I'd always thought Financial Times was a very decent news journal outlet, sure a little right-inclined but generally trustable much like the Economist. I thought they wouldn't be up to dirty tricks, then I saw the image they used for the Piketty article: http://www.ft.com/intl/cms/s/2/e1f343ca-e281-11e3-89fd-00144...
They deliberately used that image (scratching his head, looking confused, etc.) to paint a certain narrative. That's just a really low way to go.
I used to read the FT and the Economist thoroughly, and felt I was well informed. Maybe I thought they were high-quality publications because their ideology aligned with mine.
But I matured and my blind belief in the power of free, unregulated markets was challenged by many examples of abject market failure in the real world.
I still read FT and the Economist, but with a much more jaundiced eye. Much of what they say is reflexive, ideological, based on either blind belief or self-interest.
There's a reason the Economist doesn't credit articles to authors, so it appears as received wisdom from seasoned economists/political insiders instead of actually being written by a 20something hipster intern. If you save a few issues they will contradict themselves every couple of months especially on articles about Russia. where Putin is the hero of capitalism in one issue then an evil protectionist Bolshevik in another. Europe's future will be declared as under the whims of Russia then a few issues later they claim Russia has little influence. It's a borderline tabloid rag, so is the FT.
Everybody is biased. Having a somewhat left-of-centre bias myself, I like to read the FT and the Economist precisely because they don't simply reinforce my beliefs.
Does the FT maintain a firewall between the editorial board and the reporting of news staff? The Wall Street Journal, historically (though not as sure now that Rupert Murdoch owns it), has had such a distinction...a predominantly rightward editorial staff but relatively even-handed news reporting.
The thing you have to remember about the British press (and the majority of their readership) is, more than anything else, they love taking someone of notoriety down a peg. You can just hear the tuts and proclamations of "well this is why you don't stick your neck out!"
On the one hand, Krugman, Summers, and other economists praise Piketty primarily for his unique, groundbreaking empirical work on income inequality.
On the other hand, when FT critique his empirical work, Piketty says that his work has already been superceded by other work that proves income inequality is growing. So nothing the FT can say about Piketty's work will overturn this now well established fact.
So which is it? I'm inclined to go with the former, because those economists focused on Piketty's empirical work and downplayed his theoretical work and policy suggestions. And my own knowledge of economics informs me that detailed empirical work of this sort is not done enough. So I think that while Piketty might consider the empirical part of his book to be a detail, in fact it is a very important matter. All that remains is how valid FT's criticism is, and how much it changes the results.
You are right, this is possible. But I am assuming that the Krugman, Summers and other reviewers (at least somewhat) did their homework, and were correct in saying that Piketty's empirical work was unique and important.
He and others (including critics of his work) have, as far as I can tell?
> While the available data was "imperfect", it did not undermine his central argument about widening inequality, he said. "Where the Financial Times is being dishonest is to suggest that this changes things in the conclusions I make, when in fact it changes nothing. More recent studies only support my conclusions, by using different sources."
> Scott Winship, an economist at the right-leaning Manhattan Institute for Policy Research, and notable critic of Piketty's analysis, said the FT's allegations weren't "significant for the fundamental question of whether Piketty's thesis is right or not". In an email to Bloomberg news agency, he wrote: "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."
The first quote is exactly the kind of vagueness that could be avoided by specifically addressing what the FT said, which other studies support his conclusions, etc.
The second quote is similarly vague, and the part on ethics is irrelevant.
To quote from the Economist article about this yesterday:
> There are four important questions raised by the FT's work. First, which data are wrong? ...
> "Capital" is a sprawling book based on an enormous pile of reference material and data. Much of the data was collected by Mr Piketty and other economists in a series of published papers that have since been used to create the World Top Incomes Database. None of this work appears to be at issue. Rather, Mr Giles focuses on wealth inequality, to which Mr Piketty turns in Chapter 10 of his book. Mr Piketty has not published nearly as much research on the question of wealth inequality, and it seems that much of the analysis in Chapter 10 was done specifically for the book, based on others' research. Mr Piketty's wealth-inequality analysis certainly matters as a component of the book's argument, but it is not accurate to say, as Mr Giles does, that the results in Chapter 10 constitute the "central theme" of the book.
