Was he, though? He was for the pre-Industrial Revolution period, of which he sat at the cusp (so arguably he couldn’t see what was to come). Makes me wonder if we’re at a similar junction.
Malthus was wrong until his era then, and the information that things were changing wasn’t available to him.
Piketty is either right about r>g or he isn’t. I’ve seen a lot of people disliking his argument, but nobody really refuting that the rate or return on capital in general is greater than the growth rate of the economy right now. The future might be different.
I'm not so sure about this one. After the publication of Capital in the 21st Century in 2013, the nominal Treasury rate has been around 2-3%, while the nominal growth rate has been around 4-5%. Of course, it depends a little on what R you want to use exactly, but it's not as clear-cut as you make this out to be.
The treasury rate should barely exceed inflation. Indeed its occasionally been below inflation. The vast majority of American household savings are in equities, and the total stock market return has been over 11% per annum over the past 20 years.
Yes, but the top 1% own 50% of equities; the top 10% own 67%. While the bottom 50% own 2.5%. Stock ownership is heavily weighted towards the wealthy, who appropriately cheer when the DOW rises.
But for middle class downwards, a rise in stocks means essentially nothing. Half of US households are a rent check away from homelessness.
Quite right. While it is a very legit questoin to examine, it is not clean-cut and evident as pretended (although it is very useful to examine the overall point even if the issue of historical data and selection probably makes it at best very challenging to arrive a The Answer[tm])
The R is not determined by the treasury rate. Piketty’s r is the average return on all capital: shares, businesses, real estate, farmland, bonds, and so on. And both calculations are real, not nominal.
One or two years of data would actually not refute the point, even if true.
The thing that people most often create with agentic AI is not an app in the traditional sense of a product that many people will use. It is really a personal utility or tool that solves your own very bespoke problem. And that's fine! The issue is that most people don't understand that yet. They still think they're the next Steve Jobs, because they lack experience and understanding of market fit, etc.
That’s what I was going to say - it looks like people are making a lot more apps, and as a result, fewer apps are reaching the “widely used” threshold, because more people have access to apps that do the thing they want. That seems like an economic gain (though perhaps one that doesn’t show up in GDP data, if these are self- and friend-made apps rather than apps people purchase).
I think because AI coding reduced the barriers to entry, lots of developers have been cranking out slopware that mimic other apps, or are based on a shower thought, and of course these aren’t going to gain traction. Just look in the App Store and search for “AI companion” and there are dozens or hundreds of apps that all look similarly bad. And if someone makes an actual novel killer app it will be lost in the sea of slop.
But this doesn’t mean AI can’t help make good apps, but it may mean we need someone (or somebot) to find, review and popularize the new good apps.
Piketty is trying to solve too many problems with one comprehensive approach. There is no doubt in my mind that growing inequality poses unique challenges to a pluralistic society. There is also no doubt that climate change impacts different countries differently. Suffice to say, poverty and climate change - and many other factors - have set off a wave of migrations that challenge the current order of things. Reducing the discussion to 'Piketty just wants to tax the rich' is not doing justice to the work done. And yes - I did read his books.
Well, I can say I’m glad Piketty is busy working on completely unworkable plans to destroy the rich/save the planet since we can all safely ignore him, unlike his buddy Emmanuel Saez at Berkeley who wrote the California wealth tax proposal which can’t be ignored and may actually destroy the startup economy in Silicon Valley.
Thank you...it's nice to hear that at least someone with an opinion about Piketty here has read his books! In my opinion, they are quite well and clearly written but intimidating because they are extraordinarily dense with data and analysis. So I understand if one is put off by the thought of the the chore. I felt the same way about Ulysses and Moby DIck, until I finally read them, that is.
As regards drone warfare, when I was 12 or 13 we were having a discussion in a sixth-form history lesson about the future of war. We (us kids) all said it would all be rockets (we watched too much science fiction maybe). Drones had not been invented. The history teacher, who had been an officer in the army before becoming a teacher, said that there would always be a need for an army no matter how important rockets got. You cannot occupy a country you have conquered with rockets, you need actual soldiers for that.
