Two On This Picketty Business

This book has been like throwing meet to wolves in this country. It’s exactly what some people needed/wanted to hear. Don’t get too bogged down in the facts, it’s the story that’s important.

A few days ago Dr. Steve Horwitz made an important point in a FB post. Paraphrasing … There has been discussion over the data errors in the Picketty book. How many are there? How big are they? Are they intentional? If they were unintentional you might reasonably expect that near half of them would go against his point.

I won’t pretend to understand the very academic bits of economics in here. But do read these two pieces from Boudreaux and Murphy.

Dr. Boudreaux’s review is excellent.

Reviewing Piketty’s Blockbuster: “Every semester, I ask my freshman students how wealthy they would be if they each were worth financially as much as Bill Gates but were stranded with all those stocks, bonds, property titles, and bundles of cash alone on a desert island. They immediately see that what matters is not the amount of money they have but, rather, what that money can buy. No principle of economics is more essential than the realization that, ultimately, wealth isn’t money or financial assets but, rather, ready access to real goods and services. Piketty seems barely aware of this reality, focusing on differences in people’s monetary portfolios.”

It’s often not about wanting to help the poor as much as “punishing” the rich.

Thomas Piketty wants to keep billions of people poor to stop a few from becoming rich: “The most obvious problem with Piketty’s book is that he wants to make workers poorer, just so long as it will hurt rich capitalists even more. No economist denies that as the stockpile of “capital”—which Piketty broadly defines to include real estate and all forms of non-human wealth—expands, that the absolute wages of the workers will rise. After all, if workers have more tools, machines, and equipment augmenting their labor, they are going to be more physically productive per hour, and hence will be paid more.

Yet the continual increase in the workers’ standard of living is not enough to placate Piketty and his fans. Indeed, Nobel laureate Robert Solow admits that capital accumulation will make the workers better off in absolute terms, but worries that they might be worse off relative to the capitalists.”