Brava, Deirdre McCloskey, For Avoiding The Primary Rhetorical Failing of Our Times
Deirdre McCloskey wrote a truly massive review, and in some senses a rebuttal, of Thomas Piketty's Capital in the Twenty-First Century
I am not really going to comment on the details of her paper -- many prominent economists have already done so. I will say that I learned a lot from it not just about Piketty's proposition but about economic history in general. It is an interesting read.
No, what I wanted to comment on -- in this era when rebuttals usually take the form of impugning the other person's funding, integrity, honesty, and motivations rather than their actual arguments -- is that she begins her article with this:
It has been a long time (how does “never” work for you?) since a technical treatise on economics has had such a market. An economist can only applaud. And an economic historian can only wax ecstatic. Piketty’s great splash will undoubtedly bring many young economically interested scholars to devote their lives to the study of the past.....
It is an honest and massively researched book. Nothing I shall say—and I shall say some hard things, because they are true and important—is meant to impugn Piketty’s integrity or his scientific effort. The book is the fruit of a big collaborative effort of the Paris School of Economics, which he founded, associated with some of the brightest lights in the techno-left of French economics. Hélas, I will show that Piketty is gravely mistaken in his science and in his social ethics. But so are many economists and calculators, some of them my dearest friends.
Craig Loehle:
3 big mistakes made about inequality by Piketty and the press:
February 26, 2015, 8:57 am1) People's income changes with age as they advance in their careers. Even in a perfect world, 60 yr olds will be making much more than 20 yr olds.
2) Piketty's and the press' definition of wealth is off. People near retirement have capital (house, savings, investments) but they better because when they retire they are going to live off it for 20+ years.
3) some people do not have much apparent wealth but have a pretty good pension, which none of these studies counts.
Craig Loehle:
An additional mistake of Piketty is about inheritance. His view reflects the old landed aristocracy which held onto land as a source of wealth. But in order to hold onto inherited wealth these days, one must be diligent and clever. It is equally (more?) likely that the inheritor of wealth will spend it down, not build it up, especially when it is divided up among heirs. Think about the fate of winners of the lottery, or older athletes who made millions during their career but could not hold onto it. Piketty is thinking like the 18th Century.
February 26, 2015, 9:26 am