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Naked Capitalism has an article on how popular the book is among economists, and the emergence of "Bastard-Pikettyism".
The mainstream acceptance of the book in economic circles is, in my view, due to the simplicity of the r > g story Piketty weaves into the long run inequality trends he has meticulously pieced together. This story is compatible with many of ridiculously simplistic explanations economists love, such as technology change, education, regulatory intervention in labour markets, and just about anything else. Yes, the mainstream is stuck on these same metaphysical explanations that Henry George made fun of back in the 1870s.
by gk (gk (gk quattro due due sette @gmail.com)) on Thu Apr 24th, 2014 at 04:59:00 AM EST
From the NC article:
One thing we miss in this process is that if ownership of wealth was equally distributed, it wouldn't matter whether r > g in terms of its impact in inequality. Or more precisely, institutional settings can be designed to combat any social force that concentrates wealth if we so desire, and if it is politically palatable.
I do not see a relation between these two statements. So we just need the institutions to concentrate on giving "r" to everyone? Firstly, that would be the ultimate acknowledgement that productive "g" is for fools, that "g" has to be exploited with meager reward. Someone has to produce more than "save" anyway. Secondly - Capitalism is then the ultimate casino, and we are forcefully invited to play.

Institutions could be designed and build to do any good - until they co-opted to do the opposite. The post-WWII institutions are failing for exactly this corruption reason.

by das monde on Thu Apr 24th, 2014 at 06:37:15 AM EST
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From what I have seen it would appear that r > g will be the bulldozer of economic history. The only way to control its push towards a patrimonial capitalist state is to reverse wealth disparity. It has happened before so, presumably, it can happen again. But it will be an uphill fight.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 24th, 2014 at 07:38:24 PM EST
[ Parent ]
Perhaps the best tool to control the effects of r > g is public control over the creation of money, but that is only beneficial if the government is controlled by people operating in the interests of the majority of individuals, not the majority of wealth.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 24th, 2014 at 07:42:39 PM EST
[ Parent ]
Actually, sustaining r>g needs a lot of institutional support. Enforcement of debt, rent, property relations is strongest ever - just think of copyright, intellectual property. Somehow "incompetent" governments, international institutions do an outstanding job here.

Unless the accounting apparatus will crumble by itself at some time, a social-political transformation is needed, it seems. Or some independence from the totalitarian financial interests (so to speak), democratization of basic economic, monetary relations.

by das monde on Fri Apr 25th, 2014 at 02:15:08 AM EST
[ Parent ]
Ah, you beat me to it.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Fri Apr 25th, 2014 at 02:21:37 AM EST
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Well, I would (and will) argue that, although you can make a case that r>g is almost a constant, it is not because of any actual economic grand truth, but because of a politics constant that the wishes of the mighty are listened to and acted upon.

r is constantly being propped up. Increasingly so under threat: "you give that to us or we move our capital to China/Caiman Island... insert wherever".
Interestingly, that is also the argument of the "super-managers", pretending that they must be paid a fortune because it is a global market where others are paid a fortune and they would leave the minute they were given a penny less.

When French CEOs claim that, it is quite extraordinary. For, as a few minutes of observations would show, the number of French CEOs of foreign mega multinational corporations is... zero (unless you count Renault-Nissan as a Japanese company, and anyway Ghosn is binational).

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Fri Apr 25th, 2014 at 02:21:03 AM EST
[ Parent ]
r > g ?

Rate of return is greater than growth?

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Wed Apr 30th, 2014 at 01:13:53 PM EST
[ Parent ]
Rate of return on capital is greater than growth means that capital's share of income increases with time. This is, of course, unsustainable in the long run.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Apr 30th, 2014 at 01:15:06 PM EST
[ Parent ]
thanks


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Wed Apr 30th, 2014 at 02:03:31 PM EST
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