Liberals' new hero

Piketty refuses to allow for any alternatives to his desired social state. Wouldn’t a negative income tax, as proposed by Milton Friedman 50 years ago, be more effective in alleviating poverty and inequality than a utopian global tax on capital? Piketty starts from unproven evidence—the state is good and growth is spontaneous—to plead for capital taxation.

Piketty’s book has other flaws. The author never considers whether some degree of inequality is necessary for growth in a market economy. Instead, he attacks economists for “relying too much on mathematical models and not understanding the deep structures of capital and inequality.” He thus ignores the fact that economists whom he dislikes have identified the actual factors of growth—such as property rights and the rule of law—based on empirical observation. Without the economic models he scorns, countries like China, India, and Ghana would not have seen such spectacular growth—and their poorest citizens would have far fewer opportunities. Piketty admits that he considers economics not a genuine science, but a subdivision of the social sciences, such as history or anthropology. Such a view is much more common in socialist-leaning France (Piketty now teaches at the Paris School of Economics) than in the United States (where Piketty studied at MIT).

Capital in the Twenty-First Century couldn’t have become a bestseller in the United States without the current concern over income inequality. This concern has merit, but is the tiny super-wealthy minority whom Piketty disparages a major source of social, political, or economic unrest? Hardly.