Contra Piketty: “wealth isn’t money or financial assets but, rather, ready access to real goods & services”

How Are We Doing? By W. Michael Cox and Richard Alm

The above is a quote from economist Don Boudreaux‘s review of Thomas Piketty’s Capital in the Twenty-First Century, published in Barrons:

Flaws aplenty mar Piketty’s telling of the capitalist saga, flaws that spring mainly from his disregard for basic economic principles. None looms larger than his mistaken notion of wealth.

Every semester, I ask my freshman students how wealthy they would be if they each were worth financially as much as Bill Gates but were stranded with all those stocks, bonds, property titles, and bundles of cash alone on a desert island. They immediately see that what matters is not the amount of money they have but, rather, what that money can buy. No principle of economics is more essential than the realization that, ultimately, wealth isn’t money or financial assets but, rather, ready access to real goods and services.

Piketty seems barely aware of this reality, focusing on differences in people’s monetary portfolios. He therefore ignores the all-important supply side: what people—rich, middle class, and poor—can buy with their money.  …

Read the whole review: Piketty: A Wealth of Misconceptions – Barron’s. (Via  Reviewing Piketty’s Blockbuster.)

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