Why Are Economists Giving Piketty the Cold Shoulder? (2017)
This bit really struck me:<p>“Matthew Rognlie—then a doctoral student, now an assistant professor at Northwestern—took up that line in even greater detail in an article that eventually appeared in the Brookings Papers on Economic Activity, to which he added that the rising capital-to-income ratio in Piketty’s data is disproportionately the result of the price appreciation of certain scarce stores of wealth, primarily housing and the land it sits on, not the quantity accumulation of productive capital that is the subject of the neoclassical theory of economic growth.”<p>I find that a compelling explanation because it fits with a bunch of the deep problems in the way urban development changed in the 20th century, which in turn have created the frustrating housing situation today.<p>It’s difficult to summarize this, but in short, modern zoning, the suburban development pattern, and auto dependency, create an economic vicious cycle which tends to polarize economic outcomes, where Places trend toward either the Bay Area or Detroit. (Some reading linked below)<p>This is most true in the US, but also to varying degrees in many other parts of the world.<p>In other words, if Rognlie’s quote is true, then it would mean Picketty’s observations are better explained by the bad housing and infrastructure policies of the last 80 years than by “r &gt; g”, and if that’s true then it completely changes what we should do about it.<p>Some expansion on the development pattern problems:<p><a href="https:&#x2F;&#x2F;www.strongtowns.org&#x2F;journal&#x2F;2016&#x2F;10&#x2F;23&#x2F;portland-housing-prices" rel="nofollow">https:&#x2F;&#x2F;www.strongtowns.org&#x2F;journal&#x2F;2016&#x2F;10&#x2F;23&#x2F;portland-hous...</a><p><a href="https:&#x2F;&#x2F;www.strongtowns.org&#x2F;journal&#x2F;2018&#x2F;9&#x2F;17&#x2F;austins-codenext" rel="nofollow">https:&#x2F;&#x2F;www.strongtowns.org&#x2F;journal&#x2F;2018&#x2F;9&#x2F;17&#x2F;austins-codene...</a><p><a href="https:&#x2F;&#x2F;www.strongtowns.org&#x2F;the-growth-ponzi-scheme" rel="nofollow">https:&#x2F;&#x2F;www.strongtowns.org&#x2F;the-growth-ponzi-scheme</a>