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Three Nobel prize winning economists—Robert C Merton, Paul A Samuelson and Robert Solow—gave divergent answers when asked about their personal investment portfolio at a conference organised by Boston University’s School of Management a few years ago. Harvard economist Merton, who won the Nobel Prize in economics in 1997 for his study of stock options, said the bulk of his portfolio was in a global index fund and inflation-protected securities and a hedge fund. He said he also invested in a commercial real estate fund, but dropped when its value rose too quickly. 
 Asked about his views on timing <keyword id="6362476" type="ORGANIZATION" weightage="100" keywordseo="investments">investments</keyword>, Samuelson, one of the pre-eminent American <keyword id="69568" type="PERSON" weightage="100" keywordseo="Economists">economists</keyword> of the 20th century and the sole winner of the 1970 Nobel in economic sciences, said: “History teaches no lessons,” adding, “You don’t know when to get in”. Samuelson taught economics for several years at Massachusetts Institute of Technology. 
 However, when queried about his personal investments and asset allocation, <keyword id="232238" type="PERSON" weightage="100" keywordseo="Robert-Solow">Robert Solow</keyword>, who like Samuelson, taught economics for many years at MIT and won the Nobel in 1987, gave the most startling answer, saying he had no idea what was in his portfolio. “I just never paid any attention,” he said, adding, “That’s because I don’t care. And I’m lucky to have a wife who doesn’t care.” 
 
These divergent responses point to something interesting—when it comes to investing economists do not necessarily have access to tools or approaches that average investors don’t have and that insights into economics or finance don’t easily help them come up with market-beating investment performance. 
 In order to understand if economists excel as investors, it is better to turn the question on its head and see how many among the legendary investors in history have been trained in economics. Surprisingly, none. A random look at some of the best investors—Warren Buffett, <keyword id="101566" type="PERSON" weightage="100" keywordseo="George-Soros">George Soros</keyword>, <keyword id="363023" type="PERSON" weightage="100" keywordseo="Peter-Lynch">Peter Lynch</keyword>, Jesse Livermore, John Neff, Thomas Rowe Price, Jr., John Templeton and Benjamin Graham—reveals that none of them have been known for their acumen in understanding economic theories and that their investment approaches have never been specifically dictated by economic theories. 
 While Buffett, who learned investment insights from Graham, relied on his core investment principles of discipline, patience and value that helped him emerge as arguably the best investor in history (those who invested $10,000 in his <keyword id="6362665" type="COMPANY" weightage="100" keywordseo="Berkshire-Hathaway">Berkshire Hathaway</keyword> in 1965 are above the $50 million mark today), Soros adopted a more riskier approach of a short-term speculator, making huge bets on the directions of <keyword id="60655" type="ORGANIZATION" weightage="100" keywordseo="financial-markets">financial markets</keyword>. While Neff’s preferred investment tactic involved investing in popular industries through indirect paths and focused on companies with low P/E ratios and strong dividend yields, Rowe Price viewed financial markets as cyclical and took to investing in good companies for the long-term, which was virtually unheard of when he was an active investor. Similarly, while Graham, who is equally known as a financial educator as an investment manager, has been recognised as the father of two fundamental investment disciplines – security analysis and value investing, Templeton smartly diversified his portfolio by investing in different markets across the globe. 
 
Interestingly the investment approach of none of these masters has born out of a closer understanding of economic sciences rather they relied on their own experience and understanding of the vagaries of the financial markets though most of them stood apart from typical investors—who embrace too much short-term risk to net quick returns and often are battered for the same—by adhering to value and growth investment, a clear long-term market perspective, a keen understanding of the cyclical nature of market and exercising the time-tested way of ‘buying low and selling high’ which to a great extend depends on timing the market. 
 
In fact, when it comes to investing, economists see a tussle between their macro training and practical wisdom and the challenge of how to adapt high finance to retail investing. Often, this struggle also puts them at odds with advice pushed by the personal finance industry. So whether to rely on hard-learnt macro-economic principles or tips from the portfolio manager can become a tough call to make. Depending on risk profile, what the investment manager at the mutual fund calls ‘passive’ may seem ‘aggressive’ to an economist and ‘focused’ may seem ‘diversified’. 
 
Most economists wouldn’t want to stack up against the herd and rather prefer to follow what they call life-cycle investing—a combination of maximising wealth and never taking a big hit in terms of lifestyle. Economists also don’t support brokerage firms’ approach of promoting investment products that lend them a hefty fee and selecting stocks based of strange algorithms. 
 Broadly, economists would be capable of long-term forecast and not short and medium terms that drive stock markets. They also tend to believe in the efficient market theory and invest in <keyword id="3114975" type="UNKNOWN" weightage="100" keywordseo="Market-Indexes">market indexes</keyword> and bonds. They are known to be conservative investors because they believe it is almost impossible to beat the market. 
 
(Image Credits: Indiatimes)

Are
economists good investors?

