The Financial Times' Critique Doesn't Detract

It is a deep shame that the Financial Times' critique of Piketty's data is going to put some people off from buying and listening to this book, because a few quibbles about a very small amount of the data (on the UK only) doesn't detract from the validity of this detailed piece of analysis. It won't matter that many other well-respected economists defend Piketty's use of the data, or the robustness of his argument. For the readers of the FT, for those who represent the top 10% of weathholders, or those who aspire to be one of them, this book is a fundamental threat to their plans.

It's a long book, and it takes some concentration to listen to. Looking at the linked PDFs help to bring the stats and numbers to life. But I found it incredibly worthwhile. The central argument - that R>G (capital always trumps growth) is successfully and persuasively argued six ways from Sunday. And that is something not even Piketty's most vehement detractors can argue against.

Nor did I find Piketty's conclusions and suggestions even close to being the 'radical marxist' ones that he's been accused of holding by the press. He's conscious of the fundamental value of entrepreneurship, of a vibrant market.

When all is said and done, this book will polarize its readers along ideological lines. Because ultimately he's asking the question: what do we want our society to look like? He argues very persuasively that many of the ways we have sought to establish fairness and meritocracy in society have been ineffective in the long run.

This book threatens those who continue to perpetuate the myth that there are even playing fields: that financial success is based on merit, that opportunity is available to everyone, that trickle-down economics works, that education is the great leveler. There are good reasons why certain groups find this book threatening. It erodes the very thin veneer that the free market is truly free.

But it is also a very optimistic book. Piketty offers some very 'unradical' solutions for how to mitigate the problem of rapidly accelerating wealth concentration. It's not a 'downer' at all.

The narration is good for such a long and complex book. Well chosen to be easy on the ears but still engage the concentration. I found it well worth the credit and the time I spent on it.

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Audio format still useful to get the gist of it

I agree with the other reviewer who warned that the PDF has 106 pages of figures and tables and that the audio format may not be the best way to "read" this book.

However, in my case, there is no way for me, who is not an economist or a student, to get through 685 pages (577 pages of main text and figures plus notes, index, etc.) in the hardcover copy just by, uh, reading. While the audiobook's 25 hours is longer than the length of an average audiobook, I got through it in less than 10 days just by listening during my daily commute and chores, and I feel I got the gist of the content. It was interesting enough and, I felt I missed some important aspects of the argument depicted in the figures, so I went out and got a hardcopy and a notebook so that I can even take notes. Yes, this audiobook got me interested in this book.

An unexpected bonus of this book for me was the author's references to the characters and the financial/societal backdrops of stories by Jane Austen and Honoré de Balzac. I did not realize how much I missed and did not comprehend the important nuances of the stories from the 19th centuries world (or 18th or 20th for that matter). We don't usually pay attention to how culture is influenced by the distribution of capital in the society and how that affects day-to-day mood of people in it.

I noticed that this book has been greatly politicized. But to me, the book simply provides DATA-DRIVEN analyses and recommendations for a fair society.

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Hottest Economic Beach Read of the Season

This is one of those scholarly books that seem to end up being accidental cultural markers of time and place. I'm pretty sure Piketty wanted his book to be read/discussed/debated, and Belnap/Harvard Press certainly wanted it to be bought. But, I'm pretty sure neither the author or the publisher was expecting it to do sell like it did (whether it gets read is another matter). My guess is this book will stimulate a lot of debate about the real nature and scope of income and capital inequality AND debate about the proper roll of government in addressing these issues.

What I loved about this book was Piketty's voice. His narrative style. The fact he rejected the theoretical speculation favored by a lot of modern economists and instead went with a historical and data-centric narrative, gave this book juice. He wrote an economics book that demands to be read. I loved how he used literature (Balzac and Austen) as reference points for his thesis about the challenges with income and capital disparities between the 1% and the lower 50%. I loved his boldness. I mean really, it takes some scholarly, economic balls to name your book 'Capital'. It is like walking into a Liverpool pub with a Manchester Untied shirt on. Piketty was provocative right from the start.

