'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
POL
ITIC
SC
UL
TU
RE
TH
E M
AG
AZ
INE
SUB
SCR
IBE
NO
WIn
tern
atio
nal O
rder
s|
Giv
e a
Gift
SIG
N IN
PHO
TO B
YC
HA
RLE
SPL
ATI
AU
/Reu
ters
/New
scom
Sign
up
now
toge
t you
r do
se o
fpo
litic
s, c
ultu
re,
and
big
idea
sw
ith o
ur fr
ee
TR
EN
DIN
G
BY
RO
BE
RT
M. S
OL
OW
Tho
mas
Pik
etty
Is R
ight
Ever
ythi
ng y
ou n
eed
to k
now
abo
ut'C
apita
l in
the
Twen
ty-F
irst
Cen
tury
'
APR
IL 2
2, 2
014
BO
OK
S
ICap
ital
in t
he T
wen
ty-F
irst
Cen
tury
by
Thom
as P
iket
ty,
trans
late
d by
Arth
ur G
oldh
amm
er (B
elkn
ap P
ress
)
ncom
e in
equa
lity
in th
e U
nite
d St
ates
and
els
ewhe
re h
as b
een
wor
seni
ng s
ince
the
1970
s.
The
mos
t st
rikin
g as
pect
has
bee
n th
e w
iden
ing
gap
betw
een
the
rich
and
the
rest
. Thi
s
omin
ous
anti-
dem
ocra
tic t
rend
has
fin
ally
fou
nd i
ts w
ay i
nto
publ
ic c
onsc
ious
ness
and
polit
ical
rhe
toric
. A r
atio
nal
and
effe
ctiv
e po
licy
for
deal
ing
with
it—
if th
ere
is to
be
one—
will
hav
e to
rest
on
an u
nder
stan
ding
of
the
caus
es o
f inc
reas
ing
ineq
ualit
y. T
he d
iscu
ssio
n so
THO
MA
S PI
KET
TY IS
RIG
HT
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
daily
new
slet
ter.
SIG
N-U
P
RE
AD
LA
TE
R
FON
T S
IZE
EM
AIL
PRIN
T
AL
ICE
RO
BB
Mul
tilin
gual
s H
ave
Mul
tipl
ePe
rson
alit
ies
TIM
OT
HY
SN
YD
ER
Ukr
aini
an E
xtre
mis
ts W
illO
nly
Triu
mph
if R
ussi
aIn
vade
s
JON
AT
HA
N C
OH
NH
ey, C
onse
rvat
ives
: Oba
ma
Is T
rolli
ng Y
ou o
n th
e A
CA
You
hav
e re
ad:
1/8
free
artic
les
in th
e pa
st 3
0da
ys.
ALR
EA
DY
A
far
has
turn
ed u
p a
num
ber o
f cau
sal f
acto
rs: t
he e
rosi
on o
f the
real
min
imum
wag
e; th
e de
cay
of la
bor u
nion
s an
d co
llect
ive
barg
aini
ng; g
loba
lizat
ion
and
inte
nsifi
ed c
ompe
titio
n fr
om lo
w-
wag
e w
orke
rs i
n po
or c
ount
ries;
tec
hnol
ogic
al c
hang
es a
nd s
hifts
in
dem
and
that
elim
inat
e
mid
-leve
l job
s an
d le
ave
the
labo
r mar
ket p
olar
ized
bet
wee
n th
e hi
ghly
edu
cate
d an
d sk
illed
at
the
top
and
the
mas
s of p
oorly
edu
cate
d an
d un
skill
ed a
t the
bot
tom
.
Each
of
thes
e ca
ndid
ate
caus
es s
eem
s to
cap
ture
a b
it of
the
truth
. B
ut e
ven
take
n to
geth
er
they
do
not
seem
to
prov
ide
a th
orou
ghly
sat
isfa
ctor
y pi
ctur
e. T
hey
have
at
leas
t tw
o
defic
ienc
ies.
Firs
t, th
ey d
o no
t spe
ak to
the
real
ly d
ram
atic
issu
e: th
e te
nden
cy fo
r the
ver
y to
p
inco
mes
—th
e “1
per
cent
”—to
pul
l aw
ay f
rom
the
rest
of
soci
ety.
Sec
ond,
they
seem
a li
ttle
adve
ntiti
ous,
acc
iden
tal;
whe
reas
a fo
rty-y
ear t
rend
com
mon
to th
e ad
vanc
ed e
cono
mie
s of
the
Uni
ted
Stat
es,
Euro
pe,
and
Japa
n w
ould
be
mor
e lik
ely
to re
st o
n so
me
deep
er fo
rces
with
in
mod
ern
indu
stria
l cap
italis
m. N
ow a
long
com
es T
hom
as P
iket
ty, a
forty
-two-
year
-old
Fre
nch
econ
omis
t, to
fill
thos
e ga
ps a
nd th
en s
ome.
I h
ad a
frie
nd, a
dis
tingu
ishe
d al
gebr
aist
, who
se
pref
erre
d ad
ject
ive
of p
rais
e w
as “
serio
us.”
“Z
is a
serio
us m
athe
mat
icia
n,”
he w
ould
say,
or
“Now
that
is a
serio
us p
aint
ing.
” W
ell,
this
is a
serio
us b
ook.
It is
als
o a
long
boo
k: 5
77 p
ages
of c
lose
ly
prin
ted
text
and
seve
nty-
seve
n pa
ges
of n
otes
.
(I c
all
dow
n a
pain
ful p
ox o
n pu
blis
hers
who
put
the
foot
note
s at
the
end
of
the
book
inst
ead
of th
e bo
ttom
of
the
page
whe
re th
ey
belo
ng, t
hus
mak
ing
sure
that
read
ers
like
me
will
ski
p m
any
of t
hem
.) Th
ere
is a
lso
an
exte
nsiv
e “t
echn
ical
ap
pend
ix”
avai
labl
e
onlin
e th
at
cont
ains
ta
bles
of
da
ta,
mat
hem
atic
al
argu
men
ts,
refe
renc
es
to t
he
liter
atur
e, a
nd li
nks
to c
lass
not
es f
or P
iket
ty’s
(ev
iden
tly e
xcel
lent
) le
ctur
e co
urse
in P
aris
.
The
Engl
ish
trans
latio
n by
Arth
ur G
oldh
amm
er re
ads v
ery
wel
l.
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
SU
BS
CR
IBE
R?
LOG
IN H
ER
E
sign
up
for
unlim
ited
acce
ss fo
r ju
st
$34.
97S
IGN
ME
UP
Pike
tty’s
stra
tegy
is to
sta
rt w
ith a
pan
oram
ic r
eadi
ng o
f th
e da
ta a
cros
s spa
ce a
nd ti
me,
and
then
wor
k ou
t fro
m th
ere.
He
and
a gr
oup
of a
ssoc
iate
s, m
ost n
otab
ly E
mm
anue
l Sae
z, a
noth
er
youn
g Fr
ench
eco
nom
ist,
a pr
ofes
sor
at B
erke
ley,
and
Ant
hony
B. A
tkin
son
of O
xfor
d, th
e
pion
eer
and
gray
em
inen
ce o
f m
oder
n in
equa
lity
stud
ies,
hav
e la
bore
d ha
rd t
o co
mpi
le a
n
enor
mou
s da
taba
se t
hat
is s
till
bein
g ex
tend
ed a
nd r
efin
ed.
It pr
ovid
es t
he e
mpi
rical
foun
datio
n fo
r Pik
etty
’s a
rgum
ent.