Drones are clearly very important. I doubt you can sink an aircraft carrier with drones but you can render it pretty useless by attacking planes and personnel whenever they are on deck. An aircraft carrier without aircraft operations is pretty useless. I can't find the link now, but there was recently a wargame of the US vs Ukranian drones. The US did not do well.
"Tariffs on China are helping poor countries grow"
An element of the US geo-economic/political response to China should be to promote growth, epecially of manufacures, outside of China. We need something like a TransPacific/Indian/Atlantic partnership of mutual free trade with modest tariffs on Chinese manufactures.
This is not in place of specific US tariffs on stretigic Chinese goods in which it holds a dominant market share.
Nor reducing interal ogstacles to growth: high deficits, immigration restricions, NIMBY-ism/NEPA
To put it simply, using tariffs to bring manufacturing back to the US or Europe is a fantasy—a basic calculation of BOM costs makes that mathematically impossible. However, using tariffs to drive manufacturing out of China to alternative, cost-effective locations like Vietnam, India, and Indonesia is entirely feasible.
The future is not Western re-industrialization; it is the rise of the "Next Chinas."
Noah, from what I’ve heard, a specialist in the Pentagon is buying drones primarily sourced from the USA. I agree it is unfortunate that we are not working more closely with Ukraine. The Political/Economic history of our Congress is infighting to bring Defense Contracts back to individual’s home state. This has not produced the best weapons for a given time.
I don't know that there's anything very special about Ukraine's drones. The interesting part is the military doctrine - how they are used and supplied and integrated with other munitions.
Apparently Ukraine gets a lot of its drone parts from Alibaba. Of course you still have to have the explosives, but It seems to me that weird little militias could pool their pocket change and make drones and they'd be more effective at bombing their neighbors. If this starts happening in Idaho, that would be bad, I think.
Pikety: To be honest I also never finished his book... but papers. In any case on the Climate item and RCP (where yes the Degrowthers Anti-Capitalist Left mix are just grabbing on pretext) I would reference Michael Leibreich of Cleaning Up ex Bloomberg New Energy (and hardly an Anti) as there is I think huge spin on RCP from the green-alarmist factions (which Michael heavily criticises for unhelpful much like Noah)
(a) RCP 8.5 is officially bollox
Back in 2019, I created a Twitter hashtag, #RCP85isBollox, to highlight the danger of building the case for climate action on a wildly implausible scenario. This month RCP 8.5 was retired. https://mliebreich.substack.com/p/rcp-85-is-officially-bollox
Both the Substack post and the episode are quite useful to understand the wrong-headedness (politically) in the long-running usage of RCP 8.5 in the way it was used in public, press, etc. (somewhat indicative of how click-baited alarmism as a demarche has undercut overall credibility)
It’s sad to see that even when the UN panels have officially declared RCP8.5 implausible, many climate researchers are still using it to prop up their papers (similar to how Borjas skews his data to make his false conclusions on immigration look correct) and as Pielke documents in his substack, mainstream media either fail to mention that RCP8.5 has been determined to be implausible, or say it used to be plausible but net-zero regulations have now fixed it, which is ridiculous.
These proposals like Piketty's are infuriating. Piketty is basically saying that the societal change he's been advocating for years is now necessary to keep climate change within manageable levels. And also Degrowth, which my boomer parents tell me they were assured back in the '70's was the only way to stop rivers from catching fire and bring rivers back to live.
Neither of these policies are popular and if they're presented as the only or one of the leading solutions instead of building a bunch of solar, wind and nuclear power planss, people will decide that maybe we shouldn't do anything about climate change. I used to know several climate change deniers back in the '90's and they would said it wasn't happening and immediately follow it up by saying that if we did what environmentalists wanted us to do it would destroy the economy. That's because so many activists who talked about the dangers of climate change would then pivot to Degrowth and a lot of them were explicitly anti-capitalist which seemed nutty after the fall of Communism.
There are solutions to climate change that do not involve Degrowth and a global taxing authority and they are more acceptable to the broad public, but if there's a constant refrain that any solutions must be ones that are beloved by very left wing academics, now there are two challenges: convincing the public that you're not going to make them live a much lower standard of living and electrifying the economy.
It kind of reminds me of Naomi Klein's Shock Doctrine where she was claiming that neoliberals were using crises to force countries to implement neoliberal reforms. Here were have academics using the challenge of climate change as way of forcing countries to implement degrowth and heavily tax rich people.
