Avent on Picketty 3: Problems with Theory

Exactly my criticism of economics

As we have discussed several times, a key part of Mr Piketty’s story is that the rate of return on capital, r, is greater than the rate of economic growth, g. Critics have suggested that this is at odds with economic theory, but Mr Piketty is not making a theoretical point; he is observing that, empirically, r has been greater than g throughout most of history. If the theory is inconsistent with that, then that is the theory’s problem.

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