It al
l beg
ins
with
the
time
path
of t
otal
—pr
ivat
e an
d pu
blic
—w
ealth
(or c
apita
l) in
Fra
nce,
the
Uni
ted
Kin
gdom
, an
d th
e U
nite
d St
ates
, go
ing
back
to w
hene
ver d
ata
first
bec
ome
avai
labl
e
and
runn
ing
up t
o th
e pr
esen
t. G
erm
any,
Jap
an,
and
Swed
en,
and
less
fre
quen
tly o
ther
coun
tries
, are
incl
uded
in th
e da
taba
se w
hen
satis
fact
ory
stat
istic
s ex
ist.
If y
ou a
re w
onde
ring
why
a b
ook
abou
t ine
qual
ity sh
ould
beg
in b
y m
easu
ring
tota
l wea
lth, j
ust w
ait.
Sinc
e co
mpa
rison
s ov
er v
ast
stre
tche
s of
tim
e an
d sp
ace
are
the
esse
nce,
ther
e is
a p
robl
em
abou
t fin
ding
com
para
ble
units
in w
hich
to m
easu
re to
tal w
ealth
or c
apita
l in,
say,
Fra
nce
in
1850
as
wel
l as
in th
e U
nite
d St
ates
in 1
950.
Pik
etty
sol
ves t
his
prob
lem
by
divi
ding
wea
lth
mea
sure
d in
loca
l cur
renc
y of
the
time
by n
atio
nal i
ncom
e, a
lso
mea
sure
d in
loca
l cur
renc
y of
the
time.
The
wea
lth-in
com
e ra
tio t
hen
has
the
dim
ensi
on “
year
s.” T
he c
ompa
rison
just
men
tione
d sa
ys i
n fa
ct t
hat
tota
l w
ealth
in
Fran
ce i
n 18
50 a
mou
nted
to
abou
t sev
en y
ears
wor
th o
f in
com
e, b
ut o
nly
abou
t fou
r yea
rs fo
r the
Uni
ted
Stat
es in
195
0. T
his
visu
aliz
atio
n of
natio
nal
wea
lth o
r ca
pita
l as
rel
ativ
e to
nat
iona
l in
com
e is
bas
ic t
o th
e w
hole
ent
erpr
ise.
Ref
eren
ce t
o th
e ca
pita
l-ou
tput
or
capi
tal-
inco
me
ratio
is
com
mon
plac
e in
eco
nom
ics.
Get
used
to it
.
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
Ther
e is
a s
mal
l am
bigu
ity h
ere.
Pik
etty
use
s “w
ealth
” an
d “c
apita
l” a
s in
terc
hang
eabl
e te
rms.
We
know
how
to c
alcu
late
the
wea
lth o
f a p
erso
n or
an
inst
itutio
n: y
ou a
dd u
p th
e va
lue
of a
ll
its a
sset
s an
d su
btra
ct th
e to
tal
of d
ebts
. (Th
e va
lues
are
mar
ket
pric
es o
r, in
thei
r abs
ence
,
som
e ap
prox
imat
ion.
) Th
e re
sult
is n
et w
orth
or w
ealth
. In
Engl
ish
at le
ast,
this
is o
ften
calle
d
a pe
rson
’s o
r in
stitu
tion’
s ca
pita
l. B
ut “
capi
tal”
has
ano
ther
, not
qui
te e
quiv
alen
t, m
eani
ng: i
t
is a
“fa
ctor
of
prod
uctio
n,”
an e
ssen
tial
inpu
t in
to t
he p
rodu
ctio
n pr
oces
s, in
the
for
m o
f
fact
orie
s, m
achi
nery
, com
pute
rs, o
ffic
e bu
ildin
gs, o
r hou
ses
(that
pro
duce
“ho
usin
g se
rvic
es”)
.
This
mea
ning
can
div
erge
fro
m “
wea
lth.”
Triv
ially
, the
re a
re a
sset
s th
at h
ave
valu
e an
d ar
e
part
of w
ealth
but
do
not
prod
uce
anyt
hing
: w
orks
of
art,
hoar
ds o
f pr
ecio
us m
etal
s, an
d so
forth
. (P
aint
ings
han
ging
in a
livi
ng r
oom
cou
ld b
e sa
id to
pro
duce
“ae
sthe
tic se
rvic
es,”
but
thos
e ar
e no
t ge
nera
lly c
ount
ed in
nat
iona
l in
com
e.)
Mor
e si
gnifi
cant
ly, s
tock
mar
ket v
alue
s,
the
finan
cial
cou
nter
part
of c
orpo
rate
pro
duct
ive
capi
tal,
can
fluct
uate
vio
lent
ly, m
ore
viol
ently
than
nat
iona
l inc
ome.
In a
rece
ssio
n, th
e w
ealth
-inco
me
ratio
may
fall
notic
eabl
y, a
lthou
gh th
e
stoc
k of
pro
duct
ive
capi
tal,
and
even
its
exp
ecte
d fu
ture
ear
ning
pow
er, m
ay h
ave
chan
ged
very
littl
e or
not
at a
ll. B
ut a
s lo
ng a
s w
e st
ick
to lo
nger
-run
tren
ds, a
s Pi
ketty
gen
eral
ly d
oes,
this
diff
icul
ty c
an sa
fely
be
disr
egar
ded.
AD
VER
TISE
MEN
T
load
ing.
..
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
IThe
data
then
exh
ibit
a cl
ear
patte
rn. I
n Fr
ance
and
Gre
at B
ritai
n, n
atio
nal c
apita
l sto
od fa
irly
stea
dily
at a
bout
sev
en ti
mes
nat
iona
l inc
ome
from
170
0 to
191
0, th
en fe
ll sh
arpl
y fr
om 1
910
to 1
950,
pre
sum
ably
as
a re
sult
of w
ars
and
depr
essi
on, r
each
ing
a lo
w o
f 2.5
in B
ritai
n an
d a
bit l
ess
than
3 in
Fra
nce.
The
cap
ital-
inco
me
ratio
then
beg
an to
clim
b in
bot
h co
untri
es, a
nd
reac
hed
slig
htly
mor
e th
an 5
in
Brit
ain
and
slig
htly
les
s th
an 6
in
Fran
ce b
y 20
10. T
he
traje
ctor
y in
the
Uni
ted
Stat
es w
as sl
ight
ly d
iffer
ent:
it st
arte
d at
just
abo
ve 3
in 1
770,
clim
bed
to 5
in 1
910,
fell
slig
htly
in 1
920,
reco
vere
d to
a h
igh
betw
een
5 an
d 5.
5 in
193
0, fe
ll to
bel
ow
4 in
195
0, a
nd w
as b
ack
to 4
.5 in
201
0.
