Inequality: A Piketty problem?(economist.com)
economist.com
Inequality: A Piketty problem?
http://www.economist.com/blogs/freeexchange/2014/05/inequality-0
9 comments
Political intentions aside, I'm very impressed by Piketty's elucidative and insightful reply:
> 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, and household surveys with self-reported data on wealth (with typically a lot of under-reporting at the top). As I make clear in the book, in the on-line appendix, and in the many technical papers I have published on this topic, one needs to make a number of adjustments to the raw data sources so as to make them more homogenous over time and across countries. I have tried in the context of this book to make the most justified choices and arbitrages about data sources and adjustments. 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).
For putting the data up online, he's proven himself to be a true scholar. This is how progress is made.
> 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, and household surveys with self-reported data on wealth (with typically a lot of under-reporting at the top). As I make clear in the book, in the on-line appendix, and in the many technical papers I have published on this topic, one needs to make a number of adjustments to the raw data sources so as to make them more homogenous over time and across countries. I have tried in the context of this book to make the most justified choices and arbitrages about data sources and adjustments. 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).
For putting the data up online, he's proven himself to be a true scholar. This is how progress is made.
FT was quick to compare Piketty to Reinhart-Rogoff. Felt like a hit piece.
The most egregious part to me was the following:
"A 2 is added because the number wasn't high enough — it didn't seem to fit what he wanted to show in his charts, so he just added 2 to it. There was quite a lot of this sort of thing in his spreadsheets."
The FT author is claiming Piketty knowingly falsified the data here "to fit what he wanted to show." That's a major accusation, and Giles clearly cannot know it is true.
The Economist agrees:
"But while some of the data and adjustments in the spreadsheets lack adequate documentation, Mr Giles does not have the evidence to justify the implication that figures are drawn "from thin air". Data fabrication is a serious charge to make, and I am surprised Mr Giles would allege it without clearer proof."
"A 2 is added because the number wasn't high enough — it didn't seem to fit what he wanted to show in his charts, so he just added 2 to it. There was quite a lot of this sort of thing in his spreadsheets."
The FT author is claiming Piketty knowingly falsified the data here "to fit what he wanted to show." That's a major accusation, and Giles clearly cannot know it is true.
The Economist agrees:
"But while some of the data and adjustments in the spreadsheets lack adequate documentation, Mr Giles does not have the evidence to justify the implication that figures are drawn "from thin air". Data fabrication is a serious charge to make, and I am surprised Mr Giles would allege it without clearer proof."
I recommend reading what Paul Krugman has to say on the FT piece:
http://krugman.blogs.nytimes.com/2014/05/24/is-piketty-all-w...
http://krugman.blogs.nytimes.com/2014/05/24/is-piketty-all-w...
How so? Having read it, can you explain his points and their importance so readers can know it's worth reading further?
In math, there are many "proofs" that 1 = 2. Going through them and picking them apart is a useful exercise, and can expose misunderstandings and mistakes that are important to be aware of. But at the end of the day, nobody really seriously considers that 1 actually equals 2, it's too at odds with everything else we know.
This article is saying that it's possible the FT piece found a valid nitpick, but that the conclusion they're fighting against (rising wealth inequality) is backed up far too strongly by other independent sources for a nitpick to damage it at all.
This article is saying that it's possible the FT piece found a valid nitpick, but that the conclusion they're fighting against (rising wealth inequality) is backed up far too strongly by other independent sources for a nitpick to damage it at all.
I recommend reading what Tyler Cowen has to say on the FT piece:
http://marginalrevolution.com/marginalrevolution/2014/05/wha...
http://marginalrevolution.com/marginalrevolution/2014/05/wha...
You have to understand that FT is a conservative news organization. If you think about their primary audience (wealthy businesspeople), it was no surprise that they tried to take a shit on Piketty's work.
This is the laziest of criticisms. Don't like someone's argument? Don't even bother reading through, let's check who sponsored the study, or maybe the author is a hypocrite, or at least cheats on his wife, and anyway, it's racist.
You could just as easily dismiss Piketty: Oh, he's just some French lefty (cheese eating...), of course he'll conclude that inequality is the problem and we need to tax wealth.
You could just as easily dismiss Piketty: Oh, he's just some French lefty (cheese eating...), of course he'll conclude that inequality is the problem and we need to tax wealth.
