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Note on a Cuff

One of my two absolute favorite quotations of all time is this one from H.L. Mencken, which he originally entitled “Note on a Cuff.”  (My other absolute favorite quotation is this one; it’s from the final paragraph of Thomas Sowell’s magisterial 1980 volume, Knowledge and Decisions.)  So, I title this post “Note on a Cuff” – not (believe me) because I fancy that it rivals Mencken’s quotation in either insight or style but, rather, simply because I like the title.


Thomas Piketty writes as if accumulated wealth perpetuates itself, growing inevitably over time and yielding to its owners streams of unearned returns that are unconnected with any productive contributions that these owners might make with their wealth to the economy.  Thomas Piketty writes also that very rich people have advantages over only moderately rich people because very rich people can hire better financial advisors than can people of more modest means.

These two propositions of Piketty sit uneasily with each other.  If (as is unquestionably true) not all financial advisors are equally talented, then not only does wealth not grow ineluctably or without human effort and risks to its owners, but the more talented the financial advisor the better he or she is in a market-oriented economy at investing wealth in ways that generate attractive products for the masses – that is, at investing wealth in ways that cause the economic pie to grow.  And there’s no reason to believe that competition among top-flight financial advisors – each one seeking energetically and brilliantly to serve as faithfully and as successfully as possible his or her plutocratic clients – does not help promote economic growth that raises the living standards of even the poor at a pace equal to, or even greater, than the rise in the living standards of the super rich.

In short, if Piketty is correct that people differ in their talents at investing wealth to yield consistently high returns, then Piketty is almost certainly incorrect to suggest that wealth, once accumulated, perpetuates itself to the advantage chiefly of its owners.