Capital In The Twenty-First Century

piketty-capital-21st-centuryHey there reader.  I hope you’re doing great.  I started a new book this week, Capital in the Twenty-First Century by French macro economist, Thomas Piketty.  The book is wonderful, I love it.  Piketty’s thesis is simple enough: economic inequality happens when the return on investment is greater than growth (I=R>G).

Piketty analyzed thousands of tax returns and found some interesting facts about wealth and work over the last 200 years;
  • Almost all wealth was destroyed by the Great Depression and the 30 years of prosperity which followed were unlike any time since the industrial revolution.
  • The average worker did not become wealthy from their work, but union membership helped after WW2.  Work is primarily for paying bills.
  • Education was correlated to increasing wages, but in the long run education does little to decrease economic inequality.
  • People build wealth by acquiring or inheriting property, investing, marrying and having children.  An example: wealthy parents pay for a child to attend graduate school, the parents bequeath to them the down payment for their first house in affluent neighborhood so their grandchildren can attend a high quality public school.  The adult children start their own business and repeat the cycle.

Piketty believes a global tax on wealth would reduce economic inequality and reduce the frequency and severity of recessions and depressions.  I think he is right.

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kristianberhost@gmail.com

I want to write about new experiences, the people I meet and the things I learn. I moved from Tempe, AZ to Arlington, VA with my dog 3 years ago. We love it here.

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