Bests & Worsts Reviews from Amazon

The writing is pretty clear, and the book has some interesting statistics. The rest warrants the book one star. The author has a single-minded concern -- inequality. How much capitalism has increased standards of living and life expectancies in the last 200+ years is irrelevant by omission. Many poor people today live better than the wealthy did many years ago. The latter didn't have electricity, central heating, cars, televisions, computers and phones. The interdependence of capital and labor are also irrelevant by omission. One of Piketty's tricks is to treat capital and labor as completely separate categories, not just conceptually but in reality. When businesses do capital spending, e.g. to build a new factory or store, upgrade one, erect new cell phone towers, or venture capitalists fund an Internet startup, they compensate labor, directly or indirectly, in the process. Another trick is that there is a "fixed pie" that a government or "society" has the Karl Marx-inspired moral authority to decide how the pie should be sliced. Piketty's fundamental thesis is that r>g; the returns to capital are greater than the growth rate. He defines 'r' with no mention of taxes, implying pre-tax. Yet he sometimes uses it meaning after taxes. Due to income tax rates varying over many years, 'r' meaning pre-tax or after-tax when showing data is a significant issue. Anyway, according to Piketty capital simply grows to eventually dominate the economy, driving growing inequality. It is a gross non sequitur. Let CII (capital owners' investment income) be a proxy for "r" and LI (non-capitalist labor income) be a proxy for "g". The size of CII minus LI alone does not imply more inequality. The extent of real inequality depends much upon what those with CII do with the money. They pay taxes. If they reinvest it in the manner of capital spending as described above, that raises LI. If they spend it on luxury consumer goods, that raises LI directly or indirectly in the process. If they merely save it; it merely appears to not raise LI. As Piketty readily admits, wealthy capitalists don't put their CII in a mattress or in a money bin like Scrooge McDuck. Instead, like Piketty says, they invest in private equity funds, venture capital funds, hedge funds and obtain higher than average returns. But what do these funds do? They directly or indirectly enable capital spending, which raises LI. If those with CII give to charity, that raises the welfare of "the poor", which reduces inequality. Piketty's book is conspicuously silent about charity. That doesn't surprise me, because his agenda is massive tax increases, and recognizing charity would weaken his rationalization for his agenda. I don't have detailed, accurate statistics to support my claim, but I will give it a first try using numbers I found on the Internet. U.S. public charities reported over $1.65 trillion in total revenues and $1.57 trillion in total expenses for 2012. At least 75% of most charities' spending go to the programs and services they exist to provide. Piketty's Table 7.3 says 20% of U.S. income goes to the lower 50% (for 2010, but assume 2012 is the same). Suppose 75% of charity expenses go to benefit recipients, 80% of that within the U.S., and what stays in the U.S. goes to the lower 50%. 0.75*$1.57 *0.8 = $0.94 trillion. U.S. gross national income in 2012 was $15.7 trillion. (0.2*15.7 + 0.94)/(15.7 + 0.94)= 0.245. So the lower 50%'s share is not 20%, but 24.5%, a very significant difference (near total equality would be 50%). Moreover, such 24.5% does not include a large chunk of charity (food, education, health care, etc.) from governments, nor employer-paid benefits, that don't appear on the recipient's income tax return. An even simpler demonstration undercuts Piketty's statistics. Suppose a U.S. billionaire makes a huge donation to a charity. It does not reduce his/her pre-tax income. It does not increase reportable pre-tax income of the charity -- charities are largely exempt from taxes, period -- or the ultimate recipients. In reality inequality is reduced, but is unrecognized by Piketty's statistics. There are also employee benefits like for health insurance and retirement plan contributions that don't appear in the employee's taxable income. He is like the drunk man who lost his keys and searches for them only under a streetlight because that's where the light is. His only light is income statistics, and with them he can't see charity and employee benefits that go to end recipients but don't appear on their income tax returns and thus in the income statistics he uses. Despite the huge growth of government spending on social programs since about 1900 and especially since about 1965 in the U.S., Piketty's book shows no data about the empirical effectiveness of these programs in reducing inequality. So it seems Piketty, while stressing the importance of data and wanting to appear so empirical, expects readers to buy his agenda of government activism with zero supporting empirical data of its effectiveness. Some reviewers here claim that Piketty is not a socialist. Duh. He was economic advisor to the Socialist Party candidate for the French presidency in 2006-07.