AI is going to eliminate way more jobs than anyone realizes

<ul class="summary-list"><li>Machine Gun Kelly proposed to <keyword id="11930795" type="UNKNOWN" weightage="60" keywordseo="megan-fox" source="Orion">Megan Fox</keyword> on January 11, 2022.</li><li>The unique ring has both a diamond and an emerald, their respective birthstones.</li></ul><a href="https://www.insider.com/unique-celebrity-engagement-rings-2017-4">An engagement ring</a> is one way of telling the person you love how much they mean to you — and in some cases, the ring itself can hold even more meaning when it's personalized.These 10 <keyword id="11897677" type="UNKNOWN" weightage="60" keywordseo="celebrities" source="Orion">celebrities</keyword> all received unique <keyword id="11984866" type="UNKNOWN" weightage="60" keywordseo="engagement-rings" source="Orion">engagement rings</keyword> that have hidden details or a special nod to the couple's shared or family history.Keep scrolling to learn more about these beautiful rings.<h2>Machine Gun Kelly proposed to Megan Fox with a unique ring containing two stones</h2>Kelly <a href="https://www.insider.com/machine-gun-kelly-and-megan-fox-announced-engagement-instagram-post-2022-1">proposed to the "Jennifer's Body" actress</a> in January 2022 after a year and a half of dating,"underneath the same branches we fell in love under," <a href="https://www.instagram.com/p/CYpdvOgJ4eP/">he wrote on Instagram</a>. The ring has both an emerald and a diamond, representing each of their birthstones."I know tradition is one ring, but I designed it with Stephen Webster to be two: the emerald (her birth stone) and the diamond (my birth stone) set on two magnetic bands of thorns that draw together as two halves of the same soul forming the obscure heart that is our love," <a href="https://www.instagram.com/p/CYpdvOgJ4eP/" rel="nofollow sponsored">Kelly wrote</a>.<h2>Fans believe <keyword id="12069427" type="UNKNOWN" weightage="60" keywordseo="ariana-grande" source="Orion">Ariana Grande</keyword>'s similar two-stone ring from Dalton Gomez includes a nod to her grandfather</h2>Grande's ring can be seen in the fourth photo of her Instagram post above. Gomez, her now-husband, <a href="https://www.insider.com/ariana-grande-dalton-gomez-relationship-timeline">proposed in December 2020</a>, after 11 months of dating. The asymmetrical ring contains both an oval diamond and a pearl.Fans believe that the pearl <a href="https://www.insider.com/ariana-grande-engagement-ring-pearl-grandpa-nonna-2020-12">may have come from a tie pin</a> her grandmother gave her after the death of her grandfather in 2014 — or at least have been inspired by it. At the time, Grande tweeted that her grandmother had given it to her (in ring form) after "she [said] he told her in a dream it'd protect me."This was somewhat confirmed when the ring designer, Jack Solow, <a href="https://www.eonline.com/news/1221317/how-dalton-gomez-helped-to-create-the-perfect-engagement-ring-for-ariana-grande">spoke to E! News about the ring</a>."[Gomez] said to me we had to incorporate a pearl into the finished piece because it is very sentimentally special, the element of a pearl is very, very sentimentally special to Ariana. He wanted to include that in the ring," said Solow.<h2>Britney Spears' engagement ring has her nickname engraved inside the band</h2><div type="image" title="britney spears asghari" height="1764" width="2352" msid="88920805" hostid="261"></div>Sam Asghari and Britney Spears <a href="https://www.insider.com/britney-spears-sam-asghari-engaged-instagram-ring-2021-9">got engaged in September 2021</a> after around five years of dating. Asghari <a href="https://www.instagram.com/p/CTvPcEJP_2P/?utm_source=ig_embed&amp;ig_rid=3a3d9684-32d0-46b7-8a38-4062e3757d7b">announced the news on his Instagram</a> with a closer look at the ring, which was designed by Forever Diamonds' founder Roman Malayev.On the brand's website, the ring has been named "Lioness," which is Asghari's nickname for Spears — he even had it engraved on the band. "Just as Sam did for Britney, a special message or nickname can be engraved on the inside of your band," <a href="https://www.foreverdiamondsny.com/jewelry-details/uniques/lioness/516241">reads the site.</a><h2>Katy Perry's flower-shaped engagement ring is a clear nod to her fiancé's last name, Bloom</h2>When Orlando Bloom proposed to Perry on Valentine's Day in 2019, he gifted the "Smile" singer a flower-shaped ring — a reference to his flowery surname. Perry even captioned her post "full bloom."Perry had some type of input into the botanical ring — "I voiced my opinions," <a href="https://www.insider.com/katy-perry-orlando-bloom-valentines-day-proposal-jimmy-kimmel-video-2019-2">she told Jimmy Kimmel</a> later that month.<h2>Princess Eugenie received a ring from Jack Brooksbank that's almost identical to her mother's</h2><div type="image" title="Left: Princess Eugenie and Jack Brooksbank announce their engagement. Right: Eugenie's engagement ring, a pink diamond surrounded by more diamonds." height="600" width="800" msid="88920806" hostid="261"></div>Eugenie's is similar to Perry's, in that it has a colored stone in the middle with a halo of diamonds surrounding it. Brooksbank proposed to his now-wife in January 2018 — <a href="https://www.insider.com/princess-eugenie-jack-brooksbank-relationship-timeline-2018-10">the two met in 2010.</a>Eugenie's ring is almost identical to her mother Sarah Ferguson's engagement ring that she received from Prince Andrew back in the '80s. <a href="https://www.insider.com/photos-princess-eugenies-engagement-ring-looks-like-sarah-fergusons-2018-1">You can see how similar they are here.</a>However, Eugenie's center stone is a padparadscha sapphire, while Ferguson's is an oval-shaped ruby.<h2>Jason Sudeikis proposed to Olivia Wilde with a green ring inspired by her eyes</h2><div type="image" title="olivia wilde engagement ring" height="1907" width="2542" msid="88920807" hostid="261"></div>Wilde and Sudeikis, who <a href="https://www.insider.com/jason-sudeikis-doesnt-totally-understand-olivia-wilde-split-harry-styles-2021-7">split in 2020</a>, got <a href="https://twitter.com/oliviawilde/status/290474122952196096?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E290474122952196096%7Ctwgr%5E%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fwww.bustle.com%2Fentertainment%2Folivia-wilde-jason-sudeikis-relationship-timeline-shows-how-committed-they-are-to-each-other-17889489">engaged in January 2013</a>. The "Ted Lasso" star chose a vintage diamond ring surrounded by a circle of emeralds — that color choice was no accident."It's a bit of an aqua-emerald, not a deep, dark green. Jason said it reminded him of my eyes, which is very sweet," <a href="https://nypost.com/2015/04/14/celebs-sparkle-in-their-unusual-engagement-rings/">Wilde told Lucky magazine</a> in 2014. "All they know is that it went through Paris around 1921."<h2>Kristin Chenoweth's ring has a nod to her shared faith with her fiancé, Josh Bryant</h2>Chenoweth and Bryant, a musician, <a href="https://people.com/style/kristin-chenoweth-engagement-ring-details/">got engaged in October 2021</a> after first being linked in August 2018. Her ring is different from the usual one-stone ring, and instead features three oval diamonds side by side as a nod to the Holy Trinity and their shared Christian faith, <a href="https://people.com/style/kristin-chenoweth-engagement-ring-details/">according to People.</a><h2>Lady Gaga's first engagement ring had her and her fiancé's initials in a hidden place</h2>"Chicago Fire" star Taylor Kinney and Lady Gaga met on the set of her music video for "Yoü and I" in July 2011. Kinney popped the question in February 2015 with <a href="https://www.instagram.com/p/5kGvGnJFI7/">this heart-shaped diamond</a> that was already swoon-worthy, but when the "Shallow" singer turned the ring around on Instagram, fans got a better view at the band.The band spells out "T S" in white diamonds for Taylor and Stefani, Gaga's real first name."He always called me by my birth name. Since our very first date," she wrote.<a href="https://people.com/celebrity/lady-gaga-and-taylor-kinney-split-couple-end-engagement/">They split in July 2016</a>.<h2>Kate Middleton's sapphire engagement ring is already beautiful, but it takes on new meaning when you learn it once belonged to Princess Diana</h2><div type="image" title="kate middleton engagement ring" height="1267" width="1690" msid="88920808" hostid="261"></div>The idea for Middleton's ring, of course given to her by Prince William in November 2010, <a href="https://www.brides.com/story/kate-middleton-engagement-ring-history">actually dates back to 1840</a> when Prince Albert gifted a sapphire brooch Queen Victoria ahead of their wedding — in fact, she wore it as her "something blue" on the big day.This brooch in turn inspired Prince Charles when he was picking out an engagement ring for Princess Diana. They look similar, as both are giant sapphires encased in a circle of diamonds. This ring would later be passed down to Diana's son, Prince William, and in turn his now-wife Middleton.<h2>Halle Berry's engagement ring contains 'codes and symbols'</h2><div type="image" title="halle berry engagement ring in 2012" height="1441" width="1922" msid="88920809" hostid="261"></div>Berry got engaged to French actor Olivier Martinez in March 2012 after two years of dating. The atypical engagement ring is an emerald with two small diamonds on either side with a thick gold band, but that's not all that makes it special."The ring is textured and contains codes and symbols which you cannot see … only the person wearing it can," <a href="https://people.com/style/halle-berrys-engagement-ring-all-the-details/">the ring's designer Robert Mazlo told People</a>. "It's very uncommon. The symbols and codes represent [the couple's] story and only they can interpret it."They got married in 2013, <a href="https://people.com/movies/halle-berry-olivier-martinez-divorce/">but they split in 2015.</a>

