Book review: Capital in the Twenty-First Century, by Thomas Piketty.

Piketty makes an exhaustive case for his argument that the return on capital has historically and consistently been significantly higher than the rate of growth in the economy and that, unchecked, this will lead to greater and greater concentrations of private wealth at upper 1/10^th (decile) and 1/100^th (centile) of society. At 655 pages (including the extensive and substantive endnotes), it is an exhausting study as well. His focus on Europe, while natural for a French economist, will put off many American readers who have not followed the turmoil and foibles of the Eurozone since 2008. In the end, Piketty's solution, a global (or at least widely-based) progressive tax on capital strikes me as both effective and politically impossible.

As someone who lived in a tax haven for a number of years, and examined the paucity of the nominal returns on capital hidden away there, I was most delighted by the passage on pages 521-2, where Piketty notes that bank secrecy is most plausibly explained by the haven's share in the illicit gains when its clients exploit the secrecy to avoid their fiscal obligations. Piketty calls this “outright theft.” I would compare the tax havens of the 21^st century to the pirate havens of the 17^th century – profiting at their neighbor's expense, while contributing nothing of value.

Capital is one of the most important books of 2014, but a condensed version would be more accessible, while still conveying the salient points that have contributed to a wider discussion of income inequality.

Transient Gems

Minneapolis got 2 inches (5 cm) of light, fluffy snow this afternoon. Now, under the streetlights and full moon, it is as if every surface was dusted with a thousand small fairy gems, with shimmers and reflections. Added bonus: the snow squeaks underfoot!