Thomas Piketty accuses Financial Times of dishonest criticism

From the FT article on the matter

>Nobel Prize-winning economists have heaped praised on Mr Piketty’s work. Professor Paul Krugman of Princeton University said it was safe to say the book “will be the most important economics book of the year – and maybe of the decade”.

It is something that clearly had been billed as an influential book, even the leader of the opposition in my country commented on it.

Clearly someone felt it was worthy of review. Meanwhile, I'm not aware of any of my nations political leaders basing policy on the Tol 2009 paper. Generally such academic papers don't reach as many readers as this book has/will/wouldhave.

I think the question of one investigation being a sign of a systemic bias is a bit of a moot point.

I had to look up that paper to know which one you were referring to, and I follow climate change very closely. Piketty has lead to a firestorm of criticisms and rebuttals and counter-rebuttals: virtually every major political and economic blog has addressed it. Yesterday I saw a pile of copies of it in a mainstream bookstore. They're in totally different leagues.

Reinhart–Rogoff falls somewhere in between those extremes, and IIRC FT and the Economist have both mentioned its flaws.

For what it's worth, it is known that Dutch politicians are reading it and have commented about it already.

1. He disagrees with Piketty's conclusion

2. He finds the FT's criticisms insignificant wrt. Piketty's conclusion.

So: he also thinks Piketty is wrong, but not for the reasons the FT claims, and he thinks that what the FT claims is inconsequential to whether Piketty is wrong or right.

But I matured and my blind belief in the power of free, unregulated markets was challenged by many examples of abject market failure in the real world.

I still read FT and the Economist, but with a much more jaundiced eye. Much of what they say is reflexive, ideological, based on either blind belief or self-interest.

Rather than accuse them of dishonesty surely all Piketty has to do is explain where their analysis is wrong?

> There are four important questions raised by the FT's work. First, which data are wrong? ...

> "Capital" is a sprawling book based on an enormous pile of reference material and data. Much of the data was collected by Mr Piketty and other economists in a series of published papers that have since been used to create the World Top Incomes Database. None of this work appears to be at issue. Rather, Mr Giles focuses on wealth inequality, to which Mr Piketty turns in Chapter 10 of his book. Mr Piketty has not published nearly as much research on the question of wealth inequality, and it seems that much of the analysis in Chapter 10 was done specifically for the book, based on others' research. Mr Piketty's wealth-inequality analysis certainly matters as a component of the book's argument, but it is not accurate to say, as Mr Giles does, that the results in Chapter 10 constitute the "central theme" of the book.

So your two proposition are not contradictory. Piketty's principle historical work was published before the book, in peer-reviewed journals, and that is different from the analysis which is being criticized.

I think it is clear from other sources that wealth inequality is going up, and the FT is pushing its findings too far.

Er...some of his numbers appear incorrect. From this you incorrectly assume that this invalidates the conclusion. It may invalidate the conclusion if the errors are significant. However, what little I've seen so far does not seem to be all that significant.

From the fine article:

'Scott Winship, an economist at the right-leaning Manhattan Institute for Policy Research, and notable critic of Piketty's analysis, said the FT's allegations weren't "significant for the fundamental question of whether Piketty's thesis is right or not".'

So there seem to be highly qualified sources that say that the differences are not significant. That's not the same as "he said/she said".

Do you have any evidence that the errors are significant?

You also blatantly mischaracterize Krugman's point: he showed that inequality in capital income is going up, not (just) general income. Capital income has this property that it usually derives from capital (as the name says). So unless there is evidence that the top 1% or so systematically get significantly better returns on the same capital, an increase in capital income let's us include that there is an increase in base capital from which to derive that income.

On the other side of the coin, income leads to wealth, and unless you have evidence that high-income people save less of their income than lower-income people, then wealth will diverge. All the evidence I have seen so far (and common sense) say that it is the other way around: consumption saturates, so people with higher incomes actually save more and spend less, at least in relative terms.

So both sides of this equation quite trivially show the link between income inequality (especially for, but not limited to capital income) that you deny.

So both the FT criticism (= nit-picking in non-substantive details) and your criticism are unfounded, as far as we can tell.

Again, if you have some actual substantive evidence that the errors are significant, I'd love to see it.