Yesterday Paul Krugman and David Brooks opined about Thomas Piketty's new book, with Brooks emphasizing human capital (and some Marxian class conflict theories of his own!). Krugman wrote about this issue in his formal review but doesn't mention it here. Ironically, this seems like a focal point at least for U.S. inequality: much is driven by high returns to managers at the top. It's not obvious whether better educating the bottom, as Brooks suggests, could help much, but perhaps he's positing that anyone with enough education could break into those ranks of the hyper-successful.
Update: Greg Mankiw weighs in as well, and mentions an AEA session upcoming in Jan 2015.
Friday, April 25, 2014
In the 5/8/14 issue of the NY Review, Paul Krugman reviews Thomas Piketty's new book on historical wealth, returns, and growth. I bet somebody smarter than I has already remarked about this, but if the return to capital or wealth is "too high" and needs to be taxed, another view is that if the supply is elastic, taxing it will reduce it and presumably raise its marginal product and return. I'm not an expert, but perhaps the estate tax would be safest in this regard, presumably being less disincentivizing.
Frederic Mishkin offers a tutorial about incorporating the zero lower bound into intermediate macro, and it looks like his approach mirrors the one presented by Buttet and Roy in J Econ Educ. I like their creativity, and maybe the very point is that an upward sloping aggregate demand curve is so very unintuitive. But I'm not sure it's the best approach in the classroom, where nifty changes to supply or demand curves beyond tinkering with the slopes seem to really snow students. I don't have any alternatives yet!
Thursday, April 24, 2014
Robert Solow reviews Thomas Piketty's new book on wealth inequality, through the lens of the Solow model effectively. He emphasizes the central finding that the return on capital has historically exceeded the growth rate of the economy, or what I recall being termed the "dynamic efficiency" condition, r > n + g.