
Turns out Piketty was right: inequality in owning companies will worsen - hhs
https://www.afr.com/markets/equity-markets/turns-out-piketty-was-right-20200211-p53zm2
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nabla9
Piketty's main point is changing Capital/Income ratio, K/Y=s/(g+n+δ), where s
is savings rate, n is population growth and, δ is capital deprecation.

As Capital/Income ratio increases, larger share of profits go to capital. This
increases Capital/Income ratio even more until some kind of equilibrium is
reached. This is natural progression when population growth lows down.

Most of the end consumption that generates profits comes is paid by personal
income. This creates feedback effects:

1\. If Capital/Income ratio keeps growing, economic growth will slow down
(unless government spends more)

2\. When supply of capital increases relative to demand of capital, return of
capital decreases. Interest rates should fall at some point when
Capital/Income ratios increases. Rates have fallen but evidence suggest that
they do not fall enough to fully offset the increasing importance of capital.

If Piketty is right, we should expect slower growth, low interest rates. Lower
return for capital. Technological progress provides only steady ~1% annual
growth, rest comes from labor supply that has decreased. Productivity growth
seems to have decreased as well.

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stevedekorte
It's easy to confuse correlations with causes, so it's important to keep in
mind that while real growth (of wealth) is correlated with money changing
hands that money changing hands is not the cause of real growth. Real growth
is caused by making good investments of resources. For example, the
governments of Zimbabwe and Venezuela could print and spend as much money as
they liked which can make things like GDP metrics high in nominal terms of the
currency being printed, but the net effect is a downward spiral of bad
investments.

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nabla9
Zimbabwe and Venezuela didn't print and spend. They took loans in foreign
currency and spend that.

Money printing alters just the nominal value of the currency. You can't buy
more stuff by printing more money. You can decease the real wages and real
value loans denominated in that currency with monetary inflation. Because the
countries you mentioned had debt denominated in foreign currency they could
not change the real value of their loans.

(it's common layman internet fallacy to draw back all macroeconomic discussion
into money printing)

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kcolford
Can we get a link to a non paywall version?

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gchokov
Inequality in owning companies. Well, everybody is free to go out and create a
company and be a 100% owner in it.

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metalliqaz
...a company with no assets, woo!

