Picketing Piketty

An iron law of increasing wealth inequalityor a tendency amenable to policy intervention? The City of London in back in 2005
An iron law of increasing wealth inequality or a tendency amenable to policy intervention? The City of London in 2005

This is the link to the detail of the FT's critique of Piketty's much-acclaimed 'Capital in the 21st century'.


Well worth a look for if you take this stuff seriously. It will be interesting too see a detailed response from Piketty rather than the rather vague one he gave to the FT.


Branko Milanovic, (@BrankoMilan) the World Bank's interesting inequality guy gives his pretty hurried response here.


My response to Branko piece was in a tweet to him  'You're saying the data can only be judged by context-savvy savants or not at all? Giles' critique deserves a fuller response.'


But once you get into the detail of the data the going gets pretty tough and as Milanovic says the data you choose does depend on what you are trying to discover.


There are lots of comments under the FT piece to the effect that this is the 'elite striking back' at a critique of capitalism that claims that its central contradiction is the tendency for wealth to become more concentrated in the hands of the already rich. And that there is an almost an iron law that determines that the wealth inequalities of the 19th century will again occur in the 21st. Or as Prof Piketty says


“the reason why wealth today is not as unequally distributed as in the past is simply that not enough time has passed since 1945”.


Early one morning just as wealthy inequality was rising: St Paul's from the Millenium Bridge, 2009
'Early one morning just as [wealthy inequality] was rising': St Paul's from the Millenium Bridge, 2009

I haven't read Piketty but I am sympathetic to his thesis. I think that what Chris Giles' critique in the FT does is to raise important questions about the degree of the tendency of the wealthy to get wealthier. It seems to me that Piketty's analysis finds a stronger growth rate in post-1970 wealth concentration than may be justified by the data. On the other hand I do not find Chris Giles' conclusion that 'wealth concentration among the richest people has been pretty stable for 50 years in both Europe and the US' entirely convincing.


This isn't helped by the lack of clear labelling on some of Giles' charts and the, at least for me, unexplained differences between his two charts on wealth concentration in the UK.


Rather than the elite striking back I think Giles' piece is genuine and well-intentioned and will probably do Piketty a service by drawing attention to gross levels of wealth inequality. It may also help to draw attention to the policy levers that have and can be used to challenge and ameliorate that inequality. This is a lack in Piketty's analysis according to the reviews I have read.


This link below goes to the FT video of Chris Giles discussing his critique which is brief but not by any means exhaustive.


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