tag:blogger.com,1999:blog-582368152716771238.post3134033831774046575..comments2024-03-28T14:41:03.793-05:00Comments on The Grumpy Economist: McCloskey on Piketty and FriendsJohn H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger22125tag:blogger.com,1999:blog-582368152716771238.post-31152985700762663622017-04-02T07:42:36.395-05:002017-04-02T07:42:36.395-05:00I can't speak usefully to the supply response ...I can't speak usefully to the supply response point.<br /><br />On forgetting the Great Enrichment thus far McCloskey means that it's an ongoing process (contra folks like Steven Pressman) that will continue, and therefore will enrich us further, with the degree of improvement from that continued enrichment exceeding the improvement not only from Piketty's proposed measures but even something vastly more drastic in redistributive oomph like a one-time total levelling of incomes.matthewhaydenhttps://www.blogger.com/profile/08067364162463228385noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-32570603366195971042016-05-29T04:17:03.774-05:002016-05-29T04:17:03.774-05:00Piketty's discussion of supply responses is at...Piketty's discussion of supply responses is at least as detailed as Dr. McCloskey, who, for all her online paragraphs, has misplaced the one containing the plain-language, real world account of supply responses and how they negate Piketty's work. <br /><br />Elsewhere, a main charge against Pickety is he forgets also "the Great Enrichment of the last two centuries." Yet his tome spends a great deal of time looking at this very thing from multiple perspectives and timelines, specifically in the "Growth: Illusions and Realities" section. Maybe he looks at it wrongly? That's what we are all trying to figure out.<br /><br />I'm not sure what to make of Dr. McCloskey. With so many asides and unexplained references and nods and winks and polemical categories in place of plain-language, her essays and articles are not very helpful.Anonymoushttps://www.blogger.com/profile/16419267735558060529noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-91197529379079825722015-01-19T19:51:39.133-06:002015-01-19T19:51:39.133-06:00Dears,
The last, leftish, Anonymous comment strik...Dears,<br /><br />The last, leftish, Anonymous comment strikes I think the right note. Let us listen to each other and respond. As the medieval Europeans put it, "Audite et alteram partem," listen even to the other side. (Amazing fact from postmodernism: in his later years Foucault read Friedman and Becker with understanding and enthusiasm.)<br /><br />I don't understand why scholars object to LONG books and articles. We're scientists, right? We want to see the argument in full, yes? Three short articles are the same as one long, eh? Piketty cannot at least be accused of hiding the ball, which is the unhappily Gaussian habit of High Theory.<br /><br />John is mistaken that statistical significance is no longer a problem. That's a common argument people make. Claudia says to me, "Oh, statistical significance is never used so. Consider the following advanced problem in specification error." Steve Ziliak and I reply, in The Cult of Statistical Significance (2008), that you're wrong: the cult goes one and on and on.<br /><br />And existence theorems are deeply attractive to the Math-Department trained mind, the wretched way we teach micro to first-year grad students---which one can see in Piketty's inability to understand supply response.<br /><br />Regards,<br /><br />Deirdre McCloskey <br />Unknownhttps://www.blogger.com/profile/05638820963402539684noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-4414930497679064662015-01-08T00:38:23.609-06:002015-01-08T00:38:23.609-06:00Overall I have to say that the article is an excel...Overall I have to say that the article is an excellently composed attack on the left. Beautifully composed and backed up with strong logic and counter-examples. <br /><br />However, as a person of the left I would be remiss if I did not point out the weaknesses in my view. Of course, this just means that your next article will be even more devastating. <br /><br />The main weakness in my view is the common simplification of anything remotely leftist to the all-encompassing command economy with an all-leveling wage. Of course the problem with this is, is that even totalitarian societies such as North Korea and the USSR under Stalin have never tried leveling all wages. <br /> <br />For example, look at how McCloskey turns Piketty into a complete wage leveler: "If we reduce the Great Society to a family by taxing the rich to the limit we destroy the signaling. People wander between cleaning and doctoring without such signals about the value people put on the next hour of the services."