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235 of 266 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 16 months ago by A. D. Thibeault

269 of 321 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 14 months ago by Geoff Crocker

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2 of 2 people found the following review helpful
2.0 out of 5 stars Disappointing, 19 April 2015
This review is from: Capital in the Twenty-First Century (Kindle Edition)
After finishing I have been left clueless as to how this won Piketty the Nobel. The vast majority of the book consists solely of descriptive statistics devoid of insight or analysis
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1 of 1 people found the following review helpful
5.0 out of 5 stars Excellent, detailed and huge., 10 Jan. 2015
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A comprehensive, clear and informative read. Bought for my son at AS level to further inform his studies. Impressive, well written and clearly a passion/dedication of the writer.
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9 of 12 people found the following review helpful
4.0 out of 5 stars Review from a non-economist, 17 Nov. 2014
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This review is from: Capital in the Twenty-First Century (Kindle Edition)
It was with some trepidation that I decided to read this quite weighty book on economics. However I needn't have worried, for the technical content of this book is very low. What you do get however is an interesting tour of economic history, and it looks like quite a lot of research has been done by Piketty and his students to analyse current trends against a much longer and broader backdrop. This is really interesting, and the strong point of this book is the analysis of historic trends.

Where the book slightly falls down is when it comes remedying growing inequality, namely to tax capital. So this is really two books in one. The second half of the book makes the case for a capital tax, and I am mostly convinced, in the sense that it seems to be the least bad option. Piketty is actually very fair, in that he concedes that inequality and incentives for entrepreneurship are absolutely essential, but if left unfettered, the degree of inequality would inevitably rise to unacceptable levels. He reaches this conclusion based on historic data, and I for one shudder at the prospect of a return to pre-war inequality and poverty. Piketty is also very fair in savaging (politely of course) the work of other economists who simply cherry-pick data to back up their theories.

I hear it argued from various directions that the effect of any form of tax will be to reduce an activity, namely to hurt entrepreneurship, but I think such criticisms are based largely on dogma and self-interest, rather than to take a cold hard look at the data. Data from other directions suggests that counties with more equality tend to do better (in things that matter, i.e. quality of life, family, education, health, longevity etc.) I digress.

Apart from being very repetitive at times, this book left me with an uneasy feeling about just how subjective economics and social science actually are. The certainly with which social scientists present subjective opinion leaves me very uneasy indeed. As a layman, it's hard to separate fact from opinion. This book is wonderful when it presents facts, but weaker when it presents conjecture.
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44 of 58 people found the following review helpful
3.0 out of 5 stars Thought-provoking but flawed, 26 April 2014
Eric Lonergan - See all my reviews
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One way to summarise is as follows: Piketty's astronomical sales have increased wealth inequality among economists. Is his new-found wealth deserved? What is the impact of this wealth on the democratic process? Should we tax his global sales? Should he set up a foundation to combat the negative effects of inequality?

This book's strength is the novel approach Piketty takes to framing the problem of inequality. We are all aware that the distribution of income and wealth has become more extreme in the last 30 years. It is usually assumed that policies of deregulation and taxation have caused this. More recently, Brynjolfsson and others have argued that technology and globalisation are the underlying causes. Piketty, however, draws attention to the fact that the rate of return which owners of wealth generate is itself a critical determinant of the distribution of wealth. A central part of his thesis is that the very wealthiest in society save more and earn higher returns on their investments. Labour income grows more slowly than wealth. This is a novel focus for the debate.

But Piketty's interpretation of the data and his predictions need to be considered very carefully. There are clear flaws. Much of the increase in the value of wealth in the last 30 years has been caused by declining real interest rates: this lies behind the huge capital gains in property, bonds and equities. But it is not repeatable. It is also likely to have economic consequences which drive down their prospective returns. For example, the surge in technological innovation which is creating many technology billionaires (in part due to financial conditions), is also sowing the seeds for the destruction of wealth in the industries it is rendering redundant.

What Piketty's framework does, however, is force us to focus on which types of assets are owned by whom and what their prospective returns might be. Piketty's tentative conclusion that the trend of wealth compounding at a rate higher than labour income may be right for the wrong reasons. The distribution of what is likely to be the highest returning asset - equity - is even more concentrated than property, or other financial assets, such as deposits. A structural reason why wealth may have an inherent tendency to become increasingly concentrated is that the wealthier you are the greater risk you can take with capital. Surprisingly, Piketty has little to say about shifts in the valuation and ownership of equities, which is hugely relevant to the last 30 years, and probably the next thirty.

