The daily Piketty, perhaps the last

This in Salon from Paul Rosenberg puts the book in a broader context of other problems and struggles.

The daily Piketty

The "Piketty Bubble" is more than hot air says John Cassidy
Piketty Fever from The Economist
Piketty vs Mankiw Mankiw says "I don’t see wealth increasing at the rate of return on capital. That’s simply because people spend their money when they have capital. " 
Clearly Mankiw has not read the book. Piketty says in Chapter 10, page 351,"For example, if g=1%, and r=5%, saving one-fifth of the capital from income (while consuming the other four-fifth) is enough to ensure that capital inherited from the previous generation grows at the same rate as the economy. If one saves more, because one's fortune is large enough to live well while consuming less than one's annual rent, then one's fortune will increase more rapidly than the economy, and inequality of wealth will tend to increase even if one contributes no income from labor."
P.S. Tyler Cowen of George Mason University keeps posting anti-Piketty reviews. The latest makes a similar mistake.
And Yves Smith keeps linking to anti-Piketty reviews from the left, this time about the definition of capital.

Kalekuri (Kalaikuri) Prasad

There is a Facebook account devoted to him https://www.facebook.com/KalekuriPrasad

Piketty-Graeber dialogue

Here (one can ask for translation). A review of Graeber's book (which I browsed only in part because I did not really like it) by Mike Beggs Debt:The first 500 pages.
P.S. There is also a discussion here.

Last bottle gourd of the season?

Rat eaters

Kuffir links to this article on a rat eater community in Bihar "The[Musahar] community found in the states of Bihar and Uttar Pradesh are landless and don't have their own livestock. While some manage to buy food, most still have to procure food every day and which involves scrounging whatever they can such as small fish, snails and even cockroaches."
I remember a community in coastal Andhra during my childhood (forties and fifties) and I have seen them catching rats in fields but do not remember the name of the community.
P.S. Apparently one of the communities in Andhra are called ఇర్లవాళ్ళు See http://te.wikipedia.org/.../%E0%B0%8E%E0%B0%B2%E0%B1%81...

ఎలుకల నివారణ - వికీపీడియా

te.wikipedia.org

The daily Chunduru: Kalaikuri Prasad

The daily Piketty

Doug Henwood has a nice discussion going https://www.facebook.com/doug.henwood?fref=ts in 'Zachary Levenson's great list of 10 tips for a Marxist critique of Piketty without actually reading the book'.
And Brad DeLong on the poverty of the Right-Wing Piketty criticism
Matt Bruenig on r,s,g
The nine stages of the Piketty bubble.

The daily Piketty

Robert Kuttner points to what Piketty omitted and is looking forward to a sequel.
Yves Smith from the left and Tyler Cowen from George Mason University are not happy with Piketty. Yves Smith thinks that the following piece is 'dead on' Piketty Dikitty Rikitty. Tyler Cowen has several pieces in Marginal Revolution which I will leave out. Apparently, Piketty is not that popular in France. The Economist explains "Perhaps the chief reason, though, is that questions about inequality, the centrepiece of Mr Piketty’s research, have long been central to the political debate in France, a country that already has an annual wealth tax on assets. This has been true for the right as much as" for the left. Jacques Chirac, a Gaullist, was first elected president by campaigning to mend the country’s “social fracture”. Mr Hollande was at his most passionate on the campaign stump when denouncing the world of finance as his “chief adversary”, and the super-rich as “grasping and arrogant”. In short, drawing attention to resurgent inequality has a sense of novelty in America, but in France it is a political given.
More at Brad Delong including this questions and answers.

Alla Rakha Jayanti

Google celebration
It is probably not well known that he was a MD for several Hindi films during forties and fifties. It was under the name A.R. Qureshi and some similar names.
Here is one by Surinder Kaur from the film Sabak 1950 https://www.youtube.com/watch?v=cmwrlr2BHuo
One by Sudha Malhotra from Alladin Laila 1957 https://www.youtube.com/watch?v=IoaoWs4AH7Y
One by Naseem Akthar from Waqim Azra 1946 https://www.youtube.com/watch?v=Ofpj20gmOq4
And a video is available for one from 1952 film Bewafa

A duet and dance from 'Amar Singh Rathod' 1957

The daily Piketty

as Brad Delong put it. Dean Baker links to a couple of his posts about Piketty and discusses some of the left's reactions that Piketty may be appropriated by the right Paul Krugman and the Economic Fringe
"In short, there are some grounds for us fringe types to be unhappy about the current course of mainstream economics, but to my view it’s better to look for allies than enemies. For this reason, I remain happy that Piketty has renewed public focus on inequality, and I will pass over the technical grounds on which he has rightly been criticized by my fellow fringists."