> "The non-curious and the non-open-minded do not belong in academia. Thus it is one of our jobs to set up systems to make sure that the ideological crusaders find their proper places outside more attractive."
Who has picked up this jobsmantle, in a carrotly (for horses) way, or is that entirely not what you meant?
And doesn't it matter too, if thinktankie puts out biased stuff under thinktank's auspices, is it someone's job as well to critique that output?
I think some of your statements on the US and western militaries is overstated tbh. I don't doubt we are not learning all the lessons we should, but there is a difference between not being perfect and being outdated. The US military was more than capable of annihilating Iran and the reason why we stopped isn't because we couldn't win but because our industrial output is not big enough.
I have read Phillip O'Brien, and I understand that just being a good military force is not enough to win a war. Heck, as far back as Sparta: being unable to replace your losses will result in eventual defeat. But let's not pretend the West lacks military capability. We have some powerful capabilities, but we WILL become obsolete if we don't keep adapting, and don't fix our industrial problems.
I suspect that if NATO actually fought a war with Russia (excluding nukes) we'd win pretty handily.
The transition to an AI battlefield with drones, robots, etc also has some parallels to software companies transitions from products developed and built for the physical disk world to become SaaS companies to now the transition to AI. Starting a SaaS company was easier than transitioning to a SaaS company and become an AI first company (including product development) is easier than transitioning from a SaaS company to an AI company. The US is going to have to rapidly recognize the battlefield has changed. You'd think the Ukraine/Russia war and the Iran war would make that blatantly obvious.......to those not blinded by their fragile egos..
"Climate change is a global negative externality — the reason countries don’t all just impose their own local carbon taxes and solve the problem is that there’s an incentive to free ride and let other countries handle it."
This proves too much. If free riding were the problem countries woud not incur ANY cost to reduce net CO2 emissions. In fact, most do impose costs, just high (infinite?) cost per unit of CO2 emitted on an arbitrary number of transactions. Resistance to taxation of net emissions of CO2 is better explained by misperceptions of how small the DWL of the tax woud be.
Most countries pay very, very little cost toward decarbonization; they do it only when doing so makes them money (as when solar is cheaper than fossil fuels) or when natural demand trends push them in that direction (dematerialization). We have only seen a couple instances of countries accepting a noticeable decline of living standards to decarbonize (the UK, maybe Germany). The real world isn't as clean as a simple economics model, but the notion of a free rider problem with respect to climate change will explain most of what you see in terms of national policy.
Interesting that the two examples are both democracies where lowering standard of living is something the government really has to worry about. If asked to predict which countries would actually do something like that I would have picked more authoritarian states like China.
?? What do rooftop solar+net metering, subsidies to the purchase of EV, making public buildings "zero carbon," the entire IRA, opposition to US fossil fuel production and transportation projects have to do with free riding?
I don’t know enough about zero carbon public buildings to comment, but it’s worth noting that none of the other examples you cite have survived as policy in the United States, with the partial exception of rooftop solar net metering, a policy that encourages rent seeking behavior by homeowners and encourages free riding on distribution grid investments.
For this decade, the part of Thomas Malthus will be played by Thomas Piketty
Was he, though? He was for the pre-Industrial Revolution period, of which he sat at the cusp (so arguably he couldn’t see what was to come). Makes me wonder if we’re at a similar junction.
Better to only cite Borjas. Especially once he attains cabinet rank with Trump2.
Well he’s right about R>G. Right now anyway. Malthus was also correct for his era.
It is not at all clear Piketty is right in fact, econometrically.
And Malthus was already wrong for the time he was alive, it just was not yet visible to him: https://ourworldindata.org/breaking-the-malthusian-trap
Malthus was wrong until his era then, and the information that things were changing wasn’t available to him.
Piketty is either right about r>g or he isn’t. I’ve seen a lot of people disliking his argument, but nobody really refuting that the rate or return on capital in general is greater than the growth rate of the economy right now. The future might be different.
If you have not seen anything critiquing the data and assumptions for his r>g analysis then you simply have not looked.
Malthus was already wrong for his own era, by at least 50-70 yrs but the data was not clear and evident for him at the time.
