![\"Recent](\"https:\/\/i0.wp.com\/www.dougsbriefcase.com\/blog\/wp-content\/uploads\/2014\/06\/credit-national-review.jpg\")
<\/a>Recent crit\u00adi\u00adcism of Thomas Piket\u00adty\u2019s Cap\u00adi\u00adtal in the 21st Cen\u00adtu\u00adry has drawn the ire of the sple\u00adnet\u00adic Paul Krug\u00adman. [Cred\u00adit: Nation\u00adal Review]<\/p><\/div>There is grow\u00ading con\u00adcern among peo\u00adple on the Right and Left about income inequal\u00adi\u00adty. But you wouldn\u2019t know that from read\u00ading Paul Krugman\u2019s lat\u00adest screed<\/a>.\n What stirred Krugman\u2019s bile this week was crit\u00adi\u00adcism of econ\u00ado\u00admist Thomas Piketty\u2019s book, Cap\u00adi\u00adtal in the 21st Cen\u00adtu\u00adry<\/em>,<\/span> a work that has attained canon\u00adi\u00adcal sta\u00adtus among the Left on both sides of the Atlantic.<\/p>\n Krug\u00adman is incensed that the Finan\u00adcial Times\u2019 Chris Giles<\/a> found fault with Piketty\u2019s method\u00adol\u00ado\u00adgy. Comb\u00ading through Piket\u00adty\u2019s spread\u00adsheets, Giles found evi\u00addence that Piket\u00adty manip\u00adu\u00adlat\u00aded data to sup\u00adport his the\u00adsis that inequal\u00adi\u00adty has risen sharply in recent decades in devel\u00adoped countries.<\/p>\n Krug\u00adman declared that Giles\u2019 crit\u00adi\u00adcism has been defin\u00adi\u00adtive\u00adly \u201cdebunked\u201d and that the lib\u00ader\u00adties Piket\u00adty took with the raw data \u201care nor\u00admal in any research that relies on a vari\u00adety of sources.\u201d<\/p>\n That may be. Krug\u00adman has one more Nobel Prize in Eco\u00adnom\u00adics than I ever will and he is steeped in the ways of acad\u00ade\u00admia. If fudg\u00ading num\u00adbers to sup\u00adport one\u2019s the\u00ado\u00adries is a wide\u00adly accept\u00aded prac\u00adtice, then per\u00adhaps Giles\u2019 cri\u00adtique of Piket\u00adty is indeed misguided.<\/p>\n What I find trou\u00adbling about the Krug\u00adman arti\u00adcle are his ful\u00admi\u00adna\u00adtions against any\u00adone who would dare to ques\u00adtion Piketty\u2019s work. While absolv\u00ading Giles of \u201cbeing a hired gun for the plu\u00adtoc\u00adra\u00adcy,\u201d Krug\u00adman rails against those who cred\u00adit Giles\u2019 cri\u00adtiques as \u201cself-pro\u00adclaimed experts,\u201d \u201cpro\u00adfes\u00adsion\u00adal debunkers of lib\u00ader\u00adal pieties,\u201d and \u201ccon\u00adcern trolls\u201d [what\u00adev\u00ader that might mean]. Worst of all, they are guilty of \u201cinequal\u00adi\u00adty denial.\u201d Their crit\u00adi\u00adcism of \u201cthe con\u00adsen\u00adsus\u201d proves them to be of fee\u00adble mind and malev\u00ado\u00adlent intent.<\/p>\n This notion of \u201cdeniers,\u201d first apt\u00adly applied to those who claim that the Holo\u00adcaust nev\u00ader occurred, has now become the epi\u00adthet of choice applied to any\u00adone who crit\u00adi\u00adcizes the polit\u00adi\u00adcal agen\u00adda of the Left. If you ques\u00adtion whether human activ\u00adi\u00adty con\u00adtributes sig\u00adnif\u00adi\u00adcant\u00adly to glob\u00adal warm\u00ading or reject the pol\u00adi\u00adcy pre\u00adscrip\u00adtions of cli\u00admate change adher\u00adents, you are a denier. Krug\u00adman now is extend\u00ading this slan\u00adder to peo\u00adple who raise doubts about the work of Thomas Piketty.<\/p>\n His pur\u00adpose is to sti\u00adfle debate. It is the intel\u00adlec\u00adtu\u00adal equiv\u00ada\u00adlent of a gag order, a dec\u00adla\u00adra\u00adtion that those who hold a cer\u00adtain posi\u00adtion are moral\u00adly and intel\u00adlec\u00adtu\u00adal\u00adly unfit to be tak\u00aden seri\u00adous\u00adly. A \u201cdenier\u2019s\u201d views are said to con\u00adflict with sci\u00adence, which is believed to have \u201cset\u00adtled\u201d con\u00adtro\u00adver\u00adsies and ren\u00addered fur\u00adther debate coun\u00adter\u00adpro\u00adduc\u00adtive and useless.