Reader’s Comments on Thomas Piketty

On June 12 I wrote a post “Thomas Piketty & Neil deGrasse Tyson” which elicited some comments from readers. I then added a few more thoughts in my June 13 post and decided to elaborates somewhat in my June 14 post : “Thomas Piketty, Critical Thinking, and Social Stability.” These posts elicited comments from readers who put a lot of time into their responses. Since they did I thought I’d give two of those comments the front page today.  Both address the issues, with the latter a rejoinder to the former. (For those interested Charlie Rose devoted a recent PBS broadcast to an interview with Piketty.)

Professor Messerly:

Commenter #1.

I have read numerous (8+) reviews of Piketty’s book, which skewer it for different reasons, along several dimensions. If you read even a few of these reviews, you will see that Piketty repeatedly makes claims like:

Controversial assumption A + controversial assumption B, under economics model X, predicts conclusion Y, the data support Y, therefore … capitalism is fundamentally broken.

Over and over again, Piketty refers to the fundamental flaw or error in capitalism, based on far narrower and nuanced premises, just like in the example that I outline above.

You write: “As a non-expert in the field though I am more likely to accept his views–since they are consistent with the majority view among economists today–than those of blog post or articles by individuals who have a vested interest in his claims being false.”

FIrst, I’m not sure that his views are “consistent with the majority view among economists today.” Most moderate-left economists are cautiously supportive of capitalism as the engine of growth and abundance in the world, given certain constraints. Most of the economists do not, to my knowledge, regard modern capitalism as doomed to self-destruct without even greater reforms, taxes, and redistribution than we have now. That sounds more like Marx than The New York Times or the American Economic Review.

Second, even if your claim (Piketty is consistent with mainstream economics) is true, I’m not sure that’s a solid foundation to form beliefs, instead of reserving judgment. Your statement itself involve enormous complexity, in deciding what exactly is Piketty’s view, and what about it is consistent with the “majority” of economists. And do we really want to turn your beliefs about economics into a popularity contest?

Lastly, the far more important point: you discount critiques of Piketty by alleging that his critics are biased because they succeed through “plutocra[cy.]” The first major problem with this argument is that Piketty’s critics are typically not millionaire robber barons twirling their mustaches and counting their gold coins. They are libertarian, conservative, and independent economists, pundits, and scholars. Few people would call academics like Tyler Cowen or Bryan Caplan or Scott Sumner (or any of the writers at the Liberty Fund) to be “plutocrats.” They’re university economics professors, and bloggers, with various degree of success in publishing books (Cowen moreso than the others). The true plutocrats in the United States, like the deca-millionaire tycoons on Wall Street, generally don’t give a damn about Piketty because he’s too powerless, and his book too trivial, to upset their daily lives. Most of them are ignorant of academics and probably have no idea who Piketty is.

The second major problem with appealing to bias is that liberals are biased. If you live in, say, Seattle, surrounded by liberals, then there is undeniable pressure to fit in and agree with everyone else. Same if you teach in a college/university or surround yourself with academics. If you like women, and women are significantly more liberal than men, then you will feel pressure to be liberal. If you Piketty endorses signaling that you care by supporting more taxes and redistribution, and if women tend to be more caring and nurturing (and like those who signal the same tendency to care), then you’ll feel pressure to be liberal. If you stand to gain from liberal policies through increased welfare and handouts (as I would and you would and most people would) then you will feel increased pressure to be liberal.

So two can play the “bias” card. That’s why I asked you about Haidt’s theory of political differences and moral sensibilities (see his book The Righteous Mind). That’s also why I asked you about well-known sex differences in political views and voting patterns.

Commenter #2

Point 1 – From what I remember, Haidt’s main thesis was that reason is the slave of the passions. We have a gut reaction to some situation and find a justification that allows for the preservation of our mental framework as much as possible. If such accommodation is not possible, we’re much more likely to ignore the fact/situation than demolish our mental framework and start over. He also uncovers some “universal” moral sentiments based on surveys across cultures but I don’t remember what they are. I do remember that they are the way they are because they more or less fit with human nature (an evolved trait we can agree?). Whether you accept them or not is a function of where you were born (time, location, social-context) your particular biology, your personal experience and some amount of random chance. In all of his examination, he finds that Liberals have two of the moral foundations whereas Conservatives have six. All this is not say (in my interpretation) that one is better than the other but that neither is “right” each is appealing to different areas of moral sentiment that are necessary for a government to be responsive to humans as they are.

