Sumner Demolishes Piketty: Or Not So Much

     It all comes down to the Jews. This is how Sumner 'demolishes Piketty.' Actually he had a post called exactly that but there Scott clearly was engaging in wishful thinking. 

     "Just back from the UK and just finished Piketty’s new book.  I’ll have lots to say when I get caught up, but I thought I’d begin with a little puzzle."

     "Explain the title of this post.  Hint."

       http://www.themoneyillusion.com/?p=26966

       His demolition of Piketty is just too facile-The Sting Deduction. He seems to think that because anyone anywhere ever chooses to donate a large piece of their fortune to a charity than to their kids this shows that there is nothing to see here and we have perfectly functioning social mobility here. Everyone has an equal chance of getting wealthy at birth. 

          Is that what Sumner believes? He never quite says this but the extreme nature of this all or nothing argument-if anyone anywhere ever chooses not to live the significant part of their wealth to their kids then there is nothing to worry about in the U.S. or any other country seeing a decline in social mobility. 

          Ok, well this was facile enough-Sting disproves Piketty in one fell swoop. If nothing else the title of the post does indeed give us the Zizekean move of giving us a hint as to Sumner's Desire. He wants to demolish Piketty-and why does he want this? Well, every conservative economist wants to and this is obviously because they see Piketty's theory as very dangerous. 

         As facile as the Sting Defense was, wait til you see Sumner Demolishes Piketty 2.0. Turns out the Jews disprove inequality en toto. That Jews according to Scott show up on the Forbes list in much higher percentages than their numbers shows that there is no problem here.  

           "Interestingly, I don't recall any Piketty reviews discussing the role of ethnicity and great wealth. One of the wealthiest people in the world is Mexican telecom owner Carlos Slim, who is of Lebanese descent (a fairly small minority in a mostly Hispanic culture.) In many Southeast Asian nations the wealth is disproportionately owned by a relatively small group of Chinese immigrants. America has many examples of immigrant success, perhaps none more famous than Jewish immigrants from Europe."

         http://econlog.econlib.org/archives/2014/06/piketty_on_meri.html

         An obvious reason why no reviews have discusses enthncity is that it hasn't been seen as relevant by any reveiwers-until Scott. He seems to suspect this because he says this:

         "If I could hazard a guess, it might be that the lack of discussion of ethnicity in the Piketty debate might partly reflect the fact that explanations of disproportionate ethnic success that are not merit-based might seem slightly non-PC. I'm not sure that would be fair to those on the other side---my own view is that we have become so sensitive to these issues (mostly a good thing!) that the charge of prejudice is somewhat overused in contemporary American intellectual debates. Still, I feel slightly better finding myself on the "merit" side of the question of ethnic success, than having to defend some sort of non-merit theory of disproportionate ethnic success (where discrimination is clearly not the deciding factor.)"

         It seems to me that he has it backwards-he wants it to be that those who don't discuss ethnicity or Jewish success are the ones who need to justify their silence whereas it's the opposite: those who want to argue ethnicity must be very clear of its relevance. 

           Sumner also complains that Piketty sounds as if he thinks that wealth is entirely due to luck which I don't think he is reading Piketty right at all here. It seems to me that the luck of being born to the right parents is a major factor but there are others-including 'merit.  David Glasner says that while Piketty isn't necessarily wrong his idea that inequality grows thanks to the rate of profit on capital increases at a higher rate then growth is the wrong way to prove it. 

          That goes double for Scott's attempt to 'demolish Piketty' by simply counting how many people sound Jewish on the Forbes top 400. 

            http://uneasymoney.com/2014/06/19/further-thoughts-on-capital-and-inequality/

           P.S. Not all reasons parents have for giving away a lot of their money somewhere else than their kids are so admirable to say the least. A big part of why Buffett is giving away so much to charity is that he has no desire to see his daughter with it. In this case we have a kind of individual vice-vindictiveness-giving us a social benefit-billions in charity to those who really need it.