Author Topic: Capital in the Twenty-First Century - Thomas Piketty  (Read 274 times)

harnett

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Capital in the Twenty-First Century - Thomas Piketty
« on: March 29, 2014, 23:54:44 GMT »
Has anybody read this?  I'm fascinated.

http://www.youtube.com/watch?v=7TLtXfZth5w

A.D. Thibeault says "The main argument: The unequal distribution of wealth in the developed world has become a significant issue in recent years. Indeed, the data indicate that in the past 30 years the incomes of the wealthiest have surged into the stratosphere (and the higher up in the income hierarchy one is, the greater the increase has been), while the incomes of the large majority have stagnated. This has led to a level of inequality in wealth in the developed world not seen since the eve of the Great Depression. This much is without dispute."

petagny

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Re: Capital in the Twenty-First Century - Thomas Piketty
« Reply #1 on: April 01, 2014, 08:34:35 GMT »
Indeed, it sounds very interesting. His point that there is nothing natural or inevitable about the distribution of income and/or wealth - it's a policy choice - is encouraging (unless you're in the 1%). I'm going to get the book.

Piketty is in Prospect's list of 50 top world thinkers this year. Along with several other French economists, including Esther Duflo. (Christine Lagarde is also classed as an economist, but I think she is a lawyer).

Here's an article by Edward Luce from yesterday's FT on inequality and democracy (for the 1%!):

http://www.ft.com/cms/s/0/c8fe32c2-b5cb-11e3-a1bd-00144feabdc0.html?siteedition=uk#axzz2xX7Y7STF

'Is inequality bad for US democracy? Not according to the US Supreme Court. In the next few weeks America’s apex court is likely to remove what remains of post-Watergate limits on campaign finance.
In 2010 it did away with the biggest restriction by giving corporations the same rights to free speech as people. Now it looks set to scrap ceilings on what individuals can give to candidates and parties. In a less unequal society, the downside would be limited. But in an economy where the top 1 per cent of the population owns more than a third of national wealth, it corrodes the republic from which such riches sprung. People fret about America’s 1 per cent economy. They should worry more about its 1 per cent democracy.'


Here's an article from the Guardian referring to IMF research suggesting that inequality can be a drag on growth.

http://www.theguardian.com/business/2014/feb/26/imf-inequality-economic-growth


Attached is the IMF paper. It is rather more measured than the Guardian article might indicate, suggesting that even if inequality is negatively correlated with growth, it does not necessarily follow that redistribution will be good for growth. It depends on the policy mix. These are the main findings:

First, more unequal societies tend to redistribute more. It is thus important in understanding the growth-inequality relationship to distinguish between market and net inequality.

Second, lower net inequality is robustly correlated with faster and more durable growth, for a given level of redistribution. These results are highly supportive of our earlier work.

And third, redistribution appears generally benign in terms of its impact on growth; only in extreme cases is there some evidence that it may have direct negative effects on growth.

Thus the combined direct and indirect effects of redistribution—including the growth effects of the resulting lower inequality—are on average pro-growth.
While we should be cognizant of the inherent limitations of the data set and of cross-country regression analysis more generally, we should be careful not to assume that there is a big tradeoff between redistribution and growth. The best available macroeconomic data do not support that conclusion.





harnett

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Re: Capital in the Twenty-First Century - Thomas Piketty
« Reply #2 on: April 01, 2014, 09:23:36 GMT »
OK - I haven't read it but is he really saying that distribution of wealth is a policy choice - to me what is happening is a logical consequence of the market system - not  somebody's or institution's  choice.  30 years ago I used to teach economics to A level students and indicated that social democracy/kenysianism was basically a "restraining" of the market system to provide a more equal distribution of wealth.  Since then I've seen the roll back of social democracy and the promotion of unfettered market economies and the biggest shift of wealth from the poor to the rich in history.

Must read this book!!

petagny

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Re: Capital in the Twenty-First Century - Thomas Piketty
« Reply #3 on: April 03, 2014, 10:31:04 GMT »
Perhaps Robert Skidelsky has summarised Piketty's point better than I:

'...while the divergence of wealth and income under capitalism is natural, its "compression" is contingent on singular events [e.g., the Great Depression, which destroyed a mass of inherited wealth] plus policy reactions...'

See review of Capital in the 21st Century in the April edition of Prospect.

petagny

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Re: Capital in the Twenty-First Century - Thomas Piketty
« Reply #4 on: April 03, 2014, 16:42:45 GMT »
Here's something on addressing inequality from the IMF PFM-Blog

http://blog-pfm.imf.org/pfmblog/2014/03/meeting-rising-pressures-to-address-income-inequalitya-users-guide.html#more

The paper to which it refers is attached.

John Short

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Re: Capital in the Twenty-First Century - Thomas Piketty
« Reply #5 on: April 03, 2014, 17:08:42 GMT »
.....policy reactions such as increasing the share of public expenditure that health and education receives which, ceteris paribus. increases human capital and feeds into income and reduces poverty?

harnett

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Re: Capital in the Twenty-First Century - Thomas Piketty
« Reply #6 on: April 04, 2014, 13:38:40 GMT »
Precisely!  And in what direction is the UK going the moment?  I see the £10 charge to see a GP is now on the agenda.

Regarding the great depression - did that level wealth?  Certainly the recent crash has exacerbated the wealth divide.  Anyway, the answer is to read this book!!!!

 

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