Morgan Stanley are revisiting the idea that the world has seen its peak working-age population growth come and go.
They’re also, we think, revisiting a favourite slogan of ours even if they can’t say it explicitly:
The two key cohorts of the labour force – the prime working age population and the aged – are likely to find themselves in a political battle. As the ranks of the aged swell, their political clout will increase significantly. The prime working age population will not have quite the same ability to grow its influence through numbers. However, what they will have on their side is a declining supply of a commodity – labour – whose price is likely to be on an upward trend. The compensation for the loss of political power to the aged may thus be something that workers counter-balance by seeking higher wages, given that they will not be able to withhold their own supply of labour, i.e., they will not be able to quit their jobs.
This FT Alphaville writer hasn’t read Capital in the Twenty-First Century (YES, OKAY, SORRY).
However, this is so good from William Porter and team at Credit Suisse, it’s time to reconsider: Read more
Institutional Investor’s Alpha published its rich list for 2013 this week which, as Matt Levine has described with flair and some made-up maths, is only tangentially related to how well the hedge fund managers in question performed last year:
If you start with a ton of money, and/or your hedge fund has really good returns, you will make a lot of money. Notions of fair compensation for your labor, or appropriate pay for performance, just don’t enter into it. Money begets money, lots of money begets lots of money, and skill in the begetting is a nice bonus.
That post is also his contribution to the burgeoning mountain of Piketty-related comment, and without tossing another pebble onto the pile, it is worth digging a little more into the reasons for those vast fortunes to exist, and why that matters. Read more
Ryan Avent takes issue with my take on Piketty. He makes two points, which I’ll address in turn.
First, the French data [Smith] considers is a bit of an outlier. You can download Mr Piketty’s data tables (in French) here and see the figures for Britain and America. In Britain the recent rise in the capital-income ratio is about two-thirds attributable to housing and one-third attributable to other domestic capital. In America growth in other domestic capital is actually more important than growth in housing.
I hesitate – to say the least – to critique the central argument in French economist’s Thomas Piketty’s new book Capital in the 21st Century. The author, an inequality expert, is distinguished. The work is acclaimed. The book’s empirical detail is already the stuff of legend. And, most damningly, I have not read the text and do not expect to until it is released in English, sometime in March. Read more