"Capital in the Twenty-First Century": Piketty's argument on wealth is misleading and biased.

Piketty's argument hits an iceberg

by Stan Veuger 

The progressive darling's argument on wealth is misleading and biased.

Prof. Thomas Piketty’s "Capital in the Twenty-First Century" is all the rage among progressives of all stripes who, like him, presumably wept softly when Leo died after Cal Hockley was so mean to him in the 1997 blockbuster "Titanic," a movie Piketty references throughout the book as a powerful piece of fictional evidence of how patrimonial capitalism works. Despite all the attention and praise, some sections of the book have received limited attention. A good example is Piketty’s analysis of the world’s wealthiest individuals and how they have fared over the last few decades.

Piketty’s analysis in that section focuses on the wealthiest people on Forbes Magazine’s list of the world’s highest-net-worth individuals, which started in 1987. What he does is the following: He takes the total wealth of the richest people in 1987, compares it to the richest people today, and finds that they have gotten richer, at an annual rate of almost 7 percent net of inflation. “They,” you say. “You mean the wealthiest people in 1987?” No, that is not what he does. He compares people in 1987 who were rich at the time to an almost entirely different group today. In Piketty’s world, of course, the super wealthy only become more super wealthy because the returns on capital are super high and they rule the universe, so you would expect this group not to change much. In the actual world we live in, things are very different.

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