Gates on Piketty, Baker on Gates

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Bill Gates wrote a review of Piketty's Capital:

Piketty was nice enough to talk with me about his work on a Skype call last month. As I told him, I agree with his most important conclusions, and I hope his work will draw more smart people into the study of wealth and income inequality--because the more we understand about the causes and cures, the better.

Gates continues by observing that "Piketty's book has some important flaws that I hope he and other economists will address in the coming years. [...] For all of Piketty's data on historical trends, he does not give a full picture of how wealth is created and how it decays:"

More important, I believe Piketty's r > g analysis doesn't account for powerful forces that counteract the accumulation of wealth from one generation to the next. I fully agree that we don't want to live in an aristocratic society in which already-wealthy families get richer simply by sitting on their laurels and collecting what Piketty calls "rentier income"--that is, the returns people earn when they let others use their money, land, or other property. But I don't think America is anything close to that.

(Of course, the concept of rentier economics is neither new nor unique to Piketty.) Dean Baker replies that "Gates gives us a textbook example of the problems:"

While he is undoubtedly smart and hardworking, the key to his incredible wealth was the decision by the Justice Department largely to ignore antitrust law. Gates used classic anti-competitive practices to gain and protect a near monopoly in the market for personal computer operating systems. [...]

While Gates wants us to believe that his software innovations were a great service to the world, most users of his software would probably not agree. His efforts to corner the market may have made him rich, but they slowed down the process of software development.

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This page contains a single entry by cognitivedissident published on October 17, 2014 12:18 PM.

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