From my article in American Thinker, Everything that Counts


Just as Piketty’s task is distorted by the focus on categories instead of real people, so is his categorization of the “average” rate of return, which is critical to his thesis that investment returns are greater than economic growth and thus inevitably a source of growing inequality.

Averages are often misleading and irrelevant.  A six-foot man can drown crossing a river with an average depth of four feet.  A man with one foot in the freezer and one foot in the oven is not comfortable just because the average temperature is normal.

Within the average return on capital are the hugely successful and the bankrupt.  But that return is what drives capital to socially productive purposes.  Efforts to centrally influence or control the flow of capital can have disastrous ramifications, as we observed during the mortgage collapse.


Think how much the capital markets would change if every investor was guaranteed a 5% return vs that chance or opportunity to make a 500% return or lose everything. Averages in this case tell us nothing.