To put Thomas Piketty's worries to rest

You might recall that Thomas Piketty told us all that capitalism was on its last legs, again, and that we needed to have that glorious revolution, again.

The particular worry this time was that capital was growing in relationship to GDP. Instead of said societal capital being 200%, or 300%, of GDP it was rising to ever higher multiples, perhaps 400% and so on. This could only mean that inherited capital was going to become ever more important as a determinant of positions in life, as was true in the 18th and 19th centuries, so tax the capitalists now and tax 'em good.

It's possible that we missed a little of the nuance there but that's a reasonable outline of his worries and his policy solutions. At which point we've this information from the OECD:

The 2016 OECD Pensions Outlook analyses how the pensions landscape is changing in the face of challenges that include ageing populations, the fallout from the financial and economic crisis, and the current environment of low economic growth and low returns.


The report shows that there were 13 OECD countries in which assets in funded pensions represented more than 50% of GDP in 2015, up from 10 in the early 2000s. Over the same period, the number of OECD countries where assets in funded private pension arrangements represent more than 100% of GDP increased from 4 to 7 countries.

We're living longer lives these days, we're working for fewer decades of them and thus people are rationally saving for their expected golden years. Thus capital as a percentage of GDP rises - not to produce inheritances, but to produces incomes in retirement. And rises by potentially at least more than 100% of GDP.

We can't see that this is a problem and we most certainly cannot see that this is an argument for greater taxation of capital. Quite the reverse in fact, people saving for their old age should be encouraged, not specifically taxed.

So much for the most recent French call for revolution then, eh?