10 ms·

‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory

42 points by davidklemke 10y ago

jcbeard 10y ago
Umm, send this to peer review. Here's the link to Góes actual paper(http://www.imf.org/external/pubs/ft/wp/2016/wp16160.pdf http://www.imf.org/external/pubs/ft/wp/2016/wp16160.pdf) published as an IMF working report which doesn't even have the backing of the IMF/managers/etc. I doubt it'd get published if reviewed. Really, out of the centuries of data they could have pulled in, they chose to use 1980 through 2012? Return on the capital is not ~1%....flawed assumptions, flawed model IMHO. Amazing that WSJ parades it as if it were peer reviewed fact. Then again, I'm not an expert. I only did mathematical modeling for HPC systems, not economies.
- nanis 10y ago
  > I only did mathematical modeling for HPC systems, not economies. No worries. Economics content in Piketty's arguments is zero.
  - alienjr 10y ago
    Exactly: http://www.econlib.org/library/Columns/y2014/Jasaypython.html http://www.econlib.org/library/Columns/y2014/Jasaypython.htm...
  - coldtea 10y ago
    And scientific content in most economists is zero. It's 80% ideology + 20% math used to prove their point based on ideological assumptions. Which is also why economics and economists managed to ever make 0 predictions for anything more complicated than the most basic of models, and have failed time and again to predict real world outcomes. And then they get in bed with power, as advisors, ministers, etc -- talk about the worse case of "conflict of interest" compared to any other scientific field. Well, maybe except doctors in the 70s working for the tobacco industry.
    - fwn 10y ago
      "ideological assumptions" or - less biased - "premises".
    - Shivetya 10y ago
      sadly that 80/20 can be applied to other controversial issues as well if not the conflict of interests of being in bed with politicians or corporate interests. outside of hard sciences its difficult for even some in the field to know what is and and what isn't at times, the chance for the layman is near zero. hence when I tend to dismiss anything backed with politician ranting
    - pdkl95 10y ago
      "Understanding economics well impedes an understanding the economy." -- Yanis Varoufakis https://www.youtube.com/watch?v=L5AUAIzciLE#t=1355 https://www.youtube.com/watch?v=L5AUAIzciLE#t=1355
    - berntb 10y ago
      It is a classic conspiracy theory to say that most of a scientific field is a fraud from (political) ideology. (That is, your statement presupposes most people of the field are either idiots, fanatics or crooks.) I'd be interested if you can back that up? (With non ideological sources, of course.) Edit: Considering the numbers, there are going to be some true conspiracy theories... and mass hypnosis from unverifiable things like psychology (Freud, Jung, etc). The burden of proof is still on the one presenting the conspiracy theories. Edit 2: And of course, some sciences are experimental and use the scientific method. Some are largely historical (palaeontology, economics, etc). That doesn't counter my point either.
      - coldtea 10y ago
        >That is, your statement presupposes most people of the field are either idiots, fanatics or crooks. Kind of like there have been hundreds of thousands of Freudian psychoanalysts (considered scientists) in the 20th century until now? Or how people consider (and increasingly clinics embrace) homeopathists as doctors and scientists? With their own educational programs, journals and everything too. In any case there's nothing special about many people working in a field that makes them automatically proper scientists. To begin with, the term "science" is ambiguous. It can refer to empirically or axiomatically verifiable, experimental, scientific-method following fields, which is what is actually "science" (e.g. physics, chemistry, mathematics, biology, etc.) and whatever ad-hoc field of study one can come up with. The first is sometimes called "hard sciences" to differentiate them from the more "lax" and "anything goes" ones. Now, the second type could still be a productive (if informal) field of inquiry and argumentation and insight. I'm all for continental philosophy for example. But it's not scientific in the way engineering or physics is. Not even close. The "Academy of Science" in most countries includes philosophers for example. And they do get Ph.D degrees and everything. They never verify anything, and they can hold totally conflicting views and still be "valid" and well established. Would you consider them "scientists"? If not, are you a conspiracy theorist? It's naive to believe that the way a society names some practices is also revealing about the essence of those practices.
