Picketty, Licketty, Splittery

Tumbling into the Trap

When a book or opinion co-incides with one's own, one's credulity quotient rises exponentially.  So it has been with Thomas Picketty's tome on egalitarianism, Capital in the Twenty-First Century.  The central thesis is that capitalism (by which is meant in part a largely unregulated free-market) leads to vast discrepancies of wealth and property, which in turn means that the exclusive minority of rich folk get richer, and the vast majority of people remain poor.  The Commentariat and the chattering classes have swooned over the book.  It "proves" their theories and prejudices and what they had suspected all along. Private capital is dangerous and destructive.  State owned and controlled capital is eminently more virtuous, with vastly superior (and just) outcomes.

Coupled with this has been the self-evident scientific rigour of the book.  How do we know it's rigorous?  Why, it's filled with numbers.  Anything with numbers has to be objective and factually based.  How sad, then, that the book has now been thoroughly discredited.  Picketty's charge of the egalitarian light brigade fizzled out in the first fifty yards before it even got into full stride.  Colonel Picketty is left exposed as little more than a cheap huckster.

It turns out that Picketty cooked the books, and made up data to suit his prejudices. The Financial Times in the UK started to look closely at his "data".

National Public Radio's John Ydstie, said: Piketty's book has been widely praised by economists for breaking new ground in the area of economic inequality. At the heart of the book is his assertion that inequality is not an accident, but inherent to capitalism. He says over the long-term, higher returns to capital than to labor are giving the richest people in the world a growing share of global wealth.  As evidence of this, Piketty points to rising concentrations of wealth in the U.S. and Europe since the 1970s. But the Financial Times discovered some flaws in Piketty's work. It found errors in the data he used, suggested he had cherry-picked the data to support his conclusions and even constructed some data out of thin air.

Just a few minor issues with the data?  He had cheery picked, which means he had gone looking for data points which supported his thesis.  This is a fatal flaw, implying academic deceit.  But "constructing some data out of thin air"?  This is a whole new league of mendacity.  It means that Picketty was flat out lying. This reinforces our general impression of the left--and the Commentariat generally: never, ever let the facts get in the way of a good story--especially one which will sell hundreds of thousands of books.  When it comes down to it, the Financial Times was charging Picketty with being as fraudulent and deceitful as Dan Brown.  As a consequence of playing to the crowd, however, they have received a decent payout.  Both have made a lot of money from their respectively mendacious craft. 
  
Yet another academic paper has just emerged to lacerate the few remaining shreds of Picketty-cred.  Written by Phillip W. Magness of George Mason University and Robert P. Murphy, Institute for Energy Research (Journal of Private Enterprise, Spring 2015), the introductory abstract reads:

Thomas Piketty's Capital in the 21st Century has been widely debated on theoretical grounds, yet continues to attract acclaim for its historically-infused data analysis. In this study we conduct a closer scrutiny of Piketty's empirics than has appeared thus far, focusing upon his treatment of the United States. We find evidence of pervasive errors of historical fact, opaque methodological choices, and the cherry-picking of sources to construct favorable patterns from ambiguous data. Additional evidence suggests that Piketty used a highly distortive data assumption from the Soviet Union to accentuate one of his main historical claims about global “capitalism” in the 20th century. Taken together, these problems suggest that Piketty’s highly praised and historically-driven empirical work may actually be one of the book’s greatest weaknesses.

The chattering classes that ululate around the Commentariat probably realise that those they idolise and celebrate never let the facts get in the way of a good story.  The story is so important it justifies a few porkies being told along the way.  So, when one of  their own produces a book filled with numbers and mathematical data to confirm their ideology and beliefs it has to be glorious from the get-go.  Numbers and maths prove the case. It has to be credible and scientific because it has regressions, and progressions; percentages and graphs, all in perfectly circular symmetry.

Oh, dear.  How sad.  Never mind.  Just one more confidence trickster, selling one more New York bridge, to a credulous mob more than willing to suspend disbelief when their prejudices are being played.  In this case, the credibility quotient has been off the scale.