In a recent CEPR paper, Thomas Piketty and Gabriel Zucman trace the evolution of wealth-to-income ratios for several countries. Click here for VOX coverage of their article. They find that wealth-to-income ratios have increased since 1945 and that they are back to levels last seen two hundred years ago. What are the implications of this? Piketty and Zucman suggest that this really matters for the future of wealth inequality and of inherited wealth in particular. In other words, unless there is internationally-coordinated progressive capital and inheritance taxation, wealth inequality is here to stay and the top 1% will consist of the offspring of the current top 1%. In other words, a new aristocracy is on the way!
My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here . This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors.