Why Are Economists Giving Piketty the Cold Shoulder? (2017) • Hacker News Board

Re: Why Are Economists Giving Piketty the Cold Shoulder? (2017)

#101

Post by atq2119 » Sun, Mar 31, 2019, 6:51 PM UTC

jacques_chester wrote: post #93

mcguire wrote: post #19

Earlier quoted context omitted.

" But perhaps the greatest rebuke of Piketty to be found among academic economics is not contained in any of these overt or veiled attacks on his scholarship and interpretation, but rather in the deafening silence that greets it, as well as inequality in general, in broad swathes of the field—even to this day. You can search through the websites of several leading economics departments or the official lists of workin…

This is still not evidence of conspiracy (but has the structure of classic conspiracy theories). It just means the mainstream looked at it and disagreed. Nobody is owed attention from any discipline of study. Absence of attention is not conclusive evidence of anything.

Nobody is owed anything, but since publications are the currency of research and the measure by which academics are evaluated, publishing a critique of something as widely and publicly discussed as Piketty's books should be very tempting for academic economists (assuming that economics is a normal academic discipline).

So in front of that background, the silence is suspicious, and the most plausible explanation is that the majority of participants would like to disagree but find themselves unable to put forward such a critique.

Re: Why Are Economists Giving Piketty the Cold Shoulder? (2017)

#102

Post by bawana » Sun, Mar 31, 2019, 6:53 PM UTC

Yes the establishment economists have vested interests. But, Vested interests are what allowed Silicon Valley to flourish. The east coast financial center largely ignored the pc space until Bill Gates, Steve Jobs, Bill Joy and numerous others built the pc hardware and networking stack to allow everyone to have a'voice' and to hear all those voices. Although Piketty's arguments hold water, he has not shown a synthesis that will allow us to unwind smoothly from the concentration of wealth.

I once had a heated discussion with an economist about this very topic. Financial wealth grows now largely through speculation. Although stocks and options were once based in fundamentals, their prices now fluctuate wildly based on their own supply and demand which is often decoupled from reality.

I suggested having two currencies, one money derived from human labor and another derived from the work that financial instruments generate.

One could establish an exchange rate between one and the other based on wealth disparity. Or another way to deal with these currencies would be to restrict income and capital gains from financial money to only be spent on non-financial products (goods, services, upgrade factories, upgrade roads, etc.) As this economist was working in the financial sector in NY, he thought the idea was ludicrous.

He felt that money from the financial sector was equally valued as money from human labor. Or even more valued ! He wanted to control his money and not have to invest in the messy world of humanity directly.

Re: Why Are Economists Giving Piketty the Cold Shoulder? (2017)

#103

Post by s17n » Sun, Mar 31, 2019, 6:58 PM UTC

lusmd wrote: post #39

rjf72 wrote: post #11

This paragraph seems bothersome: "Most striking, however, is that when you hold educational attainment and other observable worker characteristics constant, pay is starkly different depending on the firm where you work, even within narrowly-defined education categories, industries and occupations. This is prima-facie evidence that the human capital model in a competitive labor market is an increasingly poor way to ex…

Yes, that paragraph is very, very bad, because it's not people of equal education that would have equal wages, but equal productivity---which will vary depending on what firm you're at! Not just because of sorting and poaching of talent, but some firms' production and capital structure will be such that the marginal worker will be more productive.

That makes no sense, equivalent workers should get paid equivalent wages regardless of their firms’ productivities. Apple doesn’t pay more for aluminum than a soda can maker.

Re: Why Are Economists Giving Piketty the Cold Shoulder? (2017)

#104

Post by yakubin » Sun, Mar 31, 2019, 7:01 PM UTC

DataWorker wrote: post #90

yakubin wrote: post #78

Earlier quoted context omitted.

Just because something isn't science, doesn't mean that it is art. Social "sciences", psychology and the like are neither. It is true however that they get more and more ridiculous when they try to dress their ideologies in a scientifically-sounding language to get a piece of the cake which is credibility that the hard sciences cooked for themselves, at the same time having remarkably little to do with any science at…

It sounds like you’ve discovered the problems with the softer sciences. You should look into whatever you consider a “real” science and see if it doesn’t have many of the same problems. That would require a bit more effort and intellect, problems in psychology and economics are pretty obvious, but you might be amazed by what you find.

I agree that there are fundamental problems in the hard sciences as well. E.g. the hype around string theory in physics. However, in this case I am told by the physicists, whom I know personally, that no physicist considers it "real physics" - they consider it mathematics (and many mathematicians consider it poor mathematics). The issue here seems largely to be the distorted image that the press presents of the views of the scientific community.