Why didn't I rate this higher? I thought his proscriptive approach (Part IV) was a bit naive. I get what he is trying to do. He is setting the flag at the ideal point and letting the politics take care of itself, but his ideal isn't really even on this planet (not even on Planet France). I'm not sure the governing class in any of the major nations he dealt with will ever be ready for a large-scale capital tax, or a global system of taxing and studying incomes. There just isn't any stomach for that. Perhaps I'm a pessimist, but I think we are already governed by system of economic élite domination. It is more likely that a natural disaster, world war, or years of inflation are way more likely to change the current and growing capital inequality in the US and Europe than any preventative, rational, or progressive tax on wealth.

We can barely politically stomach a slight increase to capital gains/dividend tax rates without shutting down government and calls to impeach our president. A one-time, double-digit tax on wealth just won't happen in my lifetime. When 97% of scientists warn us about global warming, but because of vested energy interests and media complicity we find half of our nation believing it is all hype as the poles melt, what hope do we have in preventing millionaires and billionaires from accumulating more wealth? Most will remain ignorant of the problem, apathetic about how that type of income disparity harms democracy, and mostly antagonistic about changing what is perceived to be a meritocracy for a redistributive tax solution. Just not going to happen. I can't see it happening in France, let alone Britain, China or the US.

But that is just me venting my frustrations. The future IS the sole property of the future. I might be wrong. For the most part the book is already doing what he wanted. He's got FT writing and challenging his data. He has Paul Krugman giving supporting data. I'm reading his book instead of a Dan Brown novel. So, my bitching aside, his book has already done 10x what it had every practical right to do. It might just end up being the next John Rawls tome, read by economists, politicians and those tired of Dan Brown novels. I sure hope so.

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Data-Driven Books which Lie about Data are Useless

Piketty's book strives to support the claim that r > g, and so inequality will invariably rise in capitalist societies with laissez-faire economic policies. This is an interesting claim which deserves thorough study. Unfortunately, Piketty's methods undermine his own case.

For example, one of Piketty's central claims is a plot of wealth inequality in the US over the past century (Fig 10.5). To do this, Piketty aggregates data from different studies. This is reasonable. But he uses only a single time point from each study! Each study applied their own data-collection methodology to generate their own curves, and Piketty's aggregation looks nothing like any of them. It is clear that he cherry-picked the samples to support the conclusion he desired.

Another egregious example of pseudo-intellectualism is his dismissal of technological advancements. Piketty claims that because globalization has spread the benefits of technology equally to all countries, we can ignore the effects of technological advancements when comparing countries. This is an extremely strong assertion that Piketty takes no effort to justify. Do we really believe that every country's economy benefits equally from Silicon Valley? Once considered, it becomes apparent that many of Piketty's claims can be countered by simply asking about technological advancement -- the fact that Piketty dismisses this out-of-hand exemplifies his cavalier attitude.

Even more embarrasing is Piketty's response to criticism. When economists have called out his shoddy methodology, Piketty's main response has been that people are able to see rising inequality with their own eyes and thus should not worry about his methodology. The strength of his thesis rests of the quality of the data -- if this cannot be defended, then what is the point of this book?

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Wall, meet writing

Spoiler alert: the takeaway from Thomas Piketty's dry but much-discussed book is what most citizens of the developed world already know: income and wealth inequality in first world countries, particularly the United States, are at levels not seen since the Gilded Age. As much as I've personally benefitted from globalism and technology, it’s obvious that the lion’s share of the profits from these trends has gone to a small elite, while many Americans are being left behind in an economy that no longer places great value on their skills (or gives a damn about educating their kids).

No doubt, the timing of the book’s publication has something to do with the big splash it made -- these are clearly issues on a lot of minds -- but Piketty brings some cool analysis to the current reality, helping the reader understand how to see it in terms of historical data. As he argues, all economic evidence suggests that this disparity is likely to continue to grow, driving modern countries towards a form of society not seen since 19th century Europe. There, he shows, there was less economic growth than in the 20th century, which meant that a small upper class that controlled most of the capital received most of the income, consolidating its dominance through inheritance. Piketty brilliantly illustrates this point with references to classic 19th century novels, wherein protagonists aren’t trying to better themselves in careers in which advancement is limited, but are focused on marrying well. Only the shock of two world wars ended this reality, creating a few decades of growth-through-rebuilding and relatively egalitarian prosperity for Western Europe and the US.

