I continue to agree with Paul Krugman that the Financial Times and Tyler Cowen have picked an unlikely battle with Thomas Piketty in trying to claim that wealth inequality in the United Kingdom has been decreasing rather than increasing over the last 40 years; more on this from Carter Price. As for Piketty’s broader claims of century-long trends (to perceive which the French scholar has to dismiss much of the twentieth century as an anomaly), King Banaian’s summary of some of the details in how Piketty misreported the data are troubling.
The core claim of Piketty’s book is that slower economic growth will lead to a huge increase in the capital/income ratio as a consequence of a relation that Piketty described as the “second fundamental law of capitalism”. I earlier explained why Piketty’s law is complete nonsense. Separately, James Galbraith explains why the first “law” as interpreted and applied by Piketty is also highly problematic.
Many of us believe that relatively recent globalization, rather than Piketty’s broad theories or asserted sweeping historical trends, played an important role in growing income inequality within most major developed countries over the last generation. But it should also be noted that this same globalization has also been the key factor in reducing inequality on a global scale in the sense of profoundly raising the standard of living for billions of residents of developing and emerging economies.