Another omission in this fascinating book, is that Piketty does not sufficiently distinguish between the merits of various forms of wealth and returns. This is a legitimate criticism that Nassim Taleb has made. Tax policy should surely take into account the relative social merits of different forms of wealth. We want incentives that reward innovation and philanthropy which is focused on social enterprise and R&D, such as that of the Gates foundation. Unproductive wealth and disincentivising inheritance is a specific and more reasonable target for taxation.

There are also many more philosophical possibilities suggested by this book, which are beyond its remit but worth considering. The distribution of well-being and happiness in developed economies is much less extreme than the distribution of wealth, and arguably takes priority as a policy objective. It may also act as an incentive for more socially productive investment by the wealthy. We should not lose sight of this.

Despite these weaknesses, this book is original and thought-provoking. It is also written with clarity and style.

Eric Lonergan
Author, 'Money' published by Acumen
Money (second revised edition)
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18 of 24 people found the following review helpful
5.0 out of 5 stars A Tour de Force, 3 May 2014
Athan "athan91" - See all my reviews
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Piketty argues three points:

1. Throughout human history income distribution and (even more so) wealth distribution has almost inevitably been skewed very heavily toward the top. This is the result of powerful economic laws that reinforce each other.

(i) Over time, total wealth in a society tends to the ratio of the savings rate to the growth rate, which has typically resulted in wealth (=capital) of 4 to 7 times more than total income. In the US today this ratio is at 4, in Italy today it's more like 6, the same as it was in pre-1914 France, for example. The composition of capital has changed (e.g. arable land has gone from very important to totally unimportant) but not its ratio to income (as measured by GDP or GNP or GNI).

(ii) World growth has throughout history been abysmally low. It averaged 0.1% per annum between year 0 and 1700, 1.6% per annum between 1700 and today and a mere 3% per annum from 1913 to 2013. Ergo, it's a tiny denominator that's been keeping this ratio up, rather than particularly impressive savings rates. Only a smidge more than half of that growth has been per capita growth, incidentally, with the rest attributable to population growth, which cannot but stop dead in its tracks In the next fifty years due to physical, Malthusian limitations to demographics.

(iii) Wealth, once you've got it, can work for you to make you richer. So those at the top of the wealth pyramid get a leg up in staying near the top of the pyramid.

(iv) The more wealth you command, the harder it works for you because you can hire experts to manage it, get access to better ways of investing etc.

(v) The bottom 50% of society has never saved a penny anywhere, not even in 1970's Sweden, it's always and everywhere lived hand-to-mouth.

(vi) Meantime, a large chunk of wealth in history has typically been inherited.

(vii) Return on capital is higher than the rate of GDP growth, which is Piketty's famous r>g inequality. An explanation the author offers is that there needs to be some type of compensation for risk.

So, for example, from 1800 to 1900 both in the United Kingdom and in France, the top 10% of society owned 90% of the wealth (=capital) and indeed the top 1% owned comfortably more than 50% of wealth. This wealth generated itself a lot of income, a fact that ensured there was very little chance a pauper could ever work his way to the top without marrying into wealth. This top 1% of society enjoyed income equivalent to 30 times the average. This income, was in turn used to employ the staff that would supply its masters with fresh food (no refrigerators back then, remember), clothing (a very labor-intensive set of goods up until the industrial revolution), transport (somebody needed to take care of the horses!) etc. etc.

2. We are now living in the tail end of a brief interlude in history when it appeared that we had been moving away from this status quo. The first and second world war decimated the built-up capital (=wealth) of the western world if four different ways:

(i) The loss of European (mainly British and French) colonies eliminated in one fell swoop somewhere between a quarter and a third of all accumulated wealth in the west.

(ii) The taxation that became necessary to wage WWI and WWII was obviously borne by those who could pay, i.e. the rich, and it remained truly confiscatory for years after the end of conflict, with marginal rates on passive income hitting 98% in the UK, for example.

(iii) The wars themselves brought destruction of property and capital on a massive scale.

(iv) Inflation on an equally massive scale followed, which wiped out the purchasing power of nominal savings (e.g. bonds and bank deposits) of many a saver, much as the flip side of this silent confiscation was a de facto forgiveness of public debts.

So for the first time in a couple thousand years, the top 10% of the population only controls 40% to 60% of the wealth (depending on the country). The bottom 50% controls zero, as always, but there is a 40% of the population that controls some 60% to 40% of wealth (depending on the country). A middle class!