>>This is the laziest of criticisms. Don't like someone's argument? Don't even bother reading through, let's check who sponsored the study, or maybe the author is a hypocrite, or at least cheats on his wife, and anyway, it's racist.
I read the FT article when it appeared. What seemed remarkable was that, even though it took Piketty years to compile and work with the data, it took the FT editor weeks to come up with a rebuttal [1]. That by itself should tell you something.
[1]Unless he read the original French version from last year, but that's doubtful because the book became popular (and therefore dangerous to the upper class) only after being translated to English.
I read the FT article when it appeared. What seemed remarkable was that, even though it took Piketty years to compile and work with the data, it took the FT editor weeks to come up with a rebuttal [1]. That by itself should tell you something.
[1]Unless he read the original French version from last year, but that's doubtful because the book became popular (and therefore dangerous to the upper class) only after being translated to English.
It tells me nothing. Finding mistakes is always easier than writing the book containing them.
And the list of those supposed mistakes is public[1], behind only a registration wall. Piketty either made them, or not. They either substantially change the results, or not. You don't need to make guesses based on timing.
Perhaps Chris Giles is motivated by pleasing his "wealthy businessmen" audience. Perhaps he spent sleepless nights pouring over the text to find something, anything. Maybe he even cheats on his wife.
But so what?
[1] http://blogs.ft.com/money-supply/2014/05/23/data-problems-wi...
And the list of those supposed mistakes is public[1], behind only a registration wall. Piketty either made them, or not. They either substantially change the results, or not. You don't need to make guesses based on timing.
Perhaps Chris Giles is motivated by pleasing his "wealthy businessmen" audience. Perhaps he spent sleepless nights pouring over the text to find something, anything. Maybe he even cheats on his wife.
But so what?
[1] http://blogs.ft.com/money-supply/2014/05/23/data-problems-wi...
I get the whole dismissal of the ad hominem-based conclusions thing, and you have a point.
OTOH, it is equally fallacious to suggest that Giles' cheating on his wife is as irrelevant as his ideology or that of his employers.
At this point, we don't know who has it right. But, it is not unwise to look suspiciously upon a person's ideology and/or leanings when approaching their work. This is especially so in today's world of corporate-owned media.
OTOH, it is equally fallacious to suggest that Giles' cheating on his wife is as irrelevant as his ideology or that of his employers.
At this point, we don't know who has it right. But, it is not unwise to look suspiciously upon a person's ideology and/or leanings when approaching their work. This is especially so in today's world of corporate-owned media.
>>[...]and therefore dangerous to the upper class
This does not lend credibility to whatever argument it is that you are trying to make.
>>I read the FT article when it appeared. What seemed remarkable was that, even though it took Piketty years to compile and work with the data, it took the FT editor weeks to come up with a rebuttal [1]. That by itself should tell you something.
This is an absurd and daft point. It is obvious that the process of compiling data and producing a book presents a more time-consuming task than working with the same data, already compiled, in order to complete not a book, but a newspaper article.
As a corollary to your statement it is further worth noting that The Economist also bring up scholarly defense of Piketty's data:
"Scott Winship, a scholar at the Manhattan Institute who disputes Mr Piketty's overarching narrative about inequality wrote on Twitter last night: I’ve spent time with Piketty U.S. wealth ineq[uality] spreadsheet and LOTS of time with his income data. He's not up to funny business."
As made apparent, your passive-aggressive political proselytizing does not offer a constructive contribution to this submission. Please understand this.
This does not lend credibility to whatever argument it is that you are trying to make.
>>I read the FT article when it appeared. What seemed remarkable was that, even though it took Piketty years to compile and work with the data, it took the FT editor weeks to come up with a rebuttal [1]. That by itself should tell you something.
This is an absurd and daft point. It is obvious that the process of compiling data and producing a book presents a more time-consuming task than working with the same data, already compiled, in order to complete not a book, but a newspaper article.
As a corollary to your statement it is further worth noting that The Economist also bring up scholarly defense of Piketty's data:
"Scott Winship, a scholar at the Manhattan Institute who disputes Mr Piketty's overarching narrative about inequality wrote on Twitter last night: I’ve spent time with Piketty U.S. wealth ineq[uality] spreadsheet and LOTS of time with his income data. He's not up to funny business."
As made apparent, your passive-aggressive political proselytizing does not offer a constructive contribution to this submission. Please understand this.
