by Mitch Kokai
Senior Political Analyst, John Locke Foundation
According to The Wall Street Journal, the multitudes who splurged $21.99 apiece on the Kindle edition of French economist Thomas Piketty’s best-seller, Capital in the Twenty-First Century, also spent about 20 minutes reading it. Based on Kindle-generated data, most readers lost interest in the 600-page tome by page 26 — at least that’s where they stopped highlighting the text — prompting the Journal reporter to dub the measure of unreadability the “Piketty Index.”
But most of those nonreaders probably know from reviews that Capital in the Twenty-First Century is mainly about the author’s bête noire, the U.S., in which income and wealth inequality is supposedly widening at a “potentially terrifying” rate, and for which heavy taxes on the rich are the only sure remedy.
You might imagine that there is already been more than enough commentary on the book, including a critical review that appeared in Barron’s (June 2). But most of the commentary is about the book itself, which, in light of the Piketty Index, only a handful of folks, including me, have bothered to finish.
The majority, then, have formed an opinion by reading what others have written. …
… [Paul] Krugman celebrates the book, but admits that what “slightly detracts from the achievement” is a “sort of intellectual sleight of hand.” For when Piketty analyzes the main cause of rising inequality in the U.S., “that rise, it turns out, has happened for reasons that lie beyond the scope of Piketty’s grand thesis.” Krugman is right, although the intellectual sleight-of-hand actually nullifies the “achievement.” Piketty attributes rising inequality in the U.S., not to his grand thesis about capital, but to the “wage inequality” of corporate executives.
But whatever else we might say about the French economist’s theories regarding CEO pay, he is no longer talking about a gap that can become “potentially terrifying.” Since corporate executives come and go, there is nothing to compound over time. But then, Capital in the Twenty-First Century is not really about capital at all, but about wage-and-salary inequality.
The book is also about whether the rich “merit” their income. But merit has nothing to do with getting rich under capitalism, as another Nobel laureate economist, Friedrich Hayek, pointed out in a book called The Mirage of Social Justice. After all, Thomas Piketty has written a book of no merit, and it’s made him quite rich.