The
wea
lth-in
com
e ra
tio in
the
Uni
ted
Stat
es h
as a
lway
s be
en lo
wer
than
in E
urop
e. T
he m
ain
reas
on in
the
early
yea
rs w
as th
at la
nd v
alue
s bu
lked
less
in th
e w
ide
open
spa
ces o
f Nor
th
Am
eric
a. T
here
was
of
cour
se m
uch
mor
e la
nd,
but
it w
as v
ery
chea
p. I
nto
the
twen
tieth
cent
ury
and
onw
ard,
how
ever
, th
e lo
wer
cap
ital-
inco
me
ratio
in
the
Uni
ted
Stat
es p
roba
bly
refle
cts
the
high
er l
evel
of
prod
uctiv
ity:
a gi
ven
amou
nt o
f ca
pita
l co
uld
supp
ort
a la
rger
prod
uctio
n of
out
put t
han
in E
urop
e. It
is n
o su
rpris
e th
at th
e tw
o w
orld
war
s ca
used
muc
h le
ss
dest
ruct
ion
and
diss
ipat
ion
of c
apita
l in
the
Uni
ted
Stat
es t
han
in B
ritai
n an
d Fr
ance
. The
impo
rtant
obs
erva
tion
for
Pike
tty’s
arg
umen
t is
that
, in
all t
hree
cou
ntrie
s, a
nd e
lsew
here
as
wel
l, th
e w
ealth
-inco
me
ratio
has
bee
n in
crea
sing
sin
ce 1
950,
and
is
alm
ost
back
to
nine
teen
th-c
entu
ry le
vels
. H
e pr
ojec
ts th
is in
crea
se to
con
tinue
into
the
curr
ent c
entu
ry, w
ith
wei
ghty
con
sequ
ence
s tha
t will
be
disc
usse
d as
we
go o
n.
n fa
ct h
e pr
edic
ts,
with
out
muc
h co
nfid
ence
and
with
out
kidd
ing
him
self,
tha
t the
wor
ld
capi
tal-
inco
me
ratio
will
rise
from
just
und
er 4
.5 in
201
0 to
just
ove
r 6.5
by
the
end
of th
is
cent
ury.
Tha
t w
ould
brin
g th
e w
hole
wor
ld b
ack
to w
here
a f
ew r
ich
coun
tries
of E
urop
e
wer
e in
the
nine
teen
th c
entu
ry. W
here
doe
s th
is g
uess
com
e fr
om?
Or,
mor
e ge
nera
lly, w
hat
dete
rmin
es a
n ec
onom
y’s
long
-run
cap
ital-
inco
me
ratio
any
way
? Th
is is
a q
uest
ion
that
has
been
stu
died
by
econ
omis
ts f
or s
ome
seve
nty-
five
year
s. Th
ey h
ave
conv
erge
d on
a st
anda
rd
answ
er th
at P
iket
ty a
dopt
s as
a lo
ng-r
un e
cono
mic
“la
w.”
In ro
ugh
outli
ne it
goe
s lik
e th
is.
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
TImag
ine
an e
cono
my
with
a n
atio
nal i
ncom
e of
100
, gro
win
g at
2 p
erce
nt a
yea
r (pe
rhap
s w
ith
occa
sion
al h
iccu
ps, t
o be
igno
red)
. Su
ppos
e it
regu
larly
sav
es a
nd in
vest
s (th
at is
, add
s to
its
capi
tal)
10 p
erce
nt o
f na
tiona
l inc
ome.
So,
in th
e ye
ar in
whi
ch it
s in
com
e re
ache
s 100
it a
dds
10 to
its
stoc
k of
cap
ital.
We
wan
t to
know
if th
e ca
pita
l-in
com
e ra
tio c
an st
ay u
ncha
nged
for
next
yea
r, th
at is
to sa
y, c
an st
abili
ze fo
r the
long
run.
For
that
to h
appe
n, th
e nu
mer
ator
of t
he
capi
tal-
inco
me
ratio
mus
t gr
ow a
t th
e sa
me
2 pe
rcen
t ra
te a
s th
e de
nom
inat
or. W
e ha
ve
alre
ady
said
that
it g
row
s by
10;
for t
hat t
o be
2 p
erce
nt o
f cap
ital,
capi
tal m
ust h
ave
been
500
,
no m
ore,
no
less
. We
have
foun
d a
cons
iste
nt st
ory:
this
yea
r nat
iona
l inc
ome
is 1
00, c
apita
l is
500,
and
the
ratio
is 5
. Nex
t yea
r nat
iona
l inc
ome
is 1
02, c
apita
l is
510,
the
ratio
is st
ill 5
, and
this
pro
cess
can
repe
at it
self
auto
mat
ical
ly a
s lo
ng a
s th
e gr
owth
rate
stay
s at 2
per
cent
a y
ear
and
the
savi
ng /
inve
stm
ent r
ate
is 1
0 pe
rcen
t of n
atio
nal i
ncom
e. S
omet
hing
mor
e dr
amat
ic is
true:
if c
apita
l and
labo
r com
bine
to p
rodu
ce n
atio
nal o
utpu
t acc
ordi
ng to
the
good
old
law
of
dim
inis
hing
ret
urns
, th
en w
here
ver
this
eco
nom
y st
arts
, it
will
be
driv
en b
y its
ow
n in
tern
al
logi
c to
this
uni
que
self
-rep
rodu
cing
cap
ital-
inco
me
ratio
.
Car
eful
atte
ntio
n to
thi
s ex
ampl
e w
ill s
how
tha
t it
amou
nts
to a
gen
eral
stat
emen
t: if
the
econ
omy
is g
row
ing
at g
per
cent
per
yea
r, an
d if
it sa
ves
s pe
rcen
t of i
ts n
atio
nal i
ncom
e ea
ch
year
, the
self
-rep
rodu
cing
cap
ital-
inco
me
ratio
is s
/ g
(10
/ 2 in
the
exam
ple)
. Pik
etty
sugg
ests
that
glo
bal g
row
th o
f ou
tput
will
slo
w in
the
com
ing
cent
ury
from
3 p
erce
nt to
1.5
per
cent
annu
ally
. (T
his
is th
e su
m o
f th
e gr
owth
rat
es o
f po
pula
tion
and
prod
uctiv
ity, b
oth
of w
hich
he e
xpec
ts to
dim
inis
h.)
He
puts
the
wor
ld s
avin
g / i
nves
tmen
t rat
e at
abo
ut 1
0 pe
rcen
t. So
he
expe
cts
the
capi
tal-
inco
me
ratio
to c
limb
even
tual
ly to
som
ethi
ng n
ear 7
(or 1
0 / 1
.5).
This
is a
big
deal
, as
will
em
erge
. H
e is
qui
te a
war
e th
at th
e un
derly
ing
assu
mpt
ions
cou
ld tu
rn o
ut to
be w
rong
; no
one
can
see
a ce
ntur
y ah
ead.
But
it c
ould
pla
usib
ly g
o th
is w
ay.
he k
ey th
ing
abou
t wea
lth in
a c
apita
list e
cono
my
is th
at it
repr
oduc
es it
self
and
usua
lly
earn
s a
posi
tive
net
retu
rn.
That
is
the
next
thi
ng t
o be
inve
stig
ated
. Pik
etty
dev
elop
s
estim
ates
of
the
“pur
e” ra
te o
f re
turn
(afte
r m
inor
adj
ustm
ents
) in
Brit
ain
goin
g ba
ck to
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
1770
and
in F
ranc
e go
ing
back
to 1
820,
but
not
for
the
Uni
ted
Stat
es. H
e co
nclu
des:
“[T
]he
pure
ret
urn
on c
apita
l ha
s os
cilla
ted
arou
nd a
cen
tral
valu
e of
4–5
per
cent
a y
ear,
or m
ore
gene
rally
in
an i
nter
val
from
3–6
per
cent
a y
ear.
Ther
e ha
s be
en n
o pr
onou
nced
long
-term
trend
eith
er u
pwar
d or
dow
nwar
d....
It is
pos
sibl
e, h
owev
er, t
hat t
he p
ure
retu
rn o
n ca
pita
l has
decr
ease
d sl
ight
ly o
ver
the
very
long
run.
” It
wou
ld b
e in
tere
stin
g to
hav
e co
mpa
rabl
e fig
ures
for t
he U
nite
d St
ates
.
