Piketty and the "Investment Event Horizon"

Samizdata had a great post pointing out that the ultra hot Neo Marxist tome written by Professor Piketty is strangely like a tale from Douglas Adam's Hitchhiker's guide to the Galaxy.  Piketty argues that if the rate of return on investments is sufficiently higher than the real economic growth rate then investment's share of income will continue to grow and grow, driving greater and greater inequality.  A lot of people have debunked Piketty's claim, most notably by pointing out his sloppy math and showing that past periods of great inequality didn't generate the runaway positive feedbacks that he forecasts.  But none of the critics considered the Frogstar B Shoe Event Horizon example.  Because Frogstar B was destroyed by just the kind of snowballing effect that Piketty forecasts.

In Douglas Adams famous non-fiction series on galactic economic history, “The Hitchhiker’s Guide to the Galaxy”, we are presented with a description of the tragedy of the planet Frogstar B.

On Frogstar B, for a time shoe production increased faster than the rate of overall economic growth. As a result, with time, shoe production became a larger and larger fraction of the economy, until finally the Shoe Event Horizon was hit, at which point nothing but shoes could be manufactured, and lacking any other goods or services, their civilization collapsed.

Thomas Piketty’s “Capital in the Twenty-First Century” describes a similar tragedy that lies inevitably in our future, the point at which the only economic activity left is investment, all money is held by a tiny minority of wealthy people, and our civilization permanently ends.

I also note that anthropogenic global warming alarmists also posit a snowballing positive feedback loop spiraling ever upward until the Little Teapot, Short and Stout that is the earth hits 100 C and begins to 'shout'. It all fits - everything is spiraling out of control, just look at Frogstar B.

Take that you plutocracy deniers!