Our parents' generation inherited very little, was born into as equal a society as there has been in at least two thousand years and made something of it. Not only does it feel fully entitled to its wealth, it also believes very strongly (and justifiably) that this status was acquired in an environment of fairness and meritocracy. Moreover, these events took place against the background of an equally generation-defining struggle between the free market and communism. At the apogee of its success, our parents' generation voted in people like Ronald Reagan, Margaret Thatcher and more recently George W Bush that enshrined this right to succeed and enjoy the fruits of one's success in low taxation rates on both income and capital.

3. Piketty argues that our parents are confused. It was not only the free market that contributed to the creation of a middle class. The free market has always been there. The other ingredient was the "thirty year war" that started in 1914 and ended in 1945. Now we've had peace for a good seventy years, and especially now that we have (among other things)
(i) States competing with one another to provide low taxation for corporates
(ii) Tax havens for the rich to hide their savings
(iii) Supermanagers earning 500 times what the shop-floor workers earn (as a result of the incentives offered by lower taxation rates)
...we are moving full-speed-ahead toward re-establishing the status quo of 1800-1913 and eliminating the middle class. As proof, he shows what has happened to the ratios of wealth to GDP that are approaching the Ancien Regime and Belle Epoque levels (though he does not provide any corroborating evidence from wealth distribution tables)

Having made these arguments, Piketty goes on to propose a global tax on capital, which he hopes can be one measure that will ensure we do not see the types of wealth concentration that pre-dated WWI.

I must confess that I find myself nodding in agreement with every single word of the book and then disagreeing with the conclusion. Perhaps because I don't understand why r>g. Fine, it's true for the past, but where is it written that capital can grow faster than GDP forever? Last I checked, Elon Musk's crowd were looking to mine asteroids for minerals, for which endeavor I'm very happy to warrant that E(r) = 0

Similarly, and pardon me for going technical, I really don't think that Wealth / GDP necessarily equals s / g (the saving rate divided by the growth rate) because savings can disappear if they are misinvested. What's China going to have to show for all the misinvestment going over there at the moment in ghost cities, for example? Sure, we can mark our wealth to market, but ultimately we need to be able to convert it to spending. The value of Klimts and Basquiats and Ferrari 250s is proof, if any was needed, that the super-wealthy are struggling to find something to do with their superwealth that you and I would truly covet.

Just because investment is not worthwhile if r is not much higher than g it does not mean that r must be higher than g, is my point.

More fundamentally, and Piketty himself makes this point very eloquently, some 200 years ago you needed the income to pay for the 30 servants who'd get you the fresh fruit and freshly hunted meat and fresh clothes and groomed horses if you wanted to live long, have the spare time to read and write books etc. These days, you can be in the bottom 50% of the population and enjoy all of the above (assuming a Ford Focus will do in lieu of a stable of horses), as well as decent free healthcare and education in this very bastion of inequality (according to Piketty) that is the United Kingdom. In Piketty's words, we've gone through a "tenfold increase in purchasing power." Of course there's room for improvement, but we're doing Rawls proud here.

So I remain to be convinced we need to tax capital. By all means, tax income that comes from capital, and a nice first step would be to tax it at the same marginal rate as income from labor. But to tax capital in a world that is already rather reluctant to deploy capital does not sound to me like an automatic choice. And Piketty does not offer a single word to explain what the non-bureaucratic benefits would be, beyond the re-distribution of wealth, which to me cannot be an end in itself.

Regardless, this is an UNBELIEVABLY important book. If I had not read it I would not know where to start in terms of disagreeing with its author, let's put it that way.

What we have here is as impressive a compendium of research as has ever been published by an economist. Call it Friedman and Schwartz for wealth / capital, except much better researched. The value is not in the narrative, but more than anything else in the years and years of research that went into collecting, comparing, cleaning, tabulating and interpreting data. This book is now the inevitable starting point for any discussion on the topic of wealth / capital. It is, pardon my French, a tour de force.

Finally, I thought the style of the book was totally disarming. Piketty has his views, for sure, but he never dares comingle fact and opinion, not once in 577 pages. Oh, and he sounds like a bit of a player. Never seen so many women in the acknowledgments of an Economics book.

