Justin Wolfers posted a slideshow regarding Thomas Piketty's Capital yesterday. Wolfers has been an interesting character to watch on Piketty, especially after his excessive praise of Larry Summers' abortive and error-riddled effort at critiquing it. Perhaps not surprisingly, Wolfers' slideshow recreates the exact same reading errors as Summers. Wolfers should correct these errors.
This raises the question as to whether Wolfers actually read Piketty carefully or just relied on Summers, who didn't read Piketty carefully or chose to write his own version of Piketty.
The Demos Blog— PolicyShop
Justin Wolfers' Zombie Piketty Confusions
Earlier today, I wrote a post about Justin Wolfers' incorrect understanding of Piketty. I recommend you read that post before this one. The point I am making in it, which I have made before, is that Piketty's argument that the wealth-to-income ratio will increase does not rely upon the famous r > g (the rate of return on capital is greater than growth).Suppose r is less than g
I keep pointing out in these posts that it is solely a function of the savings rate divided by the growth rate (s/g) and Piketty's forecast that growth will slow. To drive this point home though, let's actually create a hypothetical world where r is less than g (r < g) to show that in fact the wealth-to-income ratio can increase in this world and can lead to greater income inequality.
Matt Bruenig
1 comment:
Good job as usual by Bruenig. He's correct in both posts.
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