The hidden meanings behind 10 celebrity engagement rings

<ul class="summary-list"><li>A group of 130 top economists including <keyword id="45366" type="PERSON" weightage="60" keywordseo="Ben-Bernanke">Ben Bernanke</keyword> and <keyword id="116249" type="PERSON" weightage="60" keywordseo="Janet-Yellen">Janet Yellen</keyword> signed a letter with 130 top economists calling for <keyword id="1575" type="ORGANIZATION" weightage="60" keywordseo="Congress">Congress</keyword> to act and prevent "prolonged suffering and stunted economic growth."</li><li>"If Congress fails to act, state and local governments face potentially disastrous budget shortfalls, and the Congressional Budget Office estimates the unemployment rate will likely be more than 11 percent at the end of the year," the letter read.</li><li>Congress is set to debate relief spending next month, but Democrats and the GOP are far apart on what should be put into the legislation.</li></ul>Former Federal Reserve Chairs Ben Bernanke and Janet Yellen <a href="https://equitablegrowth.org/press/more-than-100-economists-tell-congress-more-relief-needed-to-avoid-prolonged-suffering-and-stunted-economic-growth/">signed a letter</a> alongside 130 top economists calling on Congress to pass additional relief measures and prevent "prolonged suffering and stunted economic growth.""Policymakers in Congress and the Federal Reserve responded to this crisis with unprecedented levels of economic support for those affected, but more needs to be done," the letter said. It was published on Tuesday by the Washington Center for Equitable Growth, a think-tank focused on inequality.It went on: "If Congress fails to act, state and local governments face potentially disastrous budget shortfalls, and the Congressional Budget Office estimates the unemployment rate will likely be more than 11 percent at the end of the year." The group of economists included two Nobel laureates and three former heads of the Council of Economic Advisers such as Jason Furman, who led it during the latter half of the Obama administration. Other prominent signatories were Emmanuel Saez, Robert Solow, Heather Boushey, Cecilia Rouse, and Alan Blinder.The economists warned that the <keyword id="1754604" type="PERSON" weightage="60" keywordseo="coronavirus">coronavirus</keyword> pandemic and ensuing economic fallout would be "especially damaging" to communities of color, given Black, Latinx, and Native Americans were both dying and losing their jobs at greater rates compared to white Americans."Evidence from the Great Recession indicates that a prolonged economic downturn will seriously damage the economic opportunities and wealth accumulation of all Americans, but especially of families of color," the letter said.Read more: <a href="https://www.businessinsider.com/how-to-navigate-chaotic-market-3-top-strategists-video-webinar-2020-6">How to navigate a chaotic market: Exclusive video discussion with 3 top Wall Street stock strategists</a>They called for another robust federal response to continue expanded unemployment benefits in some form, as well as aid to cash-strapped states, and "investments in programs that preserve the employer-employee relationship.""An adequate response must be large," the letter said, "commensurate with the nearly $16 trillion nominal output gap our <keyword id="34412" type="ORGANIZATION" weightage="60" keywordseo="economy">economy</keyword> faces over the next decade."Congress is set to kick off debate for another stimulus package in late July, though Democrats and <keyword id="66537" type="ORGANIZATION" weightage="60" keywordseo="Republicans">Republicans</keyword> are deeply divided over its shape.Democrats are urging to aid states and extend generous unemployment benefits, while Republicans call to shield businesses from coronavirus-related lawsuits and enact measures to encourage people to head back to work.Lawmakers have authorized around $3.5 trillion in relief spending so far, including the $2 trillion <keyword id="9073299" type="UNKNOWN" weightage="60" keywordseo="cares-act">Cares Act</keyword> passed in March. But the web of <a href="https://www.businessinsider.com/congress-us-economic-collapse-assistance-programs-ending-unemployment-businesses-2020-6">assistance programs put in place four months ago</a> is set to expire over the summer as the $600 federal boost in weekly unemployment benefits phases out on July 31 with no replacement in place.Many states are finalizing their budgets at the end of June, raising the prospect of another wave of layoffs that have already topped 1.5 million government workers.On Tuesday, Federal Reserve Chair Jerome Powell <a href="https://markets.businessinsider.com/news/stocks/federal-reserve-jerome-powell-economic-recovery-facing-uncertainty-recession-coronavirus-2020-6-1029314045">testified</a> to the Senate Banking Committee that a prolonged recession would deepen the economic pain felt by jobless people and throw more businesses into bankruptcy."The longer the downturn lasts, the greater the potential for longer-term damage from permanent job loss and business closures," Powell told lawmakers.

Former Fed Chairs Ben Bernanke and Janet Yellen signed a letter with 130 top economists imploring Congress to prevent 'prolonged suffering and stunted economic growth'

