
‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory - davidklemke
http://blogs.wsj.com/economics/2016/08/05/no-empirical-evidence-for-thomas-pikettys-inequality-theory-imf-economist-argues/?mod=WSJBlog
======
jcbeard
Umm, send this to peer review. Here's the link to Góes actual
paper([http://www.imf.org/external/pubs/ft/wp/2016/wp16160.pdf](http://www.imf.org/external/pubs/ft/wp/2016/wp16160.pdf))
published as an IMF working report which doesn't even have the backing of the
IMF/managers/etc. I doubt it'd get published if reviewed. Really, out of the
centuries of data they could have pulled in, they chose to use 1980 through
2012? Return on the capital is not ~1%....flawed assumptions, flawed model
IMHO. Amazing that WSJ parades it as if it were peer reviewed fact. Then
again, I'm not an expert. I only did mathematical modeling for HPC systems,
not economies.

~~~
nanis
> I only did mathematical modeling for HPC systems, not economies.

No worries. Economics content in Piketty's arguments is zero.

~~~
coldtea
And scientific content in most economists is zero.

It's 80% ideology + 20% math used to prove their point based on ideological
assumptions.

Which is also why economics and economists managed to ever make 0 predictions
for anything more complicated than the most basic of models, and have failed
time and again to predict real world outcomes.

And then they get in bed with power, as advisors, ministers, etc -- talk about
the worse case of "conflict of interest" compared to any other scientific
field.

Well, maybe except doctors in the 70s working for the tobacco industry.

~~~
berntb
It is a classic conspiracy theory to say that most of a scientific field is a
fraud from (political) ideology.

(That is, your statement presupposes most people of the field are either
idiots, fanatics or crooks.)

I'd be interested if you can back that up? (With non ideological sources, of
course.)

Edit: Considering the numbers, there are going to be some true conspiracy
theories... and mass hypnosis from unverifiable things like psychology (Freud,
Jung, etc). The burden of proof is still on the one presenting the conspiracy
theories.

Edit 2: And of course, some sciences are experimental and use the scientific
method. Some are largely historical (palaeontology, economics, etc). That
doesn't counter my point either.

~~~
coldtea
> _That is, your statement presupposes most people of the field are either
> idiots, fanatics or crooks._

Kind of like there have been hundreds of thousands of Freudian psychoanalysts
(considered scientists) in the 20th century until now?

Or how people consider (and increasingly clinics embrace) homeopathists as
doctors and scientists? With their own educational programs, journals and
everything too.

In any case there's nothing special about many people working in a field that
makes them automatically proper scientists.

To begin with, the term "science" is ambiguous.

It can refer to empirically or axiomatically verifiable, experimental,
scientific-method following fields, which is what is actually "science" (e.g.
physics, chemistry, mathematics, biology, etc.) and whatever ad-hoc field of
study one can come up with.

The first is sometimes called "hard sciences" to differentiate them from the
more "lax" and "anything goes" ones.

Now, the second type could still be a productive (if informal) field of
inquiry and argumentation and insight. I'm all for continental philosophy for
example.

But it's not scientific in the way engineering or physics is. Not even close.

The "Academy of Science" in most countries includes philosophers for example.
And they do get Ph.D degrees and everything. They never verify anything, and
they can hold totally conflicting views and still be "valid" and well
established. Would you consider them "scientists"?

If not, are you a conspiracy theorist?

It's naive to believe that the way a society names some practices is also
revealing about the essence of those practices.

~~~
berntb
So you lack references (without an ideological angle) that dismiss economics
as a science -- which I asked after?

That some sciences can't use the scientific method (do experiments etc) like
some parts of geology, don't counter my point. [Edit: Unless your point really
is that you dismiss palaeontology et al in an equal way, too?]

(Or are you arguing that 80% of most everything which aren't based on
mathematical proofs are bad?)

Edit: This is an innocent question about getting references to strong claims
that a science has 0 "scientific content". I know some people whose integrity
and intelligence I trust, which later went the academic track in economics.
That gave in total 4 down votes -- but still without a reference?

~~~
beefield
I have no references but common sense. Popper gave the best tool I know to
differentiate between proper science and quackery, namely falsification. In
order to a theory to be falsifiable, there must be a way to prove the theory
incorrect. For example, if I see that the newtonian equation for force,
acceleration and mass (F = ma) does not hold, in some circumstances, I am able
to falsify the theory.

Now, maybe the most fundamental assumtion of economics is that people are
utility maximizers. I see no way how this can be falsified. How can I make a
choice that proves I was not maximizing my utility?

This, in itself, is enough for me to be confident that economics is not (yet)
a proper science, but a bastard of ideology and mathematics.

~~~
berntb
Again, is it then also reasonable to dismiss palaeontology as having 0
"scientific content", since it can't use the scientific method either?

This is an honest question.

(And I am no economist, but afaik, the economists note that "homo economicus"
is a simplification. Most every science use simplified models, especially in
the first university courses.)

