Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]
Suppose r &gt; g as Picketty claims. What would be the implications? One I could think of is that rather than investing in human labor (e.g. education), it would make more sense to invest in capital (e.g. stock market) since that would yield you higher returns. Also, all the talk about wealth inequality uses percentages like the top 10%. However, the top 10% is not stable. In fact, the turnover is very high, much higher than it has been in the past. For instance:<p>&gt; Over the past 30 years, the origin of the wealth of the richest people in the United States has shifted away from old, inherited money. Our new metric, the self-made scores developed for the Forbes 400, shows that increasingly we find self-made billionaires among the ranks of the richest people in the country. This has accompanied the incredible increase in wealth of the members of the Forbes 400, which has jumped 1,832% times since 1984, when the total net worth of our list was $125 billion, compared with $2.29 trillion today [0]<p>And just a casual look through the richest lists, you don&#x27;t see a lot of old money. Most are first generation wealth.<p>So my question is, how is it possible that there is high turnover in the wealthiest while wealth inequality is always much higher than income inequality as Picketty claims? When Bill Gates generated great wealth by founding Microsoft, was that considered income or capital appreciation? I think it would be capital appreciation since he sold stock and the stock appreciated. But is this really &quot;capital&quot; in the sense that its passive investment like a money printing machine that was passed down generation to generation? Or if his wealth would be considered income, then how is wealth inequality always so much higher than income inequality considering the richest Americans created their wealth in a similar means to Gates?<p>[0] <a href="http:&#x2F;&#x2F;www.forbes.com&#x2F;sites&#x2F;afontevecchia&#x2F;2014&#x2F;10&#x2F;03&#x2F;there-are-more-self-made-billionaires-in-the-forbes-400-than-ever-before&#x2F;#21c2355ae0a5" rel="nofollow">http:&#x2F;&#x2F;www.forbes.com&#x2F;sites&#x2F;afontevecchia&#x2F;2014&#x2F;10&#x2F;03&#x2F;there-a...</a>