Newsmaker: Thomas Piketty

The French economist has ruffled feathers with his best-selling book, Capital in the Twenty-First Century. At a time when his country is facing a shift to the far right, he’s proving to be a controversial hero for the Left, writes Colin Randall.
Kagan McLeod for The National
Kagan McLeod for The National

If ever France needed a hero, it’s surely now, a time of social and political malaise epitomised by successive scandals affecting former presidents and mainstream parties alongside rocketing support for Marine Le Pen’s at times anti-Islamic and simplistically far-right Front National.

For some, a suitable candidate now presents himself in the unlikely guise of an earnest Parisian economist whom many ordinary French people would struggle to recognise.

Just 43, Thomas Piketty is described by the authoritative daily newspaper Le Monde as the new darling of the American left.

His burgeoning international reputation is founded on the success of his book, Capital in the Twenty-First Century, which last month reached the top of The New York Times list of hardcover works of non-fiction and has been called the 50 Shades of Grey of economics publications. In a period of austerity, he peddles a dream of fairness for all that strikes a welcome chord with a political class resentful of fabulous wealth, banking excesses and inequality.

So, with the inevitability of night following day, along comes an inconvenient controversy. Britain’s Financial Times has sought to thrust a huge spanner into Piketty’s works.

In a front-page assault on the book’s thrust – that inequality increases when the rate of capital accumulation by the top 1 per cent grows faster than the economy and must be addressed by a global wealth tax – the paper produced a litany of supposed defects. The FT cited errors of transcription and calculation, along with a failure to explain numerical adjustments or source data which, it said, Piketty used in a highly selective manner.

The resulting polemic has ripples of the age-old turbulence of relations between the French and their cross-Channel neighbours, but is being fought ostensibly on a battlefield of competing theories, interpretations and statistics.

For Piketty, the co-founder of the Paris School of Economics and the director of studies at the French capital’s School for Advanced Studies in Social Sciences (EHESS), the FT is guilty of mounting a “purely ideological attack”.

“All rankings of world fortunes indicate that the highest assets grew much faster than average wealth,” he told Le Monde. “If the FT has a rating of fortunes showing different conclusions, let it publish this. In the end, it is the clearest way of posing the debate: does the top grow faster than the average, yes or no? According to Forbes, three times faster.”

Separately, Piketty told the Agence France-Presse news agency: “The FT is being ridiculous because all of its contemporaries recognise that the biggest fortunes have grown faster.”

He accepted that available data was imperfect, but said this didn’t undermine his central argument about widening inequality, and accused the FT of dishonesty in suggesting that it altered the basis of his conclusions. On the contrary, he insisted, even more recent studies lend support to similar conclusions using different sources.

Piketty was born in the Paris suburb of Clichy in 1971. His parents were activists in the Trotskyist Lutte Ouvrière movement, before retreating to southern France to breed goats.

He was a bright student and enlisted at 18 in the École Normale Supérieure, a higher college with origins in the French Revolution but now seen as an elitist institution producing some of France’s most prominent academics and government mandarins. At 22, Piketty’s future path was set out when he collected his PhD for a thesis on wealth redistribution, prepared in Paris and at the London School of Economics.

He taught in the 1990s as an assistant professor in the economics department of the Massachusetts Institute of Technology in the United States. Back in France, he became a researcher for the French National Centre for Scientific Research and, in 2000, the director of studies at EHESS.

Two years later, he won a prize for the best young economist in France and began forging contacts with politicians of the French left.

Piketty advised Ségolène Royal in her unsuccessful presidential campaign against Nicolas Sarkozy in 2007 and, five years later, joined more than 40 other economists in declaring support in an open letter for Royal’s former partner, François Hollande. Hollande went on to defeat Sarkozy to begin what has become a troubled first presidency for the French left – the first since François Mitterrand left power in 1995.

Nothing in this CV, however, can have fully prepared Piketty for the level of attention now being focused on him. Criticism of Piketty, who has become accustomed to seeing himself described in the English-language press a “rock-star economist”, has also surfaced in France.

Some of his most ardent champions are found beyond French frontiers. Supporters in a debate that has spread from the pages of the FT to social media range from the US Nobel Prize-winning economist Paul Krugman to the lefty British singer-songwriter Billy Bragg.

Krugman questioned the methods used by the FT’s economics editor Chris Giles in his efforts to discredit Piketty and said on his New York Times blog that US income inequality had soared since 1980 by any measure applied. “Unless the affluent starting saving less than the working class, this rise in income disparity must have led to a rise in wealth disparity over time,” he wrote. “… None of this absolves Piketty from the need to respond to each of the individual questions. But anyone imagining that the whole notion of rising wealth inequality has been refuted is almost surely going to be disappointed.”

To underline his support, Krugman separately told readers of The New York Review of Books that Piketty’s book is a “magnificent, sweeping meditation on ­inequality”.

Bragg tweeted: “Why were the FT so keen to rubbish Thomas Piketty’s figures?”. He offered one explanation as advanced by Paul Mason, a journalist, novelist and an editor with Britain’s Channel 4 News: “If the FT’s attack on the radical economist is right, then all the gross designer bling in its How To Spend It section can be morally justified.”

In France, critics include the conservative news magazine Le Point, which cheerfully highlighted the FT’s dismantling of Piketty’s theories, its headline declaring: ‘‘Piketty caught by The Financial Times.”

Emma-Kate Symons, a writer for Quartz, the business-news offshoot of the US website The Atlantic, quoted withering criticism from another French economist, Nicolas Baverez, who has accused Piketty of arguing a Marxism de sous-préfecture – a sort of provincial Marxism – based on dubious and ideologically-slanted analysis of statistics.

The FT’s Giles adopted more measured tones: “The exact level of European inequality in the last 50 years is impossible to determine, as it depends on the sources one uses. However, whichever level one picks, the lines in red in the graph show that – unlike what Prof Piketty claims – wealth concentration among the richest people has been pretty stable for 50 years in both Europe and the US. There is no obvious upward trend. The conclusions of Capital in the Twenty-First Century do not appear to be backed by the book’s own sources.”

Both sides are clearly relishing the fray. The economics blog at the website of Britain’s left-of-centre newspaper The Guardian offered the thought that Piketty’s success – 200,000 books sold – has “jolted the right, who are scrabbling around for an answer to its main message: rising inequality is killing capitalism”.

In his warmly supportive article in The New York Review of Books, which appeared before the FT went on the offensive, Krugman could hardly have been more gushing. “Let me say right away that Piketty has written a truly superb book,” he said. “It’s a work that melds grand historical sweep – when was the last time you heard an economist invoke Jane Austen and Balzac? – with painstaking data analysis. And even though Piketty mocks the economics profession for its ‘childish passion for mathematics’, underlying his discussion is a tour de force of economic modelling, an approach that integrates the analysis of economic growth with that of the distribution of income and wealth. This is a book that will change both the way we think about society and the way we do economics.”

But perhaps a more telling observation was among the comments on the FT’s website in response to the article in which Giles outlined his “issues with data” used by Piketty to underpin his case. “Speaking as a mathematician,” wrote a reader using the nom de plume Dudeong, “it would be a miracle if there was ever an economic paper that wasn’t full of errors. Economics is not and never will be a science, there are fundamental flaws in all economic data that undermine their integrity.”

Could Dudeong unwittingly have suggested ideal subject matter for Piketty’s follow-up volume?

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Published: May 29, 2014 04:00 AM

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