Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory

blogs.wsj.com

Post reply on HN
Print view View original

41–50 of 90 posts

Re: ‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory

#41

Post by jsmith0295 »

coldtea wrote: post #7
nanis wrote: post #3

Earlier quoted context omitted.

> I only did mathematical modeling for HPC systems, not economies. No worries. Economics content in Piketty's arguments is zero.

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…

This is actually an argument which is pretty core to Austrian economics. They're dismissive of most traditional aggregate models basically because they think they aren't accurate enough to qualify as scientific. Generally Austrians are sort of dismissed as a cult, but IMO they have a pretty compelling explanation of how the Fed's attempts at price level stabilization helped cause the Great Depression. I'm not an economist or someone who has really studied this, though.

Re: ‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory

#42

Post by DanBC »

denzil_correa wrote: post #39
argonaut wrote: post #5

Earlier quoted context omitted.

The WSJ didn't present the paper as peer-reviewed fact. It's also not like Piketty's book was peer-reviewed either...

> It's also not like Piketty's book was peer-reviewed either... Curious, what is exactly a peer-reviewed book? Could you give me some examples of one?

> Curious, what is exactly a peer-reviewed book? Could you give me some examples of one?

Here's an article that describes the problems of the lack of fact-checking in books compared to the fact checking that some US newspapers do.

http://www.theatlantic.com/entertainment/archive/2014/09/why...

> Readers might think nonfiction books are the most reliable media sources there are. But accuracy scandals haven't reformed an industry that faces no big repercussions for errors.

Re: ‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory

#43

Post by beefield »

berntb wrote: post #32
coldtea wrote: post #18

Earlier quoted context omitted.

> 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…

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 proo…

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.

Re: ‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory

#44

Post by chakkop »

regularfry wrote: post #28
chakkop wrote: post #22

Earlier quoted context omitted.

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…

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?

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.

Re: ‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory

#45

Post by nhaehnle »

berntb wrote: post #16
coldtea wrote: post #7

Earlier quoted context omitted.

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…

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…

I don't think conspiracy theory is the right word for it. The world isn't ever that neat :)

His statement, when you refine it appropriately (which is not always done in an online forum), only presupposes that most people of the field who are visible to the public are "either idiots, fanatics or crooks".

I wouldn't phrase it quite so strongly (and for what it's worth, the grandparent didn't either), but it's easy to see why that would happen. Since economics is mostly about money, even slightly bending the public's perception on what scientific economic consensus is can have an extreme payoff via influencing public policy. So a lot of money is spent on trying to do so (virtually all of the so-called "think tanks"), much more and on a much more consistent basis than in any other science. So even from first principles, without any evidence, you have to logically expect economics to be worse than other sciences at delivering a rational truth.

As for evidence, I wonder what you would even accept as a "non-ideological source"?

All that said, it's not like the economics profession is an entirely lost cause. There are people like Dean Baker and James Galbraith who manage to occasionally bring alternative voices to the public.

Re: ‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory

#46

Post by ajuc »

chakkop wrote: post #22
regularfry wrote: post #11

Earlier quoted context omitted.

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 regulato…

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…

> it would have been unimaginable for a member of the peasantry to even claim equality with some lord

Peasant wars, uprisings etc show that it wasn't unimaginable, just mostly not realistic.

Re: ‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory

#47

Post by posterboy »

jamesblonde wrote: post #38
legulere wrote: post #26

Earlier quoted context omitted.

Extreme material inequality can't be explained by some people performing better, so it's pretty obvious that it is unjust. How can unjust distribution of the material wealth be moral? How can you morally justify that some people have to work more than 40 hours per week to be able to barely scrape by, while others can just enjoy their lives luxuriously without working at all. Oh and in fact, poor people in western soc…

How extreme can material inequality get before it's a problem? Well the Walton family have the same amount of money (wealth) as the bottom 160 million Americans. How much more extreme does it have to get before it doesn't become the issue? http://www.politifact.com/wisconsin/statements/2013/dec/08/o...

Today, money is immaterial. Your argument, as poignant as it may be, doesn't follow.

Re: ‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory

#48

Post by chakkop »

notahacker wrote: post #33
chakkop wrote: post #23

Earlier quoted context omitted.

Nearly every assumption in this argument of Piketty's is flawed. Is it only the rich that have capital? What about human capital? What about creative destruction--the entry of new market players? Don't the rich (and their children) often squander their capital? More to the point: look at the evidence of the many rich people around us. Did they build this wealth by banking on r > g, or by putting idea upon idea and cr…

The book attempts to address these in rather more detail than can be managed here, but human capital isn't likely to get you to the ranks of fabulously wealthy without the backing of VCs and their already fabulously wealthy LPs, and wealthy dynasties are generally much better at structuring their portfolios to avoid being wiped out by "creative destruction" than smaller business owners. Piketty argues that our concep…

I agree with you: it is a long book, with more problems than can be enumerated and discussed here, but key amongst them is the idea that inequality--the Gini coefficient--matters above all else, and particularly matters more than the absolute improvements in living standards that we (most of us) have experienced in recent centuries. I don't think one's goal should be to enter the ranks of the 'fabulously wealthy'. Anyway, by definition, there will always be a bottom 10% or 20%.

Re: ‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory

#49

Post by berntb »

beefield wrote: post #43
berntb wrote: post #32

Earlier quoted context omitted.

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 proo…

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 mos…

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.)

Re: ‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory

#50

Post by jamesblonde »

posterboy wrote: post #47
jamesblonde wrote: post #38

Earlier quoted context omitted.

How extreme can material inequality get before it's a problem? Well the Walton family have the same amount of money (wealth) as the bottom 160 million Americans. How much more extreme does it have to get before it doesn't become the issue? http://www.politifact.com/wisconsin/statements/2013/dec/08/o...

Today, money is immaterial. Your argument, as poignant as it may be, doesn't follow.

Money is immaterial?!? As Homer Simpson once said (to his brain): "money can be exchanged for goods and services" - like healthcare, education, important stuff....
Post reply on HN