> If you have not seen anything critiquing the data and assumptions for his r>g analysis then you simply have not looked.
It’s generally accepted to be true. It should be easy enough to work out. That’s twice you’ve refuted with non data. Try harder.
I'm not so sure about this one. After the publication of Capital in the 21st Century in 2013, the nominal Treasury rate has been around 2-3%, while the nominal growth rate has been around 4-5%. Of course, it depends a little on what R you want to use exactly, but it's not as clear-cut as you make this out to be.
The treasury rate should barely exceed inflation. Indeed its occasionally been below inflation. The vast majority of American household savings are in equities, and the total stock market return has been over 11% per annum over the past 20 years.
Equities ownership unfortunately isn't relevant for ~90% of Americans.
Approximately 58% of US household either own equities directly or are invested in funds that own equities.
Yes, but the top 1% own 50% of equities; the top 10% own 67%. While the bottom 50% own 2.5%. Stock ownership is heavily weighted towards the wealthy, who appropriately cheer when the DOW rises.
But for middle class downwards, a rise in stocks means essentially nothing. Half of US households are a rent check away from homelessness.
Quite right. While it is a very legit questoin to examine, it is not clean-cut and evident as pretended (although it is very useful to examine the overall point even if the issue of historical data and selection probably makes it at best very challenging to arrive a The Answer[tm])
The R is not determined by the treasury rate. Piketty’s r is the average return on all capital: shares, businesses, real estate, farmland, bonds, and so on. And both calculations are real, not nominal.
One or two years of data would actually not refute the point, even if true.
The thing that people most often create with agentic AI is not an app in the traditional sense of a product that many people will use. It is really a personal utility or tool that solves your own very bespoke problem. And that's fine! The issue is that most people don't understand that yet. They still think they're the next Steve Jobs, because they lack experience and understanding of market fit, etc.
That’s what I was going to say - it looks like people are making a lot more apps, and as a result, fewer apps are reaching the “widely used” threshold, because more people have access to apps that do the thing they want. That seems like an economic gain (though perhaps one that doesn’t show up in GDP data, if these are self- and friend-made apps rather than apps people purchase).
I think because AI coding reduced the barriers to entry, lots of developers have been cranking out slopware that mimic other apps, or are based on a shower thought, and of course these aren’t going to gain traction. Just look in the App Store and search for “AI companion” and there are dozens or hundreds of apps that all look similarly bad. And if someone makes an actual novel killer app it will be lost in the sea of slop.
But this doesn’t mean AI can’t help make good apps, but it may mean we need someone (or somebot) to find, review and popularize the new good apps.
Is Piketty just rage-baiting at this point? I can hardly believe he doesn't know he's bullshitting.
I think he just doesn't understand the limits on democratic governance. Its a pretty common problem for academics to have, after all.
Piketty is trying to solve too many problems with one comprehensive approach. There is no doubt in my mind that growing inequality poses unique challenges to a pluralistic society. There is also no doubt that climate change impacts different countries differently. Suffice to say, poverty and climate change - and many other factors - have set off a wave of migrations that challenge the current order of things. Reducing the discussion to 'Piketty just wants to tax the rich' is not doing justice to the work done. And yes - I did read his books.
Well, I can say I’m glad Piketty is busy working on completely unworkable plans to destroy the rich/save the planet since we can all safely ignore him, unlike his buddy Emmanuel Saez at Berkeley who wrote the California wealth tax proposal which can’t be ignored and may actually destroy the startup economy in Silicon Valley.
Thank you...it's nice to hear that at least someone with an opinion about Piketty here has read his books! In my opinion, they are quite well and clearly written but intimidating because they are extraordinarily dense with data and analysis. So I understand if one is put off by the thought of the the chore. I felt the same way about Ulysses and Moby DIck, until I finally read them, that is.
So important to call out the misuse of data as you do here with Borjas.
As regards drone warfare, when I was 12 or 13 we were having a discussion in a sixth-form history lesson about the future of war. We (us kids) all said it would all be rockets (we watched too much science fiction maybe). Drones had not been invented. The history teacher, who had been an officer in the army before becoming a teacher, said that there would always be a need for an army no matter how important rockets got. You cannot occupy a country you have conquered with rockets, you need actual soldiers for that.
