start in how to look at the problem more clearly. The solutions are food for thought, but at this stage only that- as the author states, economics is not a science it is a social science and democratic deliberation is necessary to help us decide what policies society believes in. This helps provide better tools to answer some of the questions we have to ask ourselves about why the asset base is owned as it is and how does that fit with our beliefs in how society should be organized considering all dimensions like individual merit, equality of opportunity, sanctity of contract for providing the right base incentives etc...
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  • Reviewed in the United States on March 17, 2014
    This is a monumental work about inequality. Despite the title's allusion to Marx's classic (a point emphasized by the dust jacket design), it's neither a primarily theoretical nor a primarily polemical work, though it has elements of both theory and advocacy. Nor is its author (TP) a radical: he taught at MIT, and is thoroughly at home in the concepts and categories of mainstream neoclassical theory. Nonetheless, I think even many who hold less orthodox views about economics will find this book stimulating, valuable and sympathetic in many respects. And all readers ought to find it disturbing.

    In the ultra-long comments below, I begin with the book's audience and style (§ 1); then turn to some of the book's main arguments, which are more nuanced than usually reported (§§ 2-6); then to some things that are unclear or missing (§§ 7-8); and I end with some comments about the book's production (§ 9) and some concluding remarks.

    1. In the original French edition, TP says that he intended this book to be readable for persons without any particular technical knowledge. In principle, it could be read by a broad, college-educated audience. TP's prose is very clear and direct, with a low density of jargon and a high density of information. (I read the French edition, but Arthur Goldhammer's translation seems to preserve these qualities very well.) The discussion is enlivened by well-chosen references to literature and a sprinkling of sarcastic barbs, both of them techniques that French scholars have developed into art forms (if not as elegant as John Kenneth Galbraith's irony). The allusions here range from Balzac, Jane Austen and Orhan Pamuk to "The Aristocats," "Bones" and "Dirty Sexy Money;" and the sarcasm hits both university economists and The Economist (@636n20), among others.

    But: this is a long and demanding book. It talks relatively little about current events or the policies of particular governments, unlike, say, Joseph Stiglitz's "The Price of Inequality" (2012). I wouldn't say Stiglitz's is an easy book, but it was written more with of a popular audience in mind (picking up 270+ Amazon reviews in less than 2 years). TP's presentation is far more methodical and meticulous than Stiglitz's. It helps for the reader to be interested in the fine points of data series and categories, and in the sources of uncertainty in data. Occasionally the discussion will focus on concepts from academic economics, such as Cobb-Douglas production functions, elasticities, and Pareto coefficients; while TP uses words rather than math on these occasions, he generally assumes you pretty much know what he's talking about. Finally, if, as I did, you make it through the whole thing while reading with some attention, I bet dollars to donuts you'll come out of the experience feeling very, very down, on account of TP's message. Actually, that mood will hit you long before the end. Despite its felicities of style, this is an arduous read.

    2. The "capital" in the title includes not only farms, factories, equipment and other means of production, but also assets typically owned by individuals, such as real property, stocks and other financial instruments, gold, antiques, etc. -- what's sometimes called "wealth". TP excludes so-called "human capital," because it lacks some features of true capital (ability to be traded in a market, inclusion in national accounts as investment), unless it's in the form of slaves.

    The distribution of capital is far more unequal than that of income. Even the Scandinavian countries have a Gini coefficient for capital of 0.58 -- comparable to that for income inequality in Angola and Haiti, among the 10 worst in the world (World Bank figures). For Europe and the US in 2010, the coefficient is at 0.67 and 0.73 respectively, worse than any country on the World Bank income inequality chart. (Of course, the worst countries on that World Bank list have hair-raising capital inequality, too.)

    The book's main thesis is that economic growth alone isn't sufficient to overcome three "divergence mechanisms" or "forces" that are in many places returning inequality in income and/or capital to pre-World War I levels. The main mechanisms are:

    (A) the historical tendency of capital to earn returns at a higher rate ('r') than the growth rate of national income ('g'), which typically sets a constraint on how workers' salaries grow, symbolized by the mathematical expression, "r > g".
    (B) the relatively recent (post-1980) widening spread between salaries, not only between the wealthiest 10% or 1% and the mean, but even within the top 1%.
    (C) an even newer inequality in financial returns, which correlates r with the initial size of an investment portfolio -- i.e., different r for different investors.