So your two proposition are not contradictory. Piketty's principle historical work was published before the book, in peer-reviewed journals, and that is different from the analysis which is being criticized.
Ignoring the merits or not of the criticisms, I did find it interesting to compare how much effort the FT and Economist put into finding errors in this work and how much exposure they gave their findings, compared with the way they have largely ignored problems in other far more influential studies that were much more flawed.
For example Tol 2009, a flawed paper about the economic impacts of climate change which concluded that moderate warming would be economically beneficial[1]. That was cited (although not generally named) in numerous FT and Economist editorials and opinion pieces over the years yet as far as I'm aware they have not published anything about the recent correction. It was used as the basis for serious national and international policy and has contaminated many subsequent studies in the field. For years the author made regular appearances pushing the importance of the finding in western media. Yet even a fairly basic review of the paper would have spotted some of the errors (it was a meta-analysis and some of the values from other paper were copied incorrectly or had the sign reversed) i.e. even an FT intern could have spotted the mistakes. Updates to the paper indicate that the entire result was based on fitting a curve to a single outlier (a study by the same author) and additional studies since 2009 give a very different picture when included.
As far as I'm aware Piketty's work has had little to no real world impact as yet to government policy or widespread public opinion (I might be wrong of course). Any errors it contained, while worth correcting, don't seem like they would have an earth shattering impact worthy of front page exposure and double page spreads while retractions in more influential studies go unreported.
> the way they have largely ignored problems in other far more influential studies that were much more flawed.
From the FT article on the matter
>Nobel Prize-winning economists have heaped praised on Mr Piketty’s work. Professor Paul Krugman of Princeton University said it was safe to say the book “will be the most important economics book of the year – and maybe of the decade”.
It is something that clearly had been billed as an influential book, even the leader of the opposition in my country commented on it.
Clearly someone felt it was worthy of review. Meanwhile, I'm not aware of any of my nations political leaders basing policy on the Tol 2009 paper. Generally such academic papers don't reach as many readers as this book has/will/wouldhave.
I think the question of one investigation being a sign of a systemic bias is a bit of a moot point.
Piketty has caused a political firestorm and whomever publishes newsworthy stories with Piketty as a hook is guaranteed a good readership. No mystery here. Media outlets chase eyeballs, not some ultimate factor of how important a story is to mankind or not. [insert long discussion as to how this sucks]
Piketty's work is, frankly, much more important than one paper about climate change that has been alluded to a couple times.
I had to look up that paper to know which one you were referring to, and I follow climate change very closely. Piketty has lead to a firestorm of criticisms and rebuttals and counter-rebuttals: virtually every major political and economic blog has addressed it. Yesterday I saw a pile of copies of it in a mainstream bookstore. They're in totally different leagues.
Reinhart–Rogoff falls somewhere in between those extremes, and IIRC FT and the Economist have both mentioned its flaws.
Well well, Pikkety's book has been published internationally in April 2014 (French is not mastered well enough by most people, including European politicians, to take in). It takes a little while longer for something to affect public opinion or policy. Many years, probably.
For what it's worth, it is known that Dutch politicians are reading it and have commented about it already.
The fact is, Piketty's numbers appear to be incorrect. It is no longer remotely close to clear that wealth inequality is going up, particularly at the top, at least from what we see in Piketty's book. The FT corrections show that inequality has not increased in the UK, and different weighting schemes (e.g. population weighting across countries) can completely make his effects vanish.
Krugman showed that income inequality, particularly below the 99'th percentile, is going up. Income (including capital income) != wealth.
Now maybe other sources prove him correct. If so, this response is far from convincing - why not just cite those other sources? And if that's the case, why did anyone care about his book to begin with?
In any case, Piketty is to be commended for releasing his data/methodology. Just think - if he didn't do this, it would have taken years for his errors to be discovered.