Now your question – what does Dr. M think of this. I can only surmise from reading this blog that he would say something along the lines of “Is” does not imply “ought”. At best, this would create a government/political party that mapped perfectly to “human nature” (let’s assume we can Identify the bell curve of whatever this is and not worry about outliers) which I don’t think Dr. M would think is a “good” thing.

Seeing as he espouses that we need science/technology to re-engineer human nature are get rid of traits that may have been useful in small tribes but that with bio and nuclear technology threaten our very existence as a species. I would think he would want us to use the scientific method to figure out what traits are best to ensure our long-term survival as a species so that we can get to the technological singularity and create a trans-universal species worthy of omnipotence and omniscience.

In a nutshell, Haidt is saying evolution produced x so let’s understand x and make a government that caters to it. Dr. M is saying, x is going to get us killed so let’s go turn x into y where y is awesome :)

Point 2 – It is only in a patriarchy that came to power and sustains itself through violence that some set of universally human characteristics are derisively called feminine. Violence vs. Diplomacy? How is one either feminine or masculine? Your assignment of these genders belies your misogyny.

Point 3 – From what I’ve read, all the “skewering” you talk about was pretty easily dealt with. In fact – here’s his response to the FT piece that kicked all this off and does deal with your issues of big data sets and questionable data. I mean we work with what we have right? Since there isn’t perfect data we can’t try to understand something? Then how is science ever to progress? Anyway here’s his initial response:  http://www.voxeu.org/article/factual-response-ft-s-fact-checking

“Let me start by saying that the reason why I put all excel files on-line, including all the detailed excel formulas about data constructions and adjustments, is precisely because I want to promote an open and transparent debate about these important and sensitive measurement issues.

Let me also say that I certainly agree that available data sources on wealth inequality are much less systematic than what we have for income inequality. In fact, one of the main reasons why I am in favor of wealth taxation, international cooperation and automatic exchange of bank information is that this would be a way to develop more financial transparency and more reliable sources of information on wealth dynamics (even if the tax was charged at very low rates, which everybody could agree with).

For the time being, we have to do with what we have, that is, a very diverse and heterogeneous set of data sources on wealth: historical inheritance declarations and estate tax statistics, scarce property and wealth tax data; household surveys with self-reported data on wealth (with typically a lot of under-reporting at the top); Forbes-type wealth rankings (which certainly give a more realistic picture of very top wealth groups than wealth surveys, but which also raise significant methodological problems, to say the least). As I make clear in the book, in the on-line appendix, and in the many technical papers on which this book relies, I have no doubt that my historical data series can be improved and will be improved in the future (this is why I put everything on-line). In fact, the “World Top Incomes Database” (WTID) is set to become a “World Wealth and Income Database” in the coming years, and together with my colleagues we will put on-line updated estimates covering more countries. But I would be very surprised if any of the substantive conclusions about the long run evolution of wealth distributions was much affected by these improvements.

I welcome all criticisms and I am very happy that this book contributes to stimulate a global debate about these important issues. My problem with the FT criticisms is twofold. First, I did not find the FT criticism particularly constructive. The FT suggests that I made mistakes and errors in my computations, which is simply wrong, as I show below. The corrections proposed by the FT to my series (and with which I disagree) are for the most part relatively minor, and do not affect the long run evolutions and my overall analysis, contrarily to what the FT suggests. Next, the FT corrections that are somewhat more important are based upon methodological choices that are quite debatable (to say the least). In particular, the FT simply chooses to ignore the Saez-Zucman 2014 study, which indicates a higher rise in top wealth shares in the United States during recent decades than what I report in my book (if anything, my book underestimates the rise in wealth inequality). Regarding Britain, the FT seems to put a lot of trust in self-reported wealth survey data that notoriously underestimates wealth inequality.”

One thought on “Reader’s Comments on Thomas Piketty

  1. Comment:

    1. “All this is not say (in my interpretation) that one is better than the other but that neither is ‘right’ each is appealing to different areas of moral sentiment that are necessary for a government to be responsive to humans as they are.”

    Well, I didn’t say that either was right or wrong. Also, I bet most card carrying liberals would say that it’s wrong to give much emphasis to conservative moral sentiments, like authority and purity.

    More generally, the reason I brought up Haidt – an extremely rare academic psychologist who, like Steven Pinker, leans right compared to his colleagues – is to draw Prof. Messerly’s attention to underlying structures/systems that explain political orientation.