<br /><br />Did Piketty ever say that we should eliminate the differences in wages between doctors and janitors? I must have missed it. I do not think that anyone on the left has any problem with more skilled workers being paid a higher wage or that more experience should result in a higher wage. Just observe any union contract, higher wages and higher pay for experience as well as skills are always accounted for. <br /><br />I do believe that many left-wing critiques of wealth inequality are coming from Marx's original analysis of the exploitation of labor by the owner of capital. I think the best rebuke from the right is that this is the best system for deciding who is in charge of production (the one who satisfies customers the most). The best rebuke from the right is that through innovation inspired by profit which raises all boats the free market is actually better for the proletarian than any redistribution plan. I think this article does a fantastic job of outlining this rebuke. <br /><br />Another weakness of course, is to assume that anyone on the left railing for redistribution is renouncing all the benefits of capitalism and democratic government for the last 200 years. This is simply not true, even Marx would admit to the amazing wealth building capacity of capitalism. The main difference in terms of solutions between Piketty and Marx is that Piketty, along with most modern leftists, have renounced Marx's radical call to end private property as a means to end exploitation. Instead, most modern leftists are trying to increase the social safety net and taxes to pay for the social safety net. So instead of renouncing capitalism, they are simply adding a safety net to decrease what they see as the harshest reactions of the free market. <br /><br />To be stronger in the future, a good critique from the right should be about the actual solutions the left is trying to impose, not a straw man based on abolishing all the gains of capitalism, abolishing private property, and abolishing all differences in wages. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-85843959252727345132014-12-12T21:56:56.567-06:002014-12-12T21:56:56.567-06:00"the costs of market failures pale when compa..."the costs of market failures pale when compared to the costs of government failures"<br /><br />It is very true that war and concentration camps are very bad things and if that's what you mean by "government failures", then clearly government failures can be awful. However, Piketty has not proposed war or concentration camps. He's proposed a modest wealth tax. You might argue that this is a bad idea, but to claim that Piketty is proposing anything that will lead to fascism or communism is ludicrous. <br /><br />Even the claim that Piketty's proposals will slow down the pace of technological change needs an argument, not just a reflexive cry of "communism!"<br />Ragoutnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-16869236074022588892014-12-12T12:37:20.455-06:002014-12-12T12:37:20.455-06:001. McCloskey has the a unique combination of depth...1. McCloskey has the a unique combination of depth and breadth in her writing, one gets the sense that she sees the real forest but also knows why each tree is important.<br /><br />2. Cognitive bias seems to prevent Ragout and Patrick from admitting the fundamental idea Ms. M is making, namely that market exchange (trade) does more than any other mechanism to promote human betterment, measured in any way you choose. From the incentives to innovations to greater human well being, the market is uniquely situated to perform the needed functions.<br /><br />3. One does not need to be an ideologue to recognize that although markets fail at times, the costs of market failures pale when compared to the costs of government failures, they just need to be intellectually honest.Animadvertisementhttps://www.blogger.com/profile/09110196634828780706noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-62034077025082244572014-12-12T07:51:33.113-06:002014-12-12T07:51:33.113-06:00"And now we have the OECD report on how inequ...<i>"And now we have the OECD report on how inequality is suppressing economic growth. I'm looking forward to sophisticated responses"</i><br /><br />What ever you think of inequality & growth, that OECD report is pointless. First, it is within the OECD-only, which includes serious outliers like Mexico and Chile, biasing the results of the simple correlation. Second, even in the more sophisticated parts of the analysis (where mobility across income groups is compared), it's still a cross-sectional analysis within the OECD. If you are going to look at the effect of inequality on growth, why wouldn't you examine growth as inequality varies over time within countries ?pseudoerasmushttp://pseudoerasmus.comnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-90223071284181945092014-12-10T19:26:07.175-06:002014-12-10T19:26:07.175-06:00Cochrane accurately sums up McCloskey's review...Cochrane accurately sums up McCloskey's review: Piketty wrote a book "demanding in the end immense power for the author and his fellow travelers. (No, of course, Stalin, Mao, Castro, East Germany and North Korea just implemented it wrong. With us at the helm, the truly smart and caring, it will all work out fine.)"