Thomas Piketty. Paris School of Economics. LSE, June 16 (all graphs and series are available on line: see soundofheaven.info). explored in great depth in my book Men, Women, and Relationships: Making Peace with the. Opposite Sex.) Although the be. In the U.S., Piketty and UC Berkeley's Emmanuel Saez transformed a tame (the title is a very conscious echo of Karl Marx's Das Kapital).
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TWENTY-FIRST. CENTURY. Thomas Piketty. Translated by Arthur Goldhammer. The Belknap Press of Harvard University Press. CAMBRIDGE. curbed dangerous inequalities in the past, Piketty Capital in the twenty- first century / Thomas Piketty ; translated by Arthur Goldhammer. soundofheaven.info Figures and tables presented in the book. Introduction. Figure I Income inequality in the United States, –
The FT found mistakes and unexplained entries in his spreadsheets, similar to those which last year undermined the work on public debt and growth of Carmen Reinhart and Kenneth Rogoff. The Washington Post. No longer will one be able to simply assert that rising inequality is a necessary byproduct of prosperity, or that capital deserves protected status because it brings growth. But it surely is interesting that, as he and several co-authors report in a new article in the American Economic Journal: British author Paul Mason dismissed charges of "soft Marxism" as "completely misplaced", noting that Marx described social relations trying to unveil capitalism's inner tendencies, where Piketty solely relies on social categories and historical data. In fact, a recurring theme of his book is that the theory-first approach of modern economics is a dead-end. Journal of Economic Perspectives.
Unlike most economists who write for a general audience, though, Piketty makes it quite easy for readers to separate these views from the evidence he assembles. The argument. Income from capital is invariably much less evenly distributed than labor income.
Together these amount to a powerful force for increasing inequality. But his real beef is with the mainstream economic teachings that more capital and lower taxes on capital bring faster growth and higher wages, and that economic dynamism will automatically keep inequality at bay.
This period of capital destruction was followed by a spectacular run of economic growth. The method.
Piketty does not offer his own theory of what drives economic growth, or what the optimal ratio of capital to labor income might be. In fact, a recurring theme of his book is that the theory-first approach of modern economics is a dead-end. The evidence. What the French numbers show is that the ratio of capital to income remained steady at about seven-to-one for centuries, plummeted around the start of World War I, and began recovering after World War II.
Income inequality in France probably peaked right before the Revolution, stayed very high for the entire 19 th century, then also plummeted starting in Over the past few decades it has made a modest recovery that Piketty believes is just beginning.
Less-complete data from Britain and other European countries show a similar trajectory, although in Britain income inequality has made a much stronger comeback than on the continent. The prognosis. Inequality in the U. On this side of the Atlantic, wealth and income were less concentrated in the 19 th century than in Europe. After a spike in top incomes that topped out in the late s, the income distribution flattened out here again, albeit in less dramatic fashion than in Europe. Since the s, though, the U.
But it surely is interesting that, as he and several co-authors report in a new article in the American Economic Journal: Economic Policy , the rise in the top-percentile income share in 13 countries was almost perfectly correlated with declines in top marginal tax rates in those countries. Yes, the U. Galbraith criticizes Piketty for using "an empirical measure that is unrelated to productive physical capital and whose dollar value depends, in part, on the return on capital.
Where does the rate of return come from?
Piketty never says". Galbraith also says: Daron Acemoglu and James A. Robinson used the economic histories of Sweden and South Africa to show that social inequality depends much more on institutional factors than Piketty's factors like the difference between rate of return and growth. The professors write that general laws, which is how they characterize Piketty's postulations, "are unhelpful as a guide to understand the past or predict the future because they ignore the central role of political and economic institutions in shaping the evolution of technology and the distribution of resources in a society".
Paul Romer criticises that while the data and empirical analysis is presented with admirable clarity and precision, the theory is presented in less detail. In his opinion the work was written with the attitude "Empirical work is science; theory is entertainment" and therefore an example for Mathiness.
