Capital in the Twenty First Century by Thomas Piketty was widely recognized as a very important book when it came out in 2013. Yet somehow now, in 2018, I rarely encounter people who have learned the lessons from the book. Of course I don’t expect most people to read the book, but since the lessons are so important for development of society, I would expect them to be spread by other means. In order to help that, I decided to write this blog post which summarizes the most important points. So here is the first point:
1. The more money you have, the more money you make
This seems to be a fundamental law of economics. It’s not something we have constructed. It’s even true in primitive societies: If there are two families, one family owns two cows, and one family owns ten cows, the family with ten cows doesn’t make five times as much money as the family with two cows, it makes more than that. That’s because it can more easily survive bad times (like if a cow gets sick) or it can invest in better tools to take care of cows, and those tools pay off more (like fences or a cow shed).