Peter Lindert on Piketty

He has an NBER review essay on the book.  Here is one bit:

Piketty’s “r > g” device, for all its amazing rhetorical power, does not take us very far. Our task of explaining and predicting inequality movements is not made any easier by the requirement that we must first predict both a “rate of return” and the growth rate of the economy. The formula r – g takes us no further than we were transported fifty years ago by the concept of total factor productivity as a “source” of growth. It will be another “measure of our ignorance.”

Here is more:

Oddly, however, for the twentieth century trends that he and his collaborators have documented so well, the relevance of the wealth/income and capital/income ratios for the income distribution is less compelling. Across countries, the levels and movements of this ratio do not correlate well with those in income inequality. Over time, there is more correlation, within Britain, or France, or Germany, or the United States. Yet, as we shall see later, the same overall movements will show up when we look at the inequality movements in incomes that have little to do with wealth, such as wage rates or in middle/lower income ratios.

The essay is interesting throughout and you will see at the end that Lindert is no friend of inequality and no enemy of highly progressive taxation.  By the way, here is a Lindert essay on three centuries of inequality in Britain and America (pdf).  Here is Lindert, with Williamson, on whether globalization makes the world more unequal.  He knows this area very well.


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