Now
if y
ou m
ultip
ly th
e ra
te o
f ret
urn
on c
apita
l by
the
capi
tal-
inco
me
ratio
, you
get
the
shar
e
of c
apita
l in
the
natio
nal i
ncom
e. F
or e
xam
ple,
if th
e ra
te o
f ret
urn
is 5
per
cent
a y
ear a
nd th
e
stoc
k of
cap
ital i
s si
x ye
ars
wor
th o
f na
tiona
l inc
ome,
inco
me
from
cap
ital w
ill b
e 30
per
cent
of n
atio
nal i
ncom
e, a
nd s
o in
com
e fr
om w
ork
will
be
the
rem
aini
ng 7
0 pe
rcen
t. A
t las
t, af
ter
all t
his
prep
arat
ion,
we
are
begi
nnin
g to
talk
abo
ut in
equa
lity,
and
in tw
o di
stin
ct se
nses
. Firs
t,
we
have
arr
ived
at t
he fu
nctio
nal d
istri
butio
n of
inco
me—
the
split
bet
wee
n in
com
e fr
om w
ork
and
inco
me
from
wea
lth. S
econ
d, it
is a
lway
s th
e ca
se th
at w
ealth
is m
ore
high
ly c
once
ntra
ted
amon
g th
e ric
h th
an in
com
e fr
om la
bor (
alth
ough
rece
nt A
mer
ican
his
tory
look
s ra
ther
odd
in
this
resp
ect);
and
this
bei
ng s
o, th
e la
rger
the
shar
e of
inco
me
from
wea
lth, t
he m
ore
uneq
ual
the
dist
ribut
ion
of in
com
e am
ong
pers
ons
is li
kely
to b
e. I
t is
this
ineq
ualit
y ac
ross
per
sons
that
mat
ters
mos
t for
goo
d or
ill i
n a
soci
ety.
This
is o
ften
not
wel
l un
ders
tood
, an
d m
ay b
e w
orth
a b
rief
digr
essi
on. T
he la
bor
shar
e of
natio
nal i
ncom
e is
arit
hmet
ical
ly th
e sa
me
thin
g as
the
real
wag
e di
vide
d by
the
prod
uctiv
ity o
f
labo
r. W
ould
you
rat
her
live
in a
soc
iety
in w
hich
the
real
wag
e w
as r
isin
g ra
pidl
y bu
t the
labo
r sha
re w
as fa
lling
(bec
ause
pro
duct
ivity
was
incr
easi
ng e
ven
fast
er),
or o
ne in
whi
ch th
e
real
wag
e w
as s
tagn
atin
g, a
long
with
pro
duct
ivity
, so
the
lab
or sh
are
was
unc
hang
ing?
The
first
is
sure
ly b
ette
r on
nar
row
ly e
cono
mic
gro
unds
: yo
u ea
t yo
ur w
age,
not
you
r sha
re o
f
natio
nal i
ncom
e. B
ut th
ere
coul
d be
pol
itica
l and
soc
ial a
dvan
tage
s to
the
seco
nd o
ptio
n. If
a
smal
l cl
ass
of o
wne
rs o
f w
ealth
—an
d it
is s
mal
l—co
mes
to
colle
ct a
gro
win
g sh
are
of th
e
natio
nal
inco
me,
it
is l
ikel
y to
dom
inat
e th
e so
ciet
y in
oth
er w
ays a
s w
ell.
This
dic
hoto
my
need
not
aris
e, b
ut it
is g
ood
to b
e cl
ear.
Supp
ose
we
acce
pt P
iket
ty’s
edu
cate
d gu
ess
that
the
capi
tal-
inco
me
ratio
will
incr
ease
ove
r the
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
Tnext
cen
tury
bef
ore
stab
ilizi
ng a
t a
high
val
ue s
omew
here
aro
und
7. D
oes
it fo
llow
that
the
capi
tal
shar
e of
inc
ome
will
als
o ge
t bi
gger
? N
ot n
eces
saril
y: r
emem
ber
that
we
have
to
mul
tiply
the
cap
ital-
inco
me
ratio
by
the
rate
of
retu
rn,
and
that
sam
e la
w o
f dim
inis
hing
retu
rns
sugg
ests
that
the
rate
of
retu
rn o
n ca
pita
l w
ill f
all.
As
prod
uctio
n be
com
es m
ore
and
mor
e ca
pita
l-in
tens
ive,
it g
ets h
arde
r and
har
der t
o fin
d pr
ofita
ble
uses
for a
dditi
onal
cap
ital,
or
easy
way
s to
sub
stitu
te c
apita
l fo
r la
bor.
Whe
ther
the
capi
tal
shar
e fa
lls o
r ris
es d
epen
ds o
n
whe
ther
the
rate
of
retu
rn h
as to
fall
prop
ortio
nally
mor
e or
less
than
the
capi
tal-
inco
me
ratio
rises
.
Ther
e ha
s be
en a
lot
of
rese
arch
aro
und
this
que
stio
n w
ithin
eco
nom
ics,
but
no
defin
itely
conc
lusi
ve a
nsw
er h
as e
mer
ged.
Thi
s su
gges
ts t
hat
the
ultim
ate
effe
ct o
n th
e ca
pita
l sha
re,
whi
chev
er w
ay it
goe
s, w
ill b
e sm
all.
Pike
tty o
pts
for a
n in
crea
se in
the
capi
tal s
hare
, and
I am
incl
ined
to a
gree
with
him
. Pro
duct
ivity
gro
wth
has
bee
n ru
nnin
g ah
ead
of re
al w
age
grow
th
in th
e A
mer
ican
eco
nom
y fo
r th
e la
st f
ew d
ecad
es, w
ith n
o si
gn o
f a re
vers
al, s
o th
e ca
pita
l
shar
e ha
s ris
en a
nd t
he l
abor
sha
re f
alle
n. P
erha
ps t
he c
apita
l sh
are
will
go
from
abo
ut 3
0
perc
ent
to a
bout
35
perc
ent,
with
wha
teve
r ch
alle
nge
to d
emoc
ratic
cul
ture
and
pol
itics
that
enta
ils. he
re is
a s
trong
er im
plic
atio
n of
this
line
of
argu
men
t, an
d w
ith it
we
com
e to
the
hear
t
of P
iket
ty’s
cas
e. S
o fa
r as
I k
now
, no
one
bef
ore
him
has
mad
e th
is c
onne
ctio
n.
Rem
embe
r w
hat h
as b
een
esta
blis
hed
so fa
r. B
oth
hist
ory
and
theo
ry su
gges
t tha
t the
re is
a sl
ow te
nden
cy in
an
indu
stria
l ca
pita
list
econ
omy
for
the
capi
tal-
inco
me
ratio
to st
abili
ze,
and
with
it th
e ra
te o
f re
turn
on
capi
tal.
This
tend
ency
can
be
dist
urbe
d by
seve
re d
epre
ssio
ns,
war
s, a
nd s
ocia
l an
d te
chno
logi
cal
disr
uptio
ns,
but
it re
asse
rts i
tsel
f in
tran
quil
cond
ition
s.
Ove
r the
long
span
of h
isto
ry su
rvey
ed b
y Pi
ketty
, the
rate
of r
etur
n on
cap
ital i
s us
ually
larg
er
than
the
und
erly
ing
rate
of
grow
th.
The
only
sub
stan
tial
exce
ptio
nal
sub-
perio
d is
bet
wee
n
1910
and
195
0. P
iket
ty a
scrib
es th
is r
arity
to th
e di
srup
tion
and
high
taxa
tion
caus
ed b
y th
e
two
grea
t war
s an
d th
e de
pres
sion
that
cam
e be
twee
n th
em.
