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Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

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Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#11

Post by trapperkeeper79 »

Wonderful talk. One thing he called for was a wealth tax, which is something that makes complete sense but is going to be very unpopular. On the otherhand, he also calls for progressive income taxes (something that is reported by the media and an easier pill to swallow) - in my country, Canada, progressive income taxes are not the answer IMHO.

We didn't have as much inequality for education (i.e. lots of decent Universities, not terribly expensive). The problem is wealth in the form of housing has exploded for a large fraction of the population (typically older people) and has left young people (well, anybody without a house) in the dust. In major cities like Toronto and Vancouver, average detached houses cost well over a million bucks. This is also happening because of bone-headed environmental policies (I'm all for the environment, I just don't understand why people without homes are punished for having a green belt while people with homes are rewarded). Our current PM (I'm a fan) has done many good things but he doesn't get this. We had something called the child tax credit, which families with children would get unconditionally - this became something you'd get based on income. Now, young people who are desperately saving for downpayments are hampered even more ... buying a home is just out of reach. In my humble opinion, a wealth tax is the way to go and young people should make their voices heard to our representatives.

In summary, people need to understand the difference between income inequality and wealth inequality. I argue the problem is NOT income inequality - it is wealth differences.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#12

Post by VodkaHaze »

roflc0ptic wrote: post #6
VodkaHaze wrote: post #2

In the interest of giving the fuller discussion: Picketty's book has been out for a while now. It is good economics. It deserves rightful praise, and scrutiny. Acemoglu and Robinson's answer[1] is also good economics. Digestible podcast form here [2]. It purports that Picketty's "r>g" model is flawed. It also deserves a reading. All of this is part of a larger discussion, which C21 started. r > g doesn't seem to expl…

I'm a third of the way through C21. Skimming the beginning of Acemoglu and Robinson, feels like they are criticizing points that Picketty raises - specifically that politics plays a substantial role in inequality, and r vs g. Maybe it's just a question of degree. Probably worth more than a cursory glance. Anyways, since you linked to such a relevant C21 response, do you know if there's a team-piketty response to Acem…

Picketty's re-response[1]. It gets rather technical from there on. It's not my area of expertise, either, so I won't come with my opinion on the matter. Acemoglu is a giant, and so is Picketty, so I watch the fight from afar.

The first two levels of discussion (C21 and Acemoglu's immediate answer) are digestible, though.

What's important to understand is that this is all part of a larger discussion on inequality, which has gained a lot of momentum in the last few years in economics (in all fronts -- wealth, income, education, etc.) It's fine to take the position of "I'm not sure" for the moment being, while informing yourself.

[1] http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.29.1.67

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#13

Post by justin66 »

VodkaHaze wrote: post #5
debt wrote: post #3

This is perfect. That book Capital is like 700 pages.

The fact that the book is a best seller when its intended audience is really people with a graduate education in economics tells me that most people bought is as a signal of smartness (or as an honest effort to inform oneself, but without actually slogging through the book)

How many pages have equations on them? I'm inclined to view your comment as cynical, but if it's more than 10 I'd admit that you've got a point.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#14

Post by Tycho »

VodkaHaze wrote: post #5
debt wrote: post #3

This is perfect. That book Capital is like 700 pages.

The fact that the book is a best seller when its intended audience is really people with a graduate education in economics tells me that most people bought is as a signal of smartness (or as an honest effort to inform oneself, but without actually slogging through the book)

I feel like there must have been some string pulling that made this book so popular.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#15

Post by eldavido »

trapperkeeper79 wrote: post #11

Wonderful talk. One thing he called for was a wealth tax, which is something that makes complete sense but is going to be very unpopular. On the otherhand, he also calls for progressive income taxes (something that is reported by the media and an easier pill to swallow) - in my country, Canada, progressive income taxes are not the answer IMHO. We didn't have as much inequality for education (i.e. lots of decent Unive…

I'm tempted to blame ultra-loose monetary policy, but I'm not so sure. I live in the Bay Area where house prices are also out of control, but I'm not sure why we focus on prices (rather than monthly debt payments) since what, 90% of the market is payment buyers?

In any case, I do believe the current interest rate environment has distributional consequences that haven't been well-studied. It seems the biggest beneficiaries of this environment will be people with lots of debt-financed assets who manage to sell for high nominal prices. On the other hand, a lot of people think rates aren't coming down any time soon (check the yield curve on US treasuries, the 30-year rate is like 3.4%) so maybe this will be a one-time shock where people who took on a ton of debt ca. 2008 will reap big one-time profits as cheaply-acquired assets realize big capital gains.