In order for income inequality to not lead to wealth inequality, we need to believe that poor people save more of their income than wealthy people - which seems rather difficult.
I think it is clear from other sources that wealth inequality is going up, and the FT is pushing its findings too far.
>In order for income inequality to not lead to wealth inequality, we need to believe that poor people save more of their income than wealthy people - which seems rather difficult.
Yes, but that's actually what the FT refutes (center of 3rd § of the article):
> The newspaper concluded there was little evidence in Piketty's original sources to bear out his theory that the richest were accumulating more wealth
In order for income inequality to not lead to wealth inequality, we need to believe that poor people save more of their income than wealthy people - which seems rather difficult.
Or that wealthy people achieve diminishing returns on investment as their wealth grows. I.e., my startup might grow 10-fold, but Facebook is unlikely to.
Even if you assume Piketty's "r > g" macro-level hypothesis, there are a lot of microeconomic theories completely compatible with it. Not all of them result in increasing inequality.
Many complex systems, hard to describe on a micro level, have straightforward macro statistics. I think return on capital can be described but such statistics even if individual investments are highly variable. Capturing the return is achieved by having a highly diversified portfolio.
His lack of a clearly stated theory. Ask yourself this question: in a few equations, what is his fundamental claim? What specific data (irrespective of technical details about collecting it) would prove or disprove his theory?
The closest he comes to having a clearly stated theory is that "r > g => growth of inequality". That specific claim is completely wrong.
He has a clearly stated theory which can be judged independently of his empirical measurements and is not on its face "completely wrong". I can't understand how you have spent so much time virulently criticizing Piketty and so little time doing even the most basic research of his work, going so far as to ignore material that nullifies your (imagined) criticism and which has been explicitly pointed out to you.
Had you simply spent five minutes reading documents that were helpfully found for you then you would know exactly what is his model.
Didn't the fact that you thought you could refute an recognized expert in the field's work in a few minutes with the most basic criticism give you pause?
I read his book. He talks about Balzac and Jane Austen a lot and devotes a small amount of time handwaving about the micro-scale of inequality. No equations (beyond a few accounting identities), representative agents, or anything else you'd expect to see.
Of course, if you want to include a link to someplace where it was "explicitly pointed out"...I'm not holding my breath.
And since you seem to disagree with the claims I made in my blog post, what claim do you disagree with? What's the specific error I made beyond doubting the Great Piketty?
As that economist said models and equations are not included in the book presumably because it would make it inaccessible to many people. On the other hand I don't know how someone so interested in those aspects not only spent essentially no effort in finding them but ignored references they themselves requested and were provided with.
As for the blog post what I disagree with is that it represents Piketty's claim, whether that claim is true or not. It doesn't.
Your tirade against Piketty is completely unfounded, bizarrely rabid and seemingly prejudiced.
Those papers are more of the same - no theory is clearly stated, just a few accounting identities that describe wealth/income ratios.
As for the blog post, I could be wrong. Does Piketty not claim that r > g is the cause of inequality? If so, why does Piketty have a subsection called "The Fundamental Force for Divergence: r > g" in his book?
In any case, confusion like this is why it's so important to clearly write down your main theory at the very beginning. If Piketty did this, you could simply point at a set of equations and show how my counterexamples don't disprove them.
I don't know why you are getting hostile or accusing me of being "rabid". Kind of goes against the spirit of careful intellectual discussion. Makes me think you have an emotional attachment to Piketty being right.
> I don't know why you are getting hostile or accusing me of being "rabid". Kind of goes against the spirit of careful intellectual discussion.
Initially, I felt similarly about the general 'tone' of your statements. Then I browsed through your comment history. Here are the most 'rabid' statements I could find (emphasis mine):
> What's the specific error I made beyond doubting the Great Piketty?
> I imagine Piketty would consider that a problem if he knew India existed.
followed, to be fair, by pointing out at least twice:
> It's an attempt at poetic exaggeration
To my surprise, you've been acting more in 'the spirit of careful intellectual discussion' than I initially thought, and I suspect it was the surrounding comments that agreed with yours that 'polluted' my view (as well as a slight personal bias that I have).
