Paul Krugman -Is Piketty All Wrong? (No)

[n2doc]

reat buzz in the blogosphere over Chris Giles’s attack on Thomas Piketty’s Capital in the 21st Century. Giles finds a few clear errors, although they don’t seem to matter much; more important, he questions some of the assumptions and imputations Piketty uses to deal with gaps in the data and the way he switches sources. Neil Irwin and Justin Wolfers have good discussions of the complaints; Piketty will have to answer these questions in detail, and we’ll see how well he does it.

But is it possible that Piketty’s whole thesis of rising wealth inequality is wrong? Giles argues that it is:

The exact level of European inequality in the last fifty years is impossible to determine, as it depends on the sources one uses. However, whichever level one picks, the lines in red in the graph show that – unlike what Prof. Piketty claims – wealth concentration among the richest people has been pretty stable for 50 years in both Europe and theUS.

There is no obvious upward trend. The conclusions of Capital in the 21st century do not appear to be backed by the book’s own sources.

OK, that can’t be right — and the fact that Giles reaches that conclusion is a strong indicator that he himself is doing something wrong.

I don’t know the European evidence too well, but the notion of stable wealth concentration in the United States is at odds with many sources of evidence. Take, for example, the landmark CBO study on the distribution of income; it shows the distribution of income by type, and capital income has become much more concentrated over time:


more

http://krugman.blogs.nytimes.com/2014/05/24/is-piketty-all-wrong/

[riderinthestorm]

1. I believe Krugman and Piketty are up to handling the critique!

I think its only going to make their case more strongly in the public if this argument goes viral. More of the general public will finally get exposed to the truth (since way too many of them will never read Piketty's book).

K&R!

[Warren Stupidity]

2. The FUDsters are out in force on Piketty.

I'm about half way through his book. He is quite careful to point out that the data is no always accurate, and looks at the issues from as many different data sets as he can.

[riderinthestorm]

3. am kick! nt