Capital In The 21rst Century

Capital Cover

I finished reading Piketty’s Capital in the Twenty-First Century last night. I’m a sucker for economics books and so bought this last summer after reading an article in the New York Times stating that this  was the summer book to read. Unfortunately that was last summer and I just got around to reading it this summer. There have been many, many reviews of this book by prominent reputable economists all over the world, and so I won’t even attempt to write a formal critique of the text. I just want to note a few thoughts that I had while reading it.

It is a large text with some (simple) mathematics and a lot of time series charts. If you are interested in global economics, history and finance then it is an extremely interesting read and easy to follow. However, I have a hard time believing that it was a “book of the summer” because the majority of people wouldn’t make it much past the first mathematical inequality.

There is some repetition in the text and it could have been scaled back a bit. I’m guessing that it was composed of multiple writings over the course of time and he did what he could to stitch it all together. This is a very minor point, just something I noticed.

The book was/is controversial. I have read several reviews that were critical, but since he included ALL of his sources and data it was tough for anyone to really refute his findings. Piketty’s research indicates that the world will return to a regime of low growth and increasingly concentrated wealth. His recommendation to avoid this scenario is an internationally coordinated progressive tax on capital (i.e. assets). His opinion is that it is the only way to avoid low growth and wealth concentration. An internationally recognized economist recommending something as radical as this is certainly going to be controversial.

The book was a little depressing for me because I agree with his findings and solution, but I know that the solution is an absolute political impossibility. There is no way governments of the world are going to tax assets, not to mention annually. There is no way governments and banks of the world are going to work together to prevent their citizens from hiding assets to avoid taxation. Short of some unprecedented technological revolution (free energy, light without heat, teleportation, etc.) I don’t see how the future he predicts can be avoided.

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