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Absent public awareness and policy consensus, the "r>g" disparity is pretty natural. The discrepancy between mathematical "r" and physical "g" has to be resolved institutionally one way or other - and the easier way is the one we have now.
by das monde on Mon Jun 2nd, 2014 at 09:09:58 AM EST
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"Absent public awareness and policy consensus"

Or strong unions, one might add. But in general you are right, of course -however, public awareness is clearly what Piketty was trying to get.
I was just pointing it out because I feel that we should not let the meme that this is just in the nature of things stay unchallenged. Also, as I mentioned, I believe that it is the difference between r and productivity growth that matters, not with total growth (although Piketty does compare to total growth), when discussing inequalities.

As an aside, as Krugman mentioned today, the demographic transition, towards a drop in the working-age population, could have a strong impact on the discrepancy between r and g. So it may have been somewhat natural because we were always in growing times, and now the reverse become natural because there may be an unreversible decline in numbers.

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

by Cyrille (cyrillev domain yahoo.fr) on Mon Jun 2nd, 2014 at 10:10:14 AM EST
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Just as life on this planet is the wonder of swimming upstream the global thermodynamic flow, thriving economics is the art of moving against decay, static equilibria. Under some conditions this is spontaneously easy, but most of the time, it is challenging every "natural" hurdle.  
by das monde on Mon Jun 2nd, 2014 at 10:49:10 AM EST
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Well, "r>g" is obviously subject to the bargaining power of labour vs capital, and to tax and general economic environment. The only reason to suppose that it's "natural" is to regard the capture of political power by capital as "natural". Immanent Will? Manifest Destiny? Invisible Hand? My arse.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Mon Jun 2nd, 2014 at 10:24:47 AM EST
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Just a clarification : when Piketty talks of r, it is pre-tax.
That does not mean that tax levels would not have any effect on r, but you can imagine a situation with a high pre-tax r, yet no increase in inequality thanks to taxes -in fact, that is precisely what he would like to achieve, while acknowledging that at world level it is at present a utopia.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Mon Jun 2nd, 2014 at 10:34:17 AM EST
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Overgrown capital has nothing much to do but to corrupt the political power and take it over, create its won reality. Try to prevent that! Capital also has stategic patience, can disguise appearances (even in good times), provide distractions quickly, or threaten to withdraw.
by das monde on Mon Jun 2nd, 2014 at 10:42:22 AM EST
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