Coen Welsh | Nov 14, 2017 | 0
If only Piketty were not so pickety
French economic analyst and social critic, Thomas Piketty, has cast a cat amongst the pigeons with his seminal work on income disparity, the moral pillars of economic systems, and the global need for redistribution.
The economics fraternity, both academic and applied, has not taken kindly to Mr Piketty’s submissions, referring to these using epithets that are not fit to be repeated in a public medium.
In short, economists hate Piketty and his work, not least because his book has become a best-seller. Even Nobel Prize academic economists joined the party to debunk the Piketty theory.
He is accused of incompetence, obsolescence, inaccuracies, wilful distortions, academic racketeering, and a whole list of other, some even more unpleasant, perceived transgressions. In short, he argues that the economic system (read capitalist system) is inherently structured to make rich people richer and poor people poorer. On a somewhat wider scope, it infers that the international system, by design, benefits rich countries to the detriment of poor countries.
It is no wonder the fraternity is ablaze with scorn for what they see as a traitor in their profession.
It is very similar to a medical researcher telling us, a certain element of mainstream medicine is either toxic or useless. Immediately his peers relegate him to the “alternative medicine” category, making the learned doctor out to be a hooligan.
Something similar is happening to Piketty. I have yet to come across a respondent that looks at him favourably, or at least considers his claims in a neutral, unbiased way.
Scientific truth is all about falsification as Thomas Kuhn so elegantly demonstrated decades ago. Scientific faith is something else, very sublime and very sure of itself. When a fundamental observation flies in the face of accepted, conventional truth, the immediate response is to denounce the new insight, then ridicule it, try to ignore it, and finally, attack the proponent directly.
All of this has been happening to Piketty over the past few months.
But what is it about his conclusions, right or wrong, that upsets the established economic and financial order so much? First, Piketty is no ordinary Frenchman.
He was advisor to the current president to the extent that he is now blamed for Hollande’s attempt at taxing the rich progressively. The comic episode of French actor, Gerard Depardieu taking up Russian citizenship to escape the punitive French taxes, jumps to mind.
But despite all the denunciations and the professional animosity, somewhere the French economist must have struck a cord, otherwise he would have been ignored politely and not attacked so violently. I believe, that is not so hard to explain.
We know all about poverty. It is all around us, it is the reality of everyday existence, and it is part of our ingrained psyche. Whether you are slightly up on the social spectrum or way down there in the shanty towns, poverty is part of the African development paradigm.
For this reason, it is not so easy for us to dismiss Piketty as a crank.
He may be accused of being a neo-Marxist, rehashing outdated social models, and committing professional suicide in his attempt to criticise the reigning anti-socialist view of western intelligence, but his basic assumptions can not be dismissed that easily. Globally, the macro figures support his basic assumptions.
If we will not willingly engage a redistributive economic model, then it will be done for us by an ever-increasing marginalised society.
Academics can cite as many “positives” as they want, redistribution will be forced upon the world economic order, perhaps not in five years, but certainly in fifty years, if the ratios do not change.
How can one ever defend the fact that one percent of the world’s population has access to the same amount of resources as about 80% of the rest. The distortion is so massive, it does not require special models to dissect and understand.
I am all for a system that creates rich individuals. In an earlier piece I have demonstrated that their contribution goes far beyond their own means, but the key is the ratio. If the world’s poor do not become less poor at a rate faster than the rich getting richer, then redistribution awaits us all. It is not rocket science, it is simply reality.