Prompted by the impact of increased labour costs on American Airlines’ stock valuation, Matt Breunig writes in Jacobin (coming to my attention via 3QD):
If Naidu and others are right, Piketty’s theory of how wealth and income inequality develop may be exactly backwards. And his prescriptions for reversing skyrocketing inequality may suffer accordingly.
But I don’t see any “getting it backwards” here. Piketty’s observation is just that when, for whatever reason, the rate of return on capital exceeds the rate of growth of the economy, ownership will concentrate in fewer and fewer long term holders of capital. Perhaps the reverse is also true – ie that preventing the concentration of capital ownership brings down the rate of return, but none of the critics seem to be making this claim. The difference is rather about how to prevent the concentration – by taxation and/or redistribution of assets or by raising the cost of labour (which then brings down the rate of return and/or causes continued demand for a high rate of return to lower the face value of the assets). But that is a false dichotomy. We can do both!