    A point to keep in mind is that g relates to national income, not to GDP. National income = GDP - depreciation of capital + net revenue received from overseas. Among other benefits, this measure corrects for the reconstruction boosts in GDP after wars, hurricanes, earthquakes, etc., since the depreciation term takes the destruction of property into account. Also, an increase in national income usually has two different sources: part of it is truly economic, coming from productivity growth (output per worker), and part is due to population growth. Historically, it's the latter that has dominated.

    3. The r > g argument has received the most attention. It's to be seen "as an historical reality dependent on a variety of mechanisms not as an absolute logical necessity" (@361). TP finds that this condition has held throughout most of the past 2,000 years. As long as it does, he says, it's the natural tendency of capitalism to make inequality worse -- and the bigger the difference (r - g), the worse that inequality will be. Many commentators about this book make it sound as if this is an obvious mechanism. But if you play with it on Excel, using reasonable values for r and g, it turns out to be slower and more sensitive to initial conditions than you might expect.

    Here's a toy example: Let's suppose r = 4%, g = 1.5%, and that salaries rise as fast as g (a very idealistic assumption!); and let's assume these rates are net of taxes or that no taxes apply. I'll compare the situations of three people in Silicon Valley: X, an engineer who made $8.5 million by exercising stock options when the company she used to work for had an IPO; Y, the same company's former HR manager, who made $6.0 million from her options; and Z, a young lawyer at a local law firm, who has a $200,000 salary when we first meet her.

    After a year, X has $340K in disposable income, Y has $240K, and Z gets a raise to $203K. Suppose X and Y spend all their income from their capital every year. Eventually, Z can earn more than each of them: it will take her about 37 years to exceed X's annual income, but only 13 years to make more than Y. Now suppose X and Y each save the equivalent of 1.5% of their capital. Then Z will never overtake either one in gross annual revenue, but the situation as to disposable cash is a bit different. After saving, X will always have more cash to play with than Z, but it will take more than 15 years for her to have just 50% more than Z does. As for Y, she'll actually start out with less annual cash than Z, and it will take her 13 or 14 years just to catch up -- even though she's a multi-millionaire.

    The true potency of the r > g mechanism comes from its working in conjunction with other circumstances. For example, according to TP's historical data, I've been way too conservative in my assumptions about X's and Y's advantages over Z.

    From the 18th through the early 20th Centuries, the people who earned money from capital had proportionally a lot more than they do today: e.g., in 1910, the wealthiest 1% in Europe held > 60% of all European wealth, about triple the share they hold today (see Fig. 10.6). The US was not so extreme, but still very unequal: From 1810 to 1910, the share of the top 1% grew from 25% of American wealth to 45.1% (Fig. 10.5), compared to 33.8% today. So to set our example 100-200 years ago, the endowments of X and Y could plausibly be much bigger relative to Z's wages (especially if we chose, say, Wilhelmine Germany instead of Silicon Valley).

    More recently, since the 1980s, most folks with a lot of capital also earn salaries -- and having a lot of capital tends to be correlated with having a salary well above average. So in a more realistic modern example, we should consider that X and Y have moved on to new companies where they receive hefty salaries, which would give each in total a healthy and growing excess of annual spendable cash versus Z. This is the realm of the second divergence mechanism, which is especially formidable in America. In 2010 the richest 1% not only held more than 33% of American wealth, but they earned between 17x and 20x the mean American income (depending on whether capital gains are included). Even the wealthiest 0.1% of Americans work, for average incomes roughly 75x the mean (or 95x, if capital gains are included) (see Table S8.2). At the other end of the spectrum, I was shocked to learn that the purchasing power of the US Federal minimum wage peaked in *1969* -- what was $1.60 an hour back then would be worth $10.10 in 2013 dollars. In those same dollars, the current statutory minimum hourly wage is $7.25 or a bit less (see Fig. 9.1 and nearby text).

    On top of these trends, succession to family wealth is becoming important again today, even if not to the full degree it was in 19th Century novels. TP frames this in terms of the dialogue of the worldly Vautrin and the young, ambitious Rastignac in Balzac's "Père Goriot" (1853). Rastignac aspires to wealth by studying law. Vautrin counsels him that unless he can claw his way to become one of the five richest lawyers in Paris, his path will be easier if he simply marries an heiress in lieu of study. Cut to the present: judging by TP's Fig. 11.10, law school might have been the better choice for Baby Boomers, but if you're a Rastignac in your 20s or 30s when you read this, consider marrying up. Maybe you think you'd rather found the next Facebook or Google -- but why work so hard, and against such long odds? TP shows that when Steve Jobs died in 2011, his $8 billion fortune was only 1/3rd that of French heiress Liliane Bettencourt, who has never worked a day in her life.

