Piketty argues that if r > g, wealth will accumulate into fewer and fewer hands over time. R is the rate of return of capital (rents, stocks, bonds, etc) and g is the growth of the economy over time.

If the economy grows at a higher rate than the rate of return, the pie gets bigger at a higher rate than wealth can concentrates. If the rate of return accumulates capital at a higher rate than the growth of the economy, wealth will inevitably concentrate over time.

He uses a lot of examples and economic history to argue that r > g, except for a few small periods. I think given the amount of wealth concentration we are seeing, and the political effects thereof, it is a compelling argument. Taxation (of wealth) is the proposed solution.

If the top 10% of people suddenly had their wealth double overnight, it would have absolutely disastrous effects for the lower 90% of people. Prices for scarce goods (e.g. housing) would increase dramatically. The price increase dampens the overall demand for housing since a large fraction of the 90% are now priced out. The wealthy homeowners have an incentive to maintain that scarcity, and freely use their resources to preserve the status quo by preventing desperately-needed housing from being built.

Those with wealth will tend to steer the economic system more towards their own interests in a runaway feedback loop, often in ways which create no overall net welfare for society.

Let me address the second part.

If we define wealth as it's often used colloquially -- the amount of liquid cash one has -- then your potential share of the pie of goods and services shrinks. This is true unless the pie itself grows proportionately.

Without agreeing or disagreeing with parent comment, the rate of growth of the pie certainly does not feel like it is growing as fast as accumulation of nominal wealth of some.

Historically one usually amassed monetary wealth in exchange of providing goods and services. Stock markets, high frequency arbitrage markets have broken this. Yes there is liquidity insertion, but is that liquidity worth so much ? At microsecond scale ? I don't think so.

Stock market let's one encash a perception of promised future delivery of goods and services without the need to actually deliver it. Yes the market will eventually, hopefully, price it correctly, but by then some other retail sucker is holding that bag.

When people complain about others getting disproportionately wealthy they are talking about the shrinking share of the pie.

your first question was better.

"how does creating wealth hurt others?"

most of this "wealth" is not "created" out of thin air. nor created at all.

more like, transferred.

That depends how they got wealthy.

Did they steal everything outright? Someone is worse off in that transaction. (Or everyone a little bit worse off if it’s government grift).

Did they create all that value themselves? Might be fine - positive sum games do exist.

Did they create some system where a bunch of money flows just to them based on the labour of others? Maybe it depends on the details, like how much the labour is paid.

I think Piketty’s point was around capital and wealth tending to accumulate unless something forces it to disperse. This can get worse over time. The last couple hundred years were relatively “good” due to the way revolutions and WWI and WWII basically eliminated many of the wealthy families in the west, a couple times, and the post-war societies were “reset” with good equality that has slowly eroded since (due to insufficient “friction” to prevent accumulating extreme wealth over time, such as high loophole-free wealth and inheritance taxes). Or so the theory goes.

Building on that, when you get extreme wealth you get individuals with power to affect policy for their personal good. Some will choose to be selfish (it’s human nature). Policy shifts in their favour. We end up going in the opposite direction to that since the Great Depression - which really was a collectivist culture of everyone getting a share of the wealth of the nation, rather than being screwed over by rich and powerful folks. (McCarthyism somewhat put the brakes on that in the US in particular, though, which is why you can get e.g. free health care elsewhere in the west).

I have not read Piketty. But I could imagine a society where the poor are 10% better off and the rich are 1000% better off to be a less stable society that ends up falling apart.

> We could start off with how are you worse off because of people wealthier than you?

You are smart enough to come up with some answers of your own. It's rude to demand others to do your own thinking for you.

It’s a rather public example but DOGE did immense damage and was facilitated by the ability to leverage wealth into power. There is a dangerous feedback cycle.

Walter, I believe the idea against wealth inequality is not purely that there are wealthier people but that their wealth should be redistributed such that the wealthier people are less wealthy (but still wealthier) and the poorer people are less poor (but still poorer).

I'm not worse off, just because some chucklefuck has a yacht or a jet. I'm worse off when their wealth lets them out bid me for things that are scarce. Housing is currently in short supply in in-demand areas. Access to doctors is another one. The rich still only get one vote, but let's be real, being rich means buying tons of ads pushing a rich person's agenda in the run up to an election. Also tax codes. The rich get to put their kids in private schools, rather than having better public schools. That goes for other public goods too.

I'd prefer term limits.

Explain how a free market can function with huge asymmetry in bargaining/purchasing power and access to information, and legislation intended to deter new entrants to markets? Equal access to purchase politicians?

Nothing, compared to the pace at which wealth is being concentrated into the hands of a few.

In a hypothetical free market yes. But we don't have one. We have k-polies for small k.

I have come to doubt whether free market is even possible.

The rich will use their wealth to ensure (by corruption or otherwise) to bend the laws in their favor.

Wealth has power and they will exercise this power. Why wouldn't they ?

> That's called "theft". In a free market, transactions are mutually agreed upon. Equal wealth for equal wealth.

It's also called a Transaction with asymmetric information, or being in a position in an economic system where you cannot accumulate assets because the system is stacked against you.

I also think you're confusing wealth with value. Wealth is what you have; value is what you have is worth. You may have 50 billion in stock, but its value is what you can get away with Borrowing, spending, and dying.

> Your statement presumes that "value" is some construct independent of the market. The only "value" in commerce is what someone is willing to pay for it. There is no other useful definition of value.

But it is independent of the market. A company's stock is worth all of its assets divided by the number of shares. Anything else, such as anticipation of future earnings or expected losses, is a projection into the future. They don't exist until that moment arrives when the numbers have changed.

I learned a long time ago that the money's not real until the customer's check clears. We should be applying the same logic to valuing stocks and other financial instruments.

> As for how wealth is created, I buy a canvas and some paint for $50, and paint a masterpiece that Ritchie Rich buys from me for $10,000. I created that wealth. Taylor Swift figured out how to turn her song skillz into a billion dollars. She created that wealth. Musk figured out how to turn hunks of metal into rockets that are quite profitable. He created that wealth. And so on.

Elon Musk learned how to scam investors by selling them fantasies, projections, and wishes to raise money. But here's another way to create wealth. You ask for a loan. I give you the money and charge you interest. I did nothing, I made nothing, I just put an entry in a ledger, and all of a sudden, poof, wealth has appeared.

> Now that is a complex topic. But I'll make a simple take on it. When there is more cash than things to buy, then the value of the cash diminishes. We call that "inflation". Wealth creation does not cause inflation.

When too much money is chasing too few assets, and there is anxiety about the future, asset prices rise independent of fundamentals. Traders make increasingly poor decisions and take riskier bets to increase their portfolios' value. I've heard finance people describe this as the PE ratio as too high.

> As for private equity, nobody is making you invest in it.

If you have a pension, pension funds are one of the bigger investors in private equity, and you have no choice but to ride along with the fund's choices. The private equity industry is drooling at the thought of making a similar forced choice regarding employee 401 (k) plans.

Me giving you a dollar doesn't create.

The rich extracting wealth from the poor doesn't create.

Investors buying existing housing stock doesn't create.

Mine it. Make it. Improve it. Brings wealth into existence.

Note that financially large businesses/individuals are a mix of wealth creation and transference.

That one word comment implies a lot of the wealthiest people have not created much wealth in comparison with how much they managed to transfer.