Economics Books to Read

Oh god here we go.

StoicTrader:

Knowing that Piketty's overall theory is that the inequality of wealth distribution has risen exponentially and continues to rise makes me question why you are so strongly against his book.

Except there is no "exponential growth" in wealth inequality. See link below (you can ignore the qualitative commentary and just focus just on the charts).

Again, even with Piketty's manipulated data, there is no "exponential growth."

http://www.businessinsider.com/the-ft-accusation-against-piketty-2014-5

StoicTrader:

Also, from multiple sources, it looks like his data errors aren't as significant as you make them out to be.

"Others digging into the data have suggested that the FT’s claims are not quite as strong as the newspaper suggests. “FT is massively overstating its case re: Piketty,” conservative columnist Reihan Salam tweeted. “Conservatives shouldn't get roped into this one.”

The biggest concerns appear to involve Piketty’s data on the U.K., but the FT’s charts using revised data for France and Sweden, for example, still look nearly identical to Piketty’s own. For a more detailed comparison and critique of the data issues, see here, here, here, here and here."

http://www.thefiscaltimes.com/Articles/2014/05/25/Piketty-Book-Problem-…

Regarding the data that Piketty & Giles used: "They essentially agree. While it’s quite natural for a journalist to emphasize the differences between his findings and those of a famous author, the most striking fact is how closely The F.T.'s analysis agrees with Mr. Piketty’s. Their preferred time series for the evolution of wealth inequality in the United States, Britain, France and Sweden are remarkably similar."

https://www.nytimes.com/2014/05/25/upshot/a-new-critique-of-piketty-has…

http://www.demos.org/blog/5/23/14/pikettys-us-wealth-figures-match-rece…

Here we go with this shit. Every time I debate a liberal I have to go through this bullshit of who can cite the most google sources that supports their position. The fucking articles you linked don't even deny that he manipulated the data, they just downplay the extent to which he manipulated data.

And they're wrong, by the way. What you see is that Piketty created a false upward drift starting in the 80s. This was intentional. It was to place the blame on Reagan's tax policy. In reality, the upward drift didn't start until the 90s with the dot.com bubble and easy monetary policy.

That said, even if we ignore the whole "who can spam the most google links" approach, Piketty's theory is fundamentally incoherent.

It's well known that "r > g." That's the whole basis of finance, actually. "g" is a function of "w" (wages) and "r" (return to capital). Capital's return is riskier (lower priority given in distribution of payments - reflects residual return) and thus commands a higher return. Thus it's a tautology to say that "r > g," where "g" is a blended rate. So absolutely nothing interesting there.

Now why is he wrong? Well his theory, like Marx's, assigns fixed categorizations to individuals. It draws clear dividing lines between laborers and capitalists where there isn't one. A laborer can own capital and simultaneously generate "w" (wages) and "r." In fact, this is extremely common in the US and in much of the developed world. So while "w" may decline in a relative sense, it's offset by the gain on "r."

In addition, his analysis ignores the diminishing returns on "r" (as laid out in every growth theory out there) as well as its volatility. The excess return on "r" is a function of its volatility - it's why wealth inequality declines rapidly during economic downturns (excess returns on "r" wiped out). The point is that capital's return is equal to that of wages when risk-adjusted.

His whole theory is shit and unoriginal. It was a lot of hype by liberals hoping to get some sort of support from the economics community (where there really isn't any) and he's been exposed as a fraud.

Let's move on.