Introduction
This week I complete my presentation of Piketty’s recent paradigm- shifting contribution to the study of income and wealth inequality (Capital in the 21st Century), which I had introduced last week. To benefit fully from today’s column readers should recall the main content of last week’s contribution. This was my introduction of Piketty’s two basic relations used to measure income and wealth inequality. The first of these is the accounting identity that states: the share of national income (termed, a) obtained by the owners of capital in an economy is equal to the average rate of return on their capital {termed, r) multiplied by the ratio of the capital they own to national income (termed, B). This expression was simply written as: a=r x B.
Similarly, the second relation states: the ratio of income from capital to national income (which we have already termed, B above) is equal to the national