Last year, French economist Thomas Piketty’s book on the causes of income inequality became the rallying cry by people on the left for a tax on the wealthy. However, many intelligent and thoughtful individuals (including NCPA blogger Jeff Lerner) disagreed on what Piketty pointed to as the cause of income inequality – mainly, that as the return on capital far outpaces GDP growth, inherited wealth grows, leading to a wealth gap. The left interpreted this as capitalism should be replaced by a massive global wealth tax and, of course, European-style socialism. But now, in a forthcoming article in the American Economic Review as reported by the Wall Street Journal, Piketty admits that other factors come into play, and that r > g is not as relevant when it comes to actual wage inequality. For further analysis of Piketty’s theory, see the NBER study, “The Rise and Decline of General Laws of Capitalism” by Acemoglu and Robinson.