  - minipci1321 10y ago
    For those who reads french language -- Piketty sometimes publishes articles in Le Monde. I would be really curious to know what people here think about these publications. I am not entirely sure how to interpret them.
- argonaut 10y ago
  The WSJ didn't present the paper as peer-reviewed fact. It's also not like Piketty's book was peer-reviewed either...
  - carlob 10y ago
    Piketty's book was not peer-reviewed, but as it's often the case in all fields you first publish a bunch of peer-reviewed articles on a subject and then you summarize and clarify stuff putting together a book. So the book itself might not be peer-reviewed, but many of the findings within are
  - denzil_correa 10y ago
    > It's also not like Piketty's book was peer-reviewed either... Curious, what is exactly a peer-reviewed book? Could you give me some examples of one?
    - DanBC 10y ago
      > Curious, what is exactly a peer-reviewed book? Could you give me some examples of one? Here's an article that describes the problems of the lack of fact-checking in books compared to the fact checking that some US newspapers do. http://www.theatlantic.com/entertainment/archive/2014/09/why-books-still-arent-fact-checked/378789/ http://www.theatlantic.com/entertainment/archive/2014/09/why... > Readers might think nonfiction books are the most reliable media sources there are. But accuracy scandals haven't reformed an industry that faces no big repercussions for errors.
      - denzil_correa 10y ago
        No, I absolutely agree and this is one of the reasons I do not read non-fiction books. I was just wondering what a peer-reviewed book is.
- dagaci 10y ago
  Why did they select 1980 - 2012. This is narrow. I'm not an economist but I can see an attempt to compare 12 years of selective data against 200 years of data is suspicious.
praptak 10y ago
Ah, economics. "There is little more than some apparent correlations the reader can eyeball in charts" - so, how does this compare to the actual standards of testing of competing theories in economy?
chakkop 10y ago
I'm curious - does anyone else think that the equality that matters is equality in material outcomes? I think that would be such a boring world. The real equality that matters is equality in dignity as human beings, equality before the law, equality in our respect to each other. I think the developed world has made monumental strides on these fronts, which are spreading around the world too. (Even though, of course, there is still work to be done). Incidentally, I think even though (as Piketty claims) inequality may be increasing, the average person (certainly in developed nations, but also in developing ones) has also been unimaginably enriched over the past 200 years. By any ethically relevant standard (access to food, shelter, heating, technology, entertainment), we live unbelievably fortunate lives. This when our ancestors a mere 3-4 generations ago were unspeakably poor.
- AndrewKemendo 10y ago
  What people seem to care about is not net improvement, but relative improvement. It really comes down to if you feel like things aren't better because you are comparing them to other people. It's not right or wrong, it's just an impossibly moving target.
  - chakkop 10y ago
    Agreed with you and k-mcgrady. I think maybe we will need to use more and more 'hacks' that make us aware that it's already reasonably good. FWIW, Benjamin Friedman ('The Moral Consequences of Economic Growth') has great research that shows that when people stop feeling like they're advancing and participating in economic growth, moral and ethical ideals like open-mindedness, acceptance, tolerance, and democracy deteriorate, which is concerning.
- regularfry 10y ago
  The danger is where inequality in rates of improvement in material outcomes leads to inequality in moral outcomes. To borrow some rather loaded language, the more the 1% can buy themselves legal advantage, the more unjust the world becomes. If the rate of legal advantage is affected by the absolute difference between the 1% and the 99% (which I'd argue is demonstrably true - beyond a certain point you've got regulatory capture, but even before then, paid legal representation is the lever that matters here), then it's trivially true that a more materially unequal world is more morally imbalanced in the absence of a somewhat socialist government. Yes, the poorest and the average now are doing better than they were. That doesn't make defensible the disparity in gains between the richest and the rest.
