GROWTHADVANCED◉ LIVE LAB

Capital Share (r > g)

When returns on capital outrun growth, wealth concentrates without any villain.

r = 5%g = 2%
compounding wedges apart · recreated schematic

How it works

  • If r (return on capital) exceeds g (growth), fortunes outrun wages.
  • Inheritance then compounds the gap across generations.
  • Shocks (wars, inflation) reset it — policy can mimic the reset.
Use → Tax and redistribution design; pair with mobility data.
Watch out → Reading a low-g decade as proof the gap must explode — taxes move r.
Try it → Set r = 5% and g = 2% in the lab and watch the wedge over 40 years.
REDCAPE jobs → Explain · Act
Free sources → Coursera M4 (Economic Growth)
INTERACTIVE LABoriginal recreation — poke it
■ capital (r)■ income (g)
Growth of 1 unit over 40 years
CAPITAL ×
7.0
WEDGE (r/g)
3.19×

Small rate gaps become large wedges — compounding does the concentrating, no villain required.