Building capital for the very long run

R.B. Matthews

For the first time in decades, one of the year’s best-selling books is about economics. Capital in the Twenty-First Century by Thomas Piketty argues that, in a capitalist society, economic inequality is bound to increase because the growth of capital outpaces the growth in the general economy.

And yet you know that the capital of most families is dissipated over time. Some form of the expression “from shirtsleeves to shirtsleeves in three generations” exists in all developed societies.

Given Mr. Piketty’s thesis that capital grows immutably, how can you ensure that your family breaks the mold and grows its capital for the long run?

You should begin by understanding that, to succeed, you must behave differently from a pension fund or any other institution that doesn’t have to pay taxes.