No, not nearly that much.
Piketty findings undercut by errors
More here:
nm - already posted
Your link does not lead to Piketty’s comments.
I was afraid of that; I had to register with the site (Financial Times) just to read it.
Mods, may I have permission to C&P the whole thing?
You may not. Under no circumstances will such be allowed on the SDMB.
Mad props for asking, though. Well done.
In that case, if you want to read Piketty’s response (which is essentially that he did the best he could with such data as are available at present, transparency in financial matters not being all it could be) go to this link and register:
Krugman weighs in. I should’ve said this yesterday, but I’ll go ahead and predict that the errors will be used to dismiss the entire concept even though the conclusion is accurate.
I see. Krugman is going for “fake but accurate” defense.
No, he’s not.
I haven’t read the FT’s paywalled story but this seems the most balanced assessment: the FT does find a few genuine errors without undermining the main thrust of Piketty’s argument.
It’s not exactly “paywalled,” registration is required but free. I guess they’re just trying to build up their e-mailing list.
Well, I don’t think the conclusion is accurate, but the errors don’t diminish the greatness of the work. I finally did start reading it, and while he goes wrong, probably due to ideological bias, he does make a lot of great points. The most obvious being that capital does indeed grow faster than wages.
I just don’t think that’s as significant as he makes out, because he’s looking at things in the aggregate rather than on the individual levels. For most people, their wages rise throughout their working life as their skills and experience increase. If they save money, then that money increases at a much faster rate than their wages.
While I’m 90% dependent on wages to live, one difference between now and when I was in my 20s is that I have a significant amount of stock, and the dividends rise by about 10-15% per year, much faster than my pay. It’s kinda nice to get that raise every year, even if my paper balance fluctuates as the market goes up and down. And since I’m not getting a raise from my company this year…
I think his mistake is in viewing workers and capital as totally seperate, which is just not accurate anymore. Most people are homeowners, most workers who aren’t in the low wage sector have significant savings(although most don’t have enough) invested in stocks. We have continued to transition to an ownership society and I don’t think any economists have really come to grips with how that’s going to play out.
The aggregate is where it matters WRT influence on public policy.
It is entirely accurate viewing them as social classes, and the “ownership society” does not change that.
Most of the time that is the case, but in this case I don’t think so. Let’s say that by 2100, 70% of income is drawn from capital, only 30% from wages. Sounds horrible, and it would be, if the percentage of Americans relying on capital for most of their income was the same as it is now. But perhaps by 2100, most Americans will be drawing income from capital, with wages only supplementing their living expenses, which is the opposite of the way things are today.
It doesn’t change the basic dichotomy, but it does slightly alter it over time, to the point where you could end up in a very different place in the future. If the median American has a couple hundred thousand in net worth, that’s going to create a very different political and social environment, no matter how rich Warren Buffett gets.
Doubtful, short of revolution.
Not really. If 60% of Americans are homeowners and the average home price is $100,000, and in addition most working Americans have a 401(k), we might already be pretty close to that.
According to this cite, in 2007, median net household worth was over 100K.
Shorn of the finding that inequality has been rising, though, what is the main conclusion that remains accurate?
New Deal policies like government protection of labor unions and minimum wage legislation won for millions of Americans higher incomes than they would have earned from the law of supply and demand. The government also achieved greater economic equality by taxing the rich heavily and using the money to fund programs that the rich did not need, but which benefited people who are not rich.
Because of the Republican ascendancy that certainly took hold with the 1980 election of Ronald Reagan these policies have been reversed.