Let me list the problems. First, wealth grows exponentially. Income from work does not. We have a society now designed to become more unequal.
This is problematic. By definition the wealthy do not so end all their income. As they capture a growing part of national income this means the return to those who really work will decline due to the negative multiplier effects of saving.
And the wealthy save, but do not invest. Savings guarantee that they do not lose their wealth status. Risky investments might. And since status is what really matters to the wealthy a supposedly wealthy economy is bad for innovation.
Which does rather miss the point being made by Piketty. Which is that r is greater – greater greater that is – for richer people because they can afford to take more risk. Which is the only reason it is great. But then that conflicts with the second point, that they don’t take risk, doesn’t it?
The poor might save in cash, or savings accounts, or even NS&I. The rich are in property, equities and…..higher risk, d’ye see?