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225 of 254 people found the following review helpful
5.0 out of 5 stars A Brief Summary and Review
The main argument: The unequal distribution of wealth in the developed world has become a significant issue in recent years. Indeed, the data indicate that in the past 30 years the incomes of the wealthiest have surged into the stratosphere (and the higher up in the income hierarchy one is, the greater the increase has been), while the incomes of the large majority have...
Published 13 months ago by A. D. Thibeault

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253 of 301 people found the following review helpful
3.0 out of 5 stars Correct about inequality but poor economics
Thomas Picketty offers the disclaimer that his book is ‘as much a work of history as of economics’ (p33) which he then goes on to prove. He introduces his 2 core economic equations and asks readers not well versed in mathematics not to immediately close the book. It is in fact readers who are well versed in mathematics who might well close the book, since his...
Published 11 months ago by Geoff Crocker


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225 of 254 people found the following review helpful
5.0 out of 5 stars A Brief Summary and Review, 26 Mar. 2014
The main argument: The unequal distribution of wealth in the developed world has become a significant issue in recent years. Indeed, the data indicate that in the past 30 years the incomes of the wealthiest have surged into the stratosphere (and the higher up in the income hierarchy one is, the greater the increase has been), while the incomes of the large majority have stagnated. This has led to a level of inequality in wealth in the developed world not seen since the eve of the Great Depression. This much is without dispute.

Where there is dispute is in trying to explain just why the rise in inequality has taken place (and whether, and to what degree, it will continue in the future); and, even more importantly, whether it is justified. These questions are not merely academic, for the way in which we answer them informs public debate as well as policy measures--and also influences more violent reactions. Indeed, we need look no further than the recent Occupy Movement to see that the issue of increasing inequality is not only pressing, but potentially incendiary.

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. This is the impetus behind Thomas Piketty's new book Capital in the Twenty-First Century.

One of Piketty's main concerns in the book is to put the issue of inequality in its broader historical context. Specifically, the author traces how inequality has evolved from the agrarian societies of the 18th and early 19th centuries; through the Industrial Revolution and up to the First World War; throughout the interwar years; and into the second half of the twentieth century (and up to the first part of the twenty-first).

With this broad historical context we are able to see much more clearly the causes of inequality. As we might expect, what we find is that inequality is influenced by a host of societal factors--including economic, political, social and cultural factors. However, what we also find is that inequality is influenced by a broader set of factors associated with how capital works in capitalist societies (and market economies more generally).

Specifically, we find that capital (and the wealth it generates) tends to accumulate faster than the rate of economic growth in capitalist societies. What this means is that capital tends to become an increasingly prevalent and influential factor in these societies (at least up to a point). What's more, wealth not only tends to accumulate, but to become more and more concentrated at the top (mainly because those with more capital are able to earn a higher rate of return on their capital investments). For these reasons, capitalism on its own tends to produce a relatively high degree of inequality.

The natural tendency of capital to accumulate and to become ever more concentrated largely explains the high degree of inequality that was witnessed in the developed world in the early part of the twentieth century. This inequality was largely dashed, however, in the interwar years. The reason for this is that the major events of the first half of the twentieth century (including the two world wars, and the Great Depression) thwarted capital's natural tendency to accumulate, and also destroyed large stocks of wealth. The end result was that by the time World War II was over, inequality in the developed world had reached an all-time low.

After the Second World War, the natural tendency of capital to accumulate resumed. However, various political and economic measures (including progressive taxation, rent control, increasing minimum wages, and expanded social programs) worked to redistribute this growing capital, thus preventing inequality from growing as quickly as it would have otherwise.

In the 1980s, though, the developed countries did an about-face, and began eliminating many of the measures that had prevented inequality from rising according to its natural tendency. The consequence was that inequality reasserted itself in a major way, such that it is nearly as extreme today as it was on the run up to the Great Depression. Furthermore, the historical evidence indicates that capital will likely continue to accumulate and become ever more concentrated, such that we will witness an even greater level of inequality moving forward.

As far as justifying the growing inequality that we are currently seeing, Piketty raises serious doubts as to whether it may rightly be considered fair. What's more, as inequality continues to grow, it is increasingly likely that large parts of the population will also come to see it as unfair and unjustified--thereby increasing the likelihood of political opposition.

For Piketty, the best and fairest solution to these problems would be to steepen the progressive taxation applied to the wealthiest individuals. The problem, though, is that in a world of financial globalization (where there is a high degree of competition for capital--as witnessed by tax havens), it is extremely difficult to apply the appropriate tax scheme without the cooperation and coordinated efforts of the international community--and this is simply not something that is easy to achieve.

The alternative, however, is much more troubling for it is likely that it will involve reverting to protectionism and nationalism--and this is really in no one's interest.