I've not looked at any of this, and am therefore not implying Piketty might be a fraud like Michael Bellesiles (https://en.wikipedia.org/wiki/Arming_America), but I'll note that many of the major scholars who took the latter down realized in seconds he was a fraud. Because they'd done relevant original source based research that his claimed research directly contradicted, especially non-RKBA related scholars who were simply intimately familiar with early American probate records. And then there was the smoking gun of records lost in the San Francisco earthquake and fire....
I've seen a lot of bogus stuff put out over the decades that's taken very little time to debunk. With the availability of info on the net, plus of course in this case the FT having significant internal resources, the timeline is hardly out of the question.
Note that nominally honest researchers are well known to make mistakes that follow their prejudices, I saw a lot of this in the '80s arguments against ballistic missile defense. They compute a result, but don't subject it to the critical analysis they would of something that goes against the grain, and don't give political opponents a chance to double check their work. And then e.g. end up publishing a series of articles in Scientific American that successively have fewer and fewer claims about how it's "impossible".
I've seen a lot of bogus stuff put out over the decades that's taken very little time to debunk. With the availability of info on the net, plus of course in this case the FT having significant internal resources, the timeline is hardly out of the question.
Note that nominally honest researchers are well known to make mistakes that follow their prejudices, I saw a lot of this in the '80s arguments against ballistic missile defense. They compute a result, but don't subject it to the critical analysis they would of something that goes against the grain, and don't give political opponents a chance to double check their work. And then e.g. end up publishing a series of articles in Scientific American that successively have fewer and fewer claims about how it's "impossible".
If that was the criticism, yes, it would be lazy.
But if you listen, there was no "this was poor because it was in ft". It was more like
Person1: "that seemed like a poor piece" Person2: "It's not surprising it was poor, ft is often biased"
No one claimed that appearing in ft proved anything.
But if you listen, there was no "this was poor because it was in ft". It was more like
Person1: "that seemed like a poor piece" Person2: "It's not surprising it was poor, ft is often biased"
No one claimed that appearing in ft proved anything.
[deleted]
Exactly. I'm still deeply surprised that the overwhelming response to the original FT piece wasn't basically "Biased people are biased."
Would that also be a suitable response to "Capital in the 21st Century"? If not, why not?
I'm not convinced that Piketty had an agenda in writing the book. It's unambiguous that the FT editor did.
"He proposes a global tax on wealth to help address the problem of inequality today"[0]
"Mr. Piketty is a well-known public intellectual in France. He writes a column in the left-wing daily Libération and served as a top economic adviser to the Socialist presidential candidate Ségolène Royal in the 2007 election"[1]
I exhort you to read up on Piketty and reconsider your position.
[0]:http://en.wikipedia.org/wiki/Thomas_Piketty [1]:http://online.wsj.com/news/articles/SB1000142405270230348030...
"Mr. Piketty is a well-known public intellectual in France. He writes a column in the left-wing daily Libération and served as a top economic adviser to the Socialist presidential candidate Ségolène Royal in the 2007 election"[1]
I exhort you to read up on Piketty and reconsider your position.
[0]:http://en.wikipedia.org/wiki/Thomas_Piketty [1]:http://online.wsj.com/news/articles/SB1000142405270230348030...
The words "tax" and "inequality" each appear once, in completely different paragraphs, in the NYT article cited by the Wikipedia entry on Piketty for the sentence you're quoting, and "global" zero times.
Your second quote is an ad hominem, specifically "guilt by association" — and comes from the WSJ, not exactly known for its own unbiased stance on capitalism.
Your second quote is an ad hominem, specifically "guilt by association" — and comes from the WSJ, not exactly known for its own unbiased stance on capitalism.
I quoted Wikipedia as it appears you have not read the book: you must of course read all the citations for the paragraph.
Had you been interested in actually considering the validity of the sentence I quoted, as opposed to nitpicking, you would have found that the 2nd citation refers you to http://piketty.pse.ens.fr/en/capital21c2 where you can find a table of contents[0]. Chapter 15 - "A Global Tax on Capital" stands out.
Your ad hominem claim is ironic.
You posit that it is "unambiguous that the FT editor [holds an agenda]". You further posit that the WSJ is biased. Yet when Piketty "writes a column in the left-wing daily Libération and served as a top economic adviser to the Socialist presidential candidate Ségolène Royal in the 2007 election[1]" you are not convinced that he holds an agenda.
