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Piketty, inequality and volatility: How can r exceed g?

chrisstucchio.com

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Re: Piketty, inequality and volatility: How can r exceed g?

#41

Post by themgt »

First off you're I believe incorrectly using g rather than r in your "how volatility changes things" section. Secondly you seem to be assuming not only that r will be more volatile than g, but that it will be so much more volatile that medium/long-term r will drop enough to match g.

And lastly you're ignoring the actual history Piketty is describing, in which dynastic families very often tend to accumulate and pass on vast empires of wealth. When your speculative theory doesn't match reality ... perhaps it's time to reconsider the theory.

Re: Piketty, inequality and volatility: How can r exceed g?

#43

Post by ArkyBeagle »

czr80 wrote: post #27
alnafie wrote: post #22

Earlier quoted context omitted.

One of the best and most accessible pieces I've ever read on inequality is PG's essay on the subject: http://paulgraham.com/gap.html My all-time favorite quote on inequality: "You need rich people in your society not so much because in spending their money they create jobs, but because of what they have to do to get rich. I'm not talking about the trickle-down effect here. I'm not saying that if you let Henry Ford ge…

So the thesis is that technological progress relies on us incentivizing people with the hope of extreme wealth? Seems unlikely - for one counter-example, a large part of progress in society rests on investment in basic research, and most of the scientists engaged in that work have no real expectation that they will get rich.

I don't think any of that is necessarily true. The Henry Ford that we know of is a myth, an aggregation of ... "process engineers" and engineers-in-general that worked for him, not to mention the army of line workers. He's a "macro".

The real Henry Ford was modestly ... nuts. But in a good way... well, mostly a good way... the Rouge Plant is the Neuschwanstein Castle of American industry...

But who gets identified with a machine that is as iconic as a horse? Perhaps you have to have know someone who used a 40-horse Ford in anger for decades - there were a handful of my paternal grandfather's brothers, who I knew, who did ( guys who were fully adults at the onset of the Depression) . As a suburban brat raised by somebody who was not going back to the farm, they were like priests of the Old Religion.

In order for a narrative to make any sense, we have to have a two-legged archetype. The truth is closer to "we (collectively) stumbled into using tractors and Haber-Bosch* process related fertilizers to make Malthusian scarcity/crises go away as a potential force of history."

*yes, that's James Burke's "Connections" voice you hear there.

Of course, the equal but opposite counter to that is these things also made way for machine guns and tanks. Might some extra CO2 outta it; we're not 100% sure...

Even modest wealth has a lot of fantasy tied up in it.

The whole point of markets is to enslave Vast quantities of inscrutable information. When we make up stories about this information, we should expect to fail.

I don't think it's been said better than by Talking Heads - "You may find yourself behind the wheel of a large automobile You may find yourself in a beautiful house with a beautiful wife You may ask yourself, well, how did I get here? "

If anything, what hubris it is to think we can shape that to order.

Re: Piketty, inequality and volatility: How can r exceed g?

#45

Post by davidgerard »

tl;dr: "I haven't read the book, but I'll disprove the headline from first principles without looking at the data."

Yay praxeology! Gives so much more pleasing results than the annoying "look at the world" step, doing the damned legwork with the data, as Piketty did.

Re: Piketty, inequality and volatility: How can r exceed g?

#46

Post by bayesianhorse »

_delirium wrote: post #39
bayesianhorse wrote: post #21

Earlier quoted context omitted.

The businessmen of Germany from 1935 eventually got to use slave labor to build lucrative weapons... Quite a few corporations and individuals survived the war.

The Krupps are perhaps the most famous. They profited handsomely from both WW1 and WW2, managed to escape losing their fortunes during denazification (for unclear reasons), and the family still controls large amounts of wealth today: https://en.wikipedia.org/wiki/Krupp

I have a personal beef with the "profiting from war" story. In the particular case of Krupp it stands to reason whether or not spending for the war, getting their factories bombed to the ground and the lost opportunity for peace time development (and even peacetime production of arms) wasn't making the world wars a lot less "profitable" than a peace would have been. Leaving aside the discussion if peace throughout the 20th century would have been possible in slightly different circumstances.
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