Introduction

I have been reading Piketty's Capital in the 21st Century.

The basic premise of this blog is that capital is going to play an increased role in the future in Western countries. I am listening to the audiobook, so I do not have access to page number references at this time, if anyone is interested in me elaborating further and providing detailed footnotes for increased discussion, let me know. This blog is basically my reflections as a lay person. It is interesting that now we see the world roughly a decade in the future from when Piketty published his book, so I have some incling about what he said that was correct and not correct, at the time.

My basic premise

We are seeing some people in our economy amass large fourtunes rathers quickly, such as Elon Musk or Jeff Bezos for example, and because investing has become so easy, without some course correction these fortunes are only likely to grow in the future. Basically any bozo can get 11% return on their money if they don't make major mistakes such as selling when their stock is down. Rich people can often get a higher return on their money due to having direct access to businesses they own or have large stakes in, or other arbirages such as tax avoidance though loopholes.

Capital size in 2025

In 2024, National income appears to be 24.2 billion, while total household value was roughly 161 billion, while the value of the stock market is 62.19 trillion, while nonfinancial assets of corporations is 32 trillion

https://tradingeconomics.com/united-states/national-income-fed-data.html

https://fred.stlouisfed.org/series/BOGZ1FL192090005Q

https://fred.stlouisfed.org/series/RKNANPUSA666NRUG

In any case, capital appears to be extremely large and growing, even without any definitive number in terms of "years" while national income seems to be growing at a much more modest pace.

Capital will probably have an increased role in society in the future, as it did in the past

Piketty states in his book, that the main thing that made capital "fade" and become less pertinent to success in society was the two great wars, as well as the social policy in the 30s to about the 70s, which was bearish on capital and wealth. The effects of the great war were also enormous, as much capital was destroyed in the war effort, as Piketty stated, the ripples from those wars may have lasted much longer than previously though. Since the 80s, capital has been growing due to the change in economic policy by Western countries to be more pro capital. And, we seem to only become more and more pro capital in the current times, as corporations keep merging, larger and larger tax breaks seem to be had, and perhaps decreased regulation. Corporations being allowed to merge may have a large effect on the rich's ability to increase prices, as competition helps keep prices down.

All that being said, being able to get a standard nominal return of roughly 11% in the S&P has a huge effect on the size of capital. Investing used to be rather difficult, you had to know individual stocks to buy or get a share in some business through know how. Today, it is incredibly easy, you can teach yourself in a matter of months and potentially invest for a lifetime, as I did. It's as simple as clicking a button to buy the S&P and then not selling when the market is down. Elon Musks net worth in 2025 is 482.3 billion, let's pretend Elon puts all his money in the S&P, while this is functionally impossible, because if Elon sold his shares in Tesla, price would fall, if Elon got a S&P 11% average return on his 482.3 billion, that would be roughly 5 billion dollars in the first year alone. Elon has a much larger effect on the price of Tesla stock than any S&P investor, so it is likely he could make more than 11% due to his own actions in a way a S&P investor simply cannot.

We are also not guaranteed to live in a high growth society, as Piketty said. Growth seems to smooth some inequality, as people are given a chance to acquire wealth through income during their lifetimes. Our increased growth might be due to demographic growth, which historically was quite low, close to .01% a year, according to Piketty. As demographics change, our growth rate might very well go down, while financial returns stay high, due to complex financial products. "Financialization" is the buzzword.

Unless there is some sort of major tax reform and trust busting or some other shakeup, wealth is probably only going to grow. That being said, education is getting very expensive for the average person, we will see where these trends end up. It is possible that people do stop desiring to go to college due to cost. AI in the classroom may also limit degree value. This does not mean national income has to fall, as there are alternative forms of education besides degrees and degrees don't equal income. This could also be a positive thing. However, sharing knowledge throughout society is the thing that may make inequality lessen, and universities are one of the key institutions behind that. A fair number of universities have been closing since COVID. This is likely beairsh for inequality, as these institutions provide the means to transmit information to young poeple, which decreases inequality, as Piketty claimed.

https://www.bestcolleges.com/blog/why-are-colleges-closing/

It is likely that the rich will demand a stronger hold on society as time goes on. And this isn't leveraged only at tech billionaires, but at the 1% and top 10% as a whole. Tech billionaires have been the most blatent about their power grabs in the markets they occupy, but other companies like Walmart are also guilty because due to Walmarts low prices, it makes communities reliant on Walmart instead of other businesses, not including price wars with local businesses.

One final point, inherited wealth is just surperior to wealth you work for during your own lifetime. If I can get a return and live on it, then my time is free to go be an engineer or be an academic, or whatever I want to do. If I have to work retail or drive doordash, I am losing time and energy for higher pursuits even if I could suceed if I had the time to study.