Thomas pikettys theory about income inequality has taken a triple hit from an mit graduate student. Deciphering the fall and rise in the net capital share brookings. See all books authored by thomas piketty, including capital in the twentyfirst century, and why save the bankers and other essays on our economic and political crisis, and more on. Despite pikettys resonance with the public, his book was mostly. Pikettys three big mistakes in inequality analysis.
Apr 26, 2014 this is what led to matt rognlies complaints and his claims that piketty ought to be saying that the processes of wealth accumulation he identifies a reduce the salience of the richthat although they own more wealth relative to a years national income they receive a smaller share of national incomeand b amplify the real incomes of the. It has become a commonplace to say that we are living in a second gilded age. This was first pointed out in midapril by matt rognlie, an mit graduate student and blogger. Deciphering the fall and rise in the net capital share j. Matt rognlie writes, if house values continue to rise, piketty 2014 will be right about the rise of capital in the twenty. Free shipping and pickup in store on eligible orders. His doctoral work was on savings, investment and monetary policy. I graduated from mit in 2016 and am no longer maintaining this site. A note on piketty and diminishing returns to capital matthew rognlie.
This 26yearold grad student didnt really debunk piketty, but what. Compared to the grand scope of piketty 2014, the objective of this note has been quite narrow. Let me begin by thanking matt rognlie for doing some very serious and thoughtful digging into this set of factorpayments data. Thomas pikettys bestselling capital in the twentyfirst. Over the last few days a couple of interesting critiques of thomas pikettys capital in the twentyfirst century have been published, by matt rognlie and justin wolfers.
According to thomas piketty 2014 and piketty and gabriel zucman 2014, several forces are driving up aggre. In this note, i argue that neither outcome is likely given realistically diminishing returns to capital accumulation. Rognlie suggests that a better title for pikettys book would have been housing in the twentyfirst century. Thomas piketty, depreciation and the elasticity of. Rognlie argues that because piketty cares about net measures, the elasticity of substitution between net capital and labor needs to be greater than 1. Piketty promotes the old theme that, under capitalism, the rich tend to become richer and the poor become poorer, at least in relative terms. As an economist, do you agree with the conservative historian. French economist thomas piketty, the latest to win popular acclaim for a grand theory of economic history, was a bit different. Piketty tells us capital as a proportion of the national income has been typically high throughout the last few centuries and current levels of extreme wealth are not a surprise.
Pikettys three big mistakes in inequality analysis bloomberg. These posts elicited comments from readers who put a lot of time into their responses. Rognlie s comment on the blog marginal revolution was a response to the provocative argument laid out by the french economist thomas piketty in his bestselling book on wealth inequality. Online shopping from a great selection at books store. But if pikettys story depends upon an assumption of a net elasticity that is higher than 1, then that is far too high given what rognlie finds in the empirical evidence.
Matthew rognlie says that inequality may not grow in the way piketty predicts. Oct 23, 2017 pikettys inequality theory gets dinged. Matthew rognlies analysis of thomas pikettys predictions on increasing inequality is on point regarding both the role of housing and the poor substitutability of capital for labor, but its blind to the very. Why i am not persuaded by thomas pikettys argument. Thomas piketty audio books, best sellers, author bio. Keep it in the ground thomas piketty calls for investors to divest from fossil fuels ahead of climate talks.
But a new challenge to mr pikettys book has just appeared, and from an unexpected direction. Matthew rognlie, on the other hand, isnt buying pikettys proposition. Since the publication of capital in the twentyfirst century, thomas piketty has won many plaudits for his work on inequality. Books by thomas piketty author of capital in the twenty.