Perhaps it's good to completely avoid poetic exaggeration, or to maybe consider the context of you comments and adjust to make your comments a bit more palatable to the many who strongly disagree.
Or perhaps you're doing fine as it is, and your 'karma' attests to that.
Either way, I figured I'd post my observations for those who might similarly, and I believe erroneously, feel that you are being 'rabid'.
I'd also like to thank you for your informative comments. I'm following all discussions on Pikkety with great interest, and I'm trying to stay aware of my bias of wanting his results to be correct.
(and my apologies for not contributing something more substantial at this point in time)
It is pretty brazen to say no theory exists when you were directed not only to the paper but the section where that theory is described.
Since you can't be bothered to read it, section 5 of Piketty's HID paper describes his model of long-run wealth distribution, assuming a Cobb-Douglas utility function and random multiplicative shocks to an individual's savings rate, as a Pareto distribution where the tail concentration is a function of r-g.
I am spoon feeding you at this point and I won't do it anymore.
Actually you are right - I missed it the first time. My mistake. Based on a quick skim, it looks like Piketty is assuming far more than r > g (which is of course necessary), but there does appear to be some sort of distributional theory.
Based on a first skim (I'll take a more detailed look later), inequality appears to be a function of (r - g). I.e., r > g does not imply increasing inequality, the magnitude of the inequality merely determines the level of inequality. Seems to disagree a bit with the newspaper summary of Piketty, but I'll have to read more carefully to be sure.
Er...some of his numbers appear incorrect. From this you incorrectly assume that this invalidates the conclusion. It may invalidate the conclusion if the errors are significant. However, what little I've seen so far does not seem to be all that significant.
From the fine article:
'Scott Winship, an economist at the right-leaning Manhattan Institute for Policy Research, and notable critic of Piketty's analysis, said the FT's allegations weren't "significant for the fundamental question of whether Piketty's thesis is right or not".'
So there seem to be highly qualified sources that say that the differences are not significant. That's not the same as "he said/she said".
Do you have any evidence that the errors are significant?
You also blatantly mischaracterize Krugman's point: he showed that inequality in capital income is going up, not (just) general income. Capital income has this property that it usually derives from capital (as the name says). So unless there is evidence that the top 1% or so systematically get significantly better returns on the same capital, an increase in capital income let's us include that there is an increase in base capital from which to derive that income.
On the other side of the coin, income leads to wealth, and unless you have evidence that high-income people save less of their income than lower-income people, then wealth will diverge. All the evidence I have seen so far (and common sense) say that it is the other way around: consumption saturates, so people with higher incomes actually save more and spend less, at least in relative terms.
So both sides of this equation quite trivially show the link between income inequality (especially for, but not limited to capital income) that you deny.
So both the FT criticism (= nit-picking in non-substantive details) and your criticism are unfounded, as far as we can tell.
Again, if you have some actual substantive evidence that the errors are significant, I'd love to see it.
On Scott Winship, see one of my top level comments (I made two top level comments as I only started investigating this after I posted once). Whatever was printed in the article, he has said on Twitter that he does doubt Piketty's conclusions, and also that the FT allegations are significant.
"...and also that the FT allegations are significant" (my emphasis).
Original Tweet:
"3/But UK--&, I now believe, US--methods need to be explained by #Piketty, else looks pretty bad. Just not CONSEQUENTIAL 4 overall thesis" (again, my emphasis)
According to Winship, Piketty's results are wrong/irrelevant for other, independent reasons. But not everyone shares this view, so Winship is clarifying that, for people who were initially convinced by Piketty's analysis, the FT criticism is important. But it is not important for Winship because even without the FT criticism, he has independent reasons to discounting Piketty's analysis.
What the FT showed is that "It is no longer remotely close to clear that wealth inequality is going up...". This is because when they corrected Piketty's errors, and adopted different (but similarly plausible) weighting schemes, Piketty's major claim of inequality being "high, then low, then high" vanished in Europe.
If by "significant" you mean something else, please say so.
So unless there is evidence that the top 1% or so systematically get significantly better returns on the same capital, an increase in capital income let's us include that there is an increase in base capital from which to derive that income.
The article quotes from a critic of Piketty, Scott Winship, but the strange nature of of the quotes (highly selective and including quotes on irrelevant matters) made me suspicious. Here are the latest tweets on the matter by him:
1/Quoted in Bloomberg today re #Piketty but sounds like I side w him on rising wealth ineq & US wealth ineq>Europe.
2/To be clear, I don't. Think his original results failed to make that case, which is why I'm less worked up than some abt alleged probs.
3/But UK--&, I now believe, US--methods need to be explained by #Piketty, else looks pretty bad. Just not CONSEQUENTIAL 4 overall thesis
This is the part of the article that quotes Winship:
> Scott Winship, an economist at the right-leaning Manhattan Institute for Policy Research, and notable critic of Piketty's analysis, said the FT's allegations weren't "significant for the fundamental question of whether Piketty's thesis is right or not". In an email to Bloomberg news agency, he wrote: "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."
Not sure what your beef is, your quotes etc. exactly match what the Guardian wrote about S.W.:
1. He disagrees with Piketty's conclusion
2. He finds the FT's criticisms insignificant wrt. Piketty's conclusion.
So: he also thinks Piketty is wrong, but not for the reasons the FT claims, and he thinks that what the FT claims is inconsequential to whether Piketty is wrong or right.
Reposting my reply to your other comment in this thread (feel free to continue discussion on either thread).
According to Winship, Piketty's results are wrong/irrelevant for other, independent reasons. But not everyone shares this view, so Winship is clarifying that, for people who were initially convinced by Piketty's analysis, the FT criticism is important. But it is not important for Winship because even without the FT criticism, he has independent reasons to discounting Piketty's analysis.
I hope this explains my "beef" with the use of Winship's quotes.
The rich get richer faster than others because they're better at it... That's why they're rich in the first place. Does it take 700 pages to understand it?
Think about it: most people don't even try to get richer !
The rich get richer faster than others because they're better at it... That's why they're rich in the first place. Does it take 700 pages to understand it?
Think about it: most people don't even try to get richer !
50 comments
[ 2.6 ms ] story [ 94.7 ms ] threadThey deliberately used that image (scratching his head, looking confused, etc.) to paint a certain narrative. That's just a really low way to go.
But I matured and my blind belief in the power of free, unregulated markets was challenged by many examples of abject market failure in the real world.
I still read FT and the Economist, but with a much more jaundiced eye. Much of what they say is reflexive, ideological, based on either blind belief or self-interest.
On the other hand, when FT critique his empirical work, Piketty says that his work has already been superceded by other work that proves income inequality is growing. So nothing the FT can say about Piketty's work will overturn this now well established fact.
So which is it? I'm inclined to go with the former, because those economists focused on Piketty's empirical work and downplayed his theoretical work and policy suggestions. And my own knowledge of economics informs me that detailed empirical work of this sort is not done enough. So I think that while Piketty might consider the empirical part of his book to be a detail, in fact it is a very important matter. All that remains is how valid FT's criticism is, and how much it changes the results.
Rather than accuse them of dishonesty surely all Piketty has to do is explain where their analysis is wrong?
> While the available data was "imperfect", it did not undermine his central argument about widening inequality, he said. "Where the Financial Times is being dishonest is to suggest that this changes things in the conclusions I make, when in fact it changes nothing. More recent studies only support my conclusions, by using different sources."
> Scott Winship, an economist at the right-leaning Manhattan Institute for Policy Research, and notable critic of Piketty's analysis, said the FT's allegations weren't "significant for the fundamental question of whether Piketty's thesis is right or not". In an email to Bloomberg news agency, he wrote: "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."
The second quote is similarly vague, and the part on ethics is irrelevant.
> There are four important questions raised by the FT's work. First, which data are wrong? ...