<\/p>\n Sci\u00adence, by its nature, is nev\u00ader set\u00adtled. It is an ongo\u00ading quest for truth that involves ques\u00adtion\u00ading every hypoth\u00ade\u00adsis. The great\u00adest con\u00adtri\u00adbu\u00adtions to sci\u00adence through\u00adout the ages have been made by peo\u00adple who chal\u00adlenged \u201cthe con\u00adsen\u00adsus,\u201d who dared to explore mat\u00adters long deemed \u201cset\u00adtled.\u201d<\/p>\n For the record, I am not a denier. Like many oth\u00ader con\u00adser\u00adv\u00ada\u00adtives, I am con\u00adcerned about what appears to be ris\u00ading income and wealth inequal\u00adi\u00adty, though I think its caus\u00ades are com\u00adplex and poor\u00adly under\u00adstood. I\u2019ve writ\u00adten on sev\u00ader\u00adal occa\u00adsions on the sub\u00adject [here<\/a> and here<\/a>,<\/span> for exam\u00adple], includ\u00ading a favor\u00adable piece<\/a> on a paper that Piket\u00adty co-authored before he attained rock star status.<\/p>\n That doesn\u2019t mean I take every\u00adthing that Piket\u00adty says about inequal\u00adi\u00adty at face val\u00adue. His work has met with crit\u00adi\u00adcism from econ\u00ado\u00admists like Kevin Has\u00adsett<\/a> of the Amer\u00adi\u00adcan Enter\u00adprise Insti\u00adtute, James K. Gal\u00adbraith<\/a> of the John\u00adson School of Pub\u00adlic Affairs, Tyler Cowen<\/a> of George Mason Uni\u00adver\u00adsi\u00adty and, with respect to his pol\u00adi\u00adcy pre\u00adscrip\u00adtions, for\u00admer World Bank econ\u00ado\u00admist Branko Milanovic<\/a>.<\/p>\n Even if we were to con\u00adcede that he didn\u2019t cook some of his num\u00adbers, Piket\u00adty inar\u00adguably failed to take into account the effect of tax\u00ades and income trans\u00adfers on inequal\u00adi\u00adty mea\u00adsure\u00adments. You don\u2019t have to be a con\u00adser\u00adv\u00ada\u00adtive denier to point this out. Gary Burt\u00adless<\/a> of the Brook\u00adings Insti\u00adtu\u00adtion has writ\u00adten about it, as has the Wash\u00ading\u00adton Post\u2019s Robert Samuel\u00adson<\/a>.<\/p>\n This is a seri\u00adous defi\u00adcien\u00adcy. As Burt\u00adless notes, Piketty\u2019s analy\u00adsis over\u00adlooks Social Secu\u00adri\u00adty ben\u00ade\u00adfits, cash wel\u00adfare pay\u00adments, and such mas\u00adsive gov\u00adern\u00adment pro\u00adgrams as food stamps, hous\u00ading assis\u00adtance, Medicare and Med\u00adic\u00adaid. The val\u00adue of these trans\u00adfer pay\u00adments has grown over time \u2013 from 1 per\u00adcent of per\u00adson\u00adal income in 1929 to 17 per\u00adcent in 2012 \u2013 and is pro\u00adject\u00aded to become even larg\u00ader in the future.<\/p>\n Its impact on house\u00adhold income is espe\u00adcial\u00adly pro\u00adnounced among peo\u00adple in the bot\u00adtom quin\u00adtile, accord\u00ading to the Con\u00adgres\u00adsion\u00adal Bud\u00adget Office<\/a>,<\/span> which means that Piketty\u2019s deci\u00adsion to ignore these pay\u00adments great\u00adly dis\u00adtorts his com\u00adpar\u00adisons of income inequal\u00adi\u00adty over time.<\/p>\n Nor does Piket\u00adty account for the fact that house\u00adholds are, on aver\u00adage, small\u00ader today than they were in ear\u00adli\u00ader gen\u00ader\u00ada\u00adtions. CBO<\/span> adjust\u00aded its income sta\u00adtis\u00adtics to reflect this fact, a sen\u00adsi\u00adble deci\u00adsion, as Burt\u00adless observed:<\/p>\n It seems plau\u00adsi\u00adble to think a sin\u00adgle-per\u00adson house\u00adhold can live more com\u00adfort\u00adably on $40,000 a year than a four-per\u00adson fam\u00adi\u00adly. House\u00adhold size has shrunk over time, so even if medi\u00adan house\u00adhold income has remained unchanged, the income avail\u00adable to sup\u00adport each house\u00adhold mem\u00adber has gone up.