For those who have been following, Socialist French economist Thomas Piketty has become a pretty big deal over the last few months following the release of his bestselling "Capital in the Twenty-First Century."
Piketty's magnum opus purports to illustrate that growing and pervasive income inequality is the natural end of capitalism -- and should be combated with income tax rates of up to 80% and the levying of a global annual progressive wealth tax of up to 5-10% in order to stop free nations from becoming undemocratic plutocracies.
We have documented the various arguments against Piketty's work, as well as the recent allegations of shoddy and manipulated data leveled at Piketty in an extensive investigation by the Financial Times.
Today, Piketty responded to the Financial Times with a more substantive response than his initial one (as he indicated that the Times did not provide him sufficient time to adequately respond), basically stating that (i) the Financial Times is wrong in arguing that Piketty made data errors and (ii) questioning the Financial Times' methodology in constructing some of the more essential "corrected" data.
Piketty writes in part:
"I welcome all criticisms and I am very happy that this book contributes to stimulate a global debate about these important issues. My problem with the FT criticisms is twofold. First, I did not find the FT criticism particularly constructive. The FT suggests that I made mistakes and errors in my computations, which is simply wrong, as I show below. The corrections proposed by the FT to my series (and with which I disagree) are for the most part relatively minor, and do not affect the long run evolutions and my overall analysis, contrarily to what the FT suggests. Next, the FT corrections that are somewhat more important are based upon methodological choices that are quite debatable (to say the least). In particular, the FT simply
chooses to ignore the Saez-Zucman 2014 study, which indicates a higher rise in top wealth shares in the United States during recent decades than what I report in my book (if anything, my book underestimates the rise in wealth inequality). Regarding Britain, the FT seems to put a lot of trust in self-reported wealth survey data that notoriously underestimates wealth inequality."
Piketty also reiterates that the fundamental weakness of the data at hand in and of itself makes the sort of global tax regime that he supports more attractive:
"Let me also say that I certainly agree that available data sources on wealth inequality are much less systematic than what we have for income inequality. In fact, one of the main reasons why I am in favor of wealth taxation, international cooperation and automatic exchange of bank information is that this would be a way to develop more financial transparency and more reliable sources of information on wealth dynamics (even if the tax was charged at very low rates, which everybody could agree with)."
Following Piketty's introduction, he addresses the Financial Times' allegations on a country-by-country basis.
You can read his whole response here.