    4. There's another way that "r > g" is inadequate as a summary of TP's argument: TP calculates that during the past century (1913-2012), we've seen r < g, the opposite of its usual polarity (Chapter 10).

    High rates of growth -- or at least, what we're accustomed to thinking of as high rates of growth, 3%-4% or more -- aren't a sufficient explanation. In fact, such rates of growth aren't sustainable in the long term, and were not sustained in most countries; they're mainly a catch-up mechanism lasting a few decades, according to TP. During the period from 1970-2010, the actual per capita growth rate of national income averaged about 1.8% for the US and Germany, 1.9% for the UK, and 1.6%-1.7% for France, Italy, Canada and Australia. The wealthy country with the highest per capita rate was Japan, at 2.0 (Table 5.1). (Think about that, next time you're tempted to swallow what Paul Krugman and other pundits pronounce.) Nonetheless, growth rates in this range appear to be what TP calls "weak" (e.g., @23).

    Rather, the main reasons for the flip are the tremendous destruction of capital in Europe due to the two world wars, and the imposition of very substantial taxes on capital, at an average rate of about 30% in recent years. These greatly reduced r.

    Despite these trends, inequality has been getting worse during the past few decades. This isn't a paradox, but rather the impact of the other divergence mechanisms, especially the rise of the "working rich" and the spread of inequality in salaries. So we should be quite alarmed by TP's assertion that we'll flip back to r > g during the 21st Century. His explanations for this seem rather more speculative than most of the rest of the book, though it's clear he expects g to remain low. I return to this a bit more in § 7 below.

    In any case, it's clear that r > g isn't a necessary condition for inequality to get worse.

    5. TP reserves his most anxious prose ("radical divergence," "explosive trajectories and uncontrolled inegalitarian spirals") for the third mechanism, inequality in returns from capital (@431, 439). Those with a great deal of capital are able to earn higher returns on it -- such as 6%-7%, or even 10%-11% in the case of billionaires like Bill Gates and Bettencourt -- compared to those with only a few hundred thousand or millions of dollars, who may earn closer to 2%-4%. This results from two types of economies of scale: the ultra-rich can afford more intermediaries and advisers, and they can afford to take on more risk.

    Unfortunately, public records don't provide adequate information on this point, and while TP does look at Forbes's and other magazines' lists of the wealthy, those present many methodological issues. So TP corroborates his findings by looking at the more than 800 US universities who report about their endowments. Most spend less than 1%, or even less than 0.5%, of their endowments on annual management fees. Harvard University spent around $100 million annually (ca. 0.3%) on management of its $30 billion endowment, and earned net returns of 10.2% annually during 1980-2010 (not counting an additional 2% annual growth from new gifts). Yale and Princeton, each with a $20 billion endowment, earned a similar rate. A majority of universities have endowments of less than $100 million, and so obviously can't fork over $100 million to managers; they earned average returns of 6.2% during that period (still better on average than you or me).

    TP of course doesn't worry that universities will own most of the world, nor does he find it plausible that sovereign funds from Asia or oil-producing countries will either. The bigger danger, he contends, is private oligarchs, and he believes this process is already underway. Since the officially documented ownership of global assets comes up slightly negative, TP calculates that either the rich are already hiding the equivalent of at least 8% of global GDP in tax havens, or else that our planet is owned by Mars (@465-466).

    6. In Part IV of the book, TP considers policy approaches to deal with the three forces of divergence. In short, the answer for all three is a progressive, annual global tax on capital, to be set at an internationally agreed rate and its proceeds apportioned among countries according to a negotiated schedule (@515). This will also need a global real-time reporting system for transactions in capital assets. Many will attack these ideas, but it seems that TP's main intention is to get a serious conversation going. His admits his approach is utopian, but maintains that utopian ideas are useful as points of reference.

    What interested me most was that TP doesn't see pumping up g as a viable approach to preventing r > g from returning. For one thing, demographics create some limitations in how far g can be pushed, especially in countries whose populations will soon be declining (or Japan, where that's happening already). For another, the same forces that pump up g can also increase r, at least in theory, so (r - g) wouldn't necessarily change much. The more practical answer then, is to bring down r.

