Money

What causes economic inequality? What is different about economic inequality now vs. before World War I? Economic inequality is a growing issue today. In Capital in the Twenty-First Century, Thomas Piketty argues that high salaries for executives and managers are the driving forces for inequality. Read more on how uneven salary distribution could be the leading cause of this imbalance.

Why are more people inheriting wealth? How does inherited wealth contribute to rising inequality? During their lifetimes, baby boomers accumulated large stocks of capital. As they begin to pass away, their children are inheriting this wealth—but it’s creating an unequal society. Keep reading to learn why a new Gilded Age might be upon us thanks to a growth in inherited wealth.

What does R>G mean in economics? What is one of the fundamental laws of capitalism? The formula R>G states that the net rate of return on capital (R) is greater than the economic growth rate (G). In Capitalism in the Twenty-First Century, Thomas Piketty claims this is one of the fundamental laws of capitalism. Read more to learn how R>G explains wealth inequality.

What does “capital’s share of income” mean? Should you worry about capital accumulating national income? Thomas Piketty warns that the rising capital-to-income ratio will result in capital accumulating an ever-growing share of national income. In his book Capital in the Twenty-First Century, he explains how this happens and why it’s bad. Continue reading to understand how capital’s share of income contributes to inequality.

What is the capital-to-income ratio? How does it help us understand wealth inequality? According to Thomas Piketty, the capital-to-income ratio is the total stock (meaning the total inventory) of all the assets owned by residents of a country divided by total national income. Piketty further stresses that national capital and national income aren’t the same things. Keep reading for an in-depth look at the capital-to-income ratio.