More Piketty

http://www.nytimes.com/2014/04/20/opinion/sunday/douthat-marx-rises-again.html?ref=rossdouthat&_r=0

We’re to take it as settled that income on capital grows faster than income on labor.

I can accept that.  I’m trying to figure out structurally why that is, and then why it should bother anyone.

Thing is, you can leverage capital and assets to goose your returns.  You can’t leverage your labor to goose your returns.

With capital, you can reinvest your returns immediately to beget more returns.  You can compound them.  With labor, you work your 8 hour day.  You can not compound that.

Then, capital is probably somewhat more inexpensive to maintain than labor.

So it’s the natural order, perhaps for benign reasons Piketty would affirm.  But apparently this is also in need of solving, maybe with a taxation regime that slows the ability of capital to grow.

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