Phil Magness and my GMU Econ colleague Vincent Geloso are correct: “It’s time to discard Piketty’s inequality statistics.” Three slices:
The most recent of these is an article by David Splinter and Gerald Auten in the Journal of Political Economy. Auten and Splinter revisited many of the data construction assumptions made by Piketty and his acolytes in dealing with data from 1960 to 2020. Most notably, they made sure that income definitions were consistent over time, that the proper households were considered (as Piketty et al. used tax units that can be easily biased by demographic changes), and that better data were used. They ended up finding that Piketty’s mid-century trough was not as low as advertised. They also showed that the increase in income concentrations after 1980 was far more moderate than Piketty claims.
In the main article by Piketty and Saez, the top 1 percent earned 9 percent of all pre-tax incomes in 1980 versus 20 percent in 2020. In Auten and Splinter’s improvements, these proportions are 9 percent and 14 percent, respectively. After accounting for transfers and taxes (something that Piketty and Saez fail to do), Auten and Splinter find virtually no changes since 1960. Piketty and his defenders have thus far attributed the differences to differing assumptions about methodology and the calculation of imputed portions of their series. But Auten and Splinter’s work shows that these assumptions matter a great deal, meaning Piketty’s version is no longer an authoritative standard for evaluating levels of inequality.
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In earlier works published in The Economic Journal and Economic Inquiry, we also found other signs of carelessness by Piketty and his acolytes with data sources pre-1960. They used inconsistent definitions to link discontinuities in tax records. They omitted certain tax filing records after misreading their data sources. They made arbitrary decisions about how to impute gaps in their data, and used unreliable ratios to estimate the effects of accounting changes by the IRS. When we corrected all of these issues, we found that inequality was far lower in the 1920s than depicted. The decline did not start in the 1940s — it started in 1929 and close to two-thirds of it was completed by 1941. Again, the mid-century trough was not as deep as depicted.
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Critics do not deny inequality. They merely want to measure it correctly. Piketty’s own data are deeply suspect and open to challenges that he simply does not want to answer. Labeling his critics as “deniers” is a way of sidestepping the many problems with his own work. That alone warrants not only discarding his estimates but also discounting any future research because of bad academic behavior.
Wall Street Journal columnist Barton Swaim reviews Jennifer Burns’s new biography of Milton Friedman. Two slices:
“Milton Friedman: The Last Conservative,” by Jennifer Burns, a historian at Stanford, is a sympathetic intellectual biography. Ms. Burns had full access to Friedman’s papers stored at Stanford’s Hoover Institution; she has interviewed many of Friedman’s friends, colleagues and competitors; and she is plainly an authority on the at times highly abstruse subjects of economic theory and monetary policy. The book is a tremendous scholarly accomplishment.
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On one point I find Ms. Burns’s interpretation unfair. It’s a tangled subject, but to simplify: Friedman generally felt that the free market would address racial inequities more effectively than governmental attempts to dictate equality. He therefore resisted the idea, codified in Title VII of the Civil Rights Act of 1964, that government had both the ability and the moral authority to tell employers whom they could hire or businesses whom they could serve. That is not a popular view today, but its holders might reasonably claim that the private sector—sports, business—has done more than governmental compulsion to integrate the races, and less to sow discord. Yet Ms. Burns calls Friedman’s articulation of this viewpoint, expressed in his 1962 collection “Capitalism and Freedom,” an “apologia for racism.” The charge is preposterous—unless you can’t fathom a legitimate response to morally deplorable private behavior that doesn’t involve governmental coercion.
The perplexing issue is the noun. A user @breakingbaht expressed a lack of sympathy for “Jewish communities” (emphasis added) that allegedly encouraged “the exact kind of dialectical hatred against whites that they claim to want people to stop using against them” while supporting immigration of “hordes of minorities.”
After Mr. Musk responded “You have said the actual truth,” the New York Times cited equally undefined “Jewish groups” as detecting in the original tweet a common antisemitic trope. In one Times account, the phrase “Jewish communities” was transmuted into “Jewish people.” By the end of the week, without any new information being added, the Washington Post was reporting with unqualified confidence that Mr. Musk had given his “endorsement of comments alluding to the great replacement theory—a conspiracy theory espoused by neo-Nazi demonstrators in Charlottesville in 2017 and the gunmen who killed people inside synagogues in Pittsburgh in 2018 and Poway, Calif., in 2019.”
That’s 37 words of interpolation for a six-word tweet. Mr. Musk and the original tweeter heatedly denied antisemitic intent. The Journal examined the context and suggested Mr. Musk was really exercised about a specific Jewish group, the Anti-Defamation League, which has largely adopted the identitarian and censorship agendas of the progressive left.
Peter Suderman reviews Ridley Scott’s Napoleon. Here’s his conclusion:
As a takedown of political ambition and wartime glory, Scott’s movie is an enjoyably mean-spirited romp, much in keeping with his excellent, underrated movie about pitiable masculinity in the Middle Ages, The Last Duel. As a narrative, however, it’s something of a mess. Napoleon comes across as episodic and choppy even if you aren’t already aware that there’s a four-hour-and-change extended cut on the way. The two-and-a-half-hour theatrical cut often feels like a miniseries cut down to feature length, and it’s so intent on caricaturing its title characters that it never really explains why so many people followed him, often to their deaths, or how he was able to rise from such humble roots. But the movie’s blackly comic sensibility, in which a great man of history and his political ambition are recast as both absurd and horrific, is a welcome antithesis to the sort of iconographic portrayal that so often marks historical epics. And in that way, at least, Scott’s Napoleon is rather glorious.
“Why did the SEC suddenly dismiss dozens of cases?”
David Henderson is indebted to the late Charlie Munger.
Sally Pipes warns of the dangers of “Medicare for all.” A slice:
In other words, as progressive Americans make the case for single-payer, foreign countries with such systems are going the other way.
Contrary to popular belief, just one-quarter of practicing physicians in the United States are members of the American Medical Association.
That number may decline further if the organization keeps flirting with a single-payer system, which would prove devastating for physicians and patients alike.
William Ruger and Jason Sorens look at freedom across the 50 U.S. states.