<\/p><\/blockquote>\n Final\u00adly, CBO<\/span> fac\u00adtored in fed\u00ader\u00adal (though not state and local) tax\u00ades. The com\u00adbined effect of income, ben\u00ade\u00adfits and fed\u00ader\u00adal tax\u00ades is shown in this chart below, which Burt\u00adless pre\u00adpared based on CBO<\/span> data. Valid com\u00adpar\u00adisons between cur\u00adrent income dis\u00adpar\u00adi\u00adties and those that exist\u00aded before the New Deal are pos\u00adsi\u00adble only if they include the val\u00adue of social wel\u00adfare pay\u00adments. Piket\u00adty failed to do that. This omis\u00adsion also casts doubt, not only on his his\u00adtor\u00adi\u00adcal com\u00adpar\u00adisons, but also on asser\u00adtions that mid\u00addle class income has stag\u00adnat\u00aded in recent decades. If income is broad\u00adly under\u00adstood to include both wages and ben\u00ade\u00adfits, it has not. Since the late 1970s, the poor\u00adest have seen a 50 per\u00adcent increase in real net income, while the mid\u00addle quin\u00adtile expe\u00adri\u00adenced a 36 per\u00adcent increase. That doesn\u2019t mean that income inequal\u00adi\u00adty has been arrest\u00aded. Far from it. After-tax income for the top 1 per\u00adcent tripled over the same period.<\/p>\n Krug\u00adman acknowl\u00adedges that Piket\u00adty ignored the effects of tax\u00ades and trans\u00adfer pay\u00adments, but curi\u00adous\u00adly sug\u00adgests that this omis\u00adsion doesn\u2019t \u201cgreat\u00adly change the pic\u00adture.\u201d But if tax\u00ading the rich has\u00adn\u2019t \u201cgreat\u00adly changed the [inequal\u00adi\u00adty] pic\u00adture,\u201d then why does Krug\u00adman \u2014 in his next sen\u00adtence \u2014 align him\u00adself with \u201cpop\u00adulist demands for high\u00ader tax\u00ades on the rich?\u201d<\/p>\n Inequal\u00adi\u00adty\u2019s stub\u00adborn para\u00addox is that it appears to have increased along\u00adside poli\u00adcies that the Left insists will reduce it \u2014 high tax\u00ades on the rich cou\u00adpled with a robust array of income trans\u00adfer pro\u00adgrams. Those who say that this is because the US<\/span> does\u00adn\u2019t tax and spend enough should note that, accord\u00ading to Piket\u00adty, inequal\u00adi\u00adty also has grown in Europe, where tax\u00ades are sub\u00adstan\u00adtial\u00adly high\u00ader and trans\u00adfer pro\u00adgrams much larg\u00ader than in the US<\/span>.<\/p>\n It\u2019s not clear why Krug\u00adman believes that dou\u00adbling down on these poli\u00adcies will pro\u00adduce a dif\u00adfer\u00adent result. But that is char\u00adac\u00adter\u00adis\u00adtic of the Left. If many on the Right deny the increase in inequal\u00adi\u00adty or dis\u00admiss its sig\u00adnif\u00adi\u00adcance, the Left tends to use it as a sym\u00adbol\u00adic issue to ral\u00adly their core sup\u00adport\u00aders behind tired pol\u00adi\u00adcy pro\u00adpos\u00adals like tax hikes and min\u00adi\u00admum wage increas\u00ades. These poli\u00adcies have not and will not resolve the inequal\u00adi\u00adty problem.<\/p>\n The data on inequal\u00adi\u00adty, as some of Piket\u00adty\u2019s crit\u00adics have not\u00aded, are spot\u00adty, the prob\u00adlem com\u00adplex, its caus\u00ades elu\u00adsive. Plen\u00adty of work remains to be done by seri\u00adous pol\u00adi\u00adcy\u00admak\u00aders of all ide\u00adolo\u00adgies. It is a dis\u00adcus\u00adsion worth hav\u00ading \u2014 one that should wel\u00adcome the con\u00adtri\u00adbu\u00adtions of every\u00adone, includ\u00ading Krug\u00adman and his much-despised \u201cdeniers.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" There is grow\u00ading con\u00adcern among peo\u00adple on the Right and Left about income inequal\u00adi\u00adty. But you wouldn\u2019t know that from read\u00ading Paul Krugman\u2019s lat\u00adest screed. What stirred Krugman\u2019s bile this week was crit\u00adi\u00adcism of econ\u00ado\u00admist Thomas Piketty\u2019s book, Cap\u00adi\u00adtal in \u2026 Con\u00adtin\u00adue read\u00ading <\/a> Peo\u00adple in the bot\u00adtom fifth receive $3 in ben\u00ade\u00adfits for every $1 that they earn in wages, and pay vir\u00adtu\u00adal\u00adly no net fed\u00ader\u00adal tax\u00ades. Those in the mid\u00addle fifth col\u00adlect more in ben\u00ade\u00adfits in the aggre\u00adgate than they pay in tax\u00ades, while those at the top derive a neg\u00adli\u00adgi\u00adble por\u00adtion of their incomes from trans\u00adfer pay\u00adments and for\u00adfeit a sub\u00adstan\u00adtial share of their earn\u00adings to the fed\u00ader\u00adal gov\u00adern\u00adment. Piketty\u2019s work took none of this into account.<\/p>\n