Saturday, May 10, 2014

Picketty's Problem

These changing years
They add to your confusion
Oh and you need to hear
The time that told the truth
--Level 42

Critique of some major theoretical and empirical problems with Thomas Picketty's recent work. The book that houses this work, Capital in the Twenty First Century, has lit up media channels and has become an instant hit with the Left due to its central proposition that wealth grows faster than the general economy, and therefore the wealthy keep getting richer compared to everyone else.

I do not plan to read this book, as its thesis appears consistent with crank works dating back through Keynes to Marx and Engels. Once such drivel has been decisively refuted, revisiting it is a waste of time.

Notwithstanding criticisms such as those noted in the above article, to get me to seriously consider his work, Picketty would need to satisfactorally answer questions linked to basic assumptions that underpin his work, such as:

1) Why is economic inequality undesirable? If it flows from unhampered production and trade (a.k.a. capitalism), then wealth is created when producers reduce scarcity in a manner that serves the needs of others. The world is better off when this occurs, lest there would be no trade.

To turn my head Picketty must convincingly argue why such inequality is bad rather than merely a smokescreen for the greed and envy of some seeking to employ force to benefit from the work of others.

2) How are empirical trends toward greater economic inequality a product of capitalism? If he seeks to relate longitudinal data reflecting greater inequality today, then Picketty must convincingly explain how capitalism has been also been growing commensurately. In fact, it seems easier to argue the opposite--that capitalism has been on the decline for at least a century.

What has been increasing? Socialism--a trend which explains unnatural skew in economic wealth and income.

1 comment:

dgeorge12358 said...

Men are unequal; individuals differ from one another. They differ because their prenatal as well as their postnatal history is never identical.

What those people who ask for equality have in mind is always an increase in their own power to consume.
~Ludwig von Mises