Lawrence Blume and Steven Durlauf criticized the book in the Journal of Political Economy for being "unpersuasive when it turns from description to analysis Both of us are very liberal in the contemporary as opposed to classical sense , and we regard ourselves as egalitarians. We are therefore disturbed that Piketty has undermined the egalitarian case with weak empirical, analytical, and ethical arguments.
German economist Stefan Homburg criticizes Piketty for equating wealth with capital. Homburg argues that wealth does not only embrace capital goods in the sense of produced means of production , but also land and other natural resources.
Homburg argues that observed increases in wealth income ratios reflect rising land prices and not an accumulation of machinery. Stiglitz endorses this view, pointing out that "a large fraction of the increase in wealth is an increase in the value of land, not in the amount of capital goods". This idea is furthered by Matthew Rognlie , then a graduate student at M. Rognlie also found that "surging house prices are almost entirely responsible for growing returns on capital.
Marxist academic David Harvey , while praising the book for demolishing "the widely-held view that free market capitalism spreads the wealth around and that it is the great bulwark for the defense of individual liberties and freedoms," is largely critical of Piketty for, among other things, his "mistaken definition of capital", which Harvey describes as:.
Piketty defines capital as the stock of all assets held by private individuals, corporations and governments that can be traded in the market no matter whether these assets are being used or not. And he has certainly not produced a working model for capital of the twenty-first century.
For that, we still need Marx or his modern-day equivalent". Harvey also takes Piketty to task for dismissing Marx's Das Kapital without ever having read it.
In a similar vein, philosopher Nicholas Vrousalis faults Piketty's remedies for misconstruing the kind of political "counter-agency" required to remove the inequalities Piketty criticizes and for thinking that they are compatible with capitalism. Norwegian economist and journalist Maria Reinertsen compares the book to the book Counting on Marilyn Waring: On May 23, , Chris Giles, economics editor of the Financial Times FT , identified what he claims are "unexplained errors" in Piketty's data, in particular regarding wealth inequality increases since the s.
The data The FT found mistakes and unexplained entries in his spreadsheets, similar to those which last year undermined the work on public debt and growth of Carmen Reinhart and Kenneth Rogoff. The central theme of Prof Piketty's work is that wealth inequalities are heading back up to levels last seen before the World War I.
The investigation undercuts this claim, indicating there is little evidence in Prof Piketty's original sources to bear out the thesis that an increasing share of total wealth is held by the richest few. Piketty wrote a response defending his findings and arguing that subsequent studies he links to Emmanuel Saez and Gabriel Zucman 's March presentation, The Distribution of US Wealth, Capital Income and Returns since confirm his conclusions about increasing wealth inequality and actually show a greater increase in inequality for the United States than he does in his book.
The accusation received wide press coverage. For example, The Economist , a sister publication to the Financial Times , wrote:. Mr Giles's analysis is impressive, and one certainly hopes that further work by Mr Giles, Mr Piketty or others will clarify whether mistakes have been made, how they came to be introduced and what their effects are.
Based on the information Mr Giles has provided so far, however, the analysis does not seem to support many of the allegations made by the FT , or the conclusion that the book's argument is wrong. Scott Winship, a sociologist at the Manhattan Institute for Policy Research and critic of Piketty, asserts the allegations are not "significant for the fundamental question of whether Piketty's thesis is right or not It's hard to think Piketty did something unethical when he put it up there for people like me to delve into his figures and find something that looks sketchy Piketty has been as good or better than anyone at both making all his data available and documenting what he does generally".
A study in Social Science History by University of California Riverside economic historian Richard Sutch concluded "that Piketty's data for the wealth share of the top 10 percent for the period to are unreliable Piketty's data for the top 1 percent of the distribution for the nineteenth century — are also unreliable The values Piketty reported for the twentieth century — are based on more solid ground, but have the disadvantage of muting the marked rise of inequality during the Roaring Twenties and the decline associated with the Great Depression.
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