forreal2 10y ago
Many of these kind of "studies" need the author to have actually witnessed at least one or twice how a person, man,woman, children, opening a trash bag looking for food, and then they'd know how the face of a hungry human being looks like.
- T2_t2 10y ago
  What would that fix? A big part of modern, first world ideology is that we think the problem is caring. That if only we understood, or cared, the world would be better. People need to care and understand transgender people, or people who have lacked education, or poor people. That if only they cared, we could fix the problem. Dr Martin Luther King jr gave one of the most needed, most important speeches of all time. He had an emotional desire for humanity, a dream. A dream that, in many ways, changed the world. Unfortunately, ever since that time every issue has been approached with the same emotional bedrock, a dream. Very little has involved a real PLAN, or real measurement. Thing is, caring, empathy and understanding don't fix problems, they highlight them certainly, but they don't provide fixes. People seem to confuse those two ideas - highlighting and solving - and we keep highlighting, when solutions seem the more important need. caring creates problems that hinder performance - that's why we don't have people that care about us perform surgeries on us, because their emotions don't help. The problems the world faces don't need more emotion, they need a more objective, result driven, rational response that we measure and change in response to results. This video I think introduces a lot of these ideas well. http://www.theatlantic.com/video/index/474588/why-empathy-is-a-bad-thing/ http://www.theatlantic.com/video/index/474588/why-empathy-is...
  - js8 10y ago
    I don't understand why this has to be a dichotomy? Why cannot you be a caring, empathetic person, while also rationally maximizing efficiency of your actions? There are people like that. And yes, sometimes empathy is needed to motivate people to take action. For example: http://www.aljazeera.com/indepth/features/2016/08/greece-fishermen-lesbos-saving-refugee-lives-160804091028172.html http://www.aljazeera.com/indepth/features/2016/08/greece-fis...
  - 10y ago
dredmorbius 10y ago
I'm not terribly surprised to find Mr. Goes has worked with the Cato Institute, one of a network of hundreds of policy think tanks worldwide under the Atlas Network and strongly tied to the Mont Pelerin Society with a very specific ideological agenda. Though it's curious Mr. Talley's brief note fails to mention those bona fides. Collectively, these institutions have been on the far side from truth on debates over tobacco, asbestos, leaded petrol and paint, the ozone hole, and now global warming. This isn't to say that Mr. Goes' analysis is flawed, I've yet to look at it. But the glee with which it's being picked up by the Murdoch/Newscorp WSJ, and from a quick bit of DDGing, numerous bloggers and commentators, suggests a wee bit of bias could be present. The lack of substantive description of the study by Talley doesn't suggest much of strength either. Certainly other IMF and World Bank economists have found Piketty credible. http://carlosgoes.com/resume/ http://carlosgoes.com/resume/ https://www.atlasnetwork.org/partners/global-directory https://www.atlasnetwork.org/partners/global-directory https://www.atlasnetwork.org/partners/global-directory/cato-institute https://www.atlasnetwork.org/partners/global-directory/cato-... https://www.atlasnetwork.org/partners/global-directory/mont-pelerin-society https://www.atlasnetwork.org/partners/global-directory/mont-... https://www.worldcat.org/title/road-from-mont-pelerin-the-making-of-the-neoliberal-thought-collective-with-a-new-preface/oclc/933791931?ht=edition https://www.worldcat.org/title/road-from-mont-pelerin-the-ma...
KaiserPro 10y ago
Its economics, anything empiric is pretty thin on the ground. Yes there is a sea of data, but none of it is complete.
MarkMc 10y ago
It seems to me obvious that it is rich people who own shares and property. Therefore if total income from capital grows faster than total income from labour, the gap between rich and poor will grow. But I have to admit I don't really understand theory behind the opposite view. In particular, the article says "the data shows changes in the savings rate are likely to offset most of the effects of an increase in capital share of national income". Is this saying that poor people will save more as capital returns grow, and this mostly compensates poor people for the relatively slow growth in wages?