This book is an absolute tour-de-force. The broad time-frame that Piketty explores, and the enormous body of data that he brings together, makes this study extremely comprehensive (no one will even think of accusing Piketty of cherry picking the data). Also, the reader is struck by how dispassionately Piketty analyzes the evidence he brings to the table. Indeed, while the author does have a position on inequality, one never receives the impression that this is corrupting his analysis (I consider myself to be a pragmatist politically, and often find that writers on both the left and the right massage the truth, but that was never the case here). Finally, it should be said that the book is very long, and just as dense, with the author often delving into extreme detail, so be prepared for a challenge. A must read for anyone with a serious interest in economics.
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253 of 301 people found the following review helpful
3.0 out of 5 stars Correct about inequality but poor economics, 12 May 2014
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Thomas Picketty offers the disclaimer that his book is ‘as much a work of history as of economics’ (p33) which he then goes on to prove. He introduces his 2 core economic equations and asks readers not well versed in mathematics not to immediately close the book. It is in fact readers who are well versed in mathematics who might well close the book, since his equations make no sense and cannot bear the weight of interpretation he places on them throughout the book. They are core to his argument, but they fail. He nowhere derives them, proves them, or empirically tests them. He merely states them.

According to Picketty, the ‘first fundamental law of capitalism’ (p52) is that α=rxβ where α is the share of capital in national income, r is the rate of return on capital, and β is Picketty’s capital/income ratio. This is a simple identity, is no more than telling us that a/b x b = a. Picketty admits this identity and tautology but nevertheless insists that this is the ‘first fundamental law of capitalism’, a claim he simply cannot justify. His ‘second fundamental law of capitalism’ (p166) is that β=s/g where s is the savings rate and g the growth rate. His example claims that a savings rate of 12% and a growth rate of 2% give a capital/income ratio of 600%. This is simply untrue. A simple spreadsheet taking 100 units of GDP growing in row 1 at 2%/year, showing 12% saving of that GDP in row 2, cumulating that in row 3 and dividing the result by row 1 to give Picketty’s capital/income ratio in row 4, shows that it becomes 600% only in year 199. Not only does this ‘fundamental law’ take so long to be true, as Picketty admits, but it is only true in that year and thereafter continues to grow, contrary to his claim that it reaches a long term equilibrium. His third equation is his claim that r>g drives capital accumulation. r and g are however measures in different units, r is a scalar ratio, whereas g is a first differential over time. Equations and inequalities require variables on each side to be in the same units. Picketty’s comparison of the return to capital and the growth rate are like comparing one person’s height to another person’s weight. His model is bogus.

He then conflates capital and wealth (‘I use the words ‘capital’ and ‘wealth’ interchangeably’ (p47)). This obscures more than it elucidates. Capital traditionally defined in economics is the means of production. It is an input to the economic process. Wealth by contrast is an output. We might very well care differently about how much capital and wealth we have, and who owns them. More effective capital may drive up output, whilst more wealth has no creative function and attracts a moral question. Picketty is wrong, analytically and morally, to confuse the two in one measure.

Picketty is disparaging in very short measure of Marx (p227-230), Keynes (p220), mathematical economics (p32), and economists generally (p296, 437, 514, 573, 574). Only Picketty has it right (p232). He quotes Jane Austen and Honoré de Balzac, more than he does either Marx or Keynes. His book is unnecessarily long and a tedious read, due to its rambling repetitive style. It could have been far more concise.

His main point is however well taken. Ownership of wealth has become increasingly unequal. His remedy is a global progressive tax on capital. By this he means all capital. But he doesn’t say what effect a progressive tax on each form of capital would have, how it would be paid, and what should be done with the payment. Would companies owning productive assets have to hand factories to the state? Or to the poor? Would house owners have to sell their houses, or shareholders their shares, in which case would their price be sustained? Or is he assuming asset owners also have income to pay the capital tax, in which case it becomes an income tax? And what’s the point? The purpose Picketty tells us on page 518 is ‘to regulate capitalism’ and thereby to ‘avoid crises’. But he doesn’t tell us how capitalism would be thereby made more acceptable or how crises would be avoided. He also admits it will never happen!

Whilst I agree with Picketty that extremes of income and wealth are morally repugnant, my complaint is that i) he should do more to investigate and attack the processes which allow this outcome, for example regulating the software market more effectively to avoid Bill Gates becoming obscenely wealthy based on Microsoft’s extreme and unjustified monopoly rate of profit, whilst also regulating natural resource markets to avoid billionaire build up there, ii) this is not in fact the major issue facing capitalism today. Far more important is the lack of effective macroeconomic demand and the fall in real wages caused by the high productivity of automation technology. For this a citizen’s income funded by QE (ie without being added to government debt) is the only and the urgently needed solution. Maybe we could compromise and use the proceeds of Picketty’s capital tax to fund a world citizen income. He clearly has a very good PR machine promoting his book – see the low votes attached to any critical review on Amazon, a fate very likely to meet this review!

