Nice summary

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Nice summary

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Supplements to wages and salaries have grown dramatically, but labour compensation inequality has not

https://www.facebook.com/taxfoundation/photos/pb.19219803864.-2207520000.1434030135./10152970467213865/?type=3&src=https%3A%2F%2Ffbcdn-sphotos-b-a.akamaihd.net%2Fhphotos-ak-xtf1%2Fv%2Ft1.0-9%2F11102783_10152970467213865_6756945966977092418_n.png%3Foh%3Daec8ad59fc08d0e23c3931845ec89bf4%26oe%3D5630EAB6%26__gda__%3D1442243218_3b3fd51768ac8836221e27e048378f8d&size=850%2C645&fbid=10152970467213865

Gross Domestic Income (GDI) is a complete measure of all income earned in the United States. About half is wages, salaries, and benefits. A quarter goes to business-level taxes and the replacement of worn out machinery. Another quarter of gross domestic income is returned to owners of capital, including business owners and private homeowners.

The shares of income returned to workers and owners of capital remain constant over time once benefits, taxes, and depreciation are accounted for – two-thirds of net income goes to labour and one-third goes to capital.

Rather than focus on shares of GDP, a recent preoccupation of the Left over Left, we should focus on shares of labour compensation, that is, wages, salaries and fringe benefits. Both Piketty and his critics agree on that.

via A Walkthrough of Gross Domestic Income | Tax Foundation.

Winston Churchill on Piketty

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The last word on Piketty: Deirdre McCloskey, John McTernan, Chris Giles Panel

Deirdre McCloskey on Piketty’s definition of wealth in the Age of Human Capital

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Deirdre McCloskey has a 55-page review essay on Piketty

You will find it here (pdf), forthcoming in the Erasmus Journal of Philosophy and Economics.

via Deirdre McCloskey has a 55-page review essay on Piketty.

What if We’re Looking at Inequality the Wrong Way? – NYTimes.com

Fig. 5

 

via What if We’re Looking at Inequality the Wrong Way? – NYTimes.com.

Piketty on inequality: views of the IGM economic experts

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Question: The most powerful force pushing towards greater wealth inequality in the US since the 1970s is the gap between the after-tax return on capital and the economic growth rate?

Daron Acemoglu and James Robinson have a simple explanation for why Piketty is wrong:

But like Marx, Piketty goes wrong for a very simple reason. The quest for general laws of capitalism or any economic system is misguided because it is a-institutional.

It ignores that it is the institutions and the political equilibrium of a society that determine how technology evolves, how markets function, and how the gains from various different economic arrangements are distributed.

Despite his erudition, ambition, and creativity, Marx was ultimately led astray because of his disregard of institutions and politics. The same is true of Piketty.

The Key to victory: Run against Piketty-nomics, Scott Sumner | EconLog | Library of Economics and Liberty

This is good news:

New Zealand’s NZX 50 Index increased 1.1 percent, driven higher by power-company stocks, after John Key won a third term as prime minister. Key, a former head of foreign exchange at Merrill Lynch & Co., led his National party to a 48 percent victory in New Zealand’s weekend election, securing the first single-party majority in the South Pacific nation’s parliament since at least 1996. The main opposition Labour Party, which wanted to introduce a tax on capital gains and raise the minimum wage, suffered its worst defeat since 1922.
Perhaps Labour got their ideas from Paul Krugman.

When right-of-center parties are elected, they generally disappoint. Although right-of-center economists favor free markets, most conservative politicians do not. Abe (Japan) and Modi (India) are two recent examples of conservatives who promised reforms and failed to come through (thus far). Fortunately New Zealand is different.

Via http://econlog.econlib.org/archives/2014/09/the_key_to_vict.html

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