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Supervision Kosei Yamagata (Translator of the original)
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I’m sure the supervisor really wanted to include the part where it’s not necessary for the story to be pieced together.
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Piketty argues that previous scholars have not based their arguments about inequality and distribution on data, and that they are based on three centuries of data from 20 countries.
- Fixed theory:
- Inequality naturally narrows (market mechanism leads to return on capital r = economic growth rate g)
- trickle down
- Data-based criticism: return on capital r is greater than economic growth g
- The rate at which the capital of capitalists increases faster than the rate at which the income of those who earn wages through labor increases
- Fixed theory:
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National income: GDP - depreciation + income from foreign sources
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National capital: non-financial assets + financial assets - financial liabilities
- Including real estate, plant facilities, infrastructure such as road networks, patents, etc.
- Does not include human assets (e.g., personal skills)
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Capital Income Ratio: National Capital / National Income
- 5-6 in today’s developed countries.
- Per capita equivalent in wealthy countries: 20.9 million in national capital and 3.5 million in income.
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return-on-investment ratio
- What percentage of income earned by capital (capital income) is capital
- Average return on capital in wealthy countries is 5%.
- This is the same in 19th century France
- Capital income is 30% of national income
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The main mechanism of disparate training is the diffusion of knowledge (Capital in the 21st Century p.76)
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The best way to reduce inequality with respect to labor is the same way to increase the average productivity of the labor force and the growth rate of the economy in general: investment in education (Capital in the 21st Century p. 319).
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Economic growth rate g is due to population growth and increase in per capita output
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When the population is growing, there is a redistribution of wealth because distribution to several people occurs at the time of inheritance.
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A declining birth rate makes it easier to maintain economic status as property is passed down from one child to another.
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Many people believe that the economic growth rate should be 3-4% per year, but this is only an illusion (Capital in the 21st Century p.99)
- No long-term increase in output growth per capita has exceeded 1.5%.
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A 1.5% output growth rate may seem small, but it is over 50% in 30 years. That means 1/3 of today’s jobs did not exist 30 years ago.
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savings rate
- U.S.A. and U.K.: 7-8%.
- Japan and Italy: 14-15%.
- Higher savings rate → greater amount of income converted to capital → greater influence of capital
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Most of the capital in wealthy countries is private capital, half of which is retained corporate capital
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Utilization of Social Capital
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From the 19th century to WW1, tax revenues in developed countries were less than 10% of national income
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Now 1/3 to 1/2
- The change to a tax state occurred with tax increases under the pretext of warfare expenses see Drucker..
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Increases in insurance medical care, education, replacement income, and payment transfers
- We’ve moved on to the social state.
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graduated taxation
- Progressive taxation on labor income is actually regressive because the labor income rate is lower for the top earners
- Piketty’s proposal to introduce a global capital tax…
- I’m sure there are countries that will never participate and capital will be transferred to them.
- Many criticize that it is impossible, but they say that it is not impossible in the long run because there was no progressive income tax 100 years ago.
- Since the problem is capital accumulation by heirs, I think it would be a good idea to raise the inheritance tax.
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