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
BTher
e is
no
logi
cal n
eces
sity
for
the
rate
of
retu
rn to
exc
eed
the
grow
th ra
te: a
soc
iety
or
the
indi
vidu
als
in i
t ca
n de
cide
to
save
and
to
inve
st s
o m
uch
that
the
y (a
nd t
he l
aw o
f
dim
inis
hing
ret
urns
) dr
ive
the
rate
of
retu
rn b
elow
the
long
-term
gro
wth
rat
e, w
hate
ver t
hat
happ
ens
to b
e. I
t is
kno
wn
that
this
pos
sibl
e st
ate
of a
ffai
rs is
soc
ially
per
vers
e in
the
sens
e
that
letti
ng th
e st
ock
of c
apita
l dim
inis
h un
til th
e ra
te o
f re
turn
falls
bac
k to
equ
ality
with
the
grow
th r
ate
wou
ld a
llow
for
a p
erm
anen
tly h
ighe
r le
vel o
f con
sum
ptio
n pe
r per
son,
and
thus
for
a be
tter
soci
al s
tate
. B
ut th
ere
is n
o in
visi
ble
hand
to st
eer a
mar
ket e
cono
my
away
from
this
per
vers
ity. Y
et it
has
bee
n av
oide
d, p
roba
bly
beca
use
hist
oric
al g
row
th r
ates
hav
e be
en
low
and
cap
ital
has
been
sca
rce.
We
can
take
it a
s no
rmal
that
the
rate
of
retu
rn o
n ca
pita
l
exce
eds
the
unde
rlyin
g gr
owth
rate
.
ut n
ow w
e ca
n tu
rn o
ur a
ttent
ion
to w
hat
is h
appe
ning
with
in th
e ec
onom
y. S
uppo
se it
has
reac
hed
a “s
tead
y st
ate”
whe
n th
e ca
pita
l-in
com
e ra
tio h
as st
abili
zed.
Tho
se w
hose
inco
me
com
es e
ntire
ly fr
om w
ork
can
expe
ct th
eir w
ages
and
inco
mes
to b
e ris
ing
abou
t
as fa
st a
s pr
oduc
tivity
is in
crea
sing
thro
ugh
tech
nolo
gica
l pro
gres
s. T
hat i
s a
little
less
than
the
over
all
grow
th r
ate,
whi
ch a
lso
incl
udes
the
rat
e of
pop
ulat
ion
incr
ease
. N
ow i
mag
ine
som
eone
who
se in
com
e co
mes
ent
irely
from
acc
umul
ated
wea
lth. H
e or
she
ear
ns r
per
cent
a
year
. (I
am ig
norin
g ta
xes,
but
not
for
long
.) If
she
is v
ery
wea
lthy,
she
is li
kely
to c
onsu
me
only
a s
mal
l fr
actio
n of
her
inco
me.
The
res
t is
sav
ed a
nd a
ccum
ulat
ed, a
nd h
er w
ealth
will
incr
ease
by
alm
ost
r pe
rcen
t ea
ch y
ear,
and
so w
ill h
er in
com
e. I
f you
leav
e $1
00 in
a b
ank
acco
unt p
ayin
g 3
perc
ent i
nter
est,
your
bal
ance
will
incr
ease
by
3 pe
rcen
t eac
h ye
ar.
This
is P
iket
ty’s
mai
n po
int,
and
his
new
and
pow
erfu
l con
tribu
tion
to a
n ol
d to
pic:
as
long
as
the
rate
of
retu
rn e
xcee
ds t
he r
ate
of g
row
th,
the
inco
me
and
wea
lth o
f the
rich
will
gro
w
fast
er th
an th
e ty
pica
l in
com
e fr
om w
ork.
(Th
ere
seem
s to
be
no o
ffse
tting
tend
ency
for t
he
aggr
egat
e sh
are
of c
apita
l to
shr
ink;
the
tend
ency
may
be
slig
htly
in th
e op
posi
te d
irect
ion.
)
This
int
erpr
etat
ion
of t
he o
bser
ved
trend
tow
ard
incr
easi
ng i
nequ
ality
, an
d es
peci
ally
the
phen
omen
on o
f th
e 1
perc
ent,
is n
ot r
oote
d in
any
fai
lure
of
econ
omic
inst
itutio
ns; i
t res
ts
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
Pprim
arily
on
the
abili
ty o
f th
e ec
onom
y to
abs
orb
incr
easi
ng a
mou
nts
of c
apita
l w
ithou
t a
subs
tant
ial f
all i
n th
e ra
te o
f ret
urn.
Thi
s m
ay b
e go
od n
ews f
or th
e ec
onom
y as
a w
hole
, but
it
is n
ot g
ood
new
s for
equ
ity w
ithin
the
econ
omy.
We
need
a n
ame
for
this
pro
cess
for
fut
ure
refe
renc
e. I
will
cal
l it
the
“ric
h-ge
t-ric
her
dyna
mic
.” T
he m
echa
nism
is a
littl
e m
ore
com
plic
ated
than
Pik
etty
’s b
ook
lets
on.
The
re is
som
e sa
ving
from
labo
r inc
ome,
and
thus
som
e ac
cum
ulat
ion
of c
apita
l in
the
hand
s of
wag
e
and
sala
ry e
arne
rs.
The
retu
rn o
n th
is w
ealth
has
to
be t
aken
int
o ac
coun
t. St
ill, g
iven
the
smal
l ini
tial w
ealth
and
the
rela
tivel
y lo
w s
avin
g ra
te b
elow
the
top
grou
p, a
s w
ell a
s th
e fa
ct
that
sm
all s
avin
gs e
arn
a re
lativ
ely
low
rate
of r
etur
n, c
alcu
latio
n sh
ows
that
this
mec
hani
sm is
not c
apab
le o
f off
setti
ng th
e fo
reca
st o
f wid
enin
g in
equa
lity.
Ther
e is
yet
ano
ther
, al
so r
athe
r da
rk,
impl
icat
ion
of t
his
acco
unt
of u
nder
lyin
g tre
nds.
If
alre
ady
exis
ting
aggl
omer
atio
ns o
f w
ealth
tend
to g
row
fas
ter
than
inco
mes
fro
m w
ork,
it is
likel
y th
at th
e ro
le o
f inh
erite
d w
ealth
in so
ciet
y w
ill in
crea
se re
lativ
e to
that
of r
ecen
tly e
arne
d
and
ther
efor
e m
ore
mer
it-ba
sed
fortu
nes.
Nee
dles
s to
say
, the
fact
that
the
aggr
egat
e of
wag
e
inco
mes
gro
ws
only
at a
rela
tivel
y sl
ow ra
te d
oes
not e
xclu
de th
e po
ssib
ility
that
out
stan
ding
ly
succ
essf
ul in
nova
tors
, man
ager
s, e
ntre
pren
eurs
, en
terta
iner
s, a
nd o
ther
s ca
n ac
cum
ulat
e la
rge
amou
nts
of w
ealth
in a
life
time
and
join
the
rank
s of
the
rent
iers
. But
a sl
ower
rate
of g
row
th
certa
inly
mak
es s
uch
succ
ess
stor
ies
less
like
ly. T
here
will
be
mor
e to
say
abo
ut th
is. Y
et th
e
arith
met
ic s
ugge
sts
that
the
con
cent
ratio
n of
wea
lth a
nd i
ts a
bilit
y to
gro
w w
ill fa
vor a
n
incr
easi
ng w
eigh
t of i
nher
itanc
e as
com
pare
d w
ith ta
lent
.
iket
ty li
kes
to d
escr
ibe
the
dist
ribut
ion
of in
com
e an
d w
ealth
con
cret
ely,
and
not
in te
rms
of s
umm
ary
stat
istic
s. H
e lo
oks
at t
he p
ropo
rtion
s of
the
tot
al c
laim
ed b
y th
e to
p 1
perc
ent
(som
etim
es a
lso
the
top
tent
h of
the
1 pe
rcen
t), th
e to
p 10
per
cent
, the
nex
t 40
perc
ent,
and
the
botto
m h
alf.