There are other examples, but the problems are nowhere near as big as in the fields my comment was suspicious of. And of course there surely are a lot of problems I don't have the slightest idea about. Still, the mindset of the scientists I know is so much different from the mindset of sociologists and others who seem much more driven by fashion. Back to physicists, I don't claim they are exempt from the influence of fashion. I claim that the impact of this influence is on a whole different level; there are lines that are not crossed, everything is up for falsification by experiment, and if it isn't falsifiable, then to hell with it etc. All of this makes me trust them a lot more.

Re: Why Are Economists Giving Piketty the Cold Shoulder? (2017)

#105

Post by pas » Sun, Mar 31, 2019, 7:04 PM UTC

coldtea wrote: post #54

geezerjay wrote: post #45

Earlier quoted context omitted.

Populism is a major problem, and one which is based on unscrupulous politicians taking advantage of the ignorance and prejudice while promissing unrealisting and outright impossible solutions to problems that they missrepresent and even invent. And that has absolutely zero to do with science in general and economic models in particular. Time and again we see populist politicians fanning up the masses with anti-capita…

> Populism is a major problem, and one which is based on unscrupulous politicians taking advantage of the ignorance and prejudice while promissing unrealisting and outright impossible solutions to problems that they missrepresent and even invent. Isn't that also what the elites (say, the 10%-ers) have historically also said for realistic and entirely possible solutions (like beheading the King and building a democrat…

Pretty big difference between deemed populist by the king and deemed populist by the middle class, by secular opposition to that populism, and so on.

That said, you are right, the struggle is real. But it's likely not the 10%, but probably less or a lot more, depending on how you view people who benefit from the status quo. For example anyone who buys a new car, plans a trip, ponders over a job offer, submits an offer on a tender has options to try to rock the boat. Greener, more fair, more just options are usually there - but of course those usually also require some kind of trade off. Do we want something that's good on the long term, or something that's good on the short term?

And based on how many options people have and how little they value the long term, the global perspective we could classify them into different kinds of beneficiaries of the status quo. And it's enough for a small cabal of cooperating power brokers to benefit themselves to and unimaginably huge degree. As in significant portion of the world's "income" goes to people who had the option to enrich themselves and took it.

Sure, this can be complicated further by looking at those who enriched themselves then proceeded to spend those riches on goals that ultimately help others - but these deviations are usually small, and again, ultimately, can be factored in.

However, sometimes beheading kings is contraproductive as you get a civil war. Similarly just adding more voters does not magically lead to a fairer outcome. The classic example is adding more and more cannibals will eventually lead to a bit of a pickle.

Re: Why Are Economists Giving Piketty the Cold Shoulder? (2017)

#106

Post by mcguire » Sun, Mar 31, 2019, 7:06 PM UTC

AnthonyMouse wrote: post #41

mcguire wrote: post #31

Earlier quoted context omitted.

I have some problems with that same quote. The "disproportionate price appreciation of housing and the land it sits on" seems to me to be primarily a factor only in some (maybe most) large cities; outside those cities, price appreciation, perhaps excessive price appreciation, has occurred, but it's nothing like that in those few cities. My feeling is that, sure, the effect of real estate prices are large in real term…

> The "disproportionate price appreciation of housing and the land it sits on" seems to me to be primarily a factor only in some (maybe most) large cities; outside those cities, price appreciation, perhaps excessive price appreciation, has occurred, but it's nothing like that in those few cities. But those cities are where "the 1%" live or own property, so they're the beneficiaries of the price inflation, which is pr…

Making money cheap for mortgages is the mechanism the financial industry used---they used derivative technology in a largely-failed attempt to reduce the risks[1] of a class of extremely risky loans, loans would would never have been made without the derivatives. I'd argue that this benefited the financial industry much more than even "existing owners."

Buying real estate cheap and selling it for great profit, as a rule, only works once. If you use the proceeds to buy back into the same market, you're buying expensive property; you only actually see the profit if you move to East Bumford and buy cheap property that isn't appreciating. Further $750k or even several million isn't enough to get into the 1%. But skimming a few percent in fees off of millions of transactions is nigh unlimited money.