<div class="KonaFilter image-container display-table float_right"><div><div class="image"></div></div></div>IF THERE IS a technological revolution in progress, rich economies could be forgiven for wishing it would go away. Workers in America, Europe and Japan have been through a difficult few decades.
In the 1970s the blistering growth after the second world war vanished in both Europe and America. In the early 1990s Japan joined the slump, entering a prolonged period of economic stagnation. 
Brief spells of faster growth in intervening years quickly petered out. The rich world is still trying to shake off the effects of the 2008 financial crisis. 
And now the digital economy, far from pushing up wages across the board in response to higher productivity, is keeping them flat for the mass of workers while extravagantly rewarding the most talented ones.
Between 1991 and 2012 the average annual increase in real wages in Britain was 1.5% and in America 1%, according to the Organisation for Economic Co-operation and Development, a club of mostly rich countries. That was less than the rate of economic growth over the period and far less than in earlier decades.
Other countries fared even worse. Real wage growth in Germany from 1992 to 2012 was just 0.6%; Italy and Japan saw hardly any increase at all. And, critically, those averages conceal plenty of variation. Real pay for most workers remained flat or even fell, whereas for the highest earners it soared.
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It seems difficult to square this unhappy experience with the extraordinary technological progress during that period, but the same thing has happened before. Most economic historians reckon there was very little improvement in living standards in Britain in the century after the first Industrial Revolution. And in the early 20th century, as Victorian inventions such as electric lighting came into their own, productivity growth was every bit as slow as it has been in recent decades.
In July 1987 Robert Solow, an economist who went on to win the Nobel prize for economics just a few months later, wrote a book review for the New York Times. The book in question, "The Myth of the Post-Industrial Economy", by Stephen Cohen and John Zysman, lamented the shift of the American workforce into the service sector and explored the reasons why American manufacturing seemed to be losing out to competition from abroad.
One problem, the authors reckoned, was that America was failing to take full advantage of the magnificent new technologies of the computing age, such as increasingly sophisticated automation and much-improved robots. Mr Solow commented that the authors, "like everyone else, are somewhat embarrassed by the fact that what everyone feels to have been a technological revolution...has been accompanied everywhere...by a slowdown in productivity growth".
This failure of new technology to boost productivity (apart from a brief period between 1996 and 2004) became known as the Solow paradox. Economists disagree on its causes. Robert Gordon of Northwestern University suggests that recent innovation is simply less impressive than it seems, and certainly not powerful enough to offset the effects of demographic change, inequality and sovereign indebtedness. Progress in ICT, he argues, is less transformative than any of the three major technologies of the second Industrial Revolution (electrification, cars and wireless communications).
Yet the timing does not seem to support Mr Gordon's argument. The big leap in American economic growth took place between 1939 and 2000, when average output per person grew at 2.7% a year. Both before and after that period the rate was a lot lower: 1.5% from 1891 to 1939 and 0.9% from 2000 to 2013.
And the dramatic dip in productivity growth after 2000 seems to have coincided with an apparent acceleration in technological advances as the web and smartphones spread everywhere and machine intelligence and robotics made rapid progress.
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<h3>Have patience</h3>
A second explanation for the Solow paradox, put forward by Erik Brynjolfsson and Andrew McAfee (as well as plenty of techno-optimists in Silicon Valley), is that technological advances increase productivity only after a long lag. The past four decades have been a period of gestation for ICT during which processing power exploded and costs tumbled, setting the stage for a truly transformational phase that is only just beginning (signalling the start of the second half of the chessboard).
That sounds plausible, but for now the productivity statistics do not bear it out. John Fernald, an economist at the Federal Reserve Bank of San Francisco and perhaps the foremost authority on American productivity figures, earlier this year published a study of productivity growth over the past decade. He found that its slowness had nothing to do with the housing boom and bust, the financial crisis or the recession. Instead, it was concentrated in ICT industries and those that use ICT intensively.
That may be the wrong place to look for improvements in productivity. The service sector might be more promising. In higher education, for example, the development of online courses could yield a productivity bonanza, allowing one professor to do the work previously done by legions of lecturers. Once an online course has been developed, it can be offered to unlimited numbers of extra students at little extra cost.
Similar opportunities to make service-sector workers more productive may be found in other fields. For example, new techniques and technologies in medical care appear to be slowing the rise in health-care costs in America. Machine intelligence could aid diagnosis, allowing a given doctor or nurse to diagnose more patients more effectively at lower cost. The use of mobile technology to monitor chronically ill patients at home could also produce huge savings.
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Such advances should boost both productivity and pay for those who continue to work in the industries concerned, using the new technologies. At the same time those services should become cheaper for consumers. Health care and education are expensive, in large part, because expansion involves putting up new buildings and filling them with costly employees. Rising productivity in those sectors would probably cut employment.
The world has more than enough labour. Between 1980 and 2010, according to the McKinsey Global Institute, global nonfarm employment rose by about 1.1 billion, of which about 900m was in developing countries. The integration of large emerging markets into the global economy added a large pool of relatively low-skilled labour which many workers in rich countries had to compete with.
That meant firms were able to keep workers' pay low. And low pay has had a surprising knock-on effect: when labour is cheap and plentiful, there seems little point in investing in labour-saving (and productivity-enhancing) technologies. By creating a labour glut, new technologies have trapped rich economies in a cycle of self-limiting productivity growth.
Fear of the job-destroying effects of technology is as old as industrialisation. It is often branded as the lump-of-labour fallacy: the belief that there is only so much work to go round (the lump), so that if machines (or foreigners) do more of it, less is left for others.
This is deemed a fallacy because as technology displaces workers from a particular occupation it enriches others, who spend their gains on goods and services that create new employment for the workers whose jobs have been automated away. A critical cog in the re-employment machine, though, is pay. To clear a glutted market, prices must fall, and that applies to labour as much as to wheat or cars.
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Where labour is cheap, firms use more of it. Carmakers in Europe and Japan, where it is expensive, use many more industrial robots than in emerging countries, though China is beginning to invest heavily in robots as its labour costs rise. In Britain a bout of high inflation caused real wages to tumble between 2007 and 2013. Some economists see this as an explanation for the unusual shape of the country's recovery, with employment holding up well but productivity and GDP performing abysmally.
Productivity growth has always meant cutting down on labour. In 1900 some 40% of Americans worked in agriculture, and just over 40% of the typical household budget was spent on food. Over the next century automation reduced agricultural employment in most rich countries to below 5%, and food costs dropped steeply.
But in those days excess labour was relatively easily reallocated to new sectors, thanks in large part to investment in education. That is becoming more difficult. In America the share of the population with a university degree has been more or less flat since the 1990s. In other rich economies the proportion of young people going into tertiary education has gone up, but few have managed to boost it much beyond the American level.
At the same time technological advances are encroaching on tasks that were previously considered too brainy to be automated, including some legal and accounting work. In those fields people at the top of their profession will in future attract many more clients and higher fees, but white-collar workers with lower qualifications will find themselves displaced and may in turn displace others with even lesser skills.
<h3>Lift out of order</h3>
A new paper by Peter Cappelli, of the University of Pennsylvania, concludes that in recent years over-education has been a consistent problem in most developed economies, which do not produce enough suitable jobs to absorb the growing number of college-educated workers. Over the next few decades demand in the top layer of the labour market may well centre on individuals with high abstract reasoning, creative, and interpersonal skills that are beyond most workers, including graduates.
Most rich economies have made a poor job of finding lucrative jobs for workers displaced by technology, and the resulting glut of cheap, underemployed labour has given firms little incentive to make productivity-boosting investments. Until governments solve that problem, the productivity effects of this technological revolution will remain disappointing. The impact on workers, by contrast, is already blindingly clear.
Click <a href="https://subscriptions.economist.com/nwcd">here</a> to subscribe to The Economist