(He
labe
ls th
e 40
per
cent
bet
wee
n th
e to
p de
cile
and
the
med
ian
as th
e “m
iddl
e cl
ass.”
The
re is
an
elem
ent
of o
xym
oron
in a
mid
dle
clas
s th
at li
es e
ntire
ly
abov
e th
e m
edia
n; b
ut I
sup
pose
this
usa
ge is
no
wor
se th
an th
e A
mer
ican
hab
it of
des
crib
ing
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
Yever
yone
bet
wee
n th
e cl
early
rich
and
the
abje
ctly
poo
r as
bein
g in
the
mid
dle
clas
s.)
The
data
are
com
plic
ated
and
not
eas
ily c
ompa
rabl
e ac
ross
tim
e an
d sp
ace,
but
her
e is
the
flavo
r of
Pik
etty
’s s
umm
ary
pict
ure.
Cap
ital i
s in
deed
ver
y un
equa
lly d
istri
bute
d. C
urre
ntly
in
the
Uni
ted
Stat
es,
the
top
10 p
erce
nt o
wn
abou
t 70
per
cent
of
all
the
capi
tal,
half
of th
at
belo
ngin
g to
the
top
1 pe
rcen
t; th
e ne
xt 4
0 pe
rcen
t—w
ho c
ompo
se th
e “m
iddl
e cl
ass”
—ow
n
abou
t a q
uarte
r of t
he to
tal (
muc
h of
that
in th
e fo
rm o
f hou
sing
), an
d th
e re
mai
ning
hal
f of t
he
popu
latio
n ow
ns n
ext t
o no
thin
g, a
bout
5 p
erce
nt o
f tot
al w
ealth
. Eve
n th
at a
mou
nt o
f mid
dle-
clas
s pr
oper
ty o
wne
rshi
p is
a n
ew p
heno
men
on in
his
tory
. The
typi
cal E
urop
ean
coun
try is
a
little
mor
e eg
alita
rian:
the
top
1 pe
rcen
t ow
n 25
per
cent
of
the
tota
l ca
pita
l, an
d th
e m
iddl
e
clas
s 35
per
cent
. (A
cen
tury
ago
the
Eur
opea
n m
iddl
e cl
ass
owne
d es
sent
ially
no
wea
lth a
t
all.)
If th
e ow
ners
hip
of w
ealth
in fa
ct b
ecom
es e
ven
mor
e co
ncen
trate
d du
ring
the
rest
of t
he
twen
ty-f
irst c
entu
ry, t
he o
utlo
ok is
pre
tty b
leak
unl
ess y
ou h
ave
a ta
ste
for o
ligar
chy.
Inco
me
from
wea
lth is
pro
babl
y ev
en m
ore
conc
entra
ted
than
wea
lth it
self
beca
use,
as
Pike
tty
note
s, la
rge
bloc
ks o
f w
ealth
ten
d to
ear
n a
high
er r
etur
n th
an s
mal
l on
es. S
ome
of th
is
adva
ntag
e co
mes
fro
m e
cono
mie
s of
sca
le,
but
mor
e m
ay c
ome
from
the
fact
that
ver
y bi
g
inve
stor
s ha
ve a
cces
s to
a w
ider
ran
ge o
f in
vest
men
t op
portu
nitie
s th
an s
mal
ler
inve
stor
s.
Inco
me
from
wor
k is
nat
ural
ly le
ss c
once
ntra
ted
than
inco
me
from
wea
lth. I
n Pi
ketty
’s st
yliz
ed
pict
ure
of t
he U
nite
d St
ates
tod
ay,
the
top
1 pe
rcen
t ea
rns
abou
t 12
per
cent
of a
ll la
bor
inco
me,
the
next
9 p
erce
nt e
arn
23 p
erce
nt,
the
mid
dle
clas
s ge
ts a
bout
40
perc
ent,
and
the
botto
m h
alf
abou
t a
quar
ter
of i
ncom
e fr
om w
ork.
Eur
ope
is n
ot v
ery
diff
eren
t: th
e to
p 10
perc
ent c
olle
ct so
mew
hat l
ess a
nd th
e ot
her t
wo
grou
ps a
littl
e m
ore.
ou g
et t
he p
ictu
re:
mod
ern
capi
talis
m i
s an
une
qual
soc
iety
, an
d th
e ric
h-ge
t-ric
her
dyna
mic
stro
ngly
sug
gest
that
it w
ill g
et m
ore
so. B
ut th
ere
is o
ne m
ore
loos
e en
d to
tie
up, a
lread
y hi
nted
at,
and
it ha
s to
do
with
the
adve
nt o
f ver
y hi
gh w
age
inco
mes
. Firs
t,
here
are
som
e fa
cts
abou
t the
com
posi
tion
of to
p in
com
es. A
bout
60
perc
ent o
f the
inco
me
of
the
top
1 pe
rcen
t in
the
Uni
ted
Stat
es to
day
is la
bor
inco
me.
Onl
y w
hen
you
get
to th
e to
p
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
tent
h of
1 p
erce
nt d
oes
inco
me
from
cap
ital
star
t to
pre
dom
inat
e. T
he i
ncom
e of
the
top
hund
redt
h of
1 p
erce
nt is
70
perc
ent
from
cap
ital.
The
stor
y fo
r Fra
nce
is n
ot v
ery
diff
eren
t,
thou
gh th
e pr
opor
tion
of la
bor i
ncom
e is
a b
it hi
gher
at e
very
leve
l. Ev
iden
tly th
ere
are
som
e
very
hig
h w
age
inco
mes
, as
if yo
u di
dn’t
kno
w.
This
is a
fairl
y re
cent
dev
elop
men
t. In
the
1960
s, th
e to
p 1
perc
ent o
f wag
e ea
rner
s co
llect
ed a
little
mor
e th
an 5
per
cent
of
all
wag
e in
com
es.
This
fra
ctio
n ha
s ris
en p
retty
stea
dily
unt
il
now
aday
s, w
hen
the
top
1 pe
rcen
t of
wag
e ea
rner
s re
ceiv
e 10
–12
perc
ent o
f all
wag
es. T
his
time
the
stor
y is
rat
her
diff
eren
t in
Fra
nce.
The
re th
e sh
are
of to
tal
wag
es g
oing
to th
e to
p
perc
entil
e w
as s
tead
y at
6 p
erce
nt u
ntil
very
rece
ntly
, whe
n it
clim
bed
to 7
per
cent
. The
rece
nt
surg
e of
ext
rem
e in
equa
lity
at th
e to
p of
the
wag
e di
strib
utio
n m
ay b
e pr
imar
ily a
n A
mer
ican
deve
lopm
ent.
Pike
tty, w
ho w
ith E
mm
anue
l Sae
z ha
s m
ade
a ca
refu
l stu
dy o
f hig
h-in
com
e ta
x
retu
rns
in th
e U
nite
d St
ates
, at
tribu
tes
this
to th
e ris
e of
wha
t he
calls
“su
perm
anag
ers.”
The
very
hig
hest
inc
ome
clas
s co
nsis
ts t
o a
subs
tant
ial
exte
nt o
f to
p ex
ecut
ives
of
larg
e
corp
orat
ions
, with
ver
y ric
h co
mpe
nsat
ion
pack
ages
. (A
dis
prop
ortio
nate
num
ber o
f the
se, b
ut
by n
o m
eans
all
of th
em, c
ome
from
the
finan
cial
ser
vice
s in
dust
ry.)
