Matt Bruenig — On Piketty and Growth

Aziz notes that if you actually look back before modern capitalism, inequality was higher. Why was that? Because it was low-growth. Why would that make inequality higher then? Because with growth that low ... the spread between r and g is very high! That's Piketty's entire point!

Piketty spends plenty of time in the book talking about low or no-growth agricultural societies and the way in which the wealth accumulation dynamics of such societies will drive severe wealth inequalities. His main point about wealth inequality going forward is that declining growth will make us more similar to those societies than we are used to. There is nothing bizarre about this. If your theory is that growth will decline, it actually makes incredible amounts of sense to compare it to periods where growth was lower.

Aziz seems caught up in feudalism versus capitalism for some reason here, when Piketty's point is about the spread between r and g in both systems. His point is that the spread between the r and g in the future is going to be closer to feudal-era spreads than the exceptionally narrow spreads we've seen in the last few decades.

Demos — Policy Shop
On Piketty and Growth
Matt Bruenig

See also Bruenig's Quick Note on Piketty, Savings Rates, and Rates of Return

The most important point to take away here is the savings point reflected in the first graph. Piketty's wealth inequality divergence theory requires the wealthy to save somewhat more than the non-wealthy, and it appears that they do that pretty consistently across time.