42 points by davidklemke 10y ago

Umm, send this to peer review. Here's the link to Góes actual paper(http://www.imf.org/external/pubs/ft/wp/2016/wp16160.pdf http://www.imf.org/external/pubs/ft/wp/2016/wp16160.pdf) published as an IMF working report which doesn't even have the backing of the IMF/managers/etc. I doubt it'd get published if reviewed. Really, out of the centuries of data they could have pulled in, they chose to use 1980 through 2012? Return on the capital is not ~1%....flawed assumptions, flawed model IMHO. Amazing that WSJ parades it as if it were peer reviewed fact. Then again, I'm not an expert. I only did mathematical modeling for HPC systems, not economies.

nanis 10y ago
> I only did mathematical modeling for HPC systems, not economies. No worries. Economics content in Piketty's arguments is zero.
- alienjr 10y ago
  Exactly: http://www.econlib.org/library/Columns/y2014/Jasaypython.html http://www.econlib.org/library/Columns/y2014/Jasaypython.htm...
- coldtea 10y ago
  And scientific content in most economists is zero. It's 80% ideology + 20% math used to prove their point based on ideological assumptions. Which is also why economics and economists managed to ever make 0 predictions for anything more complicated than the most basic of models, and have failed time and again to predict real world outcomes. And then they get in bed with power, as advisors, ministers, etc -- talk about the worse case of "conflict of interest" compared to any other scientific field. Well, maybe except doctors in the 70s working for the tobacco industry.
  - fwn 10y ago
    "ideological assumptions" or - less biased - "premises".
  - Shivetya 10y ago
    sadly that 80/20 can be applied to other controversial issues as well if not the conflict of interests of being in bed with politicians or corporate interests. outside of hard sciences its difficult for even some in the field to know what is and and what isn't at times, the chance for the layman is near zero. hence when I tend to dismiss anything backed with politician ranting
  - pdkl95 10y ago
    "Understanding economics well impedes an understanding the economy." -- Yanis Varoufakis https://www.youtube.com/watch?v=L5AUAIzciLE#t=1355 https://www.youtube.com/watch?v=L5AUAIzciLE#t=1355
  - berntb 10y ago
    It is a classic conspiracy theory to say that most of a scientific field is a fraud from (political) ideology. (That is, your statement presupposes most people of the field are either idiots, fanatics or crooks.) I'd be interested if you can back that up? (With non ideological sources, of course.) Edit: Considering the numbers, there are going to be some true conspiracy theories... and mass hypnosis from unverifiable things like psychology (Freud, Jung, etc). The burden of proof is still on the one presenting the conspiracy theories. Edit 2: And of course, some sciences are experimental and use the scientific method. Some are largely historical (palaeontology, economics, etc). That doesn't counter my point either.
    - coldtea 10y ago
      >That is, your statement presupposes most people of the field are either idiots, fanatics or crooks. Kind of like there have been hundreds of thousands of Freudian psychoanalysts (considered scientists) in the 20th century until now? Or how people consider (and increasingly clinics embrace) homeopathists as doctors and scientists? With their own educational programs, journals and everything too. In any case there's nothing special about many people working in a field that makes them automatically proper scientists. To begin with, the term "science" is ambiguous. It can refer to empirically or axiomatically verifiable, experimental, scientific-method following fields, which is what is actually "science" (e.g. physics, chemistry, mathematics, biology, etc.) and whatever ad-hoc field of study one can come up with. The first is sometimes called "hard sciences" to differentiate them from the more "lax" and "anything goes" ones. Now, the second type could still be a productive (if informal) field of inquiry and argumentation and insight. I'm all for continental philosophy for example. But it's not scientific in the way engineering or physics is. Not even close. The "Academy of Science" in most countries includes philosophers for example. And they do get Ph.D degrees and everything. They never verify anything, and they can hold totally conflicting views and still be "valid" and well established. Would you consider them "scientists"? If not, are you a conspiracy theorist? It's naive to believe that the way a society names some practices is also revealing about the essence of those practices.
- minipci1321 10y ago
  For those who reads french language -- Piketty sometimes publishes articles in Le Monde. I would be really curious to know what people here think about these publications. I am not entirely sure how to interpret them.
argonaut 10y ago
The WSJ didn't present the paper as peer-reviewed fact. It's also not like Piketty's book was peer-reviewed either...
- carlob 10y ago
  Piketty's book was not peer-reviewed, but as it's often the case in all fields you first publish a bunch of peer-reviewed articles on a subject and then you summarize and clarify stuff putting together a book. So the book itself might not be peer-reviewed, but many of the findings within are
- denzil_correa 10y ago
  > It's also not like Piketty's book was peer-reviewed either... Curious, what is exactly a peer-reviewed book? Could you give me some examples of one?
  - DanBC 10y ago
    > Curious, what is exactly a peer-reviewed book? Could you give me some examples of one? Here's an article that describes the problems of the lack of fact-checking in books compared to the fact checking that some US newspapers do. http://www.theatlantic.com/entertainment/archive/2014/09/why-books-still-arent-fact-checked/378789/ http://www.theatlantic.com/entertainment/archive/2014/09/why... > Readers might think nonfiction books are the most reliable media sources there are. But accuracy scandals haven't reformed an industry that faces no big repercussions for errors.
    - denzil_correa 10y ago
      No, I absolutely agree and this is one of the reasons I do not read non-fiction books. I was just wondering what a peer-reviewed book is.
dagaci 10y ago
Why did they select 1980 - 2012. This is narrow. I'm not an economist but I can see an attempt to compare 12 years of selective data against 200 years of data is suspicious.