On Chundur case

Sometimes written (Tsundur) does not seem to be making to many blogs except some dalit blogs.
Some background in the first two links here. Here are some YouTube links, one in Telugu.
https://www.youtube.com/watch?v=BjaazZOVG9Q
https://www.youtube.com/watch?list=UULCQXxHl_5iedP-tmNCUFPw&v=EgQAHNDu6xE#t=515
https://www.facebook.com/benjamin.kaila
More at the timelines of Benjamin Kaila and Kuffir 

Links

The wisdom of (little) crowds by Carl Zimmer
Why all babies love peekaboo from MindHacks
Alcohol could have cognitive benefits-depending on your genes
How I get all my students to be good at math by Elizabth Cleland
Mathew Gentzkow, Clark Medallist and an interview with him

Michael Hudson on Piketty

Michael Hudson in Piketty's wealth gap wakes up:
"He’s started the discussion by showing the fact of vast inequality. What needs to be done now is to explain how did this inequality come about and what do you do about it? ....

One of the things that Piketty does not discuss when it comes to making fortunes is the role of debt, that most of these fortunes that have taken off since 1980 have taken off because of the increased debt leverage. As interest rates have fallen since 1980, you’ve had more and more bank credit going in to just bid up real estate prices, stock prices, bond prices, every kind of price, not to mention fine arts trophies that have gone with this. So, just as you’ve had the rising ratio of wealth to income of the 1%, you also have a rising ratio of debt to income. And so this indebtedness and the net worth again is very unequally distributed. Most peoples’ families, the major asset they have is in their home but these homes are also very heavily mortgaged and the mortgage payments they make, basically the 99% makes interest payments to the 1%.

And what to me really has been accelerating wealth at the very top is the financial sector, is the ability of the 1% to get the other 99% in debt to them by saying “Look, we’re controlling the access point to buying a home, to buying basic needs, in America to getting an education, and you can’t afford to buy a home or get an education or even a car without borrowing money. And we’re going to charge you enough interest so that everything you earn in effect you’re going to be paying us for interest”. And that’s the same thing that is leading the corporate raiders and the activist shareholders to try to raid corporations and say “Pay up more of your money as dividends”.

.......

So you’ve actually had a dismantling of tangible wealth and an increase in what used to be called fictitious capital or fictitious wealth, which is all basically debt leveraged wealth.......

When he talks about the rate of return the largest sector in the United States, and other countries also, is the real estate sector. If you look at from 1945 to today, the real estate sector doesn’t make an income. As you know, real estate by the billionaires is run as a personal charity. They don’t pay any income – if they made an income, of course, they would pay an income tax and declare it, but they don’t make any income. Almost all the rent they make is paid out either as interest or they charge depreciation as a cost. So what Piketty is referring to is not earnings before interest, taxes, depreciation and amortisation, but one portion of declared earnings excluding taxes, excluding interest, excluding depreciation and amortisation. The next highest wealth industry is oil and gas, they don’t declare any income because either they have a depletion allowance that makes them tax-exempt or they make all their income offshore in the flags of convenience countries. So the actual returns that are made, including the capital gains and total returns, simply are not available in the statistics that he looks at.

Secondly, what is growth? If you look at the American National Income & Product Accounts, for instance, 40% of all corporate profits in America a year ago when the statistics came out were made by the banks, by the financial sector. Now, these returns are basically a transfer payment. They don’t really add to growth. Financial services are not a service, unless you believe that a hold-up man that comes up to you in front of an ATM machine and says “Your money or your life” is giving you the service of giving you your life; it’s actually a transfer payment. He’s taking your money....

Well, what Piketty has done is make this wealth seen.....But one would really have to spend even more time reworking the statistics to untangle them to find out what is the actual reality behind this. "

And more in the post. It seems that Piketty's estimate of the wealth ap may be an underestimate even without taking tax havens into account.

Check also Ten ways to fight inequality without Piketty's wealth tax.

The Piketty Pessimist

Felix Salmon writes in The Piketty Pessimist
"Which means that my reading of Piketty is ultimately pessimistic. The dynamics of the world economy are bad, and they’re getting worse; inequality is natural in human history, and right now we’re reverting to a state of affairs which is highly unfair but also both sustainable and, in its own way, unsurprising. Piketty has diagnosed a nasty condition. But I don’t think there’s a cure."
That is roughly my opinion too ( may be we are evolving to a system where about 40 percent will be about subsistence level and virtual slavery and the middle classes doing their own things and fortifying the top, and the state too powerful to change) but I will continue to follow the discussions.Brad DeLong keeps us uptodate.

Brad DeLong explains

"One thing that I had not fully realized before yesterday was just how much heavy a lift Piketty has in trying to persuade the American neoclassical growth-economics community within economics departments. Their--our--default view of the world is--very strongly--that it is characterized by a Cobb-Douglas aggregate production function, in which the rate of profit moves inversely with the L ratio and in which as a result the capital income share of total income is constant.

