Thomas Piketty's "Capital in the 21st Century" has been widely debated. So, one wonders if there is anything new that could actually be added at this point.
I found this article by Antonio Foglia quite intriguing. I shall disclose that the author is a dear friend and a member of the Board of Advisors of Istituto Bruno Leoni. But he is also, as Project Syndicate points out, a member of the Global Partners' Council of the Institute for New Economic Thinking, so perhaps his piece will be read in some unexpected quarters.
Foglia's criticism of Piketty is clear and fundamental:
Piketty observes a rising wealth-to-income ratio from 1970 to 2010 - a period divided by a significant change in the monetary environment. From 1970 to 1980, the Western economies experienced rising inflation, accompanied by interest-rate hikes. During that period, the wealth-to-income ratio increased only modestly, if at all, in these countries.
From 1980 on, nominal interest rates fell dramatically. Not surprisingly, the value of wealth rose much faster than that of income during this period, because the value of the assets that comprise wealth amounts essentially to the net present value of their expected future cash flows, discounted at the current interest rate.
He also points out, in comparing Italian and German families, that wealth is shaped by household investment decisions (i.e., Italian families have a fetish for home ownership). The article is, I think, well worth reading.