almost in a whisper, 'Ever since I can remember doing it, I knew there would never be enough time to read all the books I wanted to...'.
Piketty describes his terms, states his questions, acknowledges the gaps in data and gives real world examples of what it all means, but it takes 190 pages to get him to the present. Then he has to break down the similarities, subtleties and vagueries between capital and labor, as these overlap depending on whose banksheet you look at.
Since the preponderance of data of national economies comes from Britain, France and the US, he is able to compare and contrast those to a greater extent. But of course he goes on to great length describing emerging economies as well, many of which we simply don't have cumulative enough data before the 20th century.
Piketty comes to a couple startling conclusions. Central to these are the widely accepted bits of conventional wisdom that economic inequality is globally getting worse and that there's no top end in sight without some major disruption. One of these points that he thinks is driving the massive inequalities in the leading economic players as well as in the emerging world is the increase in what he calls supermanagers who are receiving greater and greater amounts in compensation. This basic point not only makes sense but is supported by the data.
Another point he gets to half way thru the book is that in capitalism, the rate of return on invested capital, over the long term, becomes greater than the growth rate of the economies upon which they thrive. This he calls the primary reason in agrarian societies for hyperconcentrated wealth inequality. This then becomes the basis for the greater expansion of inequality in later industrial and post-industrial global economies. This also makes sense and is shown clearly in the comprehensive French records of the various kinds of capital and taxes, including estate taxes of various sorts.
If this all seems very dry it is meant to, as it's not controversial. There are, however, other popular narratives that aren't borne out by the data that among other things aim to do away with taxes for the very wealthy and aim to increase disparities, despite the dangers that these tactics have long been known to instigate. He cautions again and again though that the data of all sets is not complete, that models of whatever kind have their frailties, that misapplication or, misplacing data sets have all typically been the norm in analyses.
But we can know enough to see inequalities indeed exist today, that these today are not worse (yet) than those seen a hundred years ago in France, just before WWI. That the World Wars wracked the west economically, that tax policy in the US and Europe and the buying and holding of assets after WWII (in Europe primarily) also utterly changed the dynamic, reducing inequalities through much of the rest of the twentieth century.
In the eleventh chapter he goes on to tackle the concepts of merit and inheritance like this:
He continually reminds that such changes as those in population, life-expectancy, migration, education levels, etc. directly change and influence economies on a broad and long scale. But the structure of wealth accumulation comes through labor or inheritance. How much of either of these do the wealthiest endure? After all these depend on social structures: are there jobs, does the state collect taxes? So, Piketty looks at 'Inheritance flows over time'. Once the reader gets into it things get very interesting. And Arthur Goldhammer makes everything in translation clear as day.
This time it started as a desire to generate dialogue about economics, of all things.
I had picked up a short monograph on Double-Entry bookeeping.
Impressed with the elegance of the basic idea, that is, to 'show the measures', the changes, in a ledger, both the costs and benefits separately, I then wanted to share this lens. And the idea appealed to me that the first published (and thus first widely-distributed and, therefore, duplicated) text was what was being discussed here. This idea appealed because there already was another digestible yet nutritious book regarding economics on my to-do list.
Capital In The Twenty-First Century got my attention through the news of its publication in English in 2014. I could not afford to purchase this book until 2015 and did not start reading it in earnest until a number of other projects could at first be finished. 2018 was that year and I hope to have it done by this same year's end.
A couple years ago I had read the introduction and shelved it. This year I picked it up again and then made a habit of it. The first 270 pages tell what the book means to show, how it will go about that, what it cannot talk about with any degree of clarity or certainty, and, what basic principles it will use and how the author will apply them, while shedding folklore and biases along the way.
To talk about Capital and income and labor and inequalities of distribution he goes back, in a few cases centuries, in order to show broad macroeconomic trends. Two basic principles involve how national income is broadly calculated. They also show how simple the concepts are here, how simple the math is, but how broad they must be to make these comparisons between countries and eras. An annual estimation, for instance, of national income of a country is figured by simply multiplying the country's capital/income ratio by the national rate of return on investment. Another basic principle, described as the second fundamental law of capitalism figures that the capital/income ratio over the long term - a century or more - can be simply calculated as the ratio of the savings rate divided by the growth rate.
I had picked up a short monograph on Double-Entry bookeeping.
Impressed with the elegance of the basic idea, that is, to 'show the measures', the changes, in a ledger, both the costs and benefits separately, I then wanted to share this lens. And the idea appealed to me that the first published (and thus first widely-distributed and, therefore, duplicated) text was what was being discussed here. This idea appealed because there already was another digestible yet nutritious book regarding economics on my to-do list.
