Letter: Questions Piketty as Basis for Income Inequality Arguments

I am no PhD in economics – only a mere BA – plus a MBA and 43 years in banking. I will grant Mr. Cunningham the observation that Mr. Gramm and Mr. Early have reached conclusions that are (likely) based on their political underpinnings. However Mr. Cunningham makes a similar error, in citing Thomas Piketty.

Mr. Piketty’s magnum opus, “Capital in the 21st Century”, has been widely panned, as was noted by Marshall Steinbaum in “Why Are Economists Giving Piketty the Cold Shoulder,” Boston Review, May 12, 2017.

“Lawrence Blume and Steven Durlauf wrote, “Capital [the noted book] is, nonetheless, unpersuasive when it turns from description to analysis. . . . Both of us are very liberal (in the contemporary as opposed to classical sense), and we regard ourselves as egalitarians. We are therefore disturbed that Piketty has undermined the egalitarian case with weak empirical, analytical, and ethical arguments.”

Mr. Piketty is decidedly liberal, for better or worse. Regardless, his wealth redistribution theories, as with Gramm/Early, are a bit less than solid.

In addition, knowing enough to be dangerous, may I point out that using 1980 as the starting point of the income growth calculation may be lacking in some judgment. 1980 was during a period of significant economic turmoil – high inflation, interest rates and unemployment, many shortages, and a bad stock market. They were crazy times. Perhaps it was a rough spot for those evil one-percenters? Perhaps 1990 or 1995 would be better?

Perhaps it won’t matter: people in the higher income/wealth brackets can afford to take more risk and then reap a greater return. I don’t know if we can or should fix that. After all, we’re the land of equal opportunity, not equal outcome.

Lies, damn lies and statistics! They are the downfall of many economists, both professional and lay. Please, would someone evaluate the data without an agenda? We must pay careful attention to the built-in bias of both our sources and our own predispositions. We all have them, regardless of our professional pedigrees.

Andrew Hewitt
Rochester, MA

Note that the author is a relative of senior reporter Cate Hewitt

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