Gave Attacks Piketty’s Understanding Of Finance

Thomas Piketty’s unlikely bestseller Capital in the Twenty-First Century has pushed income inequality into public consciousness once again, both because there are stagnant wages in the US and Europe despite other signs of recovery and because of his radical policy prescription: a global wealth tax as high as 80% for people making $1 million per year. Most critics have focused on how such a high tax rate could affect productivity and the enormous logistical problems that would arise.

But Gavekal Dragonomics chairman Charles Gave sees a more fundamental error in Piketty's analysis.

“Piketty confuses the return on invested capital, or ROIC,...