Sunday, April 27, 2014

Can Thomas Piketty's "Capital in the Twenty-First Century" Inspire Real Change?

It's rare for economist who is relatively unknown to have the #1 book at Amazon, but Thomas Piketty, author of Capital in the Twenty-First Century, has done so.

Everywhere I look lately there is someone offering commentary on and support of this "revolutionary" book. Here is a selection of recent articles/videos about the book, including a talk by the author.

Here are the questions he's trying to answer in Capital:
The distribution of wealth is one of today’s most widely discussed and controversial issues. But what do we really know about its evolution over the long term? Do the dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, as Karl Marx believed in the nineteenth century? Or do the balancing forces of growth, competition, and technological progress lead in later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznets thought in the twentieth century? What do we really know about how wealth and income have evolved since the eighteenth century, and what lessons can we derive from that knowledge for the century now under way?
To begin, here is Piketty himself talking about the thesis of his book, followed by Elizabeth Warren offering her well-educated perspective, then a LOT of article teasers to offer a variety of perspectives.

Thomas Piketty on Wealth, Income, and Inequality

Elizabeth Warren Weighs In On The Thomas Piketty Phenomenon

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Will Hutton from The Guardian:

Capitalism simply isn't working and here are the reasons why

Economist Thomas Piketty's message is bleak: the gap between rich and poor threatens to destroy us
Suddenly, there is a new economist making waves – and he is not on the right. At the conference of the Institute of New Economic Thinking in Toronto last week, Thomas Piketty's book Capital in the Twenty-First Century got at least one mention at every session I attended. You have to go back to the 1970s and Milton Friedman for a single economist to have had such an impact.

Like Friedman, Piketty is a man for the times. For 1970s anxieties about inflation substitute today's concerns about the emergence of the plutocratic rich and their impact on economy and society. Piketty is in no doubt, as he indicates in an interview in today's Observer New Review, that the current level of rising wealth inequality, set to grow still further, now imperils the very future of capitalism. He has proved it.

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Heidi Moore at Common Dreams (via The Guardian):

Can Thomas Piketty Re-Write the American Dream?

by Heidi Moore
Published on Sunday, April 27, 2014 by The Guardian


Piketty's immaculate research establishes that the American dream – and more broadly, the egalitarian promise of Western-style capitalism – does not, and maybe cannot, deliver on its promises. Photo: Ed Alcock for the Observer
When the movie is made about the fall of Western capitalism, Thomas Piketty will be played by Colin Firth. Piketty, whom the Financial Times called a "rock-star economist", isn't a household name – but he should be, and he has a better shot than any other economist. He is the author and researcher behind a 700-page economic manifesto, titled Capital in the 21st Century, that details the path of income inequality over several hundred years.

This sublime nerdishness is, somehow, a huge hit. It is now No 1 on Amazon's bestseller list and sold out in many bookstores. When Piketty spoke on a panel this month at New York's CUNY with three other economists – two of them Nobel-prize winners, Joseph Stiglitz and Paul Krugman – the Frenchman was the headliner. The event was so packed that the organizers had to create three overflow rooms. Weeks after the release of Capital, intellectuals are still salivating, even calling Piketty the new de Tocqueville.
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Justin Fox at the Harvard Business Review:

Piketty’s “Capital,” in a Lot Less than 696 Pages

by Justin Fox | April 24, 2014

It was only published in English a few weeks ago, but French economist Thomas Piketty’s Capital in the Twenty-First Century has already become inescapable. The reasons start with the confluence of subject matter and author. There’s a lot of interest in economic inequality these days, and research conducted over the past 15 years by Piketty, a professor at the Paris School of Economics, is a big reason why. In the U.S., Piketty and UC Berkeley’s Emmanuel Saez transformed a tame discussion of income quintiles and deciles into a sharp debate about the skyrocketing incomes of the 1% — and the mind-boggling gains of the 0.1% and 0.01% — by gathering and publishing income tax data that nobody had bothered with before. Piketty was behind similar projects in France, Britain, Japan, and other countries.

And now this book. It is massive (696 pages) and massively ambitious (the title is a very conscious echo of Karl Marx’s Das Kapital). It came out in France last year to great acclaim, which meant that those in the English-speaking world who pay attention to such matters knew that something big was coming. Over the past few weeks it has become one of those things that everybody’s talking about just because everybody’s talking about it. That, and it really is important.
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Sean McElwee at Salon:

Welcome to the Piketty revolution: “Capital in the 21st Century” is a game-changer (even if you never read it)

"Capital in the 21st Century" is an unexpected bestseller that could actually change the world 
Sean McElwee | Sunday, Apr 27, 2014 

Welcome to the Piketty revolution: "Capital in the 21st Century" is a game-changer (even if you never read it) 
Thomas Piketty (Credit: Reuters/Charles Platiau/Salon)
Anyone who’s anyone (and many more who aren’t) has written something this week about “Capital in the 21st Century,” the new treatise on income inequality by French economist Thomas Piketty.
The book was actually published early last month by Harvard University Press, but arrived to fanfare only within the insular, if august, community of economic policy researchers. So, on arrival, it might have seemed like the 700-page tome, with its academic tone and laboriously documented historical analyses, was destined to a life of obscurity. But then something strange happened. People — regular people — started to buy it in droves. By the time “Capital” surged to the top of the charts this week — so many physical copies of the book were sold that Amazon actually ran out of inventory — Thomas Piketty had become the most famous economist this side of Paul Krugman, celebrated on the left and reviled on the right.

At this point, a review or discussion of “Capital” is almost a rite of passage for an aspiring wonk. (You can read this writer’s here.) But the one question that hangs over Piketty’s meteoric rise is, in a way, the most obvious one: What does any of this actually mean?
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From at Updated Priors:

Capital in partial equilibrium

Tuesday, March 25, 2014
Review: Thomas Piketty, Capital in the Twenty-First Century

Piketty's primary contribution is to provide an impressive array of data on wealth and income, for several countries, beginning as early as the 1700s in some cases. Note that he does not examine consumption data. The book is an impressive feat and certainly deserves attention, as the facts Piketty provides are crucial to discussions of the evolution of capital and economic inequality in the rich countries. Many reviews have been very positive; there are a lot of positive things I could say about it, but I will leave that to others. The book suffers from some fundamental flaws; in short, while it is heavy on data it is light on serious economics. Readers will find themselves wading through hundreds of pages of opinion and ideological quips, not economic analysis, with interesting charts scattered throughout. The firehose of data can be overwhelming, which may explain why some reviewers internalized his arguments uncritically. Piketty's accomplishments with data collection are admirable. But a book of this size, with the title Capital, should include some economics.

Piketty's data on inheritance are the most interesting and persuasive to me. Inheritance still matters and plays a nontrivial role in the wealth and income distribution. Reducing wealth inequality over time, should we decide to do so, will require serious attention to the issue of inheritance, which more than any other issue lacks a tie to meritocracy (but that does not mean incentives stop mattering!). There may be other arguments, not based solely on inequality, for thinking about inheritance. That said, not all capital is created equal, and the book could have benefited from some focus on distinctions between capital types--particularly in the context of inheritance.

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