Paul Krugman: Kevin Roose

Kevin Roose: Roose's main argument is that many savers are subsidizing unprofitable businesses, benefiting consumers and workers. What's more, savers will never be able to recoup their investments. As Roose says: When these venture-backed price wars happen in dozens of high-end service sectors all at once, you have a strange cultural phenomenon in which Main Street dollars are being used to finance the lifestyles of cosmopolitan yuppies, according to Bloomberg. After the dot-com bubble of the 1990s; the subprime bust and collapse in housing prices; and now the willingness of investors to plow money into unprofitable technology companies, it's hard to buy Pikettys thesis that capital is over-compensated. Inequality has certainly increased but even Paul Krugman, in an otherwise favorable review of Piketty's book, notes that its findings dont really apply to the U.S and Investors who are eager to fund businesses that can't make money worry people like New York magazine's Kevin Roose . At the same time, the hot new book in economics -- Thomas Pikettys Capital in the Twenty-First Century -- argues that we need large wealth taxes to offset the tendency of investors to do better than workers. At least one of these people is wrong, and its probably Piketty. There's a lot to be said for this view. Interest rates adjusted for inflation are much lower than 10, 20 or 30 years ago, which means that you need to sock away even more money to achieve a given standard of living in your golden years -- or take a lot more risk with your investments. It wouldnt be much of a stretch to say that the entire financial crisis was caused by savers inability to earn a decent return without having to take excessive risks. University of California Berkeley economist Brad DeLong has some worthwhile thoughts on how to define the real rate of return on capital, for those interested in a deeper discussion of that issue. (news.financializer.com). As reported in the news.