Matias Vernengo — Robert Murphy, the Austrian theory of the rate of interest and Piketty's 'Capital'

The fascinating thing about Murphy's critique of Piketty's lack of knowledge about capital, is that for him this suggests that Piketty's wealth tax would be a bad idea (note that critiques from the left, like Galbraith or Palley are not against a wealth tax, but suggest that inequality must be combated in other ways too, with stronger unions, more regulated capital, full employment policies, etc.). Here Murphy seems to think, like Tyler Cowen, that taxes would punish entrepreneurs and reduce the dynamism of capitalism. Because, you know (wink wink nudge nudge, say no more), without taxes, and other impediments, capital would be more efficiently utilized. So here is an economist that criticizes higher taxes as the solution for inequality, by suggesting that the notion of capital used to defend a wealth tax is flawed, and uses that very same flawed notion of capital (without even getting it) to defend a laissez-faire solution.

Naked Keynesianism
Robert Murphy, the Austrian theory of the rate of interest and Piketty's 'Capital'
Matias Vernengo | Associate Professor of Economics, University of Utah