Econ book acclaimed by left based on faulty premise, factual errors, study finds
Thomas Piketty's “Capital in the 21st Century,” which New York Times columnist and Nobel-prize winner Paul Krugman called “the most important economics book of the year — and maybe of the decade,” calls for an 80 percent income tax to stop wealth inequality from increasing. The book earned its author an invitation to the White House to meet with Obama administration Treasury Secretary Jack Lew.
But it contains more than 10 factual errors, according to one new study accepted by the Journal of Private Enterprise and conducted by economists Phillip Magness of George Mason University and Robert P. Murphy of the Institute for Energy Research. The errors they report range from relatively simple mistakes such as getting several historical dates wrong to mis-attributing a massive tax increase to President Franklin Roosevelt that was actually passed by President Herbert Hoover, to incorrectly claiming that the minimum wage never increased under either George W. Bush or George H.W. Bush, who both oversaw increases.
The authors write that they see a pattern in the errors.
They also conclude that, in building some of his charts, Piketty switched between data sets in a way that was biased in favor of his argument. In his graph on wealth in the U.S., for instance, Piketty relied on data from one study going up until 1950, then for 1960 he switched to another study, and then for 1970 he went back to relying on the first study again.
The authors conclude that Piketty used “cherry-picked data points to construct a trend line that mirrors his predictions.”
The authors also found that, in one Piketty graph about US historical tax revenue, he only had data going back until 1900; yet he made the graph go back to 1870 by assuming those years were the same as 1900 and by adding or subtracting a seemingly arbitrary number to make the data appear plausible.
For Piketty's response and other alleged errors, see the article on FoxNews.com.
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