Thomas Piketty: evaluation

Transcript context

…For the distribution overall, it seems there are a lot of papers, quite recent, like Odran Bonnet, Jordà, the Rognlie work, Knoll, Pfeffer and Waitkus. They seem to think it’s primarily about real estate, if not 100 percent, predominantly real estate. You don’t agree with their estimates? Or you just think you’re addressing a separate problem of billionaire inequality at the top? No, I think, again, it depends whether you look at aggregate wealth or you look at the distribution of wealth. If you look at aggregate wealth, then real estate is a really big part of the increase in aggregate wealth-to-income ratio, especially in Europe, less so in the US. In the US, the aggregate wealth-to-income ratio increased much less than in Europe. For the aggregate wealth-to-income ratio, especially in Europe or Japan, real estate is the sum total explanation. There’s no doubt about this. Now, if you look at the distribution, it’s a very different story. In fact, the increase of the relative price of real estate asset relative to, say, stock market prices or financial assets is actually relatively good overall for the middle class as compared to the very top because the middle class owns mostly real estate, whereas the top owns mostly financial and business assets. If the only force at play was the big increase in real estate price, in fact, wealth inequality should have declined, or at least top wealth share should have declined relative to the middle, which obviously is not what we see and is a recent disagreement with many traders increase in top wealth shares. But nobody is saying that top wealth shares have been declining in recent decades in any country. By definition, the real estate argument is not going to explain what we see for the wealth distribution. It depends what segment of the distribution you’re interested in. If you’re interested in the top share, if you’re interested in the very top billionaire wealth — which is interesting in its own sake and is a non-negligible fraction of total wealth — I think, again, nobody’s saying that real estate is explaining this. If you see a paper saying that, please send it to me. If I look at nominal income data for the US or, for that matter, Switzerland, those two countries measure as being wealthier than either France or Germany. Do you think citizens in US and Switzerland are happier than the French and Germans?…

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