praptak 10y ago

Ah, economics. "There is little more than some apparent correlations the reader can eyeball in charts" - so, how does this compare to the actual standards of testing of competing theories in economy?

chakkop 10y ago

I'm curious - does anyone else think that the equality that matters is equality in material outcomes? I think that would be such a boring world. The real equality that matters is equality in dignity as human beings, equality before the law, equality in our respect to each other. I think the developed world has made monumental strides on these fronts, which are spreading around the world too. (Even though, of course, there is still work to be done). Incidentally, I think even though (as Piketty claims) inequality may be increasing, the average person (certainly in developed nations, but also in developing ones) has also been unimaginably enriched over the past 200 years. By any ethically relevant standard (access to food, shelter, heating, technology, entertainment), we live unbelievably fortunate lives. This when our ancestors a mere 3-4 generations ago were unspeakably poor.

AndrewKemendo 10y ago
What people seem to care about is not net improvement, but relative improvement. It really comes down to if you feel like things aren't better because you are comparing them to other people. It's not right or wrong, it's just an impossibly moving target.
- chakkop 10y ago
  Agreed with you and k-mcgrady. I think maybe we will need to use more and more 'hacks' that make us aware that it's already reasonably good. FWIW, Benjamin Friedman ('The Moral Consequences of Economic Growth') has great research that shows that when people stop feeling like they're advancing and participating in economic growth, moral and ethical ideals like open-mindedness, acceptance, tolerance, and democracy deteriorate, which is concerning.
regularfry 10y ago
The danger is where inequality in rates of improvement in material outcomes leads to inequality in moral outcomes. To borrow some rather loaded language, the more the 1% can buy themselves legal advantage, the more unjust the world becomes. If the rate of legal advantage is affected by the absolute difference between the 1% and the 99% (which I'd argue is demonstrably true - beyond a certain point you've got regulatory capture, but even before then, paid legal representation is the lever that matters here), then it's trivially true that a more materially unequal world is more morally imbalanced in the absence of a somewhat socialist government. Yes, the poorest and the average now are doing better than they were. That doesn't make defensible the disparity in gains between the richest and the rest.

forreal2 10y ago

Many of these kind of "studies" need the author to have actually witnessed at least one or twice how a person, man,woman, children, opening a trash bag looking for food, and then they'd know how the face of a hungry human being looks like.