Why The Digital Revolution Has Not Yet Fulfilled Its Promises

<div class="KonaFilter image-container display-table"><div><div class="image">REUTERS/Benoit TessierThomas Piketty director of the Paris School of Economics (PSE) attends the inauguration of the school in Paris, February 22, 2007. </div></div></div>In his <a href="http://www.newrepublic.com/article/117429/capital-twenty-first-century-thomas-piketty-reviewed">review</a> of Thomas Piketty's "Capitalism in the 21st Century," MIT's Robert Solow frames the author's question to his readers thusly:
Would you rather live in a society in which the real wage was rising rapidly but the labor share was falling (because productivity was increasing even faster), or one in which the real wage was stagnating, along with productivity, so the labor share was unchanging?
The answer to this question, according to Piketty, will tell us whether inequality, as bad as it is now, will worsen in years to come. 
Right now, it seems, the answer seems to be that both are happening. 
According to the BLS, <a href="http://www.bls.gov/news.release/prod2.nr0.htm">unit labor costs were up </a><a href="http://www.bls.gov/news.release/prod2.nr0.htm">4.2% in Q1</a>, as productivity declined and hourly compensation increased 2.4%. At the same time, the private sector is adding jobs at an ever-increasing clip. Last week we learned nonfarm payrolls came in at 288,000 for April, compared with 203,000 in March.
There's more. The minimum wage <a href="http://www.usatoday.com/story/money/business/2013/12/29/states-raising-minimum-wage/4221773/">is going up in 13 states</a>, as well as Washington DC, and hikes are under consideration <a href="http://www.latimes.com/nation/la-na-seattle-minimum-wage-20140502-story.html">in a number of other different places.</a>
Piketty's argument hinges on the notion that if the rate of return on capital, or wealth, outpaces GDP, which can be used as a proxy for consumption, then the rich will get exponentially richer than the the rest of society.
But just as things have turned up in the labor market, they've taken a turn for the worse in capital markets. Stocks have seen a rough 2014: The Dow is flat on the year, the S&amp;P is up just 2%, and the NASDAQ is off 1.8% year-to-date. In general <a href="http://finviz.com/futures_performance.ashx">assets across the board have</a> seen low gains year-to-date. Not even the most unproductive and most notorious forms of wealth have been immune: <a href="http://ftalphaville.ft.com/2014/05/08/1846532/not-so-nuts-is-this-the-crash/">art auctions are fizzling</a>, and returns on things like furniture and wine <a href="http://ftalphaville.ft.com/files/2013/09/Screen-Shot-2013-09-09-at-11.20.061.png">is slowing</a>. Meanwhile, hedge funds have been getting slammed.
Meanwhile, the housing market shows that within wealth inequality, there are some disparities. <a href="http://www.corelogic.com/blog/authors/sam-khater/2014/02/real-estates-one-percent.aspx#.U2uUe61dXXw">As CoreLogic observes</a>, the S&amp;P 500 serves as a very good two-month leading indicator of million-dollar home sales. So it's not surprising to learn that the fastest-growing sales segments are below that level. As of February, sales of homes valued between $650,000 and $950,000 had climbed 33% from year-ago levels, while sales in the $350,000 to $650,000 range were up 26 percent during the same period. Clearly not everyone's house is valued as such, and rents are going up. But housing gains at the topmost part of the food chain look to have stagnated. 
Perhaps the biggest sign is savings. <a href="http://www.npr.org/blogs/money/2012/08/01/157664524/how-the-poor-the-middle-class-and-the-rich-spend-their-money">The BLS says</a> those with incomes above $150,000 spend the most on saving for retirement. That comes back to the S&amp;P, but it also comes back to the return you can get from keeping your money in the bank. Thanks to the Federal Reserve those returns have been practically non-existent for half a decade now.
Most analysts agree that the function Piketty describes as having exacerbated inequality is correct, <a href="http://www.whitehouse.gov/sites/default/files/docs/global_lessons_for_inclusive_growth_iiea_jf.pdf">although in a new speech White House economic adviser Jason Furman</a> says there is no guarantee the function will hold in the future. 
There's still plenty of evidence to show Piketty is still correct as of May 8, 2014, where, for instance, the U.S. labor force participation rate remains at lows not seen in decades.
But for now we appear to be trending through a moment Piketty said was unlikely to happen.