Re: Why Are Economists Giving Piketty the Cold Shoulder? (2017)

#107

Post by m0llusk » Sun, Mar 31, 2019, 7:12 PM UTC

mordymoop wrote: post #15

Are we still talking about this? Within months of the book’s release, readers had found many examples where his data selections had been incomplete. To the extent that the main points were invalidated or made far less convincing. When you include the full data in his analysis, the main conclusions are drawn into question. There are many very thorough blog posts by economists you can easily Google. It’d be like if Ori…

This is not accurate. Piketty has continued to refine the data and add more as it comes available. The main point was that capital flows are interesting and that is beyond contest at this point. The book Capital has some tentative analysis at the end but doesn't make any strong conclusions and avoids taking the focus away from measuring flows of capital.

Because it is possible to use this data about capital to come to conclusions that are politically unpopular among some subgroups people have piled on this false critical narrative emphasizing supposed errors and gaps in the data and keeping the focus on some brief remarks at the end of a very large work that has a range of applications.

I don't think critics of Piketty did this on purpose. They just pushed unreasonably hard on the data they wanted to find fault with.

Re: Why Are Economists Giving Piketty the Cold Shoulder? (2017)

#108

Post by taffer » Sun, Mar 31, 2019, 7:20 PM UTC

blunte wrote: post #100

taffer wrote: post #86

Earlier quoted context omitted.

> Go ahead poke at Milton Friedman and watch them get really hot under the collar. Who is them ? Do you think economics hasn't made any progress sice the 1970s and everyone is a paleomonetarist?

It is exceptionally difficult to prove economic theories because experiments cannot be repeated. The variables are always changing, and there is far from complete control over them.

Microeconomists and behavioural economists do indeed conduct repeatable experiments. This is more difficult for macroeconomists, of course, but the same is true for many sciences, such as theoretical physics, climate science or much of biology.

Re: Why Are Economists Giving Piketty the Cold Shoulder? (2017)

#109

Post by taffer » Sun, Mar 31, 2019, 7:27 PM UTC

atq2119 wrote: post #98

taffer wrote: post #83

Earlier quoted context omitted.

And that is exactly what so called climate sceptics say about climate science or what antivaxxers say about conventional medicine.

You can take a look at track records of predictions and policy interventions to compare those fields. Vaccine did in fact significantly reduce or even eradicate some diseases. The track record of predictions out of economics is a lot spottier.

Can biologists or paleontologists forecast evolution? Can meteorologists forecast the weather in four months?

> Vaccine did in fact significantly reduce or even eradicate some diseases. The track record of predictions out of economics is a lot spottier.

The same applies to the track record of seismologists. Moreover, forecasting is a very, very small field of economics.

Re: Why Are Economists Giving Piketty the Cold Shoulder? (2017)

#110

Post by mcguire » Sun, Mar 31, 2019, 7:29 PM UTC

burlesona wrote: post #44

mcguire wrote: post #31

Earlier quoted context omitted.

I have some problems with that same quote. The "disproportionate price appreciation of housing and the land it sits on" seems to me to be primarily a factor only in some (maybe most) large cities; outside those cities, price appreciation, perhaps excessive price appreciation, has occurred, but it's nothing like that in those few cities. My feeling is that, sure, the effect of real estate prices are large in real term…

I agree that real estate appreciation is an effect rather than a cause. What I'm suggesting is: if Rognlie is correct, the root cause of real estate appreciation may also be the root cause of rising inequality. I'll try to explain, giving a US-centric narrative because that's the one I know best, but similar parallel things have happened around the world. - - - - - Mass urbanization started in the 1800s and accelerat…

I see your point about a push-back against urbanization (I live in the Tennessee valley), although there are a lot of confounding factors. Concentrations of population do make most infrastructure more cost-effective, particularly in for-profit terms. On the other hand, there are a lot of reasons other than anti-urbanization for rural electrification, roads, and bridges.

For one thing, there was (and is, in, say, China now (can I get some more commas in here?)) massive inequality between the wealthy, electrified urban areas and poor, low education, rural areas. This is a problem for a democracy like the US, where an urban majority (which only happened in 1910-20) cannot run rough-shod over a rural minority. That political problem is enhanced by a media who is certain to show the famine out in the sticks, in comparison to the comfort of your favorite city.

Further, all of the resources are in rural areas. You'd have a hard time digging coal out of Appalachia if every moves to Jersey City. And you still have to deal with agriculture: your bread is coming from the Dakotas and your corn flakes from Kansas. Unless, of course, there's no infrastructure to transport it from there to here. And this was before the "green revolution" made food really, really cheap.

There are also other factors. The US was largely founded on the idea of a homeowner, living on a homestead that he owns, with property rights and all that. And then there's the belief (which I kinda agree with) that people who own property are more involved in their communities than people who don't, and thus that home ownership is a good thing in itself. ("The city council is doing something stupid! Do we go down and yell at people, or do we pack up the apartment and move?")