Drones are clearly very important. I doubt you can sink an aircraft carrier with drones but you can render it pretty useless by attacking planes and personnel whenever they are on deck. An aircraft carrier without aircraft operations is pretty useless. I can't find the link now, but there was recently a wargame of the US vs Ukranian drones. The US did not do well.
Here's one link: https://euromaidanpress.com/2026/02/13/nato-exercise-reveals-alliance-cant-survive-ukraine-style-drone-warfare/
"Tariffs on China are helping poor countries grow"
An element of the US geo-economic/political response to China should be to promote growth, epecially of manufacures, outside of China. We need something like a TransPacific/Indian/Atlantic partnership of mutual free trade with modest tariffs on Chinese manufactures.
This is not in place of specific US tariffs on stretigic Chinese goods in which it holds a dominant market share.
Nor reducing interal ogstacles to growth: high deficits, immigration restricions, NIMBY-ism/NEPA
Agreed.
To put it simply, using tariffs to bring manufacturing back to the US or Europe is a fantasy—a basic calculation of BOM costs makes that mathematically impossible. However, using tariffs to drive manufacturing out of China to alternative, cost-effective locations like Vietnam, India, and Indonesia is entirely feasible.
The future is not Western re-industrialization; it is the rise of the "Next Chinas."
Noah, from what I’ve heard, a specialist in the Pentagon is buying drones primarily sourced from the USA. I agree it is unfortunate that we are not working more closely with Ukraine. The Political/Economic history of our Congress is infighting to bring Defense Contracts back to individual’s home state. This has not produced the best weapons for a given time.
I don't know that there's anything very special about Ukraine's drones. The interesting part is the military doctrine - how they are used and supplied and integrated with other munitions.
Apparently Ukraine gets a lot of its drone parts from Alibaba. Of course you still have to have the explosives, but It seems to me that weird little militias could pool their pocket change and make drones and they'd be more effective at bombing their neighbors. If this starts happening in Idaho, that would be bad, I think.
Just you wait, 'enry 'iggins...just you wait...
Thanks a lot, King, says I, in a manner well-bred
But all I want is a drone swarm to destroy my enemies
Hm. I'll workshop it a little.
Pikety: To be honest I also never finished his book... but papers. In any case on the Climate item and RCP (where yes the Degrowthers Anti-Capitalist Left mix are just grabbing on pretext) I would reference Michael Leibreich of Cleaning Up ex Bloomberg New Energy (and hardly an Anti) as there is I think huge spin on RCP from the green-alarmist factions (which Michael heavily criticises for unhelpful much like Noah)
(a) RCP 8.5 is officially bollox
Back in 2019, I created a Twitter hashtag, #RCP85isBollox, to highlight the danger of building the case for climate action on a wildly implausible scenario. This month RCP 8.5 was retired. https://mliebreich.substack.com/p/rcp-85-is-officially-bollox
And
(b) Cleaning Up, Michael Liebreich welcomes Professor Roger Pielke Jr. back to explore why RCP 8.5 became the dominant "business as usual" climate scenario, and what its demise means for climate research, policymaking and public debate.: https://www.cleaningup.live/rcp85-is-dead-what-comes-next-ep260-roger-pielke-jr/
Both the Substack post and the episode are quite useful to understand the wrong-headedness (politically) in the long-running usage of RCP 8.5 in the way it was used in public, press, etc. (somewhat indicative of how click-baited alarmism as a demarche has undercut overall credibility)
It’s sad to see that even when the UN panels have officially declared RCP8.5 implausible, many climate researchers are still using it to prop up their papers (similar to how Borjas skews his data to make his false conclusions on immigration look correct) and as Pielke documents in his substack, mainstream media either fail to mention that RCP8.5 has been determined to be implausible, or say it used to be plausible but net-zero regulations have now fixed it, which is ridiculous.
These proposals like Piketty's are infuriating. Piketty is basically saying that the societal change he's been advocating for years is now necessary to keep climate change within manageable levels. And also Degrowth, which my boomer parents tell me they were assured back in the '70's was the only way to stop rivers from catching fire and bring rivers back to live.