Capital In The Twenty-First Century got my attention through the news of its publication in English in 2014. I could not afford to purchase this book until 2015 and did not start reading it in earnest until a number of other projects could at first be finished. 2018 was that year and I hope to have it done by this same year's end.
A couple years ago I had read the introduction and shelved it. This year I picked it up again and then made a habit of it. The first 270 pages tell what the book means to show, how it will go about that, what it cannot talk about with any degree of clarity or certainty, and, what basic principles it will use and how the author will apply them, while shedding folklore and biases along the way.
To talk about Capital and income and labor and inequalities of distribution he goes back, in a few cases centuries, in order to show broad macroeconomic trends. Two basic principles involve how national income is broadly calculated. They also show how simple the concepts are here, how simple the math is, but how broad they must be to make these comparisons between countries and eras. An annual estimation, for instance, of national income of a country is figured by simply multiplying the country's capital/income ratio by the national rate of return on investment. Another basic principle, described as the second fundamental law of capitalism figures that the capital/income ratio over the long term - a century or more - can be simply calculated as the ratio of the savings rate divided by the growth rate.
Piketty describes his terms, states his questions, acknowledges the gaps in data and gives real world examples of what it all means, but it takes 190 pages to get him to the present. Then he has to break down the similarities, subtleties and vagueries between capital and labor, as these overlap depending on whose banksheet you look at.
Since the preponderance of data of national economies comes from Britain, France and the US, he is able to compare and contrast those to a greater extent. But of course he goes on to great length describing emerging economies as well, many of which we simply don't have cumulative enough data before the 20th century.
Piketty comes to a couple startling conclusions. Central to these are the widely accepted bits of conventional wisdom that economic inequality is globally getting worse and that there's no top end in sight without some major disruption. One of these points that he thinks is driving the massive inequalities in the leading economic players as well as in the emerging world is the increase in what he calls supermanagers who are receiving greater and greater amounts in compensation. This basic point not only makes sense but is supported by the data.
Another point he gets to half way thru the book is that in capitalism, the rate of return on invested capital, over the long term, becomes greater than the growth rate of the economies upon which they thrive. This he calls the primary reason in agrarian societies for hyperconcentrated wealth inequality. This then becomes the basis for the greater expansion of inequality in later industrial and post-industrial global economies. This also makes sense and is shown clearly in the comprehensive French records of the various kinds of capital and taxes, including estate taxes of various sorts.
If this all seems very dry it is meant to, as it's not controversial. There are, however, other popular narratives that aren't borne out by the data that among other things aim to do away with taxes for the very wealthy and aim to increase disparities, despite the dangers that these tactics have long been known to instigate. He cautions again and again though that the data of all sets is not complete, that models of whatever kind have their frailties, that misapplication or, misplacing data sets have all typically been the norm in analyses.
But we can know enough to see inequalities indeed exist today, that these today are not worse (yet) than those seen a hundred years ago in France, just before WWI. That the World Wars wracked the west economically, that tax policy in the US and Europe and the buying and holding of assets after WWII (in Europe primarily) also utterly changed the dynamic, reducing inequalities through much of the rest of the twentieth century.
In the eleventh chapter he goes on to tackle the concepts of merit and inheritance like this:
"The overall importance of capital today ... is not very different from what it was in the eighteenth century. Only its form has changed: capital was once mainly land but is now industrial, financial, and real estate. ... the concentration of wealth remains high... [t]he poorest half still owns nothing, but there is now a patrimonial middle class that owns between a quarter and a third of total wealth... [and] that the relative movements of the return on capital and the rate of growth of the economy... can explain many of the observed changes, including the logic of accumulation...." [p.377]
He continually reminds that such changes as those in population, life-expectancy, migration, education levels, etc. directly change and influence economies on a broad and long scale. But the structure of wealth accumulation comes through labor or inheritance. How much of either of these do the wealthiest endure? After all these depend on social structures: are there jobs, does the state collect taxes? So, Piketty looks at 'Inheritance flows over time'. Once the reader gets into it things get very interesting. And Arthur Goldhammer makes everything in translation clear as day.
___________________________________
Piketty, Thomas: Capital In The 21st Century, translated Arthur Goldhammer; Belknap,Harvard University Press, Cambridge, MA 2014
Piketty, Thomas: Capital In The 21st Century, translated Arthur Goldhammer; Belknap,Harvard University Press, Cambridge, MA 2014