    In his final chapter TP turns to the very topical question of public debt, which he sees as an issue of wealth distribution and not of absolute wealth. He reminds us about two of its important aspects: One is that public debt takes money from the pockets of the mass of citizens, who pay taxes, and puts it in the pockets of the smaller group of people who are wealthy enough to make loans to the state. The other point is that nations are rich -- it's only states who are strapped for funds. He calculates that in many countries, a one-time progressive capital tax of up to 20% on property portfolios worth more than 1 million Euro could bring the national debt to zero, or nearly so.

    Actually, TP doesn't believe that such a drastic reduction in debt levels is urgent, any more than he believes that such a gigantic tax is politically feasible. But his observation puts the lie to the notion that one must raise consumption taxes or income taxes (or, for that matter, experience economic growth) to reduce debt levels.

    7. There were a couple of rare instances where I didn't feel the text was sufficiently clear. TP very graciously replied to my emailed inquiries about these matters, but without that input, I'd have remained quite confused by them.

    (a) The first arose in Chapter 1, where α (alpha) is defined as designating the "share of income from capital in national income." According to the perhaps intemperately named "first law of capitalism," α = rβ, where β is the ratio of the stock of capital to the flow of national income (and r is as above, the rate of return on capital).

    But an important category of income from capital is capital gains, the profits you make when you buy assets cheap and sell them dear. Unrealized capital gains make up a substantial part of the fortunes of Bill Gates, Steve Jobs and other billionaires mentioned in the book. And capital gains are *not* included in national income, according to the algorithm for computing that quantity. (Nor are they included in GDP.) This makes the use of the preposition "in" confusing -- does it mean that capital gains aren't considered as income from capital?

    This issue seems to have its root in academic economics, where α appears as a parameter in the neoclassical growth model developed by Robert Solow. The model represents an economy that produces one type of good -- i.e., it's all about making and selling stuff that gets consumed, so capital gains aren't considered. (In a sense, this model supplies a lot of the motivation for Part II of the book: the academic debate over the relative shares of capital and labor in the national income, i.e., the size of α and whether it changes with time, is a long and at times contentious one. But you can still benefit from reading Part II without knowing that.)

    The answer I got from TP is that because capital gains don't seem to be very important in the long term (>100 years), netting out to roughly zero over such periods, he didn't consider them when discussing α. The subject of capital gains does come up later in other contexts, though, and TP does consider them important in the short-term (which in some contexts can mean a timescale of several decades).

    (b) The second issue relates to TP's prediction that our current condition of r < g will flip back to r > g later this century. TP mentions that for the past 100 years, wartime destruction and, later, an average 30% tax rate on capital have brought r below g, despite currently weak growth rates in many countries. The data in the book, though is rather opaque about the relative contributions of these factors. Also, the book's clearest explanation of why matters might reverse rests on the possibility that countries will compete to attract capital by a race to the bottom in capital tax rates, allowing r to edge back up. This sounded rather too speculative to warrant such definite conviction about the return of r > g.

    I checked the online material, and found the Excel file (not the pdf file) of supplementary Table S10.3, which mentions some of TP's assumptions. Among other things, this makes it clear that TP factors in destruction of capital from WWII in calculating r even for the most recent 50 years. It seems plausible that this will be less important going forward, so that even a 30% average tax rate on capital might not be sufficient in and of itself to prevent r from popping above g again ... maybe. I'm still not entirely convinced that TP's argument about the future of r is among the strongest in the book; but I'd be even less so if I hadn't consulted the online information.

    8. No book can talk about everything pertinent to its theme, so it's all too easy to think of things one wishes had been included. Still, I was disappointed that the book was conventional both in its thinking about economic growth, and in its thinking less about growth's environmental consequences.

    TP tells us that part of "the reality of growth" is that "the material conditions of life have clearly improved dramatically since the Industrial Revolution" (@89). Its main benefits include its roles as a social equalizer, and as a "diversifi[er] of lifestyles" (@ 83, 90). "[A] society that grows at 1 percent a year ... is a society that undergoes deep and permanent change" (@96).

    Growth's equalizing effect, though, comes largely from population-based growth, whereas "a stagnant, or worse, decreasing population increases the influence of capital in previous generations" (@84). So is a country already in that condition, such as Japan, supposed to open its doors to immigrants? As an immigrant to Japan myself, I can appreciate that there are many social, cultural and political reasons why this could be a bad path both for country and for many of the immigrants as well. How about focusing on productivity-led growth instead? Maybe, because "in a society where output per capita grows tenfold in a generation, it is better to count on what one can earn and save from one's own labor" (@84), instead of relying on an inheritance. The problem is, this takes for granted that gains from productivity improvements will be shared with labor, rather than shareholders. Yet Part II shows that labor's share has been flat or declining. In Japan, productivity improvements nowadays tend to come from using temporary employees instead of higher-paid permanent ones, and from using robots in lieu of employees at all. These have worked out to be more methods for enhancing inequality, than for abating it.