Neither of these policies are popular and if they're presented as the only or one of the leading solutions instead of building a bunch of solar, wind and nuclear power planss, people will decide that maybe we shouldn't do anything about climate change. I used to know several climate change deniers back in the '90's and they would said it wasn't happening and immediately follow it up by saying that if we did what environmentalists wanted us to do it would destroy the economy. That's because so many activists who talked about the dangers of climate change would then pivot to Degrowth and a lot of them were explicitly anti-capitalist which seemed nutty after the fall of Communism.
There are solutions to climate change that do not involve Degrowth and a global taxing authority and they are more acceptable to the broad public, but if there's a constant refrain that any solutions must be ones that are beloved by very left wing academics, now there are two challenges: convincing the public that you're not going to make them live a much lower standard of living and electrifying the economy.
It kind of reminds me of Naomi Klein's Shock Doctrine where she was claiming that neoliberals were using crises to force countries to implement neoliberal reforms. Here were have academics using the challenge of climate change as way of forcing countries to implement degrowth and heavily tax rich people.
> "The non-curious and the non-open-minded do not belong in academia. Thus it is one of our jobs to set up systems to make sure that the ideological crusaders find their proper places outside more attractive."
Who has picked up this jobsmantle, in a carrotly (for horses) way, or is that entirely not what you meant?
And doesn't it matter too, if thinktankie puts out biased stuff under thinktank's auspices, is it someone's job as well to critique that output?
Helen Andrews had tweeted perhaps relevantly, re critiquing thinktank output
I think some of your statements on the US and western militaries is overstated tbh. I don't doubt we are not learning all the lessons we should, but there is a difference between not being perfect and being outdated. The US military was more than capable of annihilating Iran and the reason why we stopped isn't because we couldn't win but because our industrial output is not big enough.
I have read Phillip O'Brien, and I understand that just being a good military force is not enough to win a war. Heck, as far back as Sparta: being unable to replace your losses will result in eventual defeat. But let's not pretend the West lacks military capability. We have some powerful capabilities, but we WILL become obsolete if we don't keep adapting, and don't fix our industrial problems.
I suspect that if NATO actually fought a war with Russia (excluding nukes) we'd win pretty handily.
The transition to an AI battlefield with drones, robots, etc also has some parallels to software companies transitions from products developed and built for the physical disk world to become SaaS companies to now the transition to AI. Starting a SaaS company was easier than transitioning to a SaaS company and become an AI first company (including product development) is easier than transitioning from a SaaS company to an AI company. The US is going to have to rapidly recognize the battlefield has changed. You'd think the Ukraine/Russia war and the Iran war would make that blatantly obvious.......to those not blinded by their fragile egos..
"Climate change is a global negative externality — the reason countries don’t all just impose their own local carbon taxes and solve the problem is that there’s an incentive to free ride and let other countries handle it."
This proves too much. If free riding were the problem countries woud not incur ANY cost to reduce net CO2 emissions. In fact, most do impose costs, just high (infinite?) cost per unit of CO2 emitted on an arbitrary number of transactions. Resistance to taxation of net emissions of CO2 is better explained by misperceptions of how small the DWL of the tax woud be.
Most countries pay very, very little cost toward decarbonization; they do it only when doing so makes them money (as when solar is cheaper than fossil fuels) or when natural demand trends push them in that direction (dematerialization). We have only seen a couple instances of countries accepting a noticeable decline of living standards to decarbonize (the UK, maybe Germany). The real world isn't as clean as a simple economics model, but the notion of a free rider problem with respect to climate change will explain most of what you see in terms of national policy.
Interesting that the two examples are both democracies where lowering standard of living is something the government really has to worry about. If asked to predict which countries would actually do something like that I would have picked more authoritarian states like China.
?? What do rooftop solar+net metering, subsidies to the purchase of EV, making public buildings "zero carbon," the entire IRA, opposition to US fossil fuel production and transportation projects have to do with free riding?
I don’t know enough about zero carbon public buildings to comment, but it’s worth noting that none of the other examples you cite have survived as policy in the United States, with the partial exception of rooftop solar net metering, a policy that encourages rent seeking behavior by homeowners and encourages free riding on distribution grid investments.
Sorry, but using Thomas Piketty as a straw dog--especially if you haven't read him--is a risky businness. Just ask the Financial Times.