T2_t2 10y ago
What would that fix? A big part of modern, first world ideology is that we think the problem is caring. That if only we understood, or cared, the world would be better. People need to care and understand transgender people, or people who have lacked education, or poor people. That if only they cared, we could fix the problem. Dr Martin Luther King jr gave one of the most needed, most important speeches of all time. He had an emotional desire for humanity, a dream. A dream that, in many ways, changed the world. Unfortunately, ever since that time every issue has been approached with the same emotional bedrock, a dream. Very little has involved a real PLAN, or real measurement. Thing is, caring, empathy and understanding don't fix problems, they highlight them certainly, but they don't provide fixes. People seem to confuse those two ideas - highlighting and solving - and we keep highlighting, when solutions seem the more important need. caring creates problems that hinder performance - that's why we don't have people that care about us perform surgeries on us, because their emotions don't help. The problems the world faces don't need more emotion, they need a more objective, result driven, rational response that we measure and change in response to results. This video I think introduces a lot of these ideas well. http://www.theatlantic.com/video/index/474588/why-empathy-is-a-bad-thing/ http://www.theatlantic.com/video/index/474588/why-empathy-is...
- js8 10y ago
  I don't understand why this has to be a dichotomy? Why cannot you be a caring, empathetic person, while also rationally maximizing efficiency of your actions? There are people like that. And yes, sometimes empathy is needed to motivate people to take action. For example: http://www.aljazeera.com/indepth/features/2016/08/greece-fishermen-lesbos-saving-refugee-lives-160804091028172.html http://www.aljazeera.com/indepth/features/2016/08/greece-fis...
- 10y ago

dredmorbius 10y ago

I'm not terribly surprised to find Mr. Goes has worked with the Cato Institute, one of a network of hundreds of policy think tanks worldwide under the Atlas Network and strongly tied to the Mont Pelerin Society with a very specific ideological agenda. Though it's curious Mr. Talley's brief note fails to mention those bona fides. Collectively, these institutions have been on the far side from truth on debates over tobacco, asbestos, leaded petrol and paint, the ozone hole, and now global warming. This isn't to say that Mr. Goes' analysis is flawed, I've yet to look at it. But the glee with which it's being picked up by the Murdoch/Newscorp WSJ, and from a quick bit of DDGing, numerous bloggers and commentators, suggests a wee bit of bias could be present. The lack of substantive description of the study by Talley doesn't suggest much of strength either. Certainly other IMF and World Bank economists have found Piketty credible. http://carlosgoes.com/resume/ http://carlosgoes.com/resume/ https://www.atlasnetwork.org/partners/global-directory https://www.atlasnetwork.org/partners/global-directory https://www.atlasnetwork.org/partners/global-directory/cato-institute https://www.atlasnetwork.org/partners/global-directory/cato-... https://www.atlasnetwork.org/partners/global-directory/mont-pelerin-society https://www.atlasnetwork.org/partners/global-directory/mont-... https://www.worldcat.org/title/road-from-mont-pelerin-the-making-of-the-neoliberal-thought-collective-with-a-new-preface/oclc/933791931?ht=edition https://www.worldcat.org/title/road-from-mont-pelerin-the-ma...

KaiserPro 10y ago

Its economics, anything empiric is pretty thin on the ground. Yes there is a sea of data, but none of it is complete.

MarkMc 10y ago

It seems to me obvious that it is rich people who own shares and property. Therefore if total income from capital grows faster than total income from labour, the gap between rich and poor will grow. But I have to admit I don't really understand theory behind the opposite view. In particular, the article says "the data shows changes in the savings rate are likely to offset most of the effects of an increase in capital share of national income". Is this saying that poor people will save more as capital returns grow, and this mostly compensates poor people for the relatively slow growth in wages?