Thoughts on the Thomas Piketty event

As I mentioned in my last post, I had the great pleasure of attending the Thomas Piketty event at this year's American Economic Association annual meeting. I have been reading his latest work, Capital in the Twenty First Century, which has been published to both great acclaim and great criticism. Ever since Thomas Piketty published the book, it has sent shockwaves through the current economic establishment with many rebuttal books written to in response to the ideas that Professor Piketty had presented. (The number of rebuttal books range from sort articles to large pamphlets, if you look at the Amazon website, you'll be able to find several) Within the confines of the academia and outside of it, there has been almost a numinous reception of his work. For the popularity within the outside world, it has created numerous tractable differentials in opinions, from those who love it and those who hate it. Some people have praised it and bought the book in record numbers. There have been many prominent economists who have published great books and papers, but I believe the response that Professor Piketty's book has had a ripple-like effect on the consciousness of the entire economic community. I personally enjoyed this book immensely, even though I don't necessarily agree with much of its content. In this article, I will try to dissect the 2 hour conference and throw in my thoughts about the event itself.

The Thomas Piketty event at the AEA meeting was an immense occasion where the room was packed to capacity, with perhaps about a hundred people extra standing at the sides to witness the presentation featuring other prominent economists such as Greg Mankiw. David Weill, Professor of Economics at Brown University, gave an approving observation and analysis of Thomas Piketty' ideas that were presented in Capital. Based Professor Weill's observations, we can see the wealth of knowledge that the 700+ page book has to offer for both economic researchers and wider audiences beyond. Professor Alan J. Auerbach and Dr. Kevin Hassett had different ideas when it came to Piketty's book. Despite their disagreements with much of Thomas Piketty's theories, they are very impressed by the depth of its analyses, but they feel like certain things about the book were perhaps too unrealistic in terms of its application, especially in tax reform and other related things.

Professor Greg Mankiw, Chair of Harvard University Department of Economics, gave the next lecture on his interpretation of the book and he then gave a thorough lambasting of Piketty's book. He labeled Piketty's book as resorting to the simple promotion of egalitarian policies that lead both of the rich and the poor to sink into destitution. This does not come as a surprise to many economists and voracious readers who knows about Professor Mankiw's defense of the top one percent in his recent article, Defending the One Percent, which was published in the Journal of Economic Perspectives. During this time, there were certain people that heckled Professor Mankiw, with loud cheers of approval on one side of the economic spectrum coupled with disapproving shrugs on the other side. Personally, I am impartial to the views of both conflicting sides as there is much to derive from the analyses on both viewpoints. What's interesting about Professor Mankiw's conclusion is that r>g is not the problem, but that r<g is the problem! This is a particular interesting observation as I believe that Thomas Piketty has the correct observation, but perhaps not the correct response to such taxing issues. (For those interested in a good opinion article that I had read last year, please refer to Tim Worstall's Forbes article.)The excitement in the room grew with the anticipation of Thomas Piketty's talk on the ideas that he had promoted in his book.

Professor Thomas Piketty, Chair of the Paris School of Economics, gave a simple explanation of his 700+ page book, which has reached the absolute apex of its acclaim. It has been on the front page of newspapers, best-selling book lists and other similar journals, with raising him into the public spotlight beyond what is normal for economists. In this presentation, Professor Piketty presented the basic theories in his book with a special focus on r>g in trying to resolve the huge issues that the world faces today. He talked about how its entirely applicable to the study of long-run wealth inequality versus labor income equality, which you cannot utilize r>g to solve. The other point that I derived from his work was the basic model that he had presented, with a strong focus on the reinforcement of more democratic institutions with the certain mechanisms surrounding income and wealth. He postulated that the serious problem of inequality should be tackled through a progressive wealth tax, escalating at each level, which is quite unrealistic in my mind.  I have yet to complete the many sections of the book, as I've only skimmed parts of it, but it'll be exciting to write my second thoughts on the book after going through each section in more detail.

Overall, this session was one of the most exhilarating sessions I've been to in Boston and I've been to a couple of very heated Israel-Palestine conferences. The session was followed by an extremely tense question and answer session, with a particular individual launching a fallacious tirade at both Professor Mankiw and Professor Piketty. I also had the privilege of speaking with Professor Thomas Piketty briefly after the event and I hope to have better questions prepared for him next time.