> "Capital" is a sprawling book based on an enormous pile of reference material and data. Much of the data was collected by Mr Piketty and other economists in a series of published papers that have since been used to create the World Top Incomes Database. None of this work appears to be at issue. Rather, Mr Giles focuses on wealth inequality, to which Mr Piketty turns in Chapter 10 of his book. Mr Piketty has not published nearly as much research on the question of wealth inequality, and it seems that much of the analysis in Chapter 10 was done specifically for the book, based on others' research. Mr Piketty's wealth-inequality analysis certainly matters as a component of the book's argument, but it is not accurate to say, as Mr Giles does, that the results in Chapter 10 constitute the "central theme" of the book.
So your two proposition are not contradictory. Piketty's principle historical work was published before the book, in peer-reviewed journals, and that is different from the analysis which is being criticized.
For example Tol 2009, a flawed paper about the economic impacts of climate change which concluded that moderate warming would be economically beneficial[1]. That was cited (although not generally named) in numerous FT and Economist editorials and opinion pieces over the years yet as far as I'm aware they have not published anything about the recent correction. It was used as the basis for serious national and international policy and has contaminated many subsequent studies in the field. For years the author made regular appearances pushing the importance of the finding in western media. Yet even a fairly basic review of the paper would have spotted some of the errors (it was a meta-analysis and some of the values from other paper were copied incorrectly or had the sign reversed) i.e. even an FT intern could have spotted the mistakes. Updates to the paper indicate that the entire result was based on fitting a curve to a single outlier (a study by the same author) and additional studies since 2009 give a very different picture when included.
As far as I'm aware Piketty's work has had little to no real world impact as yet to government policy or widespread public opinion (I might be wrong of course). Any errors it contained, while worth correcting, don't seem like they would have an earth shattering impact worthy of front page exposure and double page spreads while retractions in more influential studies go unreported.
[1] More about that here: http://www.washingtonpost.com/blogs/monkey-cage/wp/2015/05/2... and http://andthentheresphysics.wordpress.com/2014/05/05/tols-co...
From the FT article on the matter
>Nobel Prize-winning economists have heaped praised on Mr Piketty’s work. Professor Paul Krugman of Princeton University said it was safe to say the book “will be the most important economics book of the year – and maybe of the decade”.
It is something that clearly had been billed as an influential book, even the leader of the opposition in my country commented on it.
Clearly someone felt it was worthy of review. Meanwhile, I'm not aware of any of my nations political leaders basing policy on the Tol 2009 paper. Generally such academic papers don't reach as many readers as this book has/will/wouldhave.
I think the question of one investigation being a sign of a systemic bias is a bit of a moot point.
I had to look up that paper to know which one you were referring to, and I follow climate change very closely. Piketty has lead to a firestorm of criticisms and rebuttals and counter-rebuttals: virtually every major political and economic blog has addressed it. Yesterday I saw a pile of copies of it in a mainstream bookstore. They're in totally different leagues.
Reinhart–Rogoff falls somewhere in between those extremes, and IIRC FT and the Economist have both mentioned its flaws.
For what it's worth, it is known that Dutch politicians are reading it and have commented about it already.
The fact is, Piketty's numbers appear to be incorrect. It is no longer remotely close to clear that wealth inequality is going up, particularly at the top, at least from what we see in Piketty's book. The FT corrections show that inequality has not increased in the UK, and different weighting schemes (e.g. population weighting across countries) can completely make his effects vanish.
Krugman showed that income inequality, particularly below the 99'th percentile, is going up. Income (including capital income) != wealth.
Now maybe other sources prove him correct. If so, this response is far from convincing - why not just cite those other sources? And if that's the case, why did anyone care about his book to begin with?
In any case, Piketty is to be commended for releasing his data/methodology. Just think - if he didn't do this, it would have taken years for his errors to be discovered.
I think it is clear from other sources that wealth inequality is going up, and the FT is pushing its findings too far.
Yes, but that's actually what the FT refutes (center of 3rd § of the article):
> The newspaper concluded there was little evidence in Piketty's original sources to bear out his theory that the richest were accumulating more wealth
Or that wealthy people achieve diminishing returns on investment as their wealth grows. I.e., my startup might grow 10-fold, but Facebook is unlikely to.