Although the book is widely recognized for its empirical contributions, it also uses this data to construct a distinctive theory about the trajectory of. Jun 17, 2014 matt rognlie writes, if house values continue to rise, piketty 2014 will be right about the rise of capital in the twenty. In his blockbuster book, capital in the twentyfirst century, he asserts. Capital in the 21 st century by thomas piketty has drawn more attention than any economics book in recent memory. Shop amongst our popular books, including 48, capital in the twentyfirst century, capital and ideology and more from thomas piketty. In contrast, rognlie finds that a rising capitaltogdp ratio is most likely to result in a fall in capitals share of income, since the net rate of return on capital will fall by an even larger. Let me begin by thanking matt rognlie for doing some very serious and thoughtful digging into. Thomas piketty, critical thinking, and social stability.
More matt rognlie on piketty the most important point matt has what is probably the single best, focused technical critique of piketty. Why do people say that the conclusions thomas piketty. He discusses his findings on the economic blog marginal revolution two main inconsistencies in pikettys book. The rights piketty problemcapital in the twentyfirst. I am absolutely unfamiliar with niall ferguson, and in fact i am unsure what he means when he says conceptually u.
Matthew rognliethen a doctoral student, now an assistant professor at. Why do people say that the conclusions thomas piketty reaches. Thomas pikettys capital in the twentyfirst century1 is a treatise on how wealth inequality evolves in capitalistic economies. Technical and uninspiring as this question may be, it. Thomas piketty has 52 books on goodreads with 112166 ratings. There are others besides rognlie who need to be noted re faulting pikettys thesis. When this discrepancy is accounted for, the elasticity piketty requires turns out to be far, far higher than any known estimate. This idea is furthered by matthew rognlie, then a graduate student at m. Capital for the 21stcentury martin, emmanuel, lecaussin, nicolas, delsol, jeanphilippe, miron, jeffrey on.
Mit graduate student matt rognlie, 26, has published a paper deciphering the fall and rise in the net capital share link, published by brookings, to answer some of pikettys analysis of wealth inequality. A note on piketty and diminishing returns to capital. Matt has what is probably the single best, focused technical critique of piketty. My research focuses on macroeconomics, inequality, and international finance contact. The agenda for economics and inequality boushey, heather, delong, j. Youve been successfully added to the marginal revolution email subscription list. French economist thomas piketty speaks to journalists as he sits in front of copies of a german translation of his book capital in the twentyfirst. But the mechanism is quite distinct from the one proposed by piketty 2014 a better title would be housing in the twentyfirst century, and it has radically different policy implications. Rognlies comment on the blog marginal revolution was a response to the provocative argument laid out by the french economist thomas piketty in his bestselling book on wealth inequality. Matt ridley instinctively also got this right in a june 2014 column in the times of london. Maybe income inequality is all about housing the seattle times. Oct 20, 2014 rognlie argues that because piketty cares about net measures, the elasticity of substitution between net capital and labor needs to be greater than 1.
Rognlie is obviously a very wise man, having picked the role of artificial scarcity in land use regulation, as well as finding this major fault in piketty. Pikettys inequality story in six charts the new yorker. Rognlie read pikettys book and began to recalculate. Its publication in 1909 was heralded as a revelation, when in fact it was more a synthesis of notions that had been floating around in the political ether for a decade. May 08, 2014 thomas piketty, professor at the paris school of economics, isnt a household name, although that may change with the englishlanguage publication of his magnificent, sweeping meditation on inequality, capital in the twentyfirst century. Yet the concept of risk hardly plays a role in the major arguments of this book. June 15, 2014 abstract capital in the twentyfirst century predicts a rise in capitals share of income and the gap r g between capital returns and growth. Meet the 26yearold whos taking on thomas pikettys ominous. Ive just finally had the opportunity to read the english translation of pikettys capital, which is definitely an interesting work.
