Capital in the Twenty-First Century

I will temporarily set aside

rom the standpoint of people with the means to lend to the government, it is obviously far more advantageous to lend to the state and receive interest on the loan for decades than to pay taxes without compensation.

The median forecast shown on Figures 2.2–5 is optimistic in two respects: first, because it assumes that productivity growth in the wealthy countries will continue at a rate of more than 1 percent per year (which assumes significant technological progress, especially in the area of clean energy), and second, perhaps more important, because it assumes that emerging economies will continue to converge with the rich economies, without major political or military impediments, until the process is complete, around 2050, which is very rapid. It is easy to imagine less optimistic scenarios

particular, inherited wealth will make a comeback—a long-term phenomenon whose effects are already being felt in Europe and that could extend to other parts of the world as well. That is why it is important for present purposes to become familiar with the history of demographic and economic growth.

The formula is
α = r × β
where r is the rate of return on capital.
For example, if β = 600% and r = 5%, then α = r × β = 30%.13
In other words, if national wealth represents the equivalent of six years of national income, and if the rate of return on capital is 5 percent per year, then capital’s share in national income is 30 percent.

Taxation is not only a way of requiring all citizens to contribute to the financing of public expenditures and projects and to distribute the tax burden as fairly as possible; it is also useful for establishing classifications and promoting knowledge as well as democratic transparency.

the price that the financial markets sets on a company’s or even a sector’s immaterial capital at any given moment is largely arbitrary and uncertain.

β = s / g (which says that the capital/income ratio is equal in the long run to the savings rate divided by the growth rate).

To put it bluntly, the discipline of economics has yet to get over its childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences. Economists are all too often preoccupied with petty mathematical problems of interest only to themselves. This obsession with mathematics is an easy way of acquiring the appearance of scientificity without having to answer the far more complex questions posed by the world we live in. There is one great advantage to being an academic economist in France: here, economists are not highly respected in the academic and intellectual world or by political and financial elites. Hence they must set aside their contempt for other disciplines and their absurd claim to greater scientific legitimacy, despite the fact that they know almost nothing about anything. This, in any case, is the charm of the discipline and of the social sciences in general: one starts from square one, so that there is some hope of making major progress.

high price of real estate or petroleum may contribute to structural divergence.