A recent MIT graduate presented a new paper that, to some, puts up the greatest critique to famous world thinker Thomas Piketty’s “Capital in the Twenty-First Century,” which has so far sold more than 1.5 million copies.
And the most influential point that 26-year-old graduate Matthew Rognlie makes, “Surging house prices are almost entirely responsible for growing returns on capital.” Per The Economist:
Rognlie mounts three main criticisms of Piketty’s work.
In his third criticism, Rognlie finds that the growing share of national income deriving from capital income has not been distributed equally across all sectors. The return on non-housing wealth, in fact, has been remarkably stable since 1970. Instead, surging house prices are almost entirely responsible for growing returns on capital.
It’s this point that is gaining the attention of politicians.
But his observation that it is homeowners in particular — rather than renters generally — who are grabbing a larger share of the pie is important for policy.