~~~
beefield
I know nothing about palaeontology. Can you give an example of unfalsifiable
claim of palaeontology?

Yes, classical physics is a simplification, but it is a _falsifiable_
simplification, unlike the utility maximizer.

Note that falsifiability has nothing to do with making experiments.

[https://en.m.wikipedia.org/wiki/Falsifiability](https://en.m.wikipedia.org/wiki/Falsifiability)

~~~
berntb
Experiments are generally needed to "falsify" claims in physics, chemistry
etc. Those are experimental sciences, which can use the scientific method.
Mathematics et al can falsify "on paper".

Palaeontology, economics and many other sciences can't do either. Why can you
dismiss one out of hand, but not the others?

(I have written this quite obvious point 3-4 times now.)

Edit: Your own wikipedia reference have a link to the "scientific method". You
should read it. Well worth the trouble. It is arguable the basis for most
everything we know about the world.

~~~
beefield
To be honest, I do not know what you mean by scientific method and I have not
made any claims about scientific method. I have made a distinction based
falsifiability. Falsifiability does not need experiments, but _observations_.

You have written your "obvious" point now a few times, but you have not
written a single unfalsifiable claim of palaeontology or any of the many other
sciences you claim that exists.

My hypothesis is simple, _anything_ that claims being a science but makes
unfalsifiable claims, is quackery. You see, this hypothesis itself is
falsifiable, all you need to make is give a single unfalsifiable claim of a
respectful science to prove this hypothesis false. So can you give _one_
example of palaeontology that is unfalsifiable?

(Mathematics does not claim to be a science in popperian sense.)

~~~
berntb
It is good to look up the scientific method before arguing about Popper.

(Hint: It is in the first sentence of the second paragraph on Popper's
wikipedia page. Also, your own link had the term as a related link.)

Enough for me, bye.

Edit: Another hint, Popper was amongst others professor of "logic and
scientific method" at the University of London. It is also noted on his
Wikipedia page. In short, you argue Popper without understanding what Popper
argued _about_.

~~~
beefield
I am not quite sure why you want to stick with the scientific method. I
brought one very specific idea of Popper, falsification, that I think is
relatively ideologue free and very useful to separate science from
pseudoscience. And which happens to say that there are fundamental parts of
economics that remind much more pseudoscience than proper science.

This discussion is _extremely_ easy to bring forward. All you need to do is to
tell _one_ properly scientific theory outside economics that is not
falsifiable. If you can't do that, we can hopefully agree that economics is
one of the rare species that seem to have some (questionable) scientific
credibility without too strong foundation on falsifiable thinking.

~~~
berntb
>> why you want to stick with the scientific method.

How can you have an opinion on that, after writing that you don't know what it
is -- despite talking about Popper...?

I told you I didn't need that for my argument.

Bye.

------
chakkop
I'm curious - does anyone else think that the equality that matters is
equality in material outcomes? I think that would be such a boring world. The
real equality that matters is equality in dignity as human beings, equality
before the law, equality in our respect to each other. I think the developed
world has made monumental strides on these fronts, which are spreading around
the world too. (Even though, of course, there is still work to be done).

Incidentally, I think even though (as Piketty claims) inequality may be
increasing, the average person (certainly in developed nations, but also in
developing ones) has also been unimaginably enriched over the past 200 years.
By any ethically relevant standard (access to food, shelter, heating,
technology, entertainment), we live unbelievably fortunate lives. This when
our ancestors a mere 3-4 generations ago were unspeakably poor.

~~~
regularfry
The danger is where inequality in rates of improvement in material outcomes
leads to inequality in moral outcomes. To borrow some rather loaded language,
the more the 1% can buy themselves legal advantage, the more unjust the world
becomes. If the rate of legal advantage is affected by the absolute difference
between the 1% and the 99% (which I'd argue is demonstrably true - beyond a
certain point you've got regulatory capture, but even before then, paid legal
representation is the lever that matters here), then it's trivially true that
a more materially unequal world is more morally imbalanced in the absence of a
somewhat socialist government.

Yes, the poorest and the average now are doing better than they were. That
doesn't make defensible the disparity in gains between the richest and the
rest.

~~~
chakkop
I think the historical record is against this. Specifically: before the
liberal revolution--the liberal idea that all humans are equal, which was
truly revolutionary--it would have been unimaginable for a member of the
peasantry to even claim equality with some lord, let alone build a legal case
and have it heard. Again, it's far from perfect today, but better on many
fronts. I imagine that differences will continue (they're unavoidable) but the
mechanisms to cope with injustice will get better.

