Thomas Piketty’s Capital in the Twenty-First Century is a moving target. The book contains foundational theoretical problems, a misreading of the empirical literature that blows up his whole case, sloppy and absurd factual errors concerning tax rates and minimum wage hikes, and shocking quotations that reveal he has no desire to actually raise government revenue with his massive soak-the-super-rich schemes, but instead merely wants to prevent the formation of fortunes in the first place.Mises Canada
I am now beginning to suspect that this is the Frenchman’s rope-a-dope strategy. By this point, after I (and others) have been harping on one problem after another, the poor blogosphere reader is too fatigued to take it seriously when Chris Giles at the FT alleges that Piketty’s most important scholarship–the thing that supposedly warrants Piketty a Nobel Prize, according to Larry Summers–is not only wrong, but contains deliberately fudged data. Uh oh....
Are You Kidding Me? Now Allegations That Piketty Fudged His Wealth Data
Robert Murphy | economist with theInstitute for Energy Research (IER) specializing in climate change, a senior fellow in business and economic studies at the Pacific Research Institute, a research fellow with the Independent Institute, and an associated scholar at the Ludwig von Mises Institute
13 comments:
Robert Murphy is a hack and a shill for the plutocrat class. He has been desperately trying to come up with any old argument to throw at Piketty for a while. He has no interest in truth or honest debate and shouldn't be taken seriously.
The "shocking quotations: are precisely the ones that Shows that one reason Piketty endorses redistributive wealth and income taxes is because they have predistributive effects.
The whole Piketty affair so far has left me rather indifferent.
This may change now. First it was Tyler Cowen's personal crusade against Piketty; now the icing on the cake: this Murphy guy.
Frankly, that creature is behaving in a despicable manner even judging by the already appalling standards set by mainstream economists.
Chris Giles so far has not accused Piketty of any deliberate impropriety.
Is the right in the process of "Dan Rathering" Piketty? Take some real or imagined "discrepancy" and create a wall of noise which will continue until a general impression is created that "the report has been debunked." As far as I could ever tell, the story on GW Bush's National Guard shirking was substantially true, but Rather's career was ended "in disgrace." Tommy, we hardly knew ye.
"Take some real or imagined "discrepancy" and create a wall of noise which will continue until a general impression is created that "the report has been debunked."
This is exactly what Murphy is attempting to do, mainly just for the brainwashed moron consumers of Ludwig von Mises Institute propaganda (no one else listens to Murphy really).
This is the sort of truly moronic brain-dead response he is looking for (from a commenter at LvMI):
"Thank you Dr. Murphy. I didn't have time to read Piketty and tell my NPR listening coworkers which of his premises is wrong, and now I don't have to".
http://mises.ca/posts/blog/the-importance-of-austrian-capital-theory-interest-is-not-the-mpk/
The focus should be on non-academic behavior of economists and on whether and what sort of professional sanctions should result from malpractice. Piketty should be persecuted in some way for doing sloppy, shoddy work. He collected millions of dollars for his book. Ardent supporters have written fawning reviews of all things Piketty and wanted to have high minded debates but didn't yet have the basic principles covered. It's a huge embarrassment and it's dishonest. Obviously many have alot of ego at stake after much of what has been written about Piketty and most aren't acting very rational when it comes to discussing the larger issue at stake over econ-cranks using excel as an analytical tool or fudging data. It isn't ok, unintentional or otherwise. Defining basic skills and practices at managing, reviewing and editing datasets seems to be in order. How many economists have we seen use their little spreadsheets to hide data that doesn't fit their story -- make a little tweak then 'forget' it was there?
What does it mean for Econ if Piketty, Rogoff and Reinhart all get off with no penalty. What is to stop the next ambitious kid from faking data to make a NY Times best seller?
All the publicity is good. Whether the right is attacking or defending, in the end what this means as that there is now a major cultural discussion of inequality going on.
I keep coming back to this quote I happened upon by Wittgenstein:
[Philosophical problems] are, of course, not empirical problems; but they are solved through an insight into the workings of our language, and that in such a way that these workings are recognized -- despite an urge to misunderstand them. The problems are solved, not through the contribution of new knowledge, rather through the arrangement of things long familiar. Philosophy is a struggle against the bewitchment (Verhexung) of our understanding by the resources of our language. [Ludwig Wittgenstein, "Philosophical Investigations," 1953]
This seems applicable in some way to this situation...
I take Dan's point to mean that we have Piketty's empirical investigation to thank for leading us to examine/investigate what is really a philosophical problem...
All of this "inequality" is really a philosophical problem among we of mankind...
rsp,
When we analyze the use of the term "inequality" what we find is a normative stance toward asymmetrical power and privilege rather than disparity of wealth. What we find is that capital has replaced land in importance as not only an economic factor but also a political one, and the owners of capital, real and financial, have replaced the owners of land as the privileged aristocracy that liberal revolutions were mounted to overthrow.
Equality is a political and legal term at bottom, meaning the absence of social and political institutional privilege, and economic asymmetries arise from political and legal asymmetries. The way to address it is removing institutional privilege and the economic rents that this involves.
[Philosophical problems] are, of course, not empirical problems; but they are solved through an insight into the workings of our language, and that in such a way that these workings are recognized -- despite an urge to misunderstand them. The problems are solved, not through the contribution of new knowledge, rather through the arrangement of things long familiar. Philosophy is a struggle against the bewitchment (Verhexung) of our understanding by the resources of our language. [Ludwig Wittgenstein, "Philosophical Investigations," 1953]
What LW is saying here is central to his later work. This work articulates how terms function as tools, so to speak, in linguistic construction so that their meaning is dependent on use in context. Problems arise when terms are abstracted from context and some universal and unchanging meaning is imputed to them that is taken to provide causality in deductive models, for instance.
This is the essential mistake of neoclassical (including Austrian) economics as a philosophy and why it is not a science: The ideology consisting of non-operational definitions, non-empirical assumptions and formal method is privileged over data. What are you going to believe, your lying eyes or the model? Your answer determines your career success. Guess which is the "right" answer.
The folks that wanted smaller deficits found R&R to be very useful in opening discussion as well.
The problem when Piketty, like R&R, decided to reject reality and instead base his analysis on half-truths, is that it loses it's power, we know he isn't credible to tell us about the world.
Econ without honesty or integrity of measurement is specious ideology.
Ideology is comforting and alluring when it fits our world view but the problem is that ideology cedes power to an authority other than the truth. The old Churchill saying about Truth can be attacked and slandered but none the less there it is. Ideology, not so much.
When you use a simple average over countries in Europe to come up with an aggregate in the way Piketty did, there is no insurmountable philosophical problem, there is no hard to solve historical data set, you are just lying. This is like 6th or 8th grade level learning about means/medians/simple distributions; From a self proclaimed MIT math genius. To call most of the errors he made, 'sloppy' or 'stupid' would be very, very, very generous..
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