The take down of Piketty

The left-wing loves Thomas Piketty, but it appears that like most socialists he has lied about and massaged the data that he uses to make all sorts of claims that the luvvies of the left are all wetting their knickers over.

Tom Woods discusses the major errors in the Piketty book.

As one commenter says:

The main problem is not Piketty’s thesis but the fools that take the thesis as gospel and then either influence those in power or come into the position of controlling the levers of power to implement Piketty’s ideas. With that said,what happens when the “rich” refuse to pay Piketty’s suggested worldwide taxes? Or for that matter “shelter their wealth.” In the end Piketty’s ideas are not based on logic,reason or “human action” but strictly on a monopoly on the use of guns and force.

Listen to the discussion and be fully armed to counter the leftist arguments based on Piketty’s hallucinations.

Thomas Piketty’s Capital in the 21st Century was hailed by fashionable opinion upon its release. But it turns out that the author massaged his data, pulled numbers out of thin air, and rewrote history to conform to his biases. We look closely at Piketty’s methods in today’s episode.

Thomas Piketty’s Capital in the 21st Century was supposed to be the definitive condemnation of capitalism as an anti-social engine of inequality, but the closer his work is examined, the more unreliable it turns out to be.

Phil Magness tells the truth in today’s episode!

Phil Magness is academic program director at the Institute for Humane Studies at George Mason University, and he also teaches at the University’s School of Public Policy.

Another great comment is:

I see a basic fallacy in Piketty’s assertion; the rate of return on capital exceeds the rate of growth in income, therefore inequality will increase unless we tax away much of the capital.

Isn’t he comparing things which have no correlation? Wouldn’t it be more correct to compare the rate of growth in the sum of capital to the rate of growth of the sum of income, if you were going to make that argument? Rate of return for one area compared to growth rate in another seems like an invalid comparison. They measure different things.

Secondly, his argument, taken to its logical conclusion, would mean that eventually all the wealth would belong to one Super-duper-capitalist, because once the Capitalists had drained the lower and middle classes of all value, the richer Capitalists would need to feed on the less rich Capitalists, until you had Scrooge McDuck, rolling in his pile of all the gold coins on Earth, while everyone else had nothing. Is that feasible? Did he miss the concept that the Capitalist needs customers with money in their pockets to buy the goods made in his factory if he is going to get any rate of return? That these people need to have jobs somewhere, likely working for him or some other Capitalist? How can the sum of capital grow faster than the sum of income without starving off the customers who buy the products?

His other problem, one common to all socialists, is he has no concept of the connection between capital accumulation, increased productivity, and general prosperity, or what part a Capitalist actually plays in production and economic growth. It really sounds like he views capital accumuation as a bad thing that needs to be curtailed to improve the lot of the common man. The basic argument; increased capital leads to increased productivity leads to increased prosperity has to be made, we have to demand that they argue that. The correct metric would be to measure the amount of capital per worker vs average worker income.

These logical attacks need to be made, as much as showing that he cooked the numbers, because they debunk the heart of the Socialist argument.

– Tom Woods


THANK YOU for being a subscriber. Because of you Whaleoil is going from strength to strength. It is a little known fact that Whaleoil subscribers are better in bed, good looking and highly intelligent. Sometimes all at once! Please Click Here Now to subscribe to an ad-free Whaleoil.

  • sandalwood789

    Pfffft…. Picketty – just another socialist.

    As Thomas Sowell said – “What is your “fair share” of what someone else has worked for?”

    Socialists just *hate* self-reliance, independence and good education.

    • dgrogan

      Yes. For the simple reason that it makes them redundant. What would they do if everyone looked after themselves? Much better to have a bunch of no-hopers beholden to them, right?

      • sandalwood789

        Yep, you’ve got it.
        Socialist love “big government”.
        Lots and lots of people in jobs telling the public what to think.
        Lots and lots of laws saying “you can’t do that, you mustn’t do that”. Oh, and lots of labels too – “islamophobe” and so on.
        The cowardly people of Europe and the UK may be silenced by such ridiculous labels but I hope that the people of Australia and New Zealand are not.

  • The Accountant

    Socialists deride Capitalism and theorize all the ways that socialism could deliver a better outcome. But I am yet to see socialism work in any format, with an outcome superior to current political systems that are hinged around capitalism.

  • Bluemanning

    I have read the book,which was recommended by a Sydney based hedge fund corporate investor mate in June 2014, which he suggested to me as a barometer for the left wish list. I am not a financial wizz at all, regardless my opinion is that the Piketty capital in the 21st century scenario has holes in it like Swiss cheese and seems to be a modern version of Marx’s theory. Certainly there are interesting statistics which we know can be manipulated by evidence and fact omissions with comparative massage thrown in with a pinch of salt to cook up a wish dish but I have to concede there may be (or has to be) accuracy in some historical data as far as I know. However, for example, there is no relevancy to the 2008 crash, or explanations as to the China growth model in relation to capital ownership and comparison to the USA slide and real estate value downturn and for example nor can I find a working model for his political Shangri la solutions or relevant mathematical law. I have to say to read this book for me was long and hard going however I was intent on completing it, as I really wanted to understand the socialist perspective in case I was missing something, as it turns out I am not.

  • cows4me

    Socialism is a mental disorder, it’s practitioners are psychopaths at heart, they seek not to share the wealth but the power to control the wealth, I’ve no time for the tossers.

  • Cadae

    Piketty’s book depends on angst about inequality. That angst is based on a very common but invalid assumption: that an economy is a fixed pie and people who increase their wealth can do so only by taking from the wealth of others. This is completely wrong. An economy is not a fixed pie that is divided up. Wealth is created and open-ended, not fixed.

  • friardo

    This guy Pikety like most other commentators, whether left or right, has confused Capitalism with the mythical “free” market or even the modified markets of most economies. Socialist and “Free” Market economies both use the qualities that capital brings. There is no avoiding capital or it’s gathering and use in any economy.

    The basic difference between Socialist/Communist economies and market economies is that the first has no negative feedback loop whereas market economies do. Failure in Socialist economies usually means government pours more taxpayer money into the failed area whereas a market economy lets it fail leaving others to take the risk and fill the gap.

    By such criteria National in NZ is occasionally very socialist.

    Curiously this leads to the conclusion that large scale planning of anything is inherently flawed. Auckland City for instance, and the various initiatives to centralise Wellington, Hawke’s Bay etc.