<br /><br />This saves me the trouble of arguing that McCloskey's frequent references to North Korea, the Soviet Union, and violent revolution aren't just non sequiturs. Instead McCloskey is calling Piketty a commie, a wannabe Lenin or Mao. Cochrane agrees, I think.<br /><br />I'd be grateful if someone could explain to me what McCloskey and Cochrane are talking about. As far as I can tell, neither one is making a "Road to Serfdom" argument. How could someone believe that a small wealth tax could lead to the end of capitalism and mass murder?Ragoutnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-10509077516663734922014-12-09T22:23:44.919-06:002014-12-09T22:23:44.919-06:00And now we have the OECD report on how inequality ...And now we have the OECD report on how inequality is suppressing economic growth. I'm looking forward to sophisticated responses.Luc Hansenhttps://www.blogger.com/profile/08537879871439864387noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-79869285183751865492014-12-05T08:29:27.653-06:002014-12-05T08:29:27.653-06:00Patrick - I think that's precisely the point. ...Patrick - I think that's precisely the point. Prior to the take-off of "trade-tested betterment" or capitalism if you will, it was just not materially possible to significantly improve the lot of the poor (most people). This despite these types of early welfare programs.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-10536262560161307182014-12-04T06:57:25.425-06:002014-12-04T06:57:25.425-06:00oh god! this is excellent.oh god! this is excellent.Anonymoushttps://www.blogger.com/profile/02667467783925318118noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-14036074053408303062014-12-04T01:58:36.068-06:002014-12-04T01:58:36.068-06:00The book is pure garbage, but it must be acknowled...The book is pure garbage, but it must be acknowledge that it has a nice cover and is full of cool graphs. Piketty must have made a good amount of money with it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-66219651909179360132014-12-03T16:14:24.006-06:002014-12-03T16:14:24.006-06:00Churches in several countries - Scotland and Engla...Churches in several countries - Scotland and England I know particularly - were required to extract tithes to fund community schools back to the 1600s. English Poor Laws setting up compulsory tithes to assist the poor go back to the 1600s under Elizabeth and were greatly reformed in the 1830s. Both were spotty in application, but this all precedes the industrial revolution. Patrick Caldonnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-26413357086237463032014-12-03T12:33:50.054-06:002014-12-03T12:33:50.054-06:00I certainly agree with most of McCloskey and your ...I certainly agree with most of McCloskey and your comments, and especially your two end points about "brave" and the need for editing/shortening. But I urge you both to reconsider your thoughts on the issue of "capital accumulation" and suggest reading Mises on the subject. Capital accumulation, and all that that implies (property rights and the understanding that that concept implies being an important part) is the precursor to innovation (new/better ideas) not an alternative to it.FreedomWorkshttps://www.blogger.com/profile/05675113268360765781noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-75425526852657794342014-12-03T11:56:02.434-06:002014-12-03T11:56:02.434-06:00FYI, the EJPE article: http://ejpe.org/pdf/7-2-art...FYI, the EJPE article: http://ejpe.org/pdf/7-2-art-4.pdfMoggionoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-82544341647894573622014-12-03T11:51:17.416-06:002014-12-03T11:51:17.416-06:00If Pickety's equations hold, then why isn'...If Pickety's equations hold, then why isn't all capital now owned by 1 person? There has been "capital" for thousands and thousands of years ...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-32519745098742851552014-12-03T11:50:15.313-06:002014-12-03T11:50:15.313-06:00But many of those things have only emerged in the ...But many of those things have only emerged in the last 50 years or so, whereas McCloskey's point is that the plight of the poor had already diminished substantially prior to those programs being introduced.