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Far from showing an inexorable rising trend the data indicate that the ratio of the value of the capital stock to income is probably stable over the long-term. At least for the US over the past 88 years these confusions are unnecessary as official data are available for both the value of the domestic produced capital stock and the income it produces. To justify this claim wealth is used as a proxy for produced capital, national income is used as a proxy for domestic income and national capital as a proxy for domestic capital. Thomas Piketty’s book Capitalism in the 21st Century has the central thesis that unless capital is destroyed by war, it rises faster than income and that this process is inexorable until equilibrium is reached when the value of capital is equal to eight times income. Piketty uses misleading data to support his claims by confusing wealth with capital and income with output.Piketty’s mistake appears to come from confusing depreciation with the cost of maintenance.
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