Showing posts from May, 2014

The Good Rentier

Max Beckmann 'Party in Paris' 1947 There is a deep flaw in the centrepiece political argument of Thomas Piketty’s Capital in the Twenty-First Century . Piketty claims the rentier is the enemy of democracy. Yet there are two obvious ways in which wealth inequality and rentier wealth could be beneficial to democracy. The first relates to the likelihood that institutional designers will be more vigilant and insistent in updating safeguards against the distorting influence of money in politics once there is broad-based acceptance that wealth creation and wealth inequality are permanent, symbiotic features of democratic society. The second relates to the unique position of the rentier with secure independent wealth who lives off returns on capital or land. He or she is in some respects the ideal politician. The rentier can afford to be distant and detached from economic interests and to hold independent political convictions. He does not struggle to keep a business afloat, do

A Fable of The Piketty Goose

Paul Gaugin 'Breton Boy in a Landscape with Goose' (1889) Two great problems today in the advanced nations that we are compelled to call upon economists to help solve, are (a) how to restore and sustain economic growth and (b) how to minimise, and become adaptively ready and steady for, any future crisis like the one in 2008.  Unfortunately a new economics book which has received more immediate public attention than any other economics book in recent memory does not respond to either of those challenges.  We speak of Thomas Piketty’s Capital In The Twenty-First Century . Many reviewers -- critics and supporters alike -- respectfully note that Piketty’s principal scholarly contribution lies in the economic history of wealth inequality. Piketty may, in addition, have produced an innovation by positing r > g (the rate of return on investment or capital is larger and faster than the rate of economic growth). There is lively disagreement about the veracity of the def