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To a Correspondent About Piketty

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Here’s a letter to a correspondent:

Ms. Gloria Farrar

Dear Ms. Farrar:

Thanks for e-mailing to me your thoughts on Thomas Piketty’s Capital in the Twenty-First Century.  I have indeed read the book carefully.  I do not, however, share your impression that Piketty has “proved that increasingly the riches [of the super-wealthy] are unmerited and dangerous” to society at large.

I’m now writing a review of Piketty’s volume.  In that review I’ll cover many of my objections more fully.  I’ll send to you a link to the review when it’s published (probably in late May or early June).  But to make here one substantive point, let me ask you to look at the most recent (September 2013) Forbes list of the 400 wealthiest Americans [2].*  From Bill Gates at the top to Nicholas Woodman at the bottom, all are billionaires.  Yet 261 of these people are self-made.

That is, nearly two-thirds earned their fortunes through creative entrepreneurial effort and risk-taking – people such as Amazon.com’s Jeff Bezos, Google’s Sergey Brin and Larry Page, Facebook’s Mark Zuckerberg, eBay’s Pierre Omidyar, and entertainer Oprah Winfrey.  These people’s efforts enrich not only themselves but also you, me, and hundreds of millions of other people.  I’m aware that Piketty dismisses such claims as being crude apologetics, but I challenge you – and him – to explain how, say, Chick-fil-A founder S. Truett Cathy amassed a large fortune if the countless people who voluntarily dine at his restaurants do not benefit from doing so.

Also note that many of the superrich who aren’t self-made – many who began with lots of wealth – nevertheless continue, like Charles Koch, to work hard to further enhance their wealth through entrepreneurial creativity, effort, and risk-taking.

This Forbes list supplies powerful evidence against Piketty’s notions that large fortunes in market economies overwhelmingly generate themselves automatically and that today’s superrich are mostly parasitic and idle rentiers.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

* (You can search, in one of the boxes to the left of the full list, for “Self-Made”.)​​​​​

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