With
or
with
out
stoc
k
optio
ns, t
hese
larg
e pa
y pa
ckag
es g
et c
onve
rted
to w
ealth
and
futu
re in
com
e fr
om w
ealth
. But
the
fact
rem
ains
that
muc
h of
the
incr
ease
d in
com
e (a
nd w
ealth
) ine
qual
ity in
the
Uni
ted
Stat
es
is d
riven
by
the
rise
of th
ese
supe
rman
ager
s.
Ther
e is
not
muc
h un
ders
tand
ing
of th
is p
heno
men
on, a
nd th
is b
ook
has
little
to a
dd. P
iket
ty
is o
f co
urse
aw
are
that
exe
cutiv
e pa
y at
the
very
top
is u
sual
ly d
eter
min
ed in
a c
ozy
way
by
boar
ds o
f di
rect
ors
and
com
pens
atio
n co
mm
ittee
s m
ade
up o
f peo
ple
very
like
the
exec
utiv
es
they
are
pay
ing.
The
re i
s ce
rtain
ly a
n el
emen
t of
the
Lak
e W
obeg
on i
llusi
on: e
very
boa
rd
wan
ts to
bel
ieve
that
“its
” hi
gh e
xecu
tives
are
bet
ter
than
the
med
ian
and
dese
rve
to b
e pa
id
mor
e th
an th
e m
edia
n.
It is
of c
ours
e po
ssib
le th
at “
supe
rman
ager
s” re
ally
are
supe
rman
ager
s, an
d th
eir v
ery
high
pay
mer
ely
refle
cts
thei
r ve
ry la
rge
cont
ribut
ions
to c
orpo
rate
pro
fits.
It is
eve
n po
ssib
le th
at th
eir
incr
ease
d do
min
ance
sinc
e th
e 19
60s
has
an id
entif
iabl
e ca
use
alon
g th
at li
ne. T
his
expl
anat
ion
wou
ld b
e ha
rder
to m
aint
ain
if th
e ph
enom
enon
turn
s out
to b
e un
ique
ly A
mer
ican
. It d
oes
not
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
Ioccu
r in
Fra
nce
or, o
n ca
sual
obs
erva
tion,
in G
erm
any
or Ja
pan.
Can
thei
r top
exe
cutiv
es la
ck
a ce
rtain
gen
e? If
so, i
t wou
ld b
e a
frui
tful f
ield
for t
rans
plan
ts.
Ano
ther
pos
sibi
lity,
tem
ptin
g bu
t st
ill r
athe
r va
gue,
is th
at to
p m
anag
emen
t com
pens
atio
n, a
t
leas
t som
e of
it, d
oes
not r
eally
bel
ong
in th
e ca
tego
ry o
f lab
or in
com
e, b
ut re
pres
ents
inst
ead
a so
rt of
adj
unct
to c
apita
l, an
d sh
ould
be
treat
ed in
par
t as
a w
ay o
f sh
arin
g in
inco
me
from
capi
tal.
Ther
e is
a p
uzzl
e he
re w
hose
sol
utio
n w
ould
shed
som
e lig
ht o
n th
e re
cent
incr
ease
in
ineq
ualit
y at
the
top
of
the
pyra
mid
in
the
Uni
ted
Stat
es.
The
puzz
le m
ay n
ot b
e so
lubl
e
beca
use
the
varie
ty o
f circ
umst
ance
s an
d ou
tcom
es is
just
too
larg
e.
n an
y ca
se, i
t is
pret
ty c
lear
that
the
clas
s of
sup
erm
anag
ers
belo
ngs s
ocia
lly a
nd p
oliti
cally
with
the
ren
tiers
, no
t w
ith t
he l
arge
r bo
dy o
f sa
larie
d an
d in
depe
nden
t pro
fess
iona
ls a
nd
mid
dle
man
ager
s. S
o Pi
ketty
’s f
oreb
odin
g vi
sion
of
the
twen
ty-f
irst
cent
ury
rem
ains
to b
e
deal
t with
: slo
wer
gro
wth
of
popu
latio
n an
d pr
oduc
tivity
, a ra
te o
f re
turn
on
capi
tal d
istin
ctly
high
er th
an th
e gr
owth
rate
, the
wea
lth-in
com
e ra
tio ri
sing
bac
k to
nin
etee
nth-
cent
ury
heig
hts,
prob
ably
a s
omew
hat
high
er c
apita
l sh
are
in n
atio
nal
inco
me,
an
incr
easi
ng d
omin
ance
of
inhe
rited
wea
lth o
ver
earn
ed w
ealth
, and
a st
ill w
ider
gap
bet
wee
n th
e to
p in
com
es a
nd a
ll th
e
othe
rs.
May
be a
littl
e sk
eptic
ism
is in
ord
er. F
or in
stan
ce,
the
hist
oric
ally
fairl
y st
able
long
-
run
rate
of r
etur
n ha
s be
en th
e ba
lanc
ed o
utco
me
of a
tens
ion
betw
een
dim
inis
hing
retu
rns
and
tech
nolo
gica
l pro
gres
s; p
erha
ps a
slow
er ra
te o
f gro
wth
in th
e fu
ture
will
pul
l the
rate
of r
etur
n
dow
n dr
astic
ally
. Per
haps
. But
sup
pose
that
Pik
etty
is o
n th
e w
hole
righ
t. W
hat,
if an
ythi
ng, i
s
to b
e do
ne?
Pike
tty’s
stro
ng p
refe
renc
e is
for
an
annu
al p
rogr
essi
ve ta
x on
wea
lth, w
orld
wid
e if
poss
ible
,
to e
xclu
de f
light
to p
hony
tax
have
ns.
He
reco
gniz
es th
at a
glo
bal t
ax is
a h
opel
ess
goal
, but
he th
inks
that
it is
pos
sibl
e to
enf
orce
a re
gion
al w
ealth
tax
in a
n ar
ea th
e si
ze o
f Eur
ope
or th
e
Uni
ted
Stat
es.
An
exam
ple
of t
he s
ort
of r
ate
sche
dule
tha
t he
has
in m
ind
is 0
per
cent
on
fortu
nes
belo
w o
ne m
illio
n eu
ros,
1 p
erce
nt o
n fo
rtune
s be
twee
n on
e an
d fiv
e m
illio
n eu
ros,
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
and
2 pe
rcen
t ab
ove
five
mill
ion
euro
s. (
A e
uro
is c
urre
ntly
wor
th a
bout
$1.
37.)
Rem
embe
r
that
thi
s is
an
annu
al t
ax,
not
a on
etim
e le
vy.
He
estim
ates
tha
t su
ch a
tax
app
lied
in th
e
Euro
pean
Uni
on w
ould
gen
erat
e re
venu
e eq
ual
to a
bout
2 p
erce
nt o
f G
DP,
to
be u
sed
or
dist
ribut
ed a
ccor
ding
to s
ome
agre
ed fo
rmul
a. H
e se
ems
to p
refe
r, as
wou
ld I,
a sl
ight
ly m
ore
prog
ress
ive
rate
sch
edul
e. O
f co
urse
the
adm
inis
tratio
n of
suc
h a
tax
wou
ld re
quire
a h
igh
degr
ee o
f tra
nspa
renc
y an
d co
mpl
ete
repo
rting
on
the
part
of f
inan
cial
inst
itutio
ns a
nd o
ther
corp
orat
ions
. The
boo
k di
scus
ses
in s
ome
deta
il ho
w th
is m
ight
wor
k in
the
Euro
pean
con
text
.
