Has a 26-year-old graduate student written the most robust response to "Capital" yet?by George Magnus / March 29, 2015 / Leave a comment
Capital in the 21st Century, the zeitgeist book by Thomas Piketty, the winner of Prospect‘s 2015 World Thinkers poll, has become a totem for the ubiquitous interest in income inequality, regardless of whether people have read or understood the book, or agree with its conclusions. It is fitting then that we should ask Matthew Rognlie to take a bow.
Matthew who, you ask? Rognlie is a graduate student at the Massachusetts Institute of Technology, and at the tender age of 26, he has just published probably the most robust riposte to Piketty yet. Starting off as a blog, Rognlie’s work has morphed into a 50-page academic paper, published at the Brookings Papers on Economic Activity. Entitled modestly, “Deciphering the fall and rise in the net capital share,” Rognlie’s paper is not easily accessible and is dense with algebra. Yet, this apprentice says some important things that sometimes contradict Piketty, while offering conclusions that are by no means incompatible with those of his sorcerer.
Piketty’s central theme, by way of reminders, is that because the rate of return on capital normally exceeds the rate of economic growth, capital accum…