Monday, April 21, 2014

Piketty Puts Paris Back In The Economic Spotlight

Everyone is trying to capsulize Piketty's book into a few digestible points.  This article provides a couple of easy to digest points that should not be lost among the many points in a very long book.  The economics profession is similar to other academic professions.  They are dominated by a focus on technical elegance.  It might be called a dominance of technique or methodology.  The importance of the problems that are selected for research is less important than the choice of technique and the elegance of the application of that technique to the dominant paradigm in the profession.  Piketty left a job at MIT and returned to Paris to work on more important problems when he became aware of neo-liberal trap that constrains economic research in the US, and in much of Europe.  Thankfully, Piketty found an elegant way to frame a very important problem.

Piketty has been criticized as a determinist because he argues that inequality is inevitable under our current form of capitalism.  Nothing could be further from the truth.  He rejects the idea that economies are a creature of nature.  They are designed by humans in order to achieve certain goals.  He argues that the rules of the economic game can be altered by the democratic process.  His preferred solution to the problem of inequality is to make the tax system more progressive.  His primary concern is that democracy itself is at risk unless it can reshape an economy that is not serving the public interest.  He does not want to revisit the 1930's. 

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