Thursday, May 29, 2014

Jeremy Smith — Have Giles and the FT gone too far in the attack on Piketty?

Thomas Piketty has now published his detailed reply (dated 28th May) to two withering attacks by Chris Giles, the Financial Times’ economics editor, on his data and use of data, in particular in relation to the proportion (over time) of wealth-ownership of the top 1% and 10%. On most points, Piketty has answered the points in a reasonable (and to me generally persuasive) way. But the way Chris Giles kick-started the debate, it was clear that this is not simply an economic issue and battle, but a political one too. 
So no doubt the argument will continue, with left and right contesting the terrain. But has the quite personalised form of attack by the FT’s Economics Editor had the effect of damaging his newspaper’s reputation for even-handedness and objectivity?... 
This is sharp and effective journalism, but not unbiased journalism. It is attack dog Daily Mail style, calculated to damage the reputation of the adversary. But it is at variance with the FT’s usually even-handed way of dealing with controversy, and was followed up with an editorial – in less virulent terms – premised on the assumption that Piketty was materially wrong.

I believe, in short, that the FT and Mr Giles have handled this affair badly and unfairly through what looks like an ad hominem attack with a political dimension - and that many others also see this. That cannot be good for the FT’s reputatoin, even if it helps with short-term sales.
Surprise. It's about politics and not economics. Who could have known.
Having said all this, in my view there are serious issues around the definition of “capital”, “wealth” and “patrimony”, and the consequences to draw from them, in Piketty’s work, which tend in the opposite direction to Giles. The issue is one of power of the very wealthy, and the access to leverage to impose that power. Think Manchester United and the Glazer family, where being a billionaire allowed Mr Glazer to use debt (therefore a subtraction from wealth in official statistics) to obtain a key asset and power.
There it is again: wealthy = power.

PRIME Economics
Have Giles and the FT gone too far in the attack on Piketty?
Jeremy Smith

No comments: