Picking Apart Piketty

March/​April 2017 • Policy Report

Thomas Piketty’s Capital in the 21st Century made a splash when it was published by Harvard University Press, and was widely cited by those in politics and media — but few people have actually read all 704 of its pages. Is it really the compelling case against capitalism that some believe it to be? In a new Cato book, Anti‐​Piketty: Capital for the 21st Century, a diverse group of scholars from several different fields, including historians, economists, and tax experts, offer a thorough rebuttal of his claims. The collection is edited by Emmanuel Martin of the Institute for Economic Studies‐​Europe, and Jean‐​Philippe Delsol and Nicolas Lecaussin of the Institute for Research in Economic and Fiscal Issues.

The first section of the book investigates Piketty’s flawed vision of the world — his zero‐​sum depiction of the economy, for example, and his narrow consideration of income inequality. As Nicholas Eberstadt points out, Piketty and his supporters tend to focus only on economic inequality, specifically income inequality, despite the fact that many other forms of inequality that affect human wellbeing are rapidly improving — longevity and education, for example. “If we widen our gaze just a bit, it should be almost immediately apparent that a number of remarkable worldwide trends are not only improving the human condition overall, but also making that condition markedly less unequal,” Eberstadt writes.

The second section of the book fact‐​checks Piketty’s statistical claims. Chris Giles writes a chapter on his Financial Times investigation into Piketty’s data, which so thoroughly undermined some of his findings that Piketty himself has backpedaled on them.

Finally, in the third part of the book, scholars scrutinize Piketty’s theory, conceptual foundations, and political recommendations. Cato’s James Dorn warns that Piketty’s dramatic plan for income redistribution would “undermine the fabric of civil society, stem economic growth, and diminish economic and personal freedom.” Piketty and his followers would do well to look to history — to lift up the poor, they should seek to increase economic freedom, rather than government power.

Other contributors include Martin Feldstein, Daron Acemoglu and James A. Robinson, Richard V. Burkhauser, Jeffrey Miron, Michael Tanner, Henri Lepage, and Alvaro Vargas Llosa.

Many recipients of Cato’s Milton Friedman Prize have suffered at the hands of their government. For some of them, the suffering doesn’t end after receiving the prize. In January China’s Communist party shut down the website of 2012 winner Mao Yushi’s think tank, which promotes free market economic values such as the value of private property and the rule of law. Their targeting of Mao is just one instance of widening repression in China, which Mao has repeatedly warned about. Meanwhile, in August the Venezuelan government illegally arrested and imprisoned 2008 winner Yon Goicoechea, even using his Friedman Prize to accuse of him of being “trained by the U.S. empire” as a foreign agent. Yon led the student movement against Chavez in 2008 and has remained a principled voice against the country’s unpopular and corrupt socialist government. As Cato’s Ian Vásquez wrote, “His and Mao’s experiences are a reminder of what’s at stake in too many places in the world where the promotion of liberalism requires courageous and admirable efforts.”

Cato​.org saw its highest traffic day ever in January, as our scholars’ immigration analysis and commentary attracted high interest in the first weeks of the Trump administration. The New York Times published Cato policy analyst David Bier’s legal analysis explaining why President Trump’s executive order banning immigrants from seven countries is illegal under current U.S. law, and Bier’s analysis fueled much of the initial commentary around the ban. “The gentleman with the most impact over the weekend was … David Bier at the Cato Institute’s Center for Global Liberty and Prosperity,” said Tom Keene of Bloomberg Surveillance. Bier was cited on the front page of the Washington Post, in the Wall Street Journal, on CNN, and (critically) by Ann Coulter. At the same time, Alex Nowrasteh’s writings on immigrants, refugees, and terrorism were widely cited, including by ABC’s The View, CNN, ESPN, and former secretary of state Madeleine Albright.

In 2016 Cato senior fellow Julian Sanchez authored four of the top 16 posts at Just Security, an online forum that analyzes U.S. national security law and policy, based out of the New York University School of Law. One of his posts was their number one most popular — his critique of draft anti‐​encryption legislation from Sens. Richard Burr (R-NC) and Dianne Feinstein (D-CA). He called the legislation “extraordinarily sweeping,” to the point that it would require developers to redesign web browsers in order to comply with it and would leave all internet users less secure.

Download the Policy Report Article