Friday, April 11, 2014

More reviews of Piketty's book: Krugman, Galbraith...

Important economists and commentators have contributed new reviews of the book by Thomas Piketty "Capital in the Twenty-First Century," to be added to the review of Branko Milanovic published some months ago. Of all the reviews, the most critical is the one by James K. Galbraith, who takes issue with the notion of capital used by Piketty. Galbraith argues that the French economist confuses a physical notion of capital with a financial notion of it. He also questions the originality of using data on inequality different from survey data. Finally, he deems Piketty's proposal of a global wealth tax "futile," although he says nothing of the more feasible one of a European version of a progressive tax on capital. Overall, I don't think that the criticisms of Galbraith question the idea that capital is becoming increasingly and dangerously concentrated and that this can and should be dealt with by international policies that go beyond the nation state. Although Paul Krugman fails to emphasize the important international federalist dimension of Piketty's proposal, he is much more positive about the book. His only criticism is that the book has no deep explanation about the increasing inequality of salaries in the US due to incredibly high executive pay. The last words of Krugman's review are these: "Piketty has transformed our economic discourse; we'll never talk about wealth and inequality the same way we used to."

No comments:

Post a Comment