The short guide to Capital in the 21st Century

Review Capital in the Twenty-First Century

Over the two-plus centuries for which good records exist, the only major decline in capital’s economic share and in economic inequality was the result of World Wars I and II, which destroyed lots of capital and brought much higher taxes in the U.S. and Europe. This period of capital destruction was followed by a spectacular run of economic growth. Now, after decades of peace, slowing growth, and declining tax rates, capital and inequality are on the rise all over the developed world, and it’s not clear what if anything will alter that trajectory in the decades to come.

It’s also 696 pages long, translated from French, filled with methodological asides and in-depth looks at unique data, packed with allusions to 19th century novels, and generally a bit of a slog. Piketty uses a variety of data in some cases going back all the way to eighteenth century to support his findings. The writing is very approachable for someone with no training in economics. He illustrates the realities of capital in the nineteenth century with examples taken from the novels of Balzac and Austen. He translates the somewhat unfamiliar and abstract concepts into real-world scenarios with actual realistic euro amounts.

Review Capital in the Twenty-First Century

About Capital in the Twenty-First Century

You can thus situate your own wealth and your own income against the wealth and income distributions of past and present societies. Given the import and the polarizing nature of the issue of inequality, it is all the more crucial that we begin by way of shedding as much light on the situation as possible.

Film Adaptation ‘Capital In The Twenty-First Century’ Is An Autopsy Of A Broken System

The duo was the first to carefully exploit American income tax data to show how highly concentrated income was in the hands not just of the top 10 or 20 percent of households but the top 1, 0.1, or even 0.01 percent. The vast majority of the contemporary debate on inequality is focused on the agenda set by that work. In his new book, Piketty largely leaves that research agenda behind in favor of an inquiry focused on wealth inequality. Thomas Piketty’s Capital in the 21st Century is the most important economics book of the year, if not the decade.

  • Of course a lower after-tax return on capital might make the accumulation of large fortunes somewhat less attractive, though even that is not at all clear.
  • I couldn’t dream of living on my first wage now – thirty years later – and no one really talks about millionaires anymore.
  • Particularly in rich societies, the income lens really doesn’t give you the sense of what needs to be fixed.
  • That might be – as Piketty suggests – because rich people are good at hiding their money from the taxman.
  • Emmanuel Saez, a colleague of Piketty and one of the economists cited by Giles to discredit him, stated that “Piketty’s choice and judgement were quite good” and that his own research supports Piketty’s thesis.

What are some other possible solutions to the problem Piketty diagnoses?

But this past July, I felt compelled to read Thomas Piketty’s Capital in the Twenty-First Century after reading several reviews and hearing about it from friends. Review When Genius Failed Thomas Piketty is a French economist who rose to prominence over the past decade thanks to his collaborations with Emmanuel Saez on income inequality.

It shows a dramatic peak just prior to the 1929 crash followed by a collapse in the years up to 1980 and then a dramatic rise back up to the same level of approximately 24 percent of national income that the one percent took home in the roaring twenties. Capital draws on more than a decade of research by Piketty and a handful of other economists, detailing historical changes in the concentration of income and wealth. This pile of data allows Piketty to sketch out the evolution of inequality since the beginning of the industrial revolution.

In the 18th and 19th centuries western European society was highly unequal. Private wealth dwarfed national income and was concentrated in the hands of the rich families who sat atop a relatively rigid class structure. This system persisted even as industrialisation slowly contributed to rising wages for workers. Only the chaos of the first and second world wars and the Depression disrupted this pattern.

What are the main weaknesses of Piketty’s book?

This is the impetus behind Thomas Piketty’s new book Capital in the Twenty-First Century. Thomas Piketty is a relatively young economist who has spent most of his professional career teaching at the Paris School of Economics and the École des Hautes Études en Sciences Sociales after brief stints at MIT. He has collaborated with fellow École Normale Supérieure graduate Emmanuel Suez on comprehensive studies on income and wealth inequality. A chart of their data is a frequently-used graphic (the one that looks like the Golden Gate Bridge) in Robert Reich’s current documentary film, Inequality for All. This figure shows the income of the top 1 percent of income earners as a ratio of the national income from the period from 1910 to 2010.

Review: Income inequality? ‘Capital in the Twenty-First Century’ says the system needs fixing

But the text runs around 750 pages, and not everyone is prepared to plow through Piketty’s methodical analysis of capital-income ratios from 1700 to the near-present. A 700-page treatise on economics translated from French is not exactly a light summer read—even for someone with an admittedly high geek quotient.

Review Capital in the Twenty-First Century

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