Piketty dives down into the weeds of numerical data, graphs, charts, and comparison tables to make his point, which doesn’t always make for an ideal audiobook listen. Though there’s a PDF supplement, dedicated readers might want to get the book in print. Still, the gist is clear. We can no longer count on the rapid expansion and population growth that drove the wheels of US industry in earlier days. Return on capital is now a better bet than return on growth in most sectors of a 21st century non-emerging economy, with the start-up costs for high-tech industries or rental properties favoring the already wealthy. Even the apparent exceptions, such as software development (my own field), kind of prove the rule, in the sense that they only provide jobs for a small class of highly-skilled workers, sometimes to the detriment of the less-skilled.

However, Piketty’s proposed solutions, as much as I agree with their goals, seem naive given current politics. He advocates more confiscatory taxes on the global top 1%, more transparency in the financial systems of all countries, and stronger international laws related to seizing the assets of tax dodgers. I don’t know about his fellow French citizens, but to even suggest to a certain segment of the US electorate that their country might not actually be a meritocracy, or that it be more subject to some international body of law, would trigger instant howling outrage. Never mind that most of that group will never be wealthy themselves -- they would still rather live in a decaying shack, imagining their interests to be aligned with those of the billionaire Koch Brothers, than ever agree with some “socialist” French academic.

Piketty emphasizes his faith in democracy, but there are a few things I wish he’d discussed more, even if they fall outside the purview of economics. The long-term implications of technological advances on the job market. The tendency of big government and big business to end up in bed with each other. How the people can take back ownership of the political system and the machinery of production without going down the failed route of Communism.

Still, I’m glad this book is being talked about. If the Boomer Generation is still earnestly clinging to the “American Dream” ideals it once knew, it’s pretty clear to younger generations that the system isn’t so meritocratic or upwardly mobile as it once was. I think that Piketty, a Gen-Xer himself, is speaking more to this demographic than the one currently in charge. After all, to quote a certain Gen-X musical, the aging Koch brothers are “just for now”.

That said, your kids might give some thought to marrying one of their heirs.

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One side of the story.

Would you recommend this audiobook to a friend? If so, why?

Yes, an old friend of mine would say that there are three sides to everything, your side, my side and the truth. This book is one side of the story and the data and assumptions made are intended to bolster that side.

What was your reaction to the ending? (No spoilers please!)

The ending is a summary of the book hardly a surprise.

What does L. J. Ganser bring to the story that you wouldn’t experience if you just read the book?

It is clear and concise reading that can be followed, not an easy task with such a book. Audio frees time over reading (usually on long car trips)

Did you have an extreme reaction to this book? Did it make you laugh or cry?

Piketty cherry picks his data to prove a point but criticizes those with different views for doing the same thing. For example when comparing inequality in 1900-1910 to inequality in 200-2010 Piketty chooses to ignore transfer payments and income taxes. Since neither existed in the earlier period but both are very substantial, and substantial forces for reducing inequality today. Ignoring these makes the resulting comparisons are very skewed from reality. He is clearly smart enough to know this and deliberate misrepresentations like this cloud an important discussion. It frustrates me when this is done deliberately to make the data prove a point. Both sides do it.

Any additional comments?

If you believe that income inequality is not a problem then you should read (listen to) this book. If you believe that all wealth is inherited and they system is rigged so that the little guy never get ahead you should perhaps read "The Millionaire Next Door" which is also research based and paints a very different picture of the wealthy. Always challenge your beliefs by reading the other side it gets you close to the truth in the middle.

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Worth the time and money

I gave this audiobook 5 stars even though it's not perfect. Here's why.

Obviously audiobook is not the perfect format for a wonky macroeconomic tome with lots of graphs and numbers. Even though it comes with pdf files for the charts, that's not much help when you're listening in the car. But the glass of water half full is that I wouldn't have had the time to read this book, so listening is better than nothing. And this book has great merit.

We've all read the criticism of the author's predictions and extrapolations. That was predictable because of the reflexive reaction by conservatives, and also the carping economists who would never dream of having a best seller on their hands, thus turning into to haters.

Even if you ignore the author's prediction that US wealth is and will continue to become more concentrated in the clutches of the one-percenters, this book is valuable for its fascinating explanation of the history of wealth stratification. That alone taught me a great deal and helps explain where any why the world economy is. In brief, wealth has always tended to rise to the top. It was only because of the "economic shocks" of the two World Wars that the American and European middle classes got a temporary bigger piece of the pie. Add to this the fact that emerging economies are merely catching up to us explains why Americans have anxiety about not being so far ahead of the rest of the world.