Either you too are guilty of ad hominem, "specifically "guilt by association"", or you are logically incoherent, subscribing to double standards.
Your political prothezlysing - and downvoting - is not conducive to the discussion. Again, I exhort you to read up on Piketty and reconsider your position.
[0]:http://piketty.pse.ens.fr/files/capital21c/en/Piketty2014Con... [1]:http://online.wsj.com/news/articles/SB1000142405270230348030...
Had you been interested in actually considering the validity of the sentence I quoted, as opposed to nitpicking, you would have found that the 2nd citation refers you to http://piketty.pse.ens.fr/en/capital21c2 where you can find a table of contents[0]. Chapter 15 - "A Global Tax on Capital" stands out.
Your ad hominem claim is ironic.
You posit that it is "unambiguous that the FT editor [holds an agenda]". You further posit that the WSJ is biased. Yet when Piketty "writes a column in the left-wing daily Libération and served as a top economic adviser to the Socialist presidential candidate Ségolène Royal in the 2007 election[1]" you are not convinced that he holds an agenda.
Either you too are guilty of ad hominem, "specifically "guilt by association"", or you are logically incoherent, subscribing to double standards.
Your political prothezlysing - and downvoting - is not conducive to the discussion. Again, I exhort you to read up on Piketty and reconsider your position.
[0]:http://piketty.pse.ens.fr/files/capital21c/en/Piketty2014Con... [1]:http://online.wsj.com/news/articles/SB1000142405270230348030...
First of all, I'm not proselytizing. I've never once in this discussion stated, or even alluded to my political opinions, let alone tried to convince anyone else of them. I offered opinions about the politics of the editorial staff of both the Financial Times, and the Wall Street Journal, neither of which should be terribly controversial, and both of which are utterly orthogonal to my beliefs; and I offered an opinion about whether Piketty wrote his book in service of a pre-existing agenda, as distinct from a belief. That, too, is irrelevant to my politics.
Second, my claim of ad hominem isn't "ironic" in light of my other statements. Nowhere did I say the positions of the FT or WSJ editors were wrong; I said they were biased. One can be biased and correct, just as one can be biased and wrong.
I don't think it's much of a stretch to posit that the author of your WSJ quote meant it to convey something about how correct Piketty could possibly be, because "socialist". Note, too, that the quote doesn't say Piketty, himself, is a socialist; it just says that he keeps their company (or, more specifically, that they — but mostly, just this one, really, really icky one — keep his): guilt by association.
Contrarily, I'm not saying they're wrong because anything; I'm not saying they're wrong at all. I'm saying, "Capitalists don't like something that points out flaws in capitalism. Film at 11." Inferring anything further is projection and fabrication. Sorry, but I'm not your straw man.
Finally, if there was any downvoting, it wasn't on my part. You can't downvote direct replies.
EDIT: And I have the book already. It's in my queue. I just had to buy another bookshelf, however, so you can probably guess how deep that queue is.
Second, my claim of ad hominem isn't "ironic" in light of my other statements. Nowhere did I say the positions of the FT or WSJ editors were wrong; I said they were biased. One can be biased and correct, just as one can be biased and wrong.
I don't think it's much of a stretch to posit that the author of your WSJ quote meant it to convey something about how correct Piketty could possibly be, because "socialist". Note, too, that the quote doesn't say Piketty, himself, is a socialist; it just says that he keeps their company (or, more specifically, that they — but mostly, just this one, really, really icky one — keep his): guilt by association.
Contrarily, I'm not saying they're wrong because anything; I'm not saying they're wrong at all. I'm saying, "Capitalists don't like something that points out flaws in capitalism. Film at 11." Inferring anything further is projection and fabrication. Sorry, but I'm not your straw man.
Finally, if there was any downvoting, it wasn't on my part. You can't downvote direct replies.
EDIT: And I have the book already. It's in my queue. I just had to buy another bookshelf, however, so you can probably guess how deep that queue is.
Well, they do have their reputation to protect. If it was just an opinion piece on their blog site, that would be one thing, but the FT, conservative or not, has thrown this onto the front page and is the work of one of their chief editors no less. They have 'skin in the game.'
