January 15, 2015

Against Piketty

By In Blogs, C.Jay Engel

Two important essays are out that challenge the gigantic work produced by French Economist Thomas Piketty.  Piketty, as most are probably aware, is the new face of the anti-inequality movement and his new book might be considered a war on capital, which he quite wrongly claims is not the source of economic growth, but rather is the source of inequality. Thus, in his view, capital needs to be attacked and in this light he suggests extremely high taxes (up to 90%) on the world’s wealthiest earners. That is an astounding level of taxation.

The essays that should be considered go well together. The first was written by Robert Murphy and Phillip Magness and essentially takes Piketty to task for his empirical research –for all his statistics and data, much of which was highly misleading, deceitful, and flat at wrong.  Since Piketty relies heavily on his data, showing how bad the data is will destroy the ground he stands on.  The Murphy-Magness paper can be downloaded here: http://papers.ssrn.com/sol3/Papers.cfm?abstract_id=2543012

The second piece is perhaps more effective for those deeply interested in the Austrian School because in it, George Reisman considers the theoretical problems of Piketty. For the Austrian, economic propositions are not justified by empirical research and statistical analysis. Thus, to show the great flaws of Piketty’s argument by explaining the problems in his theory and presuppositions can go a long ways.  Reims’s paper is available on his blog for free or for a 99cent ebook on Amazon.

Written by C.Jay Engel

Editor and creator of The Reformed Libertarian. Living in Northern California with his wife, he writes on everything from politics to theology and from culture to economic theory. You can send an email to reformedlibertarian@gmail.com