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What Thomas Piketty Doesn't Get

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I don't know anyone under thirty who thinks they work for anyone anymore. They see themselves as 'Individual Capitalists' - whether they would use that term or not. Oh they may be putting in the hours somewhere, but trust me, their mind is all about how they are going to set up a business. And lest you think this is a middle class phenomenon, it's probably more the immigrant lower-income, working class population. Landing in JFK airport recently, Juan the taxi driver started pitching me his business idea without even knowing I was a venture capitalist. Entrepreneurship - big, small, disruptive, enabling - is the big story ripping around the globe right now, redefining continent after continent.

Which is why Thomas Piketty's book, Capital in the 21st Century, though it has provoked a global debate about capital and inequality, is ultimately a sad book. It is zero-sum and it misses the point, it misses this big story: Never before have the tools for becoming an owner of a business ever been so distributed, democratised and free to grab hold of by those who aspire to design their lives.

Piketty is looking backwards. He is thinking of capital exclusively in a narrow way, and he is defining labour in an old-fashioned way. Human capital is the most important force in the world. The objective of every citizen should be how to increase the return on human capital instead of confiscating capital or lowering the return on financial capital which kills the engine of wealth creation in society leading us all to become poorer more poor.

Jobs are important. Nesta, a UK organisation, has done research twice on how job creation happens, and 57% of all new job creation comes from the 6% of small, young, high-growth businesses in society. They call this the Vital 6%, and around the world, this has been proven again and again; entrepreneurs create jobs. A global wealth tax of 80% on the wealthy, as Piketty proposes but quickly admits won't be effective, won't do that - at least not in any kind of direct way.

Sometimes the alignment between entrepreneurship and job creation is tight. Assured Labour helps people in low-income economies to find jobs with their cell phones. Five to six billion people have a mobile phone.

When Maktoob in the Middle East was acquired by Yahoo in 2009 for $175million, it spawned dozens of start-ups, half a dozen of which have become much more valuable than Maktoob. It is through these kinds of supernovas that wealth is generated - from entrepreneurial management team to six derivative ones to the next three dozen etc. People are inspired to and learn how to build companies by being a part of successful ones.

So what Piketty appears to want can be compared to a new War on Drugs. We all know that the War on Drugs, is not working, and the War on the Wealthy won't work either. By the time that you make (or inherit) hundreds of millions of pounds, dollars or euros, you will probably also know how to protect it. Two weeks and a good lawyer keeps most capital safe. I'm not saying it is good; I'm just being a realist.

Entrepreneurs are the most generous people. Individuals like Bill Gates, Richard Branson, and others who have created great fortunes are sharing most of that fortune with others - creating a more level playing field. There will always be a percentage of the global wealthy who will remain, unreconstructed egoists, not investing any of their wealth in changing the world. That's their problem. But why try to re-engineer the entire world a la a War on Drugs to go after that percentage of jerks. Why not encourage more of the wealthy to share their wealth, and celebrate those actions when they do. As everyone knows, carrots have always worked better than sticks.

The real issue is not about wealth redistribution. It's about who distributes and whether the pie is growing. As The Atlantic reported in its article Can Government Play Moneyball? that government is massively inefficient. In addition, the government is no more than a proxy for how society decides to collectively organise itself. Thousands of years ago it was kings and in the future, with the benefit of crowd-sourcing technology in the sharing economy which is unfolding, collective action could be delivered entirely differently than through existing governmental structures.

Let's not create a society of the richest poor people. Let's not condescend people by saying that if you started life as poor, you'll always be that. The cards are not stacked against you in the 21st Century. Piketty's book provokes jealousy and insecurity in people rather than freeing them to create and aspire.

I know that Juan the taxi driver in New York City who pitched me that great idea at JFK airport last month won't read Piketty's book. He's too busy planning his start-up's launch, and soon he'll be building wealth, his new company and creating jobs.

Yes, entrepreneurship is back. The return on human capital is emerging as growing far more rapidly than the return on financial capital. Individual Capitalism is the force for the 21st century, not big business. Net net: society works best for everyone when it's organised around the entrepreneur.

I know that Juan the taxi driver in New York City who pitched me that great idea at JFK airport last month won't read Piketty's book. He's too busy planning his start-up's launch, and soon he'll be building wealth, his new company and creating jobs.

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