Geoff Crocker
Author ‘A Managerial Philosophy of Technology : Technology and Humanity in Symbiosis’
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5.0 out of 5 stars disturbing but insightful, 26 Mar. 2015
This review is from: Capital in the Twenty-First Century (Kindle Edition)
Finally finished this. It took me over a month but it was well worth reading. I'm not an economist and there were concepts that could be challenged, however I think the author does articulate himself well. I can't argue with all his data, but it does validate many of the criticisms that we hear regarding inequality today.

This quote really resonated with me - it's actually quite disturbing:

“this fear of growing to resemble Europe was part of the reason why the United States in 1910–1920 pioneered a very progressive estate tax on large fortunes, which were deemed to be incompatible with US values, as well as a progressive income tax on incomes thought to be excessive. Perceptions of inequality, redistribution, and national identity changed a great deal over the course of the twentieth century, to put it mildly.”

Basically even the lawmakers couldn't prevent the lobbying power of the rich. It reminds me of the parts of the Glass–Steagall Act (U.S. Banking Act of 1933) which were repealed (two provisions restricting affiliations between banks and securities firms) that protected ordinary savers from trading/ gambling of the "market"

The most famous quote:

“When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.”

“What was the good of industrial development, what was the good of all the technological innovations, toil, and population movements if, after half a century of industrial growth, the condition of the masses was still just as miserable as before, and all lawmakers could do was prohibit factory labour by children under the age of eight?”

“For millions of people, “wealth” amounts to little more than a few weeks’ wages in a checking account or low-interest savings account, a car, and a few pieces of furniture. The inescapable reality is this: wealth is so concentrated that a large segment of society is virtually unaware of its existence, so that some people imagine that it belongs to surreal or mysterious entities. That is why it is so essential to study capital and its distribution in a methodical, systematic way.”

overall well worth reading and I will read it again (as I read some pages extremely fast).
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3.0 out of 5 stars Fascinating topic, frustrating delivery, 23 Feb. 2015
By 
Antenna (UK) - See all my reviews
(TOP 500 REVIEWER)   
The Industrial Revolution saw an increase in inequality resulting from increased capital accumulation by the wealthy. The economist Kuznets misread the evidence in arguing that an "advanced phase" of industry would lead to a more equal spread of wealth, for "the sharp reduction in income equality in rich countries between 1914-1945 was due to the violent economic and political shocks resulting from two world wars.... The resurgence of inequality after the1980s was due to political shifts as regards taxation and regulation of finance". Piketty aims to enhance his academic credentials by analysing and presenting a vast amount of data between 1700-2010 to explain the above more fully and to support his central thesis that there is no natural, spontaneous process to prevent destabilising, inegalitarian forces from prevailing permanently.

At first, the style seems very clear, well-translated, with minimal use of obscure formulae beloved by economists and graphs which relate to actual numbers on the axes rather than indicate trends, although Piketty admits that such complex data over long periods of time comes with many caveats. He tends to reiterate points, which apart from reinforcing learning helps readers who wish to dip into chapter sections. However, such repetition adds significantly to the length of the book.

Length seems a major problem. If I were an economics student, I would not wish to trawl through so much verbiage to glean the useful nuggets of knowledge. As a general reader, although the history of wealth distribution is quite interesting, I am most concerned about the final section on regulating capital, that is, the reduction of destabilising inequalities of wealth in this century. Here, I find the author skirting round the problem in a woolly and diffuse fashion, as in the single 25 page chapter (out of 577 pages, excluding notes) in which he considers aspects of "A Global Tax on Capital" which he introduces, not for the first time, as a utopian idea "which it is hard to imagine the nations of the world agreeing to any time soon". Other chapters in this section each go off at a tangent without being clearly related to the book's central theme of "capital", such as Chapter 14, "Rethinking the Progressive Income Tax" which is confined to examples from the US, France, Germany and Britain .

The author's heart is in the right place but since the arguments for redistribution are controversial, they need to be thought through and presented more strongly. A shorter book would have been more effective: the first part his research, the second his reasoned case. How many of the purchasers who made this a best-seller have actually read it?
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5.0 out of 5 stars Serious economic work based on exhaustive research, 8 April 2014
By 
Denis Vukosav - See all my reviews
(TOP 50 REVIEWER)    (REAL NAME)   
‘Capital in the Twenty-First Century’ written by Thomas Piketty who is a Professor at the Paris School of Economics is a well-made evaluation of trends in the world economy until the 21st century. This is a translation of a book that was last year originally published in French, which I read on the original, but in English is much more understandable and therefore more accessible to a wider group of readers what with its quality certainly deserves.