Six stars are not enough for this book, five are downright miserly, but that's all I'm allowed to give!
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1 of 2 people found the following review helpful
5.0 out of 5 stars A Great Read - The Summary Chapter Is All You Need, 3 July 2015
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This review is from: Capital in the Twenty-First Century (Kindle Edition)
This book is quite a tome but thankfully, for us non economists / academics, it has a very well written summary that is easy to understand, full of interesting information and is probably all that most of us need. Everyone should read it - rising inequality in the world is a huge issue and Piketty's book helps to explain why it is happening and likely to get worse.
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5.0 out of 5 stars An important read for anyone looking for the causes of ..., 1 Sept. 2014
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This review is from: Capital in the Twenty-First Century (Kindle Edition)
An important read for anyone looking for the causes of increasing wealth and income inequality. Piketty not only provides a lucid explanation of the reasons, he also outlines the damage caused to the social fabric as a result and offers his own solution to a problem which may in time threaten not only social stability, but capitalism itself.
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2 of 3 people found the following review helpful
4.0 out of 5 stars OUTSTANDING, BUT MISREADING THE FUTURE, 4 April 2015
Yehezkel Dror (Jerusalem Israel) - See all my reviews
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Avant-Garde Politician: Leaders for a New Epoch

The author succinctly sums up his impressive achievement, stating "I have presented the current state of our historical knowledge concerning the dynamics of distribution of wealth and income since the eighteenth century, and I have attempted to draw from this knowledge whatever lessons can be drawn for the century ahead" (p. 571).

I would not add a review to the many already published if they did not miss a critical error, namely "drawing lessons for the century ahead" largely with eyes glued to the past. The author, in line with many others, ignores the metamorphosis into which humanity is cascading, which constitutes a break with the continuity of history of the species that makes many lessons based on the past inapplicable to the emerging future. A main cause for this sleepwalking into the future is science and technology ignorance, which prevents appreciation of the radical transformations into which humanity is pushed, willing or unwilling so.
Leaving aside secondary issues, such as the neglect of defense hardware in considering public capital, which in some countries significantly changes the public/private capital ratio, I focus on the mistaken outlooks on which the most important prescriptions are based.

While mentioning by the way the possibility of an "entirely robotized economy" (p. 217), the novel realities in-the-making thanks to molecular engineering, synthetic and quantum biology, "human enhancement," artificial intelligence and so on are ignored. Nor are coming harsh transition crises taken into account, or the likelihood of a decisive global governance forced upon humanity by disasters, in part human-made --such as mass-killings by fanatics using viruses synthesized in kitchen laboratories.

The author is wrong in postulating that "the possibility of deterioration of humanity's natural capital in the century clearly the world's principle long-term worry" (p. 567). Much more dramatic dangers as well as opportunities are emerging from science and technology, requiring more imaginative thinking on radically novel challenges than in this book, which is very innovative - but often within rapidly becoming obsolete paradigms. Thus, contrary to presented economic assumptions and predictions, thanks to science and technology outputs may increase more than capital reproduces - thus that the future overcomes the past, rather than the past devouring the future (p. 571).

Similarly doubtful are main statements on politics. It is true that "If democracy is someday to regain control of capitalism, it must start by recognizing that the concrete institutions in which democracy and capitalism are embodied need to be reinvented again and again" (p. 570). But the author leaves open the critical question who is going to do the reinventing. Similarly, while proposing "to create a Eurozone budgetary parliament" (p. 561) and "to construct a continental political authority capable of reasserting control over patrimonial capitalism" (p. 562), the author ignores the lack of will to do so by leaders and populations - who are likely to be increasingly pressed by much harsher stressors than even the worst of economic crises in the past.

Similarly, the author ignores the need for a novel type of decisive global regime for dealing with increasingly serious global issues, a regime which cannot be based in the foreseeable future on "deliberative democracy" (a term frequently used in the book as if it were clear and obvious). The author is also be wrong on the fundament assumption that "good and evil" are ideas "about which every citizen is an expert" (p. 574) - which is an amazing illusion of a serious student of history, as the author surely is.

The author realizes that "New forms of participation and governance remain to be invented" (p. 569), but seems to assume that these will be based on presently accepted Western-type democratic ideal values. However this is not assured.. Radical inventions in governance and the values on which they are based, as well as a new genre of political leaders, will be required to prevent hell on earth and assure the very survival of humanity (as discussed in my recent book). Some of the author's well-taken proposals, such as a global progressive capital tax which, inter alia, compresses inequalities, may be realized -- but not in the peaceful way he seems to envisage.

Despite such problems, if I had the power to do so I would make this book obligatory reading for all politicians who presume to express opinions on "social justice," "equality" and so on. But I would prefer to do so with a revised version which fully takes into account the metamorphosis into which humanity is cascading, including its harsh crises and not necessarily pleasant political dimensions.