The US Is Having An Anti-Piketty Moment

<div class="KonaFilter image-container display-table float_right"><div><div class="image">Charles Platiau/Reuters</div></div></div>Editor's note: Below is a Q&amp;A with Branko Milanovic, a former World Bank economist and a visiting professor at CUNY. Milanovic was the first person to publish a review of Thomas Piketty's "Capitalism in the 21st Century" in English last October. 
This Q&amp;A went out to subscribers of our "10 Things You Need To Know Before The Opening Bell" newsletter on Monday morning. <a href="https://www.businessinsider.com/account?action=newsletters&amp;newsletters[]=10+Things+Before+the+Opening+Bell&amp;source=10_things">Sign up here</a> to get the newsletter and more of these interviews in your inbox each week.
BUSINESS INSIDER: What seem to you to be the most important critiques of Piketty's thesis?
BRANKO MILANOVIC: Leaving aside the critiques of Piketty's proposal for global taxation of capital (which are easy to make), the most serious critiques, in my opinion, are two: whether the rate of return on capital will remain higher than the growth rate of the economy despite a very large increase in the capital/income and capital/labor ratios, and Piketty's lack of attention to the rise of China, India and other emerging market economies that can, in my opinion, keep the global rate of growth at a rather high level for a century or so.
BI: Are there any misconceptions about his findings that have started floating up that need to be nipped?
BM: I believe that some of the left-wing critiques that question the definition of capital used by Piketty are misplaced. To me his definition that includes housing together with the "productive capital" makes lots of sense. Piketty clearly says that he treats all forms of assets that yield an explicit or implicit income (owner-occupied housing yields an implicit income) as capital. That's both sensible and simple. So I do not see the point in the critiques.
Similarly, the right-wing critique that Piketty's ideas are driven by some kind of distaste for capitalism, or envy towards the rich, are, to be a bit harsh, pure nonsense. It is also meaningless to defend high incomes by invoking supposed high productivity of extremely well-paid executives or financiers, or to argue that their spending is needed to maintain aggregate demand. Surely, if maintaining high aggregate demand were a key objective, redistribution in favor of those who are poorer would be good for it because the poor spend a higher percentage of their income than the rich.
BI: We've since been inundated with Piketty reviews. Whose have you been most impressed by?
There were many excellent reviews. The ones I remember in particular were reviews by Robert Solow in The New Republic <a href="http://www.newrepublic.com/article/117429/capital-twenty-first-century-thomas-piketty-reviewed">http://www.newrepublic.com/article/117429/capital-twenty-first-century-thomas-piketty-reviewed</a>,
Paul Krugman on his blog and The New York Review of Books <a href="http://www.nybooks.com/articles/archives/2014/may/08/thomas-piketty-new-gilded-age/">http://www.nybooks.com/articles/archives/2014/may/08/thomas-piketty-new-gilded-age/</a>,
Robert Skidelsky in the Prospect Magazine <a href="http://www.prospectmagazine.co.uk/magazine/book-review-capital-in-21-century-thomas-piketty/#.U2bsBCiHhac">http://www.prospectmagazine.co.uk/magazine/book-review-capital-in-21-century-thomas-piketty/#.U2bsBCiHhac</a>. 
I also liked Doug Henwood's review published on Book Forum <a href="http://www.bookforum.com/inprint/021_01/12987">http://www.bookforum.com/inprint/021_01/12987</a>.
 A very nice review and discussion of some of Piketty's points is by Brad DeLong. <a href="http://equitablegrowth.org/2014/04/12/notes-finger-exercises-thomas-pikettys-capital-twenty-first-century-honest-broker-week-april-12-2014/">http://equitablegrowth.org/2014/04/12/notes-finger-exercises-thomas-pikettys-capital-twenty-first-century-honest-broker-week-april-12-2014/</a>
BI: You appear to have been the first to review Piketty in English. How did that come about? Was there much competition to capture that byline?
BM: I knew that his book was about to be published and when I was in Brussels last September, I remembered that, went to a bookstore and bought Piketty's book just a couple of days after it came out in Paris. It was very prominently displayed in the bookstore. Piketty was already then very well known economist, many of the ideas discussed in the book were in some ways presented by him earlier, and there was quite a lot of anticipation "in the air." I read the book very quickly, probably in less than 3 weeks. It was an extremely impressive piece of work; it went beyond the already high expectation that I had. There was no doubt in my mind that it is one key books of the last several decades. So I wrote the review very quickly. The first draft was ready I think by mid-October. There was not much competition because I read the book so early, in French, and the timeliness of my review "competed" with French reviews of his book, not with American.
However, having said all of that I must confess that I did not expect that the reception of the book and his ideas would be so overwhelming. I do not think Piketty himself expected it. I don't think that anyone could have imagined that within a month of its publication in the United States the book would be No. 1 of all books on Amazon. 
BI: For the true Piketty devotee, what's the next work of his - translated or not - that they should seek out?
BM: I don't know what would be his next book. But it seems to me that his work will first extend in a policy area toward implementation of some form of international cooperation regarding taxation of capital, second, expand the already formidable database on top incomes that Piketty and his coauthors have created, and thirdly, do research on new topics like fiscal evasion. True worldwide inequality may be much greater than what we currently believe if we were able to account for hidden wealth.

Here Are The Two Most Serious Criticisms Of Piketty

<div class="image-container float_right" style="width:480px"><div class="image"><a href="http://commons.wikimedia.org/wiki/File:Giant_African_Land_Snail.jpg">Wikimedia Commons</a>Giant African land snail</div></div>The U.S. <keyword id="34412" type="ORGANIZATION" weightage="60" keywordseo="economy">economy</keyword> was growing at <a href="http://www.businessinsider.com/q2-us-gdp-first-reading-2013-7">a 1.7% rate in Q2</a>, which was much stronger than the 1.0% pace estimated by economists. It was also an acceleration from the 1.1% pace we saw in Q1.
Americans are hoping that the economy will soon return to its long-term average growth rate of around 3.5%.
Unfortunately, more and more experts are convinced those days are gone. Even the optimists believe they are a long way away.
<a href="http://www.businessinsider.com/us-potential-gdp-growth-lowest-since-ww2-2013-8">JP Morgan economist Michael Feroli</a> hit this issue hard in painful detail this week.
"As recently as the late 1990s, potential growth in the U.S. was estimated to be around 3.5%; by our estimates that figure has recently fallen by half, to 1.75%," said Feroli.
