The Financial Times is standing its ground on its Piketty accusations
posted at 4:01 pm on May 27, 2014 by Erika Johnsen
After the Financial Times released the findings of its investigation into “Capital in the Twenty-First Century” author Thomas Piketty’s number-crunching on Friday, pointing to instances of cherry-picked data and non-sequitur math used to prove a foregone conclusion, Piketty published a response that — as Ricochet writer King Banaian explained for us here at HotAir over the long weekend — didn’t do much to answer the questions that the FT’s analysis raised. Despite the defenses coming from the Left on Piketty’s behalf, the FT’s editorial board is standing by its conclusions in a piece they published this morning. Although the editors do indeed commend Piketty for publishing all of his spreadsheets online, they evidently do not feel at all cowed in reasserting that “his thesis that capitalism has a natural tendency for wealth to become ever more concentrated in the hands of the rich” has a heck of a lot wrong with it. Worth the read:
Data on the distribution of wealth are notoriously unreliable, so any comparisons with more than 100 years ago must also be looked at with scepticism. Even if Prof Piketty’s figures were flawless – something which he too accepts is impossible – wealth inequalities would still be much lower than in the early 20th century. Modern America and Europe are nothing like Downton Abbey.
Other conclusions from the best-seller are also unconvincing. The FT has found grounds to question the finding that the holding of wealth by the rich in Europe has increased since 1980. Without that result, there cannot be an iron law of capitalism that leads to ever rising inequality. …
Even if wealth inequalities were to rise, it is important to understand the reasons for this increase. There is a gulf of difference between wealth derived from entrepreneurial skills and inheritance. There will also be a natural tendency for wealth concentrations to rise in an ageing society, as people need to stash more in private pensions to prepare for a long retirement. This is not to say that, in the modern world, there are no cases in which wealth for the few is inhibiting opportunities for the many. But rather than simply assuming there is a central contradiction in capitalism, one should seek the specific causes.