This book is a great history lesson. Don't prejudge it just because, in the end, the author makes some value judgments. Learning is great fun. At least I think so.

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worth the time

I liked this book a great deal. Initially, I wasn't quite sure if I would be interested in reading the entire book -- it's quite long and it includes a lot of information about finance, which is not usually something that draws me in -- but I enjoyed every page. Even when the author gave the reader permission to skip ('If you are familiar with x concept, feel free to move to the next section"), I remained engaged with the material. Piketty is great writer -- marrying finance, Jane Austin novels, culture, and various other tidbits, which culminated in an extremely thorough, yet readable, work.

There are always so many questions I ask myself about the state of money, debt, and equality on a global level but never quite have the answers to. Piketty addresses an astounding number of concerns about our global economy. I would like to have seen him delve into a few discussions in more detail. He was heavy on the facts about finance and less so about the origins of inequality. However the book was so long; perhaps what I am asking for would be another book in and of itself. My one regret was not taking notes.

Excellent work. I recommend to anyone interested in how money is acquired, accumulated, grown, disbursed, kept in the hands of one group/individual or another. Piketty discusses who has the money, what impact their wealth has on the world at large, what should or should not be done so that the money can help the masses but also remain concentrated enough to fund space, education, etc.

As an aside, it was interesting for me to read about the same pattern, in which over and over rich individuals who amass great fortunes and get to decide what advancement will take place on a national and even global level. For example, Andrew Carnegie is portrayed as a careless tyrant who grew his fortune, only to give it to the masses in controlled, thought out ways that changed the face of education, the space program, and so on. Bill Gates is doing the same thing now. Mark Zukerberg just made the news for allocating his 45 billion dollar fortune to various causes.

Absolutely worth your time, money, and effort to read this book.

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WRITTEN FOR A HIGH SCHOOLER - JUST AWFUL

I am now 8 hours into this book and am committed to finishing it, but with that said, I am totally shocked that this book has become so widely talked about. It is so incredibly remedial in its discussion and in the points (what few it makes) that is should be relegated to the reading list for those studying a trade-related curriculum at a community college. You have absolutely got to be kidding me if anyone with even the most minor of academic or general knowledge background in economics would find this book enlightening.

To start with, after 2 1/2 hours, Piketty was still in an introduction. I thought that was a bit lengthy and I kept waiting for some (ANY) substance and so far it has not appeared. I have been thankful that he has at least stopped using the word 'apocalyptic' (I stopped counting how many times he used that word in the first 2 hours of listening).

Any idiot can make the argument for the 'social justice' in the redistribution of capital but that seems to miss the fundamental point that approximately 85% of the value of capital is returned to the consumer in the form of lower costs or improved services. The 15% that indeed does go to the owners of capital is what is necessary for them to risk the capital so that society can reap the other 85% of the value. If we redistributed capital to equally we would all loss far more that immediate gain of the redistribution (just so that everyone is aware they have tried in Russia and I think we can agree it was a bit of a failure).

As an example, Walmart has a market of approximately $275 billion. Its sales are approximately $500 billion. If one assumes, conservatively, that Walmart, as a price leader, has by it investments of capital, reduced prices by 20% on the items that it sells, every year society is getting the benefit of $100 billion of reduced costs (and this is not even considering the fact that through competition it has helped to 'force' other stores to become more efficient). At Piketty's 5% return of capital (an let's add 1.5% for inflation) those greedy owners of Walmart are getting $18.875B of return ($275B X .6.5%). Every year society, not Walmart or its shareholders are getting the vast vast vast majority of the benefit. This example can be repeated over and over again. Ford and General Motors have been responsible for massive improvements to the automobile over the past 40 years and even in a good year the returns left to their shareholders is a tiny factor of the overall value of the automobile to society.

As I said, I will trudge through the rest of this book (praying that boredom does not overcome me as I am listening), but I certainly not recommend wasting time on this (a better use of time would be to watch reruns of Gilligan's Island).

I would suggest anyone with any interest in economics reads Edward Comard's OUTSTANDING book 'Unintended Consequences'.

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Audiobook not the best format for this work

Any additional comments?

Be forewarned, to properly digest this important work one must have the 106 pages of graphs and charts. My tablet screen is not good enough for viewing the .pdfs which comes with the audiobook. Therefore I'd have to print them off -- much less convenient than the handy packaging of an actual book! I'm off to buy the hardcopy now!

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