In a lengthy research note, he noted that 1) the growth of America's workforce is slowing and 2) the <keyword id="23080" type="COMPANY" weightage="60" keywordseo="productivity">productivity</keyword> levels of that population are deteriorating.
Regarding that first point, it has been well-telegraphed via the <keyword id="990594" type="UNKNOWN" weightage="60" keywordseo="labor-force">labor force</keyword> participation rate that the working-age population has been declining. But an underappreciated negative force has been the trends in migration.
"A key influence here has been an estimated slowdown in net migration, both legal and illegal," said Feroli. "Reduced net migration reflects heightened security concerns since the September 11 attacks, and the effect of soft labor markets."
Regarding the latter point of productivity, Feroli attributes the post-2005 slowdown <a href="http://www.businessinsider.com/us-potential-gdp-growth-lowest-since-ww2-2013-8">largely to declines in technological innovation</a>.
The decline of innovation is central to the thesis of Robert Gordon, a Northwestern University economist whose work has been making the rounds on Wall Street in recent months. 
<div class="image-container float_right" style="width:481px"><div class="image"><a href="http://faculty-web.at.northwestern.edu/economics/gordon/indexmsie.html">Northwestern</a>Northwestern's Robert Gordon</div></div>Here's what Art Cashin, UBS Financial Services director of NYSE floor operations said in a note earlier this week:
...Some folks point to a dysfunctional Washington. Others see structural changes and challenges in key areas like employment. A few shrug and say it is just history reasserting itself. Most of the latter cite a year old paper by Professional Robert J. Gordon of Northwestern University. Professor Gordon maintains that, for much of human history, economic growth and improvement has been incrementally slow – somewhere in the range of <keyword id="35050" type="CITY" weightage="60" keywordseo="gdp">GDP</keyword> per capita, growing at about 0.2% per year. His work indicates we may revert to 0.5% growth for many decades to come.
Here is how Professor Gordon begins his thesis in the abstract to his paper ("Is U.S. Economic Growth Over? Faltering Innovation Confronts The Six Headwinds" {August 2012})
This paper raises basic questions about the process of economic growth. It questions the assumption, nearly universal since Solow’s seminal contributions of the 1950s, that economic growth is a continuous process that will persist forever. There was virtually no growth before 1750, and thus there is no guarantee that growth will continue indefinitely. Rather, the paper suggests that the rapid progress made over the past 250 years could well turn out to be a unique episode in human history. The paper is only about the United States and views the future from 2007 while pretending that the financial crisis did not happen. Its point of departure is growth in per-capita real GDP in the frontier country since 1300, the U.K. until 1906 and the U.S. afterwards. Growth in this frontier gradually accelerated after 1750, reached a peak in the middle of the 20th century, and has been slowing down since. The paper is about “how much further could the frontier growth rate decline?”
The analysis links periods of slow and rapid growth to the timing of the three industrial revolutions (IR’s), that is, IR #1 (steam, railroads) from 1750 to 1830; IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900; and IR #3 (computers, the web, mobile phones) from 1960 to present. It provides evidence that IR #2 was more important than the others and was largely responsible for 80 years of relatively rapid productivity growth between 1890 and 1972. Once the spin-off inventions from IR #2 (airplanes, air conditioning, interstate highways) had run their course, productivity growth during 1972-96 was much slower than before. In contrast, IR #3 created only a short-lived growth revival between 1996 and 2004. Many of the original and spin-off inventions of IR #2 could happen only once – urbanization, transportation speed, the freedom of females from the drudgery of carrying tons of water per year, and the role of central heating and air conditioning in achieving a year-round constant temperature.
<div class="image-container float_right" style="width:480px"><div class="image"><a href="http://www.charlierose.com/view/interview/12812">Charlie Rose</a>GMO's <keyword id="483795" type="PERSON" weightage="60" keywordseo="Jeremy-Grantham">Jeremy Grantham</keyword></div></div>Gordon's work is cited widely by <a href="http://www.businessinsider.com/grantham-on-the-road-to-zero-growth-2012-11">GMO's Jeremy Grantham, who has argued that the U.S. faces near-zero growth for decades</a>.
In a follow-up note on Friday, Cashin showed that the slow-growth thesis was going more mainstream:
...One friend sent along an article from New York Magazine (nymag.com) that had this very downbeat paragraph:
Gordon has two predictions to offer, the first of which is about the near future. For at least the next fifteen years or so, Gordon argues, our economy will grow at less than half the rate it has averaged since the late-nineteenth century because of a set of structural headwinds that Gordon believes will be even more severe than most other economists do: the aging of the American population; the stagnation in educational achievement; the fiscal tightening to fix our public and private debt; the costs of health care and energy; the pressures of globalization and growing inequality. Over the past year, some other economists who once agreed with Gordon — most prominently Tyler Cowen of George Mason University — have taken note of the recent discoveries of abundant natural-gas reserves in the United States, and of the tentative deflation of health-care costs, and softened their pessimism. But to Gordon these are small corrections that leave the basic story unchanged. He believes we can no longer expect to double our standard of living in one generation; it will now take at least two. The common expectations that your children will attend college even if you haven’t, in other words, or will have twice as rich a life, in this view no longer look realistic. Some of these hopes are already outdated: The generation of Americans now in their twenties is the first to not be significantly better educated than their parents. If Gordon is right, then for all but the wealthiest one percent of Americans, the rate of improvement in the standard of living — year over year, and generation after generation — will be no faster than it was during the dark ages.
The article also interviewed several economists who differ with or contest Gordon's thesis. Interestingly, none seems to foresee an unalloyed Utopian future. (E.g. one says that the kind of work done by 65% of us could be done by robots. Turn the lights down, HAL.)
All of this is pretty gloomy.
On the bright side, it's worth noting that some of the most important productivity-increasing innovations in history came out of nowhere. Think about the internet.

