Meet the 26-year-old who’s taking on Thomas Piketty’s ominous warnings about inequality

[mahatmakanejeeves]

Print edition title: "Student takes on giant of economics"

Meet the 26-year-old who’s taking on Thomas Piketty’s ominous warnings about inequality

Wonkblog

By Jim Tankersley March 19 at 5:29 PM
@jimtankersley

It was 2:45 a.m. on a Thursday last April. Matthew Rognlie was still awake, like a lot of graduate students. He had just finished typing 459 words and a few equations. They totaled six paragraphs, which he posted to the comments section of a popular economics blog. ... Rognlie’s comment on the blog Marginal Revolution was a response to the provocative argument laid out by the French economist Thomas Piketty in his bestselling book on wealth inequality, "Capital in the Twenty-First Century."

Piketty had worried in his book that wealth inequality could soon explode at such a velocity that it would continue to widen essentially on autopilot. Wealthy people would accumulate more capital in the form of stocks, real estate and other assets, would continue to earn high returns on them, and then would have more capital to invest. As more and more money became concentrated among the wealthy, less and less would be available to workers. The book turned Piketty into an international celebrity.

Rognlie, however, wrote in his blog post that the French economist's argument “misses a subtle but absolutely crucial point." Piketty, he said, might have got the pattern in reverse. Instead of the returns to capital increasing in perpetuity, Rognlie said, they might be poised to decline. ... With that quick post, Rognlie was challenging the most politically earthshaking prediction about inequality and the economy in recent memory.
....

“It’s made Matt famous,” said Tyler Cowen, the George Mason University economist who runs the Marginal Revolution blog, and who elevated Rognlie’s comment into a standalone post on his site. “It was brilliantly reasoned and right on target. And very elegant.”

Marginal Revolution

Matt Rognlie on Piketty, net capital returns, and housing

[Tuesday Afternoon]

1. interesting. Reccing and posting to read later.