First, there is the lost opportunity from maldistribution: a dollar of income creates more human well-being in the hands of the relatively poor than in those of the superrich. As we trade off dessert, incentive, and utility in our assessment of what the distribution of income should be, there is potentially a huge lost opportunity from maldistribution that blocks both egalitarian division and upward mobility.WCEG
Second, there is both the loss of opportunity directly to those whose ability to move up is blocked by the sociological, Cultural, and economic consequences of plutocracy; and the indirect loss of opportunity for others because blockages to upward mobility keep a great deal of the potential talent of the society from being appropriately utilized.
Third, there is the fact that in the PikettyWorld most institutions are run and most societal decisions of note are made by those whose principal qualification is to have chosen the right parents. They for the most part lacks the meritocratic chops to would have been able to potentially acquire even 1/100 of their fortunes on their own. In such a society institutions are unlikely to function well. This is a third, enormous loss of opportunity.
And, fourth, there is, in the SummersWorld, the lost opportunity to mobilize the potential savings power of the world for economic growth and development––unless, of course, the government provides the risk-bearing capacity that the private sector cannot mobilize on its own.
Both sets of opportunities are with seizing. Summers appears to have spent a considerable amount of time thinking about how to grasp opportunities in SummersWorld. It is a flaw in Piketty’s book, I think, that Piketty takes a relatively narrow focus on policies. Here is a place where I think a great deal of thought and work could productively be concentrated.
Reviewing Lawrence H. Summers’s Review of Piketty V: Secular Stagnation and the High-Pressure Economy
Brad DeLong
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