More And More Experts Are Convinced America Is In For Years Of Low Growth

<div class="KonaFilter image-container display-table"><div><div class="image">REUTERS/Joshua RobertsU.S. President Barack Obama is shown on a screen as he speaks during the White House Correspondents' Association Dinner in Washington on May 3, 2014. </div></div></div>Good morning! Here's what you need to know.
Chinese manufacturing is contracting. HSBC's China manufacturing PMI climbed to <a href="http://www.businessinsider.com/april-hsbc-china-pmi-2014-5">48.3 in April</a> from 48.0 in March. However, any reading below 50 signals contraction in the industry. "These indicate that the manufacturing sector, and the broader economy as a whole, continues to lose momentum," said HSBC's Hongbin Qu. "Over the past few days, Beijing has introduced more reform measures which could support growth by inducing more private sector investment. We think bolder actions will be required to ensure the economy regains its momentum."
Warren Buffett isn't interested in war. Berkshire Hathaway held its <a href="http://www.businessinsider.com/r-buffett-defends-coke-bnsf-at-berkshire-annual-meeting-2014-03">annual shareholder meeting</a> this weekend. Buffett reminded shareholders that there was "no guarantee" Berkshire would outperform the S&amp;P 500 in every cycle. Regarding his role in Coca-Cola's controversial equity plan, he said it wouldn't have been productive to "go to war" with the board. "I think the best result for the Coca-Cola Company was achieved by our abstention, and we will see what happens in terms of compensation between now and the next meeting of Coke," he said.
Apple wins $120 million from Samsung. Apple won a patent lawsuit against Samsung. However, Samsung will only be paying Apple $120 million, which is <a href="http://www.businessinsider.com/apple-beats-samsung-in-latest-patent-trial-2014-5">far less than the $2.2 billion</a> the company was hoping for. "Today's ruling reinforces what courts around the world have already found: that Samsung willfully stole our ideas and copied our products," said Apple in a statement.
Euro zone inflation is staying low. The European Commission <a href="http://www.bloomberg.com/news/2014-05-05/eu-reduces-euro-growth-forecast-as-inflation-seen-slower.html">reduced its 2015 GDP growth forecast</a> for the euro zone to 1.7% from February's prediction of 1.8%. It also forecasted that the inflation rate would be 0.8% this year and just 1.2% next year.
JP Morgan's 'challenging environment.' On Friday afternoon, JP Morgan Chase filed its latest 10-Q, and in it the bank <a href="http://www.businessinsider.com/jpmorgan-sees-q2-market-revenue-down-20-2014-5">warned its Q2 markets revenue</a> wasn't looking great. "Based on Markets revenue results to date, which reflect a continued challenging environment and lower client activity levels, expect 2Q14 Markets revenue to be down approximately 20%+/- versus 2Q13," said the company. "The Markets revenue actual results will depend heavily on performance throughout the remainder of the quarter, which can be volatile."
Another GM recall. GM is <a href="http://www.businessinsider.com/r-gm-recalls-nearly-52000-suvs-for-inaccurate-fuel-gauge-2014-03">recalling 51,640 SUVs</a>. The recall include 2014 models of the Buick Enclave, the Chevy traverse, and the GMC Acadia. "An inaccurate fuel gauge may result in the vehicle unexpectedly running out of fuel and stalling, increasing the risk of a crash," said the National Highway Traffic Safety Administration.
Economist Gary Becker has died. Becker won the Nobel prize in economics in 1992. "The 82-year old Becker was a pioneer in using the tools of economics to analyze things that are frequently thought to be outside the realm of economics," <a href="http://www.businessinsider.com/gary-becker-on-utopia-2014-5">noted BI's Joe Weisenthal</a>. "This idea of using economics to analyze non-market things seems normal these days (the book "<a href="http://www.amazon.com/Freakonomics-Economist-Explores-Hidden-Everything/dp/0060731338">Freakonomics</a>" was all about this, and was a huge blockbuster). But when Gary Becker started doing this it was novel. And he truly taught people to see the world in new ways."
India makes the cover of Barron's. As 800 million Indians head to the polls in history's largest-ever election, <a href="http://online.barrons.com/news/articles/SB50001424053111903843804579533663172522346">Barron's Jonathan Laing</a> offers a bullish picture assuming Gujarat's Narendra Modi wins. "Modi's governance style flies in the face of Indian tradition, which has featured backroom business deals in exchange for kickbacks to circumvent the prospect of endless bureaucratic delays," wrote Laing. "Bidding on government contracts in Gujarat is done on the Internet, not over tea. Modi also has embraced privatization of key sectors like ports, water, and power, which is unusual in most of India's 28 state governments and in Delhi, where a dreamy Congress Party's predilection for socialism still holds sway despite the ideology's many failures in India since independence in 1947."
Pfizer earnings beat. Pfizer said its Q1 revenue fell 9% year-over-year to $11.35 billion. <a href="https://finance.yahoo.com/news/pfizer-reports-first-quarter-2014-110000000.html">Adjusted earnings came in at $0.57</a>, which was a bit higher than the $0.55 expected by analysts.
An update on American services. Later this morning, we'll get <a href="http://www.businessinsider.com/monday-scouting-report-may-2-2014-2014-5">two U.S. services industry reports</a>. First, we get Markit's services PMI report at 9:45 a.m ET; economists estimate the headline fell to 54.5 in April from 55.3 in March. At 10:00 a.m. ET comes the ISM non-manufacturing index; economists estimate ISM's index increased to 54.0 in April from 53.1 in March. "Early readings on the service sector for April, including the Richmond Fed survey and the flash reading of the Markit services PMI, pulled back slightly for April, but remained in positive territory," noted Wells Fargo's John Silvia.
Markets around the world are in the red. Asian market closed lower. European markets are in the red. And U.S. futures are predicting a down day.
***
Below is a Q&amp;A Business Insider's Rob Wile had with Branko Milanovic, a former World Bank economist and now a visiting professor at CUNY.
***
BUSINESS INSIDER: You appear to have been the first to review Piketty in English. How did that come about? Was there much competition to capture that byline?
BRANKO MILANOVIC: I knew that his book was about to be published and when I was in Brussels last September, I remembered that, went to a bookstore and bought Piketty's book just a couple of days after it came out in Paris. It was very prominently displayed in the bookstore. Piketty was already then very well known economist, many of the ideas discussed in the book were in some ways presented by him earlier, and there was quite a lot of anticipation "in the air." I read the book very quickly, probably in less than 3 weeks. It was an extremely impressive piece of work; it went beyond the already high expectation that I had. There was no doubt in my mind that it is one key books of the last several decades. So I wrote the review very quickly. The first draft was ready I think by mid-October. There was not much competition because I read the book so early, in French, and the timeliness of my review "competed" with French reviews of his book, not with American.
However, having said all of that I must confess that I did not expect that the reception of the book and his ideas would be so overwhelming. I do not think Piketty himself expected it. I don't think that anyone could have imagined that within a month of its publication in the United States the book would be No. 1 of all books on Amazon. 
BI: We've since been inundated with Piketty reviews. Whose have you been most impressed by?
BM: There were many excellent reviews. The ones I remember in particular were reviews by Robert Solow in The New Republic <a href="http://www.newrepublic.com/article/117429/capital-twenty-first-century-thomas-piketty-reviewed">http://www.newrepublic.com/article/117429/capital-twenty-first-century-thomas-piketty-reviewed</a>,
Paul Krugman on his blog and The New York Review of Books <a href="http://www.nybooks.com/articles/archives/2014/may/08/thomas-piketty-new-gilded-age/">http://www.nybooks.com/articles/archives/2014/may/08/thomas-piketty-new-gilded-age/</a>,
Robert Skidelsky in the Prospect Magazine <a href="http://www.prospectmagazine.co.uk/magazine/book-review-capital-in-21-century-thomas-piketty/#.U2bsBCiHhac">http://www.prospectmagazine.co.uk/magazine/book-review-capital-in-21-century-thomas-piketty/#.U2bsBCiHhac</a>. 
I also liked Doug Henwood's review published on Book Forum <a href="http://www.bookforum.com/inprint/021_01/12987">http://www.bookforum.com/inprint/021_01/12987</a>.
 A very nice review and discussion of some of Piketty's points is by Brad DeLong. <a href="http://equitablegrowth.org/2014/04/12/notes-finger-exercises-thomas-pikettys-capital-twenty-first-century-honest-broker-week-april-12-2014/">http://equitablegrowth.org/2014/04/12/notes-finger-exercises-thomas-pikettys-capital-twenty-first-century-honest-broker-week-april-12-2014/</a>
BI: What seem to you to be the most important critiques of Piketty's thesis?
BM: Leaving aside the critiques of Piketty's proposal for global taxation of capital (which are easy to make), the most serious critiques, in my opinion, are two: whether the rate of return on capital will remain higher than the growth rate of the economy despite a very large increase in the capital/income and capital/labor ratios, and Piketty's lack of attention to the rise of China, India and other emerging market economies that can, in my opinion, keep the global rate of growth at a rather high level for a century or so.
BI: Are there any misconceptions bout his findings that have started floating up that need to be nipped?
BM: I believe that some of the left-wing critiques that question the definition of capital used by Piketty are misplaced. To me his definition that includes housing together with the "productive capital" makes lots of sense. Piketty clearly says that he treats all forms of assets that yield an explicit or implicit income (owner-occupied housing yields an implicit income) as capital. That's both sensible and simple. So I do not see the point in the critiques.
Similarly, the right-wing critique that Piketty's ideas are driven by some kind of distaste for capitalism, or envy towards the rich, are, to be a bit harsh, pure nonsense. It is also meaningless to defend high incomes by invoking supposed high productivity of extremely well-paid executives or financiers, or to argue that their spending is needed to maintain aggregate demand. Surely, if maintaining high aggregate demand were a key objective, redistribution in favor of those who are poorer would be good for it because the poor spend a higher percentage of their income than the rich.
BI:For the true Piketty devotee, what's the next work of his - translated or not - that they should seek out?
BM: I don't know what would be his next book. But it seems to me that his work will first, extend in a policy area toward implementation of some form of international cooperation regarding taxation of capital, second, expand the already formidable database on top incomes that Piketty and his coauthors have created, and thirdly, do research on new topics like fiscal evasion. True worldwide inequality may be much greater than what we currently believe if we were able to account for hidden wealth.

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