Saturday, May 2, 2015

Notes on Capital in the 21st Century

I started reading it six months ago, I'm finally halfway, and here's a notes dump.

  • Income from labor and income from capital are both very unevenly distributed in every society at every time in history
  • Income from capital is always more unevenly distributed than income from labor
  • Typically, the top 10% of laborers earn 25 to 30% of all labor income, whereas the top 10% of wealthy always own at least 50% of all wealth in a society.
  • The bottom 50% of laborers always "receives a significant share of total labor income (generally, between one-quarter and one-third) but typically owns between 0% and 5% of the wealth.
  • "Wealth is so concentrated that a large segment of society is virtually unaware of its existence" [in a typical rich European country today] p225
  • In Europe 1900-1910, "there was no middle class in the specific sense that the middle 40 percent of the wealth distribution were almost as poor as the bottom 50 percent" p227.  This is a typical distribution throughout history.
  • The relative equality of the post-world-war 20th century in many countries is a historical aberration, probably caused by a combination of external factors unlikely to repeat.  The most equal societies have had a middle 40% that actually earned 35 to 40% of the income, e.g., a fair share, a middle class, but this is very rare historically.
  • Historically, r, the rate of return on capital, has almost always been about 5%.  g, growth, has almost always been about 1 to 1.5%.  During much of the 20th century, r was much lower and g was much higher.
  • Piketty theorizes that the discrepency between these two numbers explains or correlates with inequality.

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