Hacker News Reader

Comment by yummyfajitas | Hacker News Reader

In order for income inequality to not lead to wealth inequality, we need to believe that poor people save more of their income than wealthy people - which seems rather difficult.

Or that wealthy people achieve diminishing returns on investment as their wealth grows. I.e., my startup might grow 10-fold, but Facebook is unlikely to.

Even if you assume Piketty's "r > g" macro-level hypothesis, there are a lot of microeconomic theories completely compatible with it. Not all of them result in increasing inequality.

http://www.chrisstucchio.com/blog/2014/piketty_and_inequalit...

(But now we are moving into the topic of Piketty's theoretical weaknesses, which are supposedly irrelevant because his data is so great.)

I think it is clear from other sources...

[citation needed]

And if other sources prove this point, why was Piketty's book such a sensation?

View on HN

>I.e., my startup might grow 10-fold, but Facebook is unlikely to.

Yes, startups, an investment famous for attracting only small scale investors of small means…

What is Piketty's theoretical weakness?

See this article, especially toward the end on his understanding of capital: https://mises.org/daily/6736/Thomas-Piketty-on-Inequality-an...

The main criticism there is that the concept of return on capital is meaningless. I think that is fringe view and I don't find it compelling.

>I think that is fringe view and I don't find it compelling.

That's a vacuous non-argument and appeal to popular opinion. Not compelling as well.

Many complex systems, hard to describe on a micro level, have straightforward macro statistics. I think return on capital can be described but such statistics even if individual investments are highly variable. Capturing the return is achieved by having a highly diversified portfolio.

His lack of a clearly stated theory. Ask yourself this question: in a few equations, what is his fundamental claim? What specific data (irrespective of technical details about collecting it) would prove or disprove his theory?

The closest he comes to having a clearly stated theory is that "r > g => growth of inequality". That specific claim is completely wrong.

http://www.chrisstucchio.com/blog/2014/piketty_and_inequalit...

He has a clearly stated theory which can be judged independently of his empirical measurements and is not on its face "completely wrong". I can't understand how you have spent so much time virulently criticizing Piketty and so little time doing even the most basic research of his work, going so far as to ignore material that nullifies your (imagined) criticism and which has been explicitly pointed out to you.

Had you simply spent five minutes reading documents that were helpfully found for you then you would know exactly what is his model.

Didn't the fact that you thought you could refute an recognized expert in the field's work in a few minutes with the most basic criticism give you pause?

I read his book. He talks about Balzac and Jane Austen a lot and devotes a small amount of time handwaving about the micro-scale of inequality. No equations (beyond a few accounting identities), representative agents, or anything else you'd expect to see.

Of course, if you want to include a link to someplace where it was "explicitly pointed out"...I'm not holding my breath.

And since you seem to disagree with the claims I made in my blog post, what claim do you disagree with? What's the specific error I made beyond doubting the Great Piketty?

Here is where (a PhD economist) "explicitly pointed out" references to you after you derisively made the exact same demand you do now. https://news.ycombinator.com/item?id=7658808#up_7661247 Section 5 of HID especially.

As that economist said models and equations are not included in the book presumably because it would make it inaccessible to many people. On the other hand I don't know how someone so interested in those aspects not only spent essentially no effort in finding them but ignored references they themselves requested and were provided with.

As for the blog post what I disagree with is that it represents Piketty's claim, whether that claim is true or not. It doesn't.

Your tirade against Piketty is completely unfounded, bizarrely rabid and seemingly prejudiced.

Those papers are more of the same - no theory is clearly stated, just a few accounting identities that describe wealth/income ratios.

As for the blog post, I could be wrong. Does Piketty not claim that r > g is the cause of inequality? If so, why does Piketty have a subsection called "The Fundamental Force for Divergence: r > g" in his book?

In any case, confusion like this is why it's so important to clearly write down your main theory at the very beginning. If Piketty did this, you could simply point at a set of equations and show how my counterexamples don't disprove them.

I don't know why you are getting hostile or accusing me of being "rabid". Kind of goes against the spirit of careful intellectual discussion. Makes me think you have an emotional attachment to Piketty being right.

> I don't know why you are getting hostile or accusing me of being "rabid". Kind of goes against the spirit of careful intellectual discussion.

Initially, I felt similarly about the general 'tone' of your statements. Then I browsed through your comment history. Here are the most 'rabid' statements I could find (emphasis mine):

> What's the specific error I made beyond doubting the Great Piketty?

> I imagine Piketty would consider that a problem if he knew India existed.

followed, to be fair, by pointing out at least twice:

> It's an attempt at poetic exaggeration

To my surprise, you've been acting more in 'the spirit of careful intellectual discussion' than I initially thought, and I suspect it was the surrounding comments that agreed with yours that 'polluted' my view (as well as a slight personal bias that I have).

Perhaps it's good to completely avoid poetic exaggeration, or to maybe consider the context of you comments and adjust to make your comments a bit more palatable to the many who strongly disagree.

Or perhaps you're doing fine as it is, and your 'karma' attests to that.

Either way, I figured I'd post my observations for those who might similarly, and I believe erroneously, feel that you are being 'rabid'.

I'd also like to thank you for your informative comments. I'm following all discussions on Pikkety with great interest, and I'm trying to stay aware of my bias of wanting his results to be correct.

(and my apologies for not contributing something more substantial at this point in time)

It is pretty brazen to say no theory exists when you were directed not only to the paper but the section where that theory is described.

Since you can't be bothered to read it, section 5 of Piketty's HID paper describes his model of long-run wealth distribution, assuming a Cobb-Douglas utility function and random multiplicative shocks to an individual's savings rate, as a Pareto distribution where the tail concentration is a function of r-g.

I am spoon feeding you at this point and I won't do it anymore.

Actually you are right - I missed it the first time. My mistake. Based on a quick skim, it looks like Piketty is assuming far more than r > g (which is of course necessary), but there does appear to be some sort of distributional theory.

Based on a first skim (I'll take a more detailed look later), inequality appears to be a function of (r - g). I.e., r > g does not imply increasing inequality, the magnitude of the inequality merely determines the level of inequality. Seems to disagree a bit with the newspaper summary of Piketty, but I'll have to read more carefully to be sure.

Reply on news.ycombinator.com