    To read the writings of strong liberals, like the good professor, one gets the impression that liberal viewpoints are simply obviously right, and conservatives are buffoons or evil to disagree. In fact, there are complex psychological (and other) dynamics that help explain why people vote the way they do – such as Haidt’s moral topology. Another such dynamic would be sex differences: women tend to be more liberal than men. Another are the biases and motivations that I mentioned in my previous thread: signaling, alliance building, self-interest, and mood affiliation.

    2. “Seeing as he espouses that we need science/technology to re-engineer human nature are get rid of traits that may have been useful in small tribes but that with bio and nuclear technology threaten our very existence as a species.”

    I understand your point about transhumanism – but it doesn’t have any direct relevance to a discussion about Piketty or economics.

    3. ” It is only in a patriarchy that came to power and sustains itself through violence that some set of universally human characteristics are derisively called feminine. Violence vs. Diplomacy? How is one either feminine or masculine? Your assignment of these genders belies your misogyny.”

    I did not “derisively” call any traits feminine. I simply called some traits feminine. Calling something feminine doesn’t further imply derision or misogyny – that’s why you have to add the adverb “derisively.” It’s a low blow to call someone a sexist or a woman hater simply for acknowledging the reality of sex differences, including sex differences (on average) in political orientation and voting pattern.

    You ask: “Violence vs. Diplomacy? How is one either feminine or masculine?” Differences in physical strength and violent crime are some of the most well documented, uncontroversial, and obvious differences between the sexes. They derive ultimately from male competition for females, for example – see male animals bucking antlers while females watch.

    4. “From what I’ve read, all the ‘skewering’ was pretty easily dealt with. In fact – here’s his response to the FT piece that kicked all this off and does deal with your issues of big data sets and questionable data.”

    I’m not talking about the FT piece. Piketta was criticized heavily before then, and after then, for different reasons. From what I have read, the FT piece was an ambush that grossly exaggerated “errors,” which (even if they were errors) had little effect on Piketty’s general conclusion. I’m talking more about reviews/critiques like:

    http://marginalrevolution.com/marginalrevolution/2014/04/why-i-am-not-persuaded-by-thomas-pikettys-argument.html

    http://www.foreignaffairs.com/articles/141218/tyler-cowen/capital-punishment

    http://marginalrevolution.com/marginalrevolution/2014/05/the-piketty-bubble.html

    http://marginalrevolution.com/marginalrevolution/2014/04/more-matt-rognlie-on-piketty.html

    http://www.mit.edu/~mrognlie/piketty_diminishing_returns.pdf

    http://www.bloombergview.com/articles/2014-04-20/the-most-important-book-ever-is-all-wrong

    http://marginalrevolution.com/marginalrevolution/2014/06/piketty-v-solow.html

    http://marginalrevolution.com/marginalrevolution/2014/05/is-pikettys-second-law-of-capitalism-fundamental.html

    http://marginalrevolution.com/marginalrevolution/2014/05/aaron-hedlund-on-piketty.html

    http://updatedpriors.blogspot.com/2014/03/capital-in-partial-equilibrium.html

    That’s just based on five minutes of Googling and browsing the MR blog. I’ve left out several more high profile critiques, all independent of the FT critique. I’ve also left out some reviews that I can’t seem to find easily now, but remember reading.

    The point of all of this isn’t to show that Piketty is wrong. The point is to show that economics is incredibly complex (like nutrition, medicine, philosophy). There is little consensus on the points that Piketty wants to argue. Just a few paragraphs into some of the more technical reviews… I’m already lost, and I’m pretty smart.

    You ask: “Since there isn’t perfect data we can’t try to understand something?” You can try, but you might not succeed. Otherwise, you’re guilty of wishful thinking (weak data/arguments doesn’t justify strong conclusions, however inconvenient that may be). That’s the same conclusion that Ioannidis reaches, about medicine (another hugely complex field), in this famous interview/article:

    http://www.theatlantic.com/magazine/archive/2010/11/lies-damned-lies-and-medical-science/308269/

    “‘Science is a noble endeavor, but it’s also a low-yield endeavor,’ he says. ‘I’m not sure that more than a very small percentage of medical research is ever likely to lead to major improvements in clinical outcomes and quality of life. We should be very comfortable with that fact.'”

    The same applies to economics. You can’t mistake any of these for quality data that decisively proves your point: (A) quantity of data, (B) policy conclusions that you favor or find intuitive, (C) popularity, and/or (D) grand sweeping rhetoric.

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