The View | Key to inequality is soaring home prices

French economist Thomas Piketty's Capital in the Twenty-First Century has made him an instant celebrity in the United States, even though his work hardly caused a stir when it first appeared in France.

The release of his book in the US has coincided with a great deal of public concern over the rising inequality of income and wealth, especially its concentration among a small fraction of the population. This has incited fears about the rise of crony capitalism, inherited wealth and the formation of a 21st century aristocracy. Piketty became an instant darling of the political left.

On closer examination, however, Piketty's data can be given a totally different interpretation , with critical implications for advanced economies, such as Hong Kong, where home prices have soared.

Piketty's study consists of three parts. First, he shows empirically that the ratio of capital to income, after falling between the two world wars and during the Depression, has been rising again. This, he argues, is because the rate of return to capital is higher than the growth rate of the economy.

Second, since capital ownership is heavily concentrated among a small minority, inequalities in wealth and income will be ever rising unless checked by wars, natural disasters or taxation of capital.

Third, Piketty calls for a worldwide, coordinated approach to tax capital in all nations so as to check this capitalist tendency. He believes the growing concentration of wealth, especially hereditary wealth, will undermine democratic institutions.