11. The Myth of Dynastic Wealth: The Rich Get Poorer
- Author:
- Robert Arnott, William Bernstein, and Lillian Wu
- Publication Date:
- 09-2015
- Content Type:
- Journal Article
- Abstract:
- Thomas Piketty’s Capital in the Twenty-First Century rocketed to the top of the best-seller lists the moment it was published in 2013, and remained there for months. While this feat is quite remarkable for a weighty tome on economics, it’s no mystery why Piketty’s magnum opus created such a sensation; it is clearly articulated, is accessible to the non-economist, and contains a trove of historical insights. We believe Piketty’s core message is provably flawed on several levels, as a result of fundamental and avoidable errorsin his basic assumptions. 1 He begins with the sensible presumption that the return on invested capital, r, exceeds macroeconomic growth, g, as must be true in any healthy economy. But from this near-tautology, he moves on to presume that wealthy families will grow ever richer over future generations, leading to a society dominated by unearned, hereditary wealth.
- Topic:
- Economics
- Political Geography:
- United States and Europe