Stick a fork in Piketty

He's done...after this demolition by Netscape founder Marc Andreessen;

Marc Andreessen:The funny thing about Piketty is that he has a lot more faith in returns on invested capital than any professional investor I've ever met. It's actually very interesting about his book. This is exactly what you'd expect form a French socialist economist. He assumes it's really easy to put money in the market for 40 years or 80 years or 100 years and have it compound at these amazing rates. He never explains how that's supposed to happen.

Every investment manager I know is sweating the opposite problem....

Piketty thinks it's really easy to compound capital at scale. There's just a lot of evidence that that's not true. The shining example of that is: where are all the big companies and the big families?

If you look at what's actually happening in the Forbes 400 and the Fortune 500, churn is accelerating. One year it's some real estate family, and then the next year it's like, "There's Larry Page, where did he come from?" Somehow Piketty looks through that to a world where all this change is going to just stop. [He has] this idea that normal is 18th-century feudal France, and we're going to go back to it.

He does this other dodge where the 20th century doesn't conform to his theory, but that's because of the wars and economic dislocations. And so it's like the 21st century is predicted to be much more peaceful and calm. I don't know about you but that's not what I see happening. I look around the world right now and I see exciting things happening that's causing a lot of changes.

... At what point is all of this progress and change and disruption going to stop to basically let rich people cement their gains and then earn these great returns in perpetuity. When is that supposed to start?

Maybe that's what happening in France, but it doesn't map to anything I see. What's happening in France is the opposite, which is that all the rich people are leaving, as a consequence of the government he's advising. The irony here is very deep. 

Another irony (which Andreessen doesn't mention in the interview) is that for a really perverse concentration of capital in an economy you couldn't do worse than the former Soviet Union in the 1950s and 60s. There the central planners of Gosplan deliberately starved its citizens of consumer goods in order to build up their capital base. Nothing like that has ever happened in a truly free market economy.

In the Soviet Union everyone was equal...except for the high level members of the Communist Party who ruled everyone else. Francis Spufford, in his Red Plenty related the story told by Leonid Brezhnev's tailor, Aleksandr Igmand, in his memoir, of how Brezhnev, after a visit to America, was so enamored of denim jackets he had one made for himself.

The big problem was that nowhere in the Soviet Union were there the right metal buttons. A special order was sent to a steel foundry for enough buttons to make one jacket...for the head honcho of the people.