For me, the money quote from this article was:
Scott Winship, a scholar at the Manhattan Institute who disputes Mr Piketty's overarching narrative about inequality wrote on Twitter last night:
"I’ve spent time with Piketty U.S. wealth ineq[uality] spreadsheet and LOTS of time with his income data. He’s not up to funny business."
Scott Winship, a scholar at the Manhattan Institute who disputes Mr Piketty's overarching narrative about inequality wrote on Twitter last night:
"I’ve spent time with Piketty U.S. wealth ineq[uality] spreadsheet and LOTS of time with his income data. He’s not up to funny business."
I'm glad to see the debate and discussion surrounding Piketty's work. I'm very slowly reading through the book itself and it's almost like relearning my Economics degree 10 years later.
It's a pity if the discussion would be reduced to nitpicking though, rather than a real discussion about the books real scientific merits and its consequences for how we want to build our societies.
Harrison Bergeron comes to mind
You don't often see scientific work having implications in world economic policies that much, but when it does, it's really entertaining to watch.
It's still weird that it takes the work of an economist to prove something that everybody already knows. That's a big elephant in the room.
It puts a little faith in my political opinions that some could start listening to this discussion. It kinda pains me to watch you need to hear the word of an economist to prove it to you though.
It's still weird that it takes the work of an economist to prove something that everybody already knows. That's a big elephant in the room.
It puts a little faith in my political opinions that some could start listening to this discussion. It kinda pains me to watch you need to hear the word of an economist to prove it to you though.
This piece takes issue with the 'brushing off' response to the reported inaccuracies
http://www.zerohedge.com/news/2014-05-24/piketty-fudged-his-...
http://www.zerohedge.com/news/2014-05-24/piketty-fudged-his-...
I'm surprised to see so many left-wing views on HN. I thought most hackers were libertarians.
I'm surprised you see them as "left-wing".
Are these "left-wing" too? * http://www.economist.com/blogs/freeexchange/2014/05/inequali... * http://krugman.blogs.nytimes.com/2014/05/24/is-piketty-all-w...
Are these "left-wing" too? * http://www.economist.com/blogs/freeexchange/2014/05/inequali... * http://krugman.blogs.nytimes.com/2014/05/24/is-piketty-all-w...
I was referring to the comments you often find in political threads on HN.
Many libertarians seem to have issues with 'capitalism' because they argue that our market isn't free enough (if I understand correctly). Pikkety's research, I suppose, can be used within that ideology too. So it might not be just a left-wing thing.
"In some ways the new FT criticisms may not matter much, although I think not in a way which is reassuring for Piketty." - haha
http://marginalrevolution.com/marginalrevolution/2014/05/wha...
http://marginalrevolution.com/marginalrevolution/2014/05/wha...
To be honest, the work never seemed rigorous enough in the first place to go about finding 'fatal flaws' in it.
That is not my impression at all. I'm still waiting for my copy, but if you read the reviews they in general laud it as solid academic work.
my impression is that, regardless of outlook, economists have overwhelmingly praised the book as extremely thoroughly researched, setting a new bar for evidence presentation in economics literature.
As pointed out here
http://blogs.spectator.co.uk/coffeehouse/2014/05/why-didnt-p...
"Perhaps the idea of one’s instincts being proving empirically correct is rather intoxicating, which partly explains the success of his book. Perhaps Piketty gave the left intelligentsia a story which (as tabloid hacks say) was “too good to check”.
"Perhaps the idea of one’s instincts being proving empirically correct is rather intoxicating, which partly explains the success of his book. Perhaps Piketty gave the left intelligentsia a story which (as tabloid hacks say) was “too good to check”.
Have you read it?
At the moment it seems to be very difficult for professional economists to come to a clear conclusion, so in terms of the academic judgement of the work, the rest of us should hardly be coming down strongly one way or another.
Edit: Ironically, there seems to be an error in the linked article:
> For America, the outcome of the analysis is relatively muddy (based in part on the fact that the source data themselves are harder to parse, according to Mr Giles). The trend for the top 1% share does not seem to be affected. For the top 10% it is harder to say; here is a chart Mr Giles produces:
When you look at the chart, it's the 10% trend (the triangles) which is unaffected, and the 1% trend (the squares) which is muddied. I therefore say with utmost confidence that I have debunked the debunking of the debunking of Piketty. I don't know which of my preconceptions that means I can keep intact.