In any case, I think it's naive to assume holding rates so low, for so long, doesn't have major wealth transfer effects.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#16

Post by roflc0ptic »

VodkaHaze wrote: post #12
roflc0ptic wrote: post #6

Earlier quoted context omitted.

I'm a third of the way through C21. Skimming the beginning of Acemoglu and Robinson, feels like they are criticizing points that Picketty raises - specifically that politics plays a substantial role in inequality, and r vs g. Maybe it's just a question of degree. Probably worth more than a cursory glance. Anyways, since you linked to such a relevant C21 response, do you know if there's a team-piketty response to Acem…

Picketty's re-response[1]. It gets rather technical from there on. It's not my area of expertise, either, so I won't come with my opinion on the matter. Acemoglu is a giant, and so is Picketty, so I watch the fight from afar. The first two levels of discussion (C21 and Acemoglu's immediate answer) are digestible, though. What's important to understand is that this is all part of a larger discussion on inequality, whi…

Safe to say I have no opinion I take seriously, for the reasons you mention. It's interesting as all get out, though. Thanks for the links.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#17

Post by VodkaHaze »

Tycho wrote: post #14
VodkaHaze wrote: post #5

Earlier quoted context omitted.

The fact that the book is a best seller when its intended audience is really people with a graduate education in economics tells me that most people bought is as a signal of smartness (or as an honest effort to inform oneself, but without actually slogging through the book)

I feel like there must have been some string pulling that made this book so popular.

It just came out at an appropriate time; a year after Occupy Wall Street, etc. Inequality and inter-generational mobility is clearly on people's minds these days.

Similar story happened with Nassim Taleb's Black Swan book. It's not a particularly good book -- it's rambling, hand wavy, and only ever presents anecdotal evidence as support for its claims. But the book came out at an appropriate time (right before the financial crisis) so it was embraced.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#18

Post by eldavido »

VodkaHaze wrote: post #5
debt wrote: post #3

This is perfect. That book Capital is like 700 pages.

The fact that the book is a best seller when its intended audience is really people with a graduate education in economics tells me that most people bought is as a signal of smartness (or as an honest effort to inform oneself, but without actually slogging through the book)

I read the book. You'd be surprised at how readable it is.

Piketty says in the opening that his purpose is as much "contributing to the historical record", as it is making an economics argument. Probably half the book is history, with lots of data on things like "what percent of US wealth has been held as farmland vs. business equity over time", or "what did world war 2 do to savings rates"?

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#19

Post by refurb »

trapperkeeper79 wrote: post #11

Wonderful talk. One thing he called for was a wealth tax, which is something that makes complete sense but is going to be very unpopular. On the otherhand, he also calls for progressive income taxes (something that is reported by the media and an easier pill to swallow) - in my country, Canada, progressive income taxes are not the answer IMHO. We didn't have as much inequality for education (i.e. lots of decent Unive…

The one thing I think people forget is that since wealth is a function of time (and age), there is intronsic inequality that you can't get rid of.

Looking at wealth by age bracket. It is strongly correlated, which shouldn't surprise anyone. The longer you work the more you save. A 20 year old is going to have a lot less wealth than a 60 year old. I'm not sure that will ever change.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#20

Post by trapperkeeper79 »

eldavido wrote: post #15
trapperkeeper79 wrote: post #11

Wonderful talk. One thing he called for was a wealth tax, which is something that makes complete sense but is going to be very unpopular. On the otherhand, he also calls for progressive income taxes (something that is reported by the media and an easier pill to swallow) - in my country, Canada, progressive income taxes are not the answer IMHO. We didn't have as much inequality for education (i.e. lots of decent Unive…

I'm tempted to blame ultra-loose monetary policy, but I'm not so sure. I live in the Bay Area where house prices are also out of control, but I'm not sure why we focus on prices (rather than monthly debt payments) since what, 90% of the market is payment buyers? In any case, I do believe the current interest rate environment has distributional consequences that haven't been well-studied. It seems the biggest benefici…

Agreed. The question is what does a young person do? Take on an asset that is known to be overvalued or wait for the rate climate to change.

As a data point, condos in Toronto (condos in Toronto are generally tiny and not the most desirable place to raise 2 kids) appreciated by 9-10% this year despite continuous bubble talk by various levels of govt. You and I both know this will not stop until rates rise; and they won't - at least in canada - because of a significant problems in the oil sector of our economy. Is the right thing to do to buy into this "ponzi" scheme and try to time the exit? Or continue to hold the course of staying out of it and waiting for rates to rise. I have rented since 2008 when I graduated and I'm tired of shoveling my money into the fire :'(

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