As
with
any
tax,
ther
e w
ould
no
doub
t be
a co
ntin
uing
stru
ggle
to c
lose
loop
hole
s an
d pr
even
t
evas
ion,
but
that
is p
ar fo
r the
cou
rse.
Ann
ual
reve
nue
of 2
per
cent
of
GD
P is
nei
ther
triv
ial
nor
enor
mou
s. B
ut re
venu
e is
not
the
cent
ral
purp
ose
of P
iket
ty’s
pro
posa
l. Its
poi
nt is
that
it is
the
diff
eren
ce b
etw
een
the
grow
th
rate
and
the
afte
r-ta
x re
turn
on
capi
tal t
hat f
igur
es in
the
rich-
get-
riche
r dyn
amic
of i
ncre
asin
g
ineq
ualit
y. A
tax
on c
apita
l with
a ra
te st
ruct
ure
like
the
one
sugg
este
d w
ould
dim
inis
h th
e ga
p
betw
een
the
rate
of
retu
rn a
nd th
e gr
owth
rate
by
perh
aps
1.5
perc
ent a
nd w
ould
wea
ken
that
mec
hani
sm p
erce
ptib
ly.
This
pro
posa
l m
akes
tec
hnic
al s
ense
bec
ause
it
is a
nat
ural
ant
idot
e to
the
dyn
amic
s of
ineq
ualit
y th
at h
e ha
s un
cove
red.
Kee
p in
min
d th
at th
e ric
h-ge
t-ric
her p
roce
ss is
a p
rope
rty o
f
the
syst
em a
s it
oper
ates
on
alre
ady
accu
mul
ated
wea
lth. I
t doe
s no
t wor
k th
roug
h in
divi
dual
ince
ntiv
es to
inno
vate
or e
ven
to sa
ve. B
lunt
ing
it w
ould
not
nec
essa
rily
blun
t the
m. O
f cou
rse
a lo
wer
afte
r-ta
x re
turn
on
capi
tal
mig
ht m
ake
the
accu
mul
atio
n of
larg
e fo
rtune
s so
mew
hat
less
attr
activ
e, t
houg
h ev
en t
hat
is n
ot a
t al
l cl
ear.
In a
ny c
ase,
it
wou
ld b
e a
tole
rabl
e
cons
eque
nce.
Pike
tty w
rites
as
if a
tax
on w
ealth
mig
ht s
omet
ime
soon
hav
e po
litic
al v
iabi
lity
in E
urop
e,
whe
re th
ere
is a
lread
y so
me
expe
rienc
e w
ith c
apita
l le
vies
. I
have
no
opin
ion
abou
t tha
t. O
n
this
sid
e of
the
Atla
ntic
, the
re w
ould
see
m to
be
no s
erio
us p
rosp
ect o
f suc
h an
out
com
e. W
e
are
polit
ical
ly u
nabl
e to
pre
serv
e ev
en a
n es
tate
tax
with
real
bite
. If w
e co
uld,
that
wou
ld b
e a
reas
onab
le p
lace
to s
tart,
not
to m
entio
n a
mor
e st
eepl
y pr
ogre
ssiv
e in
com
e ta
x th
at d
id n
ot
favo
r in
com
e fr
om c
apita
l as
the
curr
ent s
yste
m d
oes.
But
the
built
-in te
nden
cy fo
r the
top
to
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
outp
ace
ever
yone
els
e w
ill n
ot y
ield
to m
inor
pat
ches
. Wou
ldn’
t it b
e in
tere
stin
g if
the
Uni
ted
Stat
es w
ere
to b
ecom
e th
e la
nd o
f th
e fr
ee,
the
hom
e of
the
bra
ve,
and
the
last
refu
ge o
f
incr
easi
ng in
equa
lity
at th
e to
p (a
nd p
erha
ps a
lso
at th
e bo
ttom
)? W
ould
that
wor
k fo
r you
?
Robe
rt M
. Sol
ow is
Inst
itute
Pro
fess
or o
f Eco
nom
ics
emer
itus
at M
IT. H
e w
on th
e N
obel
Pri
ze
in E
cono
mic
s in
198
7.
shar
e th
is a
rtic
le o
n fa
cebo
ok o
r tw
itter
post
ed in
: pol
itics
,eco
nom
ics,
inco
me
ineq
ualit
y,ta
xatio
n,m
arx
prin
t thi
s ar
ticle
You
May
Lik
eby
Tab
oola
Spo
nsor
ed C
onte
nt
Hai
r C
olor
for
Wom
en
Wh
y Y
ou S
hou
ld C
olor
You
r G
ray
at H
ome
Per
fect
ly T
imed
Pic
ture
s
Th
e M
ost
Ou
trag
eou
s,P
erfe
ctly
Tim
edP
ictu
res
Yo…
Qu
iBid
s
SP
EC
IAL
RE
PO
RT
:M
ust
-Hav
e P
rod
uct
sB
ein
g S
old
Wit
h S
t…
Con
tin
uu
m
DD
OS
in 2
014
: T
he
New
Dis
trib
ute
d D
enia
lof
Ser
vice
A…
Tru
e H
ealt
h
You
Wil
l Be
SH
OC
KE
Dto
Hea
r th
e T
ruth
Ab
out
L…
Tri
pC
ura
tor
Bes
t R
esor
ts:
Top
10
Car
ibbe
an V
alu
es
'Cap
ital i
n th
e Tw
enty
-Firs
t Cen
tury
' by
Thom
as P
iket
ty, r
evie
wed
| N
ew R
epub
lic
http
://w
ww
.new
repu
blic
.com
/arti
cle/
1174
29/c
apita
l-tw
enty
-firs
t-cen
tury
-thom
as-p
iket
ty-r
evie
wed
[4/2
7/20
14 5
:53:
41 A
M]
Apr
il 20
, 201
4 - 1
2:00
AM
Why
Do
Our
Off
ices
Mak
e U
s So
Mis
erab
le?
Apr
il 22
, 201
4 8:
00 P
M
Putin
Is U
sing
WW
II fo
r Pr
opag
anda
Bec
ause
It's
the
Bes
t Mem
ory
Tha
tR
ussi
a H
as
pro
acti
v+
Don
’t L
et Y
ours
elf
Get
Th
ese
Maj
or T
ypes
of
Acn
eW
en b
y C
haz
Dea
n
Hai
r C
are
Issu
es:
Bef
ore
& A
fter
Ph
otos
by T
aboo
laP
rom
oted
Con
tent
Fro
m T
he
Web
Fro
m T
he
New
Rep
ub
lic
How
To
Tra
in Y
our
Pu
pp
y to
Sit
(uliv
e)
See
Th
is/S
kip
Th
at: F
rom
Th
eO
ther
Wom
…(P
EO
PLE
.com
)
Th
e M
ost
Hil
ario
us,
Am
azin
g,…
(Am
azin
gly
Tim
ed P
hoto
s)
12 F
un
Fac
ts A
bou
t "S
aved
By
Th
e B
ell"
(Sug
gest
)
Ch
alle
nge
s O
n A
Cro
ss C
oun
try
Bik
e T
rip
(Mer
rell)
Is R
uss
ia S
uff
erin
g F
rom
Pos
t-T
rau
mat
ic S
tres
s D
iso
…H
ow T
wo
Inof
fen
sive
Wor
ds
Bec
ame
the
Mos
t In
flam
ma…
Rep
ubl
ican
s H
ave
a G
ood
Map
.T
hat
Doe
sn't
Mea
n O
…T
hom
as J
effe
rson
Was
a M
usl
imM
ich
ael P
ined
a’s
Fou
l Bal
l
360
com
men
ts
