Branko Milanovic published an interesting review of Thomas Piketty's book "Capital in the Twenty-First Century". This is one of the best experts in inequality reviewing another one. The review is very positive but reading it is an excellent complement of the book. Milanovic stresses that the theory of increasing inequality of Piketty goes against mainstream economics and economic history, which has mostly given a very positive view of economic development after the industrial revolution. Perhaps the most interesting aspect of the review is the doubts that Milanovic has about the low economic growth predicted by Piketty. Behind this prediction lies actually the optimistic view that developing countries will rapidly catch up and once all countries are in the technological frontier, growth will be low for everybody (and substantially below the rate of return of capital). Milanovic is not so optimistic about catching up, because he, having written extensively about between-countries inequality, is not so convinced that, say, Africa, will grow so fast. Neither of them raises the possibility of a third industrial revolution or of technological breakthroughs that will raise growth.
Milanovic stresses that the policy proposal (a global tax on capital) of Piketty is radical, but that it may be the only way to stop the increasing inequalities that threaten to make a joke of our democracies.Milanovic argues that this is a watershed book in economic thinking. These are his last words in this review: "When reading Piketty’s book, it is indeed hard to go back to thinking about anything else: one gets totally absorbed in it. This is perhaps the best compliment that the author of an almost thousand-page long economics book can ever expect to get. Don’t take this book on vacation: it will spoil it. Read it at home".
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