The Piketty’s book is quite extensive, so take some solid amount of time for its nearly 700 pages that will definitely not disappoint you, but do not expect to read them as some light novel. ‘Capital in the Twenty-First Century’ is divided into four major units – ‘Income and Capital’, ‘The Dynamics of the Capital/Income Ratio’, ‘The Structure of Inequality’ and ‘Regulating Capital in the Twenty-First century’- and as good add-on that is for such a book mandatory supplement, the author at the end of the text added Index, his notes, contents in detail and list of book tables and illustrations.

At the very beginning Thomas Piketty raises significant questions which answer why he decided to write his book – “…But what do we really know about the distribution of wealth over the long term? Do the dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, as Karl Marx believed in the nineteenth century? Or do the balancing forces of growth, competition, and technological progress lead in later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznets thought in the twentieth century? What do we really know… and what lessons can we derive from that knowledge for the century now under way?”

The author sincerely admits that his answers are not perfect and fully complete, but they are based on much more extensive historical and comparative research than were available to economists and researchers, covering three centuries and numerous countries, starting from the United States, providing a new framework that enables a better understanding of economy hidden mechanisms.

And although it might seem that this book is intended only to economic experts, due to its informativeness and clarity, ‘Capital in the Twenty-First Century’ will intrigue also general audience interested in economic developments and long term distribution of income and wealth.

After reading Piketty’s book the reader will, however, be clear that the author comes from Europe because his views are quite different from the American conservative ones, but we must not forget that a work based on such amount of data and the long period of trend observation no one has written before.

Therefore ‘Capital in the Twenty-First Century’ can certainly be considered credible and recommendable to read.
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1 of 1 people found the following review helpful
5.0 out of 5 stars xtr, 13 Sept. 2014
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This review is from: Capital in the Twenty-First Century (Kindle Edition)
Be forewarned, this is not an easy read. I have a basic understanding in economics and found aspects of this book hard. But the general argument is there and for the mathematical areas Piketty does put them into English (or translated English).

Insightful and analytical, this may be the work of our time. We can only hope governments take heed of this advice
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5.0 out of 5 stars The rich will get richer still: inevitably., 12 Mar. 2015
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The facts, the analysis, the conclusions all point to the inevitability of the increasing growth of capital and its claim on real goods and services in the hands and control of a minority of the population in western capitalist countries in particular but including analysis of Japan's experience. The logic points to either collapse of the capitalist system when the majority recognises the problem of their impoverishment vis-a-vis the capital owning class, (who remain few in number and beyond the taxing ability of governments who might have some wish to serve the majority population), and make the revolution themselves or who will stand silently by and watch the system's continuation as advocated by the New World Order who seek to sustain this trend bycurtailing civil liberties and suppressing alternative views of how to organise and manage an economy with a different vision and outcome for"a good society".
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4.0 out of 5 stars Some great information, but nothing revolutionary, 11 Sept. 2014
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This review is from: Capital in the Twenty-First Century (Kindle Edition)
Review courtesy of www.subtleillumination.com

It's a long book, so just some brief thoughts for those considering it:

-Overall very good: lots of interesting information on wealth and income inequality.
-Before world wars, inequality was from wealth inequality; now, it comes from income inequality. Rise of the supermanager.
-Policy analysis weak – hasn’t really considered other options or read the literature. Still, capital tax may be good idea: can replace the common and unfair real estate tax. WIsh he had discussed a consumption tax.
-Long run, the only cure to inequality is better education.
-No big surprises: basically just fleshes out ideas that most people would have believed true intuitively, if without data.
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4 of 5 people found the following review helpful
5.0 out of 5 stars Fascinating read on data related to shares of national income whether derived from labour or from capital which high-light the l, 28 Oct. 2014
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This review is from: Capital in the Twenty-First Century (Kindle Edition)
You don't need to be an Economist to appreciate this book. The explanations at theoretical level are very clear. Many of the findings are based on strong data tracked in some cases for over 200 years (UK and France for example). Fascinating read on data related to shares of national income whether derived from labour or from capital which high-light the levels of wealth inequality in many countries where good data exists as well as the trends and consistency in levels of inequality. The data provides interesting predictive insights. Only slight criticism would be that the text is sometimes too repetitive.
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1 of 1 people found the following review helpful
5.0 out of 5 stars Fascinating, 11 Feb. 2015
I'm studying A-level economics and although obviously not an easy read, it was worth it. Not only did I learn a few things, it really stemmed my interested in economics and the social sciences. Definitely worth a read.
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