~~~
regularfry
By what mechanism? I'd say that the historical record is specifically in
support of this. Civilisations start out relatively equal, inequality
increases over time as wealth concentrates in elites, then they collapse
either to revolution or war, reset, and start again. What evidence do we have
to support the idea that we should draw a line up and to the right?

~~~
chakkop
Maybe more correctly: the vast majority of humanity was equal in its
wretchedness, poverty, ill-health, and violence; the vast majority of people
led miserable, hungry, precarious, uninteresting lives.

Again, I'm not saying we've done all we can do. I'm not saying that many of
the rich don't behave reprehensibly. I'm not saying we can't do better. But
the question is: How? How can we do better most effectively? I don't think the
answer is 'tax global wealth and redistribute' a la Piketty--because that's
not what enriched us so over the past 200 years.

So yes, it has gone up and to the right, especially in most recent history--
though, because of human folly, there is no guarantee that it will continue to
do so.

------
praptak
Ah, economics. "There is little more than some apparent correlations the
reader can eyeball in charts" \- so, how does this compare to the actual
standards of testing of competing theories in economy?

------
dredmorbius
I'm not terribly surprised to find Mr. Goes has worked with the Cato
Institute, one of a network of hundreds of policy think tanks worldwide under
the Atlas Network and strongly tied to the Mont Pelerin Society with a very
specific ideological agenda. Though it's curious Mr. Talley's brief note fails
to mention those bona fides. Collectively, these institutions have been on the
far side from truth on debates over tobacco, asbestos, leaded petrol and
paint, the ozone hole, and now global warming.

This isn't to say that Mr. Goes' analysis is flawed, I've yet to look at it.
But the glee with which it's being picked up by the Murdoch/Newscorp WSJ, and
from a quick bit of DDGing, numerous bloggers and commentators, suggests a
_wee_ bit of bias could be present. The lack of substantive description of the
study by Talley doesn't suggest much of strength either.

Certainly other IMF and World Bank economists have found Piketty credible.

[http://carlosgoes.com/resume/](http://carlosgoes.com/resume/)

[https://www.atlasnetwork.org/partners/global-
directory](https://www.atlasnetwork.org/partners/global-directory)

[https://www.atlasnetwork.org/partners/global-
directory/cato-...](https://www.atlasnetwork.org/partners/global-
directory/cato-institute)

[https://www.atlasnetwork.org/partners/global-
directory/mont-...](https://www.atlasnetwork.org/partners/global-
directory/mont-pelerin-society)

[https://www.worldcat.org/title/road-from-mont-pelerin-the-
ma...](https://www.worldcat.org/title/road-from-mont-pelerin-the-making-of-
the-neoliberal-thought-collective-with-a-new-
preface/oclc/933791931?ht=edition)

------
MarkMc
It seems to me obvious that it is rich people who own shares and property.
Therefore if total income from capital grows faster than total income from
labour, the gap between rich and poor will grow.

But I have to admit I don't really understand theory behind the opposite view.
In particular, the article says "the data shows changes in the savings rate
are likely to offset most of the effects of an increase in capital share of
national income".

Is this saying that poor people will save more as capital returns grow, and
this mostly compensates poor people for the relatively slow growth in wages?

------
forreal2
Many of these kind of "studies" need the author to have actually witnessed at
least one or twice how a person, man,woman, children, opening a trash bag
looking for food, and then they'd know how the face of a hungry human being
looks like.

~~~
T2_t2
What would that fix?

A big part of modern, first world ideology is that we think the problem is
caring. That if only we understood, or cared, the world would be better.
People need to care and understand transgender people, or people who have
lacked education, or poor people. That if only they cared, we could fix the
problem.

Dr Martin Luther King jr gave one of the most needed, most important speeches
of all time. He had an emotional desire for humanity, a dream. A dream that,
in many ways, changed the world. Unfortunately, ever since that time every
issue has been approached with the same emotional bedrock, a dream. Very
little has involved a real PLAN, or real measurement.

Thing is, caring, empathy and understanding don't fix problems, they highlight
them certainly, but they don't provide fixes. People seem to confuse those two
ideas - highlighting and solving - and we keep highlighting, when solutions
seem the more important need.

caring creates problems that hinder performance - that's why we don't have
people that care about us perform surgeries on us, because their emotions
don't help.

The problems the world faces don't need more emotion, they need a more
objective, result driven, rational response that we measure and change in
response to results. This video I think introduces a lot of these ideas well.
[http://www.theatlantic.com/video/index/474588/why-empathy-
is...](http://www.theatlantic.com/video/index/474588/why-empathy-is-a-bad-
thing/)

~~~
nhaehnle
It's not a dichotomy.

It's true that there are people who have an "if only people were nice" type of
outlook on life, and that is indeed naive. The problem isn't that individual
people are nasty, it's that the system is set up in a way that favours
negative outcomes for many.

The only way to fix the system is politics, and a necessary condition for
getting anything done in politics is for people to care.

That said, I agree with you that less complaining and more actual plans would
be great. (And especially if the people who complain would then start
supporting plans, even if it means that others call them "bad" words like
"commie"...)

------
KaiserPro
Its economics, anything empiric is pretty thin on the ground.

Yes there is a sea of data, but none of it is complete.

