Why Are Economists Giving Piketty the Cold Shoulder?
Piketty&#x27;s idea that r &gt; g leads to wealth inequality just makes me shrug. You can&#x27;t really have it another way.<p>If r (the rate of return on capital) is less than g (the growth in output) that means that people have no incentive to build wealth or become more intelligent to deploy that capital more profitably. If I&#x27;m never going to make more than the growth in output, why bother with capital?<p>The logical conclusion to that would be that everyone wants to be an employee and nobody wants to be an employer.<p>If I can grow my wealth more quickly than the nations output, I&#x27;m grabbing a bigger slice of the pie. The hope with capitalism is that I&#x27;m grabbing that pie because I&#x27;ve earned it and the market hopes I&#x27;ll be able to steward that wealth.<p>So yeah, capitalism may be inherently inclined to wealth inequality because some people outperform. But do you really want it another way?<p>There certainly is wealth inequality in the world, but it isn&#x27;t actionable to blame it on r &gt; g. It&#x27;s more effective to look at things on a micro basis. Does this person have a child that is prohibiting them from saving? Why is the person being excluded from jobs? Do they have a proper education?