You may say: but if you have a model in which you assume the capital income share is constant, you then have no chance of ever explaining fluctuations in income distribution. How can you use a model in which fluctuations in income distribution do not happen to criticize anyone trying to explain why they do? And this is a more than fair cop. But that the habit of thought is not rational doesn't keep American neoclassical growth-economists in economics departments from doing it: their--our--first reaction to Piketty is: "t That can't be right, because in our model the capital-income share of total income is invariant to shifts in the wealth-income ratio." And they--we--typically do not take the second step in the argument and say: "wait a minute: in our model nothing causes shifts in income distribution, so we need to model"... from The daily Piketty:Thursday focus, April 24, 2014

See also Paul Krugman's response to Thomas Palley in 'Gottopardo Economics' "So by all means let’s continue to debate how we do economics. But inequality really isn’t a wedge issue in that discussion. You can be perfectly conventional in your economics — or, my own attitude and what I think is Piketty’s, willing to use conventional models when they’re convenient and seem useful without treating them as irrefutable truth — while still taking inequality very seriously."

A follow up of Solow review of Piketty

by Joshua Gans The Capital Creators: Piketty and Growth Theory discusses a point which will be much discussed.
"Thus, we could have a situation where r > or < g. r > g corresponded to having a relatively low capital stock whereas r < g corresponded to having a relatively high capital stock.

Those who have read Piketty will note that we run into an issue here. If one wanted to rationalise the Solow growth model with the data, Piketty argues that r > g most of the time (indicating the existence of scarce capital) except during the Great Depression and World War II (at least for Europe) and the 1950s (for the US) where correspondingly, the amount of capital would be relatively abundant. Maybe that is a classification issue (just which capital was productive when) but Piketty’s account and the Solow model do not appear to sit comfortably together. Indeed, Solow said as much when he argued that diminishing returns would eventually cause r to fall at a greater rate than g:[quote from Solow]

Before doing so, I wanted to point out that these implications of the Solow model for income and wealth distribution had been explored before. Luigi Pasinetti drew some of the chords together but it was aPhD student at MIT in the mid-1960s that was most obsessed about the implications of the Solow model for income distribution. What the young Joseph Stiglitz found in a paper subsequently published inEconometrica was that there were actually strong forces bringing about a more equal distribution of income but that there was also the possibility of a steady state growth trap that had with it an associated increasing inequality of income as the capital share of income grew. This happened when the capital to labour ratio was relatively low. There is certainly a plausible case that the US in the 1950s found itself on the good steady state and that something has shifted it to the bad steady state today.

Piketty did not refer to this work and the papers that followed it at all. That is one of the costs of bypassing the system. But that is too bad because, if he did, he would have seen that Stiglitz justified the very sort of taxes Piketty is now advocating and demonstrated how they might be employed to both bring about a more equal income and wealth distribution and a higher rate of growth. Instead, Piketty has been left open to the fair criticism that his proposed wealth tax is simplistic and not thought out. By contrast, there was past research that did some of this work.

Actually, it is worth noting here that Piketty does more than not use theory to justify his approach, predictions and policy recommendations. He argues (at least in my reading) that he shouldn’t be required to do so. That is one of the benefits of being less restricted but it comes at considerable cost. One cost is that without theory, it is hard to justify both predictions of the future and also policy recommendations and their likely effects (another form of prediction). Only theory can help make that argument and help us understand what we need to know in order to act.

But the other cost is that theory helps ensure that our explanation of the past is internally consistent. As noted earlier, Piketty’s argument relies on there being a lack of diminishing returns to capital. The alternatives are obvious — increasing returns to capital as my co-blogger Erik Brynjolfsson has been arguing for so forcefully recently. In other words, Piketty’s argument requires there to be capital creators — that is, people who find ways to deploy the wealth of the rich in ways that forestalls the otherwise likely effect of diminishing returns. But who are the capital creators and, if they are there, aren’t they also likely to be the ones increasing g? Put simply, if you don’t believe in diminishing returns, how is it that you are also pessimistic about the long-run rate of growth? It seems to me there is an inconsistency here."

Robert Solow steps in

Thomas Piketty is right says Robert Solow. It seems from the review that Robert Solow could have written a shorter and better book except that Solow says that nobody made the connection (between r and g) before.
P.S. Mark Thoma starts a discussion in Economist's view on the above article.
Meanwhile, there is an interesting article Adam Smith is not the antidote to Thomas Piketty. It seems that Smith's views were not too far off, seems even more radical  "The economic fundamental underlying these views was crystal-clear: For Smith, high profits were bad. They were “always highest in the countries which are going fastest to ruin,” because profit was “naturally low in rich, and high in poor countries.” High profits were not condemned for normative reasons, but efficiency ones: de facto, in countries that thrive, profits are low (except in new economies)."
P.P.S. Brad DeLong discusses Robert Solow review "To sum up: a very good book, a very, as Solow says, serious book. It has certainly moved me from thinking that the odds that two generations hence we will have a much more unequal and plutocratic society were 2-1 against to thinking that they are 3-1 for..."

A forgotten dancer?

Yog Sunder: A true prince of dance by Ashish Mohan Khokar