In the online journal The Baffler, Kathleen Geier recently attempted a roundup of conservative criticism of Thomas Piketty’s new book, Capital in the Twenty-First Century. The astonishing thing to me is how weak the right’s appraisal of Piketty’s arguments has turned out to be.
Piketty’s argument is detailed and complicated. However, five points seem particularly salient:
One, a society’s wealth relative to its annual income will grow (or shrink) to a level equal to its net savings rate divided by its growth rate.
Two, time and chance inevitably lead to the concentration of wealth in the hands of a relatively small group: Call them “the rich.”
Three, the economy’s growth rate falls as the low-hanging fruit of industrialization is picked; meanwhile, the net savings rate rises, owing to a rollback of progressive taxation, the end of the chaotic destruction of the first half of the twentieth century, and the absence of compelling sociological reasons for the rich to spend their incomes or their wealth rather than save it.
Four, a society in which the rich have a very high degree of economic, political and sociocultural influence is an unpleasant society in many ways.
Five, a society in which the wealth-to-annual-income ratio is a very large multiple of the growth rate is one in which control over wealth falls to heirs — what Geier elsewhere has called an “heiristocracy”; such a society is even more unpleasant in many ways than one dominated by a meritocratic and entrepreneurial rich elite.
Now, even in thumbnail form, this is a complicated argument. As a result, one would expect that it would attract a large volume of substantive criticism.
Indeed, Matt Rognlie has attacked point four, arguing that the return on wealth varies inversely with the wealth-to-annual-income ratio so strongly that, paradoxically, the more wealth the rich have, the lower their share of total income. Thus, their economic, political and sociocultural influence is weaker as well.
Tyler Cowen of George Mason University, echoing Friedrich von Hayek, has argued against points four and five. The “idle rich,” according to Cowen, are a valuable cultural resource precisely because they form a leisured aristocracy. It is only because they are not bound to the karmic wheel of earning, getting and spending on necessities and conveniences that they can take the long and/or heterodox view of things and create, say, great art.
Still others have waved their hands and hoped for a new industrial revolution that will create more low-hanging fruit and be accompanied by another wave of creative destruction. Should that happen, more upward mobility will be possible, thus negating points two and three.
However, the extraordinary thing about the conservative criticism of Piketty’s book is how little of it has developed any of these arguments and how much of it has been devoted to a furious denunciation of its author’s analytical abilities, motivation and even nationality.
Clive Crook, for example, argues that “the limits of the data [Piketty] presents and the grandiosity of the conclusions he draws… borders on schizophrenia,” rendering conclusions that are “either unsupported or contradicted by [his] own data and analysis.” And it is “Piketty’s terror at rising inequality,” Crook speculates, that has led him astray.
Meanwhile, James Pethokoukis thinks that Piketty’s work can be reduced to a tweet: “Karl Marx wasn’t wrong, just early. Pretty much. Sorry, capitalism. #inequalityforevah.”
Then there is Allan Meltzer’s puerile accusation of excessive Frenchness. Piketty, you see, worked alongside his fellow Frenchman Emmanuel Saez “at MIT [Massachusetts Institute of Technology], where… the [IMF’s] Olivier Blanchard was a professor… He is also French. France has, for many years, implemented destructive policies of income redistribution.”
Combining these strands of conservative criticism, the real problem with Piketty’s book becomes clear: Its author is a mentally unstable foreign communist. This is an old tactic on the US right, one that destroyed thousands of lives and careers during the McCarthy era. However, the depiction of ideas as being somehow “un-American” has always been an epithet, not an argument.
Now, in center-left US communities like Berkeley, California, where I live and work, Piketty’s book has been received with praise bordering on reverence. We are impressed with the amount of work that he and his colleagues have put into collecting, assembling and cleaning the data; the intelligence and skill with which he has constructed and presented his arguments; and how much blood Arthur Goldhammer sweated over the translation.
To be sure, everyone disagrees with 10 to 20 percent of Piketty’s argument, and everyone is unsure about perhaps another 10 to 20 percent. However, in both cases, everyone has a different 10 to 20 percent. In other words, there is majority agreement that each piece of the book is roughly correct, which means that there is near-consensus that the overall argument of the book is, broadly, right.
Unless Piketty’s right-wing critics step up their game and actually make some valid points, that will be the default judgement on Piketty’s book. No amount of Red-baiting or French-bashing will help.
J. Bradford DeLong, a former deputy assistant secretary of the US Treasury, is a professor of economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research.
Copyright: Project Syndicate
Could Asia be on the verge of a new wave of nuclear proliferation? A look back at the early history of the North Atlantic Treaty Organization (NATO), which recently celebrated its 75th anniversary, illuminates some reasons for concern in the Indo-Pacific today. US Secretary of Defense Lloyd Austin recently described NATO as “the most powerful and successful alliance in history,” but the organization’s early years were not without challenges. At its inception, the signing of the North Atlantic Treaty marked a sea change in American strategic thinking. The United States had been intent on withdrawing from Europe in the years following
My wife and I spent the week in the interior of Taiwan where Shuyuan spent her childhood. In that town there is a street that functions as an open farmer’s market. Walk along that street, as Shuyuan did yesterday, and it is next to impossible to come home empty-handed. Some mangoes that looked vaguely like others we had seen around here ended up on our table. Shuyuan told how she had bought them from a little old farmer woman from the countryside who said the mangoes were from a very old tree she had on her property. The big surprise
The issue of China’s overcapacity has drawn greater global attention recently, with US Secretary of the Treasury Janet Yellen urging Beijing to address its excess production in key industries during her visit to China last week. Meanwhile in Brussels, European Commission President Ursula von der Leyen last week said that Europe must have a tough talk with China on its perceived overcapacity and unfair trade practices. The remarks by Yellen and Von der Leyen come as China’s economy is undergoing a painful transition. Beijing is trying to steer the world’s second-largest economy out of a COVID-19 slump, the property crisis and
As former president Ma Ying-jeou (馬英九) wrapped up his visit to the People’s Republic of China, he received his share of attention. Certainly, the trip must be seen within the full context of Ma’s life, that is, his eight-year presidency, the Sunflower movement and his failed Economic Cooperation Framework Agreement, as well as his eight years as Taipei mayor with its posturing, accusations of money laundering, and ups and downs. Through all that, basic questions stand out: “What drives Ma? What is his end game?” Having observed and commented on Ma for decades, it is all ironically reminiscent of former US president Harry