Even if you assume Piketty's "r > g" macro-level hypothesis, there are a lot of microeconomic theories completely compatible with it. Not all of them result in increasing inequality.
http://www.chrisstucchio.com/blog/2014/piketty_and_inequalit...
(But now we are moving into the topic of Piketty's theoretical weaknesses, which are supposedly irrelevant because his data is so great.)
I think it is clear from other sources...
[citation needed]
And if other sources prove this point, why was Piketty's book such a sensation?
Yes, startups, an investment famous for attracting only small scale investors of small means…
That's a vacuous non-argument and appeal to popular opinion. Not compelling as well.
The closest he comes to having a clearly stated theory is that "r > g => growth of inequality". That specific claim is completely wrong.
http://www.chrisstucchio.com/blog/2014/piketty_and_inequalit...
Had you simply spent five minutes reading documents that were helpfully found for you then you would know exactly what is his model.
Didn't the fact that you thought you could refute an recognized expert in the field's work in a few minutes with the most basic criticism give you pause?
Of course, if you want to include a link to someplace where it was "explicitly pointed out"...I'm not holding my breath.
And since you seem to disagree with the claims I made in my blog post, what claim do you disagree with? What's the specific error I made beyond doubting the Great Piketty?
As that economist said models and equations are not included in the book presumably because it would make it inaccessible to many people. On the other hand I don't know how someone so interested in those aspects not only spent essentially no effort in finding them but ignored references they themselves requested and were provided with.
As for the blog post what I disagree with is that it represents Piketty's claim, whether that claim is true or not. It doesn't.
Your tirade against Piketty is completely unfounded, bizarrely rabid and seemingly prejudiced.
As for the blog post, I could be wrong. Does Piketty not claim that r > g is the cause of inequality? If so, why does Piketty have a subsection called "The Fundamental Force for Divergence: r > g" in his book?
In any case, confusion like this is why it's so important to clearly write down your main theory at the very beginning. If Piketty did this, you could simply point at a set of equations and show how my counterexamples don't disprove them.
I don't know why you are getting hostile or accusing me of being "rabid". Kind of goes against the spirit of careful intellectual discussion. Makes me think you have an emotional attachment to Piketty being right.
Initially, I felt similarly about the general 'tone' of your statements. Then I browsed through your comment history. Here are the most 'rabid' statements I could find (emphasis mine):
> What's the specific error I made beyond doubting the Great Piketty?
> I imagine Piketty would consider that a problem if he knew India existed.
followed, to be fair, by pointing out at least twice:
> It's an attempt at poetic exaggeration
To my surprise, you've been acting more in 'the spirit of careful intellectual discussion' than I initially thought, and I suspect it was the surrounding comments that agreed with yours that 'polluted' my view (as well as a slight personal bias that I have).
Perhaps it's good to completely avoid poetic exaggeration, or to maybe consider the context of you comments and adjust to make your comments a bit more palatable to the many who strongly disagree.
Or perhaps you're doing fine as it is, and your 'karma' attests to that.
Either way, I figured I'd post my observations for those who might similarly, and I believe erroneously, feel that you are being 'rabid'.
I'd also like to thank you for your informative comments. I'm following all discussions on Pikkety with great interest, and I'm trying to stay aware of my bias of wanting his results to be correct.
(and my apologies for not contributing something more substantial at this point in time)
Since you can't be bothered to read it, section 5 of Piketty's HID paper describes his model of long-run wealth distribution, assuming a Cobb-Douglas utility function and random multiplicative shocks to an individual's savings rate, as a Pareto distribution where the tail concentration is a function of r-g.
I am spoon feeding you at this point and I won't do it anymore.
Based on a first skim (I'll take a more detailed look later), inequality appears to be a function of (r - g). I.e., r > g does not imply increasing inequality, the magnitude of the inequality merely determines the level of inequality. Seems to disagree a bit with the newspaper summary of Piketty, but I'll have to read more carefully to be sure.