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-42337638450644970782014-12-03T10:46:38.283-06:002014-12-03T10:46:38.283-06:00McCloskey is a very thoughtful person, but she alw...McCloskey is a very thoughtful person, but she always tends to write too long (eg, Bourgeois Dignity). There are worse faults, but it's not insignificant. <br /><br />I do agree with her that sophisticated statistical tests are over-emphasized, in that any significant result that can't be put into a simple chart probably doesn't exist. Overfitting and the omitted variables bias are still important, but they remain outside standard tests anyway (or, are tested in a totally ad hoc way).Eric Falkensteinhttps://www.blogger.com/profile/07243687157322033496noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-81809758621158109352014-12-03T10:39:39.550-06:002014-12-03T10:39:39.550-06:00They werent really libertarians just as liberal po...They werent really libertarians just as liberal politicians dont really detest corporations, just the ones that dont have them in their pocketsKULCAThttps://www.blogger.com/profile/16021505018998821691noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-77155540462849014522014-12-03T06:33:47.938-06:002014-12-03T06:33:47.938-06:00It was curious to hear about "science writer ...It was curious to hear about "science writer Matt Ridley". A more germane description would be "Ex-chairman of the failed lending institution Northern Rock, Matt Ridley". On 16th August 2007, the man quoted in this essay twice as detesting government, called up to see about the possibility of a government bail-out of his bank. This bailout came through in September. Note also the scorn heaped upon the notion of "too big to fail" in this essay.<br /><br />I also find this passage telling: "If income is correctly measured to include better working conditions, more years of education, better health care, longer retirement years, larger poverty-program subsidies, and above all the rising quality of the larger number of goods, the real income of the poor has risen, ..." - many of these things, education, health (for poor people), income during retirement, poverty program subsidies, and again income via EITC to help pay for the goods, are all coming via government redistribution. It's not clear that the Great Enrichment described in the piece would have reached the poor without substantial redistribution. It's also not clear to me that the Great Enrichment would have touched the lives of the poor so thoroughly without an active labor movement.<br /><br />The rhetoric is of independence and hands-off-style government. But - like Matt Ridley did so dramatically - I think many libertarians turn into statists when they are confronted with real problems.<br />Patrick Caldonnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-1146224214392302692014-12-02T21:23:35.269-06:002014-12-02T21:23:35.269-06:00WRONG! This blurb is COMPLETELY WRONG! "She...WRONG! This blurb is COMPLETELY WRONG! "She left out two important conditions: The wealthy do not consume, and they leave estates intact to one child. With characteristic self-contradiction, the Pikettys of the world bemoan the excessive and garish consumption of the rich, but then claim wealth grows as if it is not consumed, if not directly then by spendthrift heirs. The correct equation is r - c - n > g, where c is the ratio of consumption to wealth and n is the growth rate of heirs. "<br /><br />No. The correct equation is still r > g, which is nearly always true (capital is scarce, and 66% of the time--as the data show-- r > g), and it holds for the 1% WHEN TAKEN AS A CLASS. You cannot 'trace' just one family, call them the Rockefellers, and say that eventually (after several generations, though the actual Rockefellers seem to be defying this trend) they will become middle class. Instead, you must look at the 1% as a whole. And Piketty's equations hold. <br /><br />Now you can counter to the above: 'well, if entry and exit into the 1% class is easy, Horatio Alger style, then it should not matter, right?'. Right, but the problem is entry is not easy, see the works by economist Gregory Clark, using Swedish data. Ray Lopezhttps://www.blogger.com/profile/11134761834999705305noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-198470721266296582014-12-02T14:21:14.527-06:002014-12-02T14:21:14.527-06:00I agree with yours and McCloskey's sentiments ...I agree with yours and McCloskey's sentiments on Piketty, but mostly because why should I really care if the median income of an upper OECD country varies between 93rd and 93.25th percentile of the global distribution ? On the other hand, any longish-run economic history is welcome, I say.pseudoerasmushttp://pseudoerasmus.comnoreply@blogger.com