Piketty: the response

I see that Piketty has made a detailed response to the Financial Times claims of errors, and it seems to have gone over well with most side line commentators.   Giles himself is still muttering.

Of most interest to me, though, has been that FT has really copped quite a pasting from many of its readers in comments for the way it handled this.  (See the comments to the two links above.)  Clearly, the opinion of a large number of their readers is that they really exaggerated the criticisms made by Giles in a very unwarranted fashion.

The fear of Piketty continues amongst the Right wing economists, though, with Steve Kates bloviating at Catallaxy about how Piketty "is an economic illiterate" over the weekend.

I also see that one response to Piketty that is being increasingly used as a fall back by free market types is to say "so what if he's right?  What does inequality matter anyway now that even the poor can afford a big screen TV?"  In fact, it was JC from Catallaxy (a very comfortably rich trader, who did a stint on Wall Street some years ago)  who brought to my attention this piece at Barrons which argues that position strenuously.  Who knew that a rich man would come out swinging for the position "inequality - it's always great!"?

In fact, I thought there had been a very large amount of economic commentary on the matter of inequality over the last few years that had most economists acknowledging problems for an economy if inequality gets too out of control.  As the readers of Catallaxy are notoriously disdainful of The Economist, perhaps they had missed it?   I suggest they go to the website and do a search.

As it happens, someone in comments to that Barrons article points out the author has come out with some surprising opinion in the past:

 Boudreaux argued in October 2009 that insider trading “is impossible to police and helpful to markets and "investors....Far from being so injurious to the economy that its practice must be criminalized, insiders buying and selling stocks based on their knowledge play a critical role in keeping asset prices honest—in keeping prices from lying to the public about corporate realities.

In a January 2013 article for the Wall Street Journal, Boudreaux and Mark Perry argued that the “progressive trope ... that America's middle class has stagnated economically since the 1970s” is “spectacularly wrong"".

But apart from the economics reasons for not wanting it, there has been much commentary regarding the social effects of inequality, and most reviews point out that Piketty spends a fair of time talking about these  in a historical context by reference to the stories of Austen and others.   Yet I see that Graham Young, the long time operator of Online Opinion (and at least formerly a part of the Liberal Party) make this recent criticism of the book:

I’m a third of the way through Piketty’s book and so far he hasn’t made a very good case at all – lots of graphs and correlations, but no reason to suppose that any particular level of inequality brings good or bad results. Perhaps he brings this together in the next two-thirds, but at this stage I’m not too worried if we have the same level of inequality as we had in the 20s.

 I responded in the thread:

You want an economist to tell you precisely when a certain level of inequality becomes problematic?
I would have thought that the matter is a question answered by an application of morality and common sense, not by a graph.

And I made that comment before reading this blog entry in The Economist which basically said the same thing, although I can't find the link right now.

It's pretty clear that Piketty is all the talk of the town because inequality was already a hot topic, and his work has provided something like a physicist's Grand Unified Theory about it, based on new and valuable data collection and interpretation.

But some ideologically committed people (many of them quite well off, of course) don't want to hear about it.