Er...some of his numbers appear incorrect. From this you incorrectly assume that this invalidates the conclusion. It may invalidate the conclusion if the errors are significant. However, what little I've seen so far does not seem to be all that significant.
From the fine article:
'Scott Winship, an economist at the right-leaning Manhattan Institute for Policy Research, and notable critic of Piketty's analysis, said the FT's allegations weren't "significant for the fundamental question of whether Piketty's thesis is right or not".'
So there seem to be highly qualified sources that say that the differences are not significant. That's not the same as "he said/she said".
Do you have any evidence that the errors are significant?
You also blatantly mischaracterize Krugman's point: he showed that inequality in capital income is going up, not (just) general income. Capital income has this property that it usually derives from capital (as the name says). So unless there is evidence that the top 1% or so systematically get significantly better returns on the same capital, an increase in capital income let's us include that there is an increase in base capital from which to derive that income.
On the other side of the coin, income leads to wealth, and unless you have evidence that high-income people save less of their income than lower-income people, then wealth will diverge. All the evidence I have seen so far (and common sense) say that it is the other way around: consumption saturates, so people with higher incomes actually save more and spend less, at least in relative terms.
So both sides of this equation quite trivially show the link between income inequality (especially for, but not limited to capital income) that you deny.
So both the FT criticism (= nit-picking in non-substantive details) and your criticism are unfounded, as far as we can tell.
Again, if you have some actual substantive evidence that the errors are significant, I'd love to see it.
Original Tweet:
"3/But UK--&, I now believe, US--methods need to be explained by #Piketty, else looks pretty bad. Just not CONSEQUENTIAL 4 overall thesis" (again, my emphasis)
https://twitter.com/swinshi/status/470880036233699328
"are significant" vs "not CONSEQUENTIAL" seem like exact opposites to me.
EDIT: missing parenthesis
According to Winship, Piketty's results are wrong/irrelevant for other, independent reasons. But not everyone shares this view, so Winship is clarifying that, for people who were initially convinced by Piketty's analysis, the FT criticism is important. But it is not important for Winship because even without the FT criticism, he has independent reasons to discounting Piketty's analysis.
If by "significant" you mean something else, please say so.
So unless there is evidence that the top 1% or so systematically get significantly better returns on the same capital, an increase in capital income let's us include that there is an increase in base capital from which to derive that income.
You are simply wrong on this: https://news.ycombinator.com/item?id=7795331
I'm not sure why you describe me as "blatantly mischaracterizeing" Krugman since I explicitly noted it was capital income.
...unless you have evidence that high-income people save less of their income than lower-income people, then wealth will diverge.
Again, this is incorrect. They might achieve a lower rate of return (including being more vulnerable to large shocks).
1/Quoted in Bloomberg today re #Piketty but sounds like I side w him on rising wealth ineq & US wealth ineq>Europe.
2/To be clear, I don't. Think his original results failed to make that case, which is why I'm less worked up than some abt alleged probs.
3/But UK--&, I now believe, US--methods need to be explained by #Piketty, else looks pretty bad. Just not CONSEQUENTIAL 4 overall thesis
This is the part of the article that quotes Winship:
> Scott Winship, an economist at the right-leaning Manhattan Institute for Policy Research, and notable critic of Piketty's analysis, said the FT's allegations weren't "significant for the fundamental question of whether Piketty's thesis is right or not". In an email to Bloomberg news agency, he wrote: "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."
1. He disagrees with Piketty's conclusion
2. He finds the FT's criticisms insignificant wrt. Piketty's conclusion.
So: he also thinks Piketty is wrong, but not for the reasons the FT claims, and he thinks that what the FT claims is inconsequential to whether Piketty is wrong or right.
According to Winship, Piketty's results are wrong/irrelevant for other, independent reasons. But not everyone shares this view, so Winship is clarifying that, for people who were initially convinced by Piketty's analysis, the FT criticism is important. But it is not important for Winship because even without the FT criticism, he has independent reasons to discounting Piketty's analysis.
I hope this explains my "beef" with the use of Winship's quotes.
Think about it: most people don't even try to get richer !
Think about it: most people don't even try to get richer !