Piketty converts the entrepreneur into the rentier. Why save the bankers and other essays on our economic and political crisis by piketty, thomas and a great selection of related books, art and collectibles available now at. Piketty notes in his book that cobbdouglas, with an elasticity of one, is the usual benchmark and then he tries to argue that the actual elasticity is somewhat higher than this benchmark. Thursday focus for june 12, 2014 matt rognlie has a firstrate exposition of his critique of piketty. While thomas pikettys documentation of the longterm evolution of income and wealth distributions is generally praised, the theoretical framework used to shed light on the future of inequality in the 21st century has recently been challenged by a number of authors. Capital in the twentyfirst century is a 20 book by french economist thomas piketty. Thomas pikettys most popular book is capital in the twentyfirst century. Capital in the twentyfirst century raised important questions about inequality that the ivory tower would rather ignore. Piketty promotes the old theme that, under capitalism, the rich tend to become richer and the poor become poorer, at least in. Thomas pikettys bestselling capital in the twentyfirst century galvanized global debate about inequality.
Dec 29, 2014 french economist thomas piketty speaks to journalists as he sits in front of copies of a german translation of his book capital in the twentyfirst century at the economy ministry in berlin on nov. Why frances rock star economist still wants to squeeze the rich promoting his new book, the frenchman is happy to talk marx and money, but less forthcoming about a. Matthew rognlie, a 26yearold first phd student at the prestigious massachusetts institute of technology mit in boston claims to have found fundamental errors in pikettys work. Thomas piketty is a french economist whose capital in the twentyfirst century has swept american discourse. Matt rognlie on piketty, net capital returns, and housing. Bradford delong university of california at berkeley at fold. Wealth inequality nimbys in the twentyfirst century free. Deciphering the fall and rise in the net capital share. This grad student didnt really debunk piketty, but.
Mar 26, 2014 in this weeks magazine, ive got a lengthy piece about capital in the twentyfirst century, a new book about rising inequality by thomas piketty, a french economist, that is sparking a. Jul 22, 2015 its one thing to claim, as piketty does in front of a large amen chorus to the left, that the game of economics is rigged for the rich. More matt rognlie on piketty the most important point. Thomas piketty author of capital in the twentyfirst century. May 27, 2014 thomas pikettys capital in the twentyfirst century evokes another famous tome with capital. He is the director of studies at the ecole des hautes etudes en sciences sociales ehess and professor at the paris school of economics. Piketty had worried in his book that wealth inequality could soon explode at. It focuses on wealth and income inequality in europe and the united states since the 18th century. To the extent capital reaps high returns, it is by assuming risk over the broad sweep of history real rates on tbills are hardly impressive. Pikettys charge if politics is a war by other means, then books often serve as the artillery. There are others besides rognlie who need to be noted re faulting piketty s thesis. It was initially published in french as le capital au xxie siecle in august 20.
Rognlie suggests that a better title for piketty s book would have been housing in the twentyfirst century. Pikettys big book of marxiness commentary magazine. A commenter points out that matt rognlie had made the exact point about gross and. A number of economists have criticized various aspects of capital in the 21st century, notably including ryan decker capital in partial equilibrium and greg.
I then added a few more thoughts in my june post and decided to elaborates somewhat in my june 14 post. Pikettys warnings of a capitalism without meritocracy are being challenged by an ossified economic theory. Thomas pikettys capital housing in the twentyfirst century. Matthew rognlie says that inequality may not grow in the way piketty predicts, finding that the longterm rise in capital income is driven mostly by housing, not labor division. You can find my uptodate website here for the 20162017 academic year, i am an ies fellow at the princeton department of economics. The student in question, matt rognlie of mit, has published a paper titled deciphering the fall and rise in the net capital share that adds valuable depth and. The epic successor to one of the most important books of the century. Deciphering the fall and rise in the net capital share matthew rognlie. Thomas piketty books list of books by author thomas piketty. As an economist, do you agree with the conservative. Ive just finally had the opportunity to read the english translation of piketty s capital, which is definitely an interesting work. Take herbert crolys the promise of american life, the foundational text of modern american liberalism. Piketty and gabriel zucman 2014, several forces are driving up aggre gate savings relative to income, and.
348 973 1636 1372 1171 1470 605 796 1427 179 256 1417 1066 948 1539 16 99 1481 79 1621 470 1074 525 522 781 1622 1157 455 85 528 1243 1074 501 787 344 640 1078 1165 327 1139 409 1143 85 1258 1104