[zygomega]

> To begin, I’m going to illustrate a mathematical fact.

'growth' rate is likely to be a geometric constant, not an arithmetic one. A 0% growth rate followed by a 6% growth rate is not 3% geometric growth on average. 100% growth followed by -100% growth isn't 0% growth on average.

Many a quant manager has gotten rich off of spruiking the reverse of this story.

The market price of capital is the discounted value of future production (which will be equal to consumption). If the discount rate declines, then the price of capital goes up and at least some of this effect finds its way into measures of capital growth (and capital return).

Windfalls accrue to the current generation of risk capital holders and, to some extent, the current generation of consumers. Losers are everyone else - current savers and future generations.

[igonvalue]

> 'growth' rate is likely to be a geometric constant, not an arithmetic one.

I agree. I find it unlikely that Piketty's thesis rests on such an elementary mistake as interpreting arithmetic means as geometric ones. Academic economists are basically applied mathematicians. (In the book, Piketty actually bemoans the fact that economists are preoccupied with proving mathematical theorems at the expense of engaging with the real world.)