Professor Yehezkel Dror
The Hebrew University of Jerusalem
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2 of 3 people found the following review helpful
4.0 out of 5 stars An astute historical analysis of growth and capital let down by a poorly developed list of suggested policy responses, 30 July 2014
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This review is from: Capital in the Twenty-First Century (Kindle Edition)
Piketty's tome is undoubtedly a work of tremendous importance, if only thanks to the political influence that it has already exerted in France, the USA and the UK. In many ways, it is an irreverent book that snubs its nose at economists as a class and tries to break down academic barriers in pursuit of an honest analysis of economic history. Piketty studies not only tax records and schedules of wills in pursuit of the development of capital and wages but also literature and uses popular culture to illustrate his arguments to a lay audience. This makes is remarkably readable even considering that it weighs in at almost 600 pages (plus footnotes and a website of economic source data).

Piketty's principal innovation is in drawing together data sets (predominantly for the three countries named above but segueing into other developed and developing economies) that are unparalleled in their range and depth, covering centuries of economic data. Working with a number of colleagues to refine and analyse the data, Pikkety has produced perhaps the most complete study of the transformation of agrarian economies into industrial economies and beyond into service economies. In doing so, he has isolated what he believes to be key economic rules affecting wealth and income and trends that hold true across multiple societies and extrapolate forward for a century or more.

The work is separated into three distinct parts; a review of existing economic theory, an analysis of the new data sets and proposals for economic policy in the twenty-first century.

Piketty's analysis is undeniably astute. Adopting the longue durée approach created by Marc Bloch, the author looks for trends across centuries rather than years. In doing so, he casts aside the surface fluctuations of individual asset classes or economic shocks and looks at the totality of economic growth, inflation, capital rate of return and wages. This turns up some interesting trends (e.g. capital return consistently out-performing growth) and a strongly supported hypothesis that political economic management has relatively little impact on the long-term maturation of an economy. It also suggests that twentieth century growth and the reduction of inequality was an aberration caused by the destruction of the World Wars rather than a new norm; consequently, he sees the challenge of the twenty-first century as being one of managing inequality returning to nineteenth-century norms.

It is this conclusion in particular, which taps into very present concerns regarding the super rich, executive returns and inequality in an era of universal suffrage, that have brought Piketty so much attention. Naturally, the book has been particularly adopted to the left, not least due to the echoes of Marx's Das Capital, but also because Piketty responses to these challenges provide a degree of academic rigor for policy responses popular with the left (notably wealth taxes).

There are, however, problems with the study. Piketty was clearly writing for a French audience and he allows political biases, which are common currency in French public discourse but considered outré elsewhere, to infect his discourse - a snobbish dismissal of `Anglo-Saxon' models, the free association of economic equality with democracy etc. This partiality is rarely more than an irritant and doesn't impact his historic analysis. (If anything, he has demonstrated that French protectionism and Anglo-Saxon free markets, despite their differences, have created almost identical economic conditions).

Once he moves on to proposed policy responses, Piketty's lazy bias does begin to grate. He espouses a tax on capital as a means of restricting the expansionary nature of capital but fails to address its potential as an inflationary factor - the kind of oversight that he would have astutely identified when looking at historic policy measures. Furthermore, Piketty has clearly isolated innovation and post-destruction catch up as the principle factors that affect capital value, return on capital and wages, yet his model can make no account for them in the future. Furthermore, his logic becomes less consistent - insisting both that some extent of inequality is necessary but fails to define what level and even occasionally suggests in ideal of no inequality. Having espoused the democratic ideal throughout, he even goes so far as to suggest technocratic government being the only way to effectively manage the economies of the twenty-first century. For Piketty, it seems, democracy is an economic rather than political function.

Undoubtedly, this is a classic piece of economic writing. There has been some criticism of Piketty's use of data but that is an academic question and beyond my reading of the book. Based on the information provided, Piketty's analysis of historic trends will prove to be hugely influential. It shares, however, the same problem with most other economic works; economics is not a science and therefore does not work in an environment of physical laws. Methodical analysis of the past can provide rules and equations that can help unpick the current economic condition but they give no real a posteriori ability to predict the future. As soon as Piketty begins to consider the state of the current economy and future policy measures, the scientific method becomes redundant and instead we are exposed to (informed) guess work and the biases of the author. This is a real shame, as the book will appeal to those of the left who find their own prejudices confirmed but the historic analysis is equally relevant to those of the right who may find the policy proposals rather thin.
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5.0 out of 5 stars Recommended if you want an alternative account of how today's ..., 11 Mar. 2015
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An evidenced based analysis that sits as an alternative to the standard explanations typically given by politicians and the media. The historical perspective is another important strength of the book. Recommended if you want an alternative account of how today's economic circumstances were forged.
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