Wednesday, May 14, 2014

Piketty the Economist

Thomas Piketty's book "Capital in the 21st Century" has taken the world by storm.  The book is devoted to the subject of global inequality.  His principal recommendation involves wealth confiscation.

Piketty doesn't believe in incentives, a view that he shares with most modern economists.  Here is a sample of Piketty's thinking on incentives:

"Of course, everyone can also understand that if all the company's earnings from its output went to paying wages and nothing to profits, it would probably be difficult to attract the capital needed to finance new investments."

"....probably be difficult...."      no kidding

This absurd statement is to be found on page 40-41 of the Piketty book.

This is the kind of thinking that permeates this book and much of modern research in macroeconomics.

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