Jonah Goldberg writes Mr. Piketty’s Big Book of Marxiness in the July issue of Commentary.
“The consequences for the long-term dynamics of the wealth distribution are potentially terrifying,” Piketty writes. For instance, Piketty fears that whenever the return on capital really starts to outstrip national growth, “capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.” That is open to debate, to put it mildly. Bill Gates, Sam Walton, Larry Ellison, Mark Zuckerberg, Sergey Brin, Fred Smith, and others became billionaires because they created goods and services of real value to consumers; there was nothing “arbitrary” about it. In fact, most of them didn’t achieve their wealth, strictly speaking, from “capital” in the Pikettyesque sense at all. They mostly earned it from technological innovation. Piketty seems to believe, without marshaling much if any evidence, that such accretions of wealth undermine meritocratic values—when in fact, in a very real sense, the wealth creation over the past 30 years collectively constitutes the most extreme example of meritocratic advancement the world has ever seen.
The flaw in Piketty’s thinking is that while he measures capital mathematically, as economists generally do, capital is largely unmeasurable in the sense that innovation is usually a creative enterprise that is unmeasurable. This is why such models as Piketty presents as logically irrefutable are worthless if they are not tested and held up to the harsh mirror of reality. This is also true of other scientific models.
From The Illogic of the Keynesian Multiplier in the blog Easy Opinions:
Airplanes are designed with well understood equations representing tested physical principles. Still, every airplane design is thoroughly tested for flight worthiness. Mathematics is a sophisticated guide to building and testing, but assumptions and math may not predict reality.
Which airplane would you like to fly on? One has been designed by teams of engineers using super-computers, but never tested. The other has been built from rough estimates and is thoroughly tested.