    Both population growth and productivity growth have other costs, too. The rapid growth of output TP alludes to could only be of the transitory, catch-up sort, such as China has been experiencing since the 1980s. The environmental consequences of that haven't exactly been benign. Nor does the book give any consideration to the environmental consequences of population growth, when the population in question aspires to a wealthy country's per capita environmental footprint.

    So are countries with declining populations doomed to oligarchy until all the other countries in the world can agree on a global capital tax? Obviously there are better ways to proceed. Such as examining whether growth truly is necessary for further improving health and other material conditions of life, even in an already-wealthy country. And inquiring whether deep and permanent change is a virtue in itself, or whether good sorts of changes can be achieved without following policies obsessed with growth. Exploring such questions thoroughly would certainly have been outside the scope of this book, but failing even to hint at their existence was either a missed opportunity or a lapse of imagination.

    9. In addition to the good translation, some other aspects of the book's transition to English succeed. The US hardcover has sewn signatures; my closely-read and much-shlepped French copy, which comes in at nearly 1,000 pages in a perfect binding, is already showing signs of loose leaves. The US edition has a pretty good index, whereas the French lacked one entirely. It's not quite complete, though: e.g., you won't find the above-mentioned references to Mars, "Bones" or The Economist in it, and I noticed a few references to Japan that were missing, too. On the other hand, the notes didn't fare as well. The notes in this book are long, discursive and informative; you really should read them. The French original used footnotes, but Harvard opted for endnotes, which means you'll either be doing a lot of flipping back and forth, or else ignoring a lot of good material.

    A mixed blessing in both editions is that the technical appendix has been punted online. The package is generous, and includes files for the book's tables and figures in both pdf and Excel formats. The expository appendix (evidently translated by someone other than Dr. Goldhammer) includes hyperlinks to pertinent scholarly articles. Downloading the 2013 paper TP wrote with Gabriel Zucman, "Capital is Back," along with its own humongous technical appendix, might be a good choice: the present book's technical appendix refers to this often. If you want all relevant Excel files (including, e.g., some UN data and TP's comments to the Angus Maddison historical data), be sure to scroll through the pdf of the appendix and click on appropriate links, since several such items are absent from the website's "Piketty 2014 Excel files" folder.

    Unfortunately, no one can know if this website will be maintained a few decades from now, or how easy it will be to read .pdf and .xls files by then. Just as is the case today with books by leading mid-20th Century economists, this is the sort of book that scholars will still want to read in future, even after it's out of print. They'll be very frustrated by the many cross-references to the technical appendix (at least 100-200 times by my eyeball count) if the information has vanished. I hope that in the not-too-distant future TP will freeze and publish a hard copy of this supplemental material for archival purposes.

    It's also surprising that not even the website provides a comprehensive bibliography. The technical appendix includes a number of references, but these are spread out over a list at the beginning and more references embedded into a chapter-by-chapter commentary. Even this fragmented resource doesn't pick up many of the books and articles mentioned in the printed book's endnotes/footnotes. Again, I hope TP or the publisher will remedy this soon.

    ===

    Among its other accomplishments, the book demolishes a couple of abstractions from the 1950s that economists have cherished for decades. One is the "Kuznets curve," according to which income inequality first rises, then peaks and thereafter declines as per capita GDP (or earlier, GNP) continues to rise. Another is the Modigliani "life-cycle" saving theory, which posits that the people save for their retirement and then spend pretty much everything by the time they die. TP's long runs of data show that both of these theories were plausible, if ever, at best only during a brief era around the time they were formulated, when both capital and income were distributed in a more egalitarian way.

    How will the economists of today react to this book? Paul Krugman didn't provide an encouraging sign in his blog a few days after the US edition appeared. First thing he did was to try to "understand" it by plugging TP's data into another abstract 1950s-era mathematical model. The vast majority of mainstream economists didn't see the 2008 crash coming, but after it happened they insisted that their models weren't defective. If an historical event of that magnitude couldn't make a dent in their worldview, one has to be a great optimist to believe that this book will. More realistic may be to hope that this book's impact can be political. Luckily, that isn't up just to economists, but to readers like us.
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