Thomas Piketty’s tome on inequality, Capital in the Twenty-First Century, a surprise best-seller that was widely hailed by liberals, is filled with flaws, according to a new study.
“Piketty’s narratives are occasionally peppered with wildly inaccurate historical ‘facts’ that, coincidentally, seem to bolster his desired interpretation of the surrounding data,” the study said.
The study was conducted by Phillip Magness, a policy historian at the Institute for Humane Studies, and Robert Murphy, a senior economist at the Institute for Energy Research. It will be published in a forthcoming edition of the Journal of Private Enterprise.
Piketty consistently claimed his extensive historical data, while still incomplete, made his conclusions more valid than previous work on inequality.
Despite Piketty’s claims, the book struggled with basic historical facts. For instance, Piketty says President Franklin Roosevelt increased the top income tax rate to 63 percent in 1933 and 79 percent in 1937. Rather, it was President Hoover that signed legislation increasing the top income tax rate to 63 percent in 1932, and Roosevelt increased the rate to 79 percent in 1936.
Piketty also laments that Presidents Reagan and H.W. Bush never increased the federal minimum wage, while stating that President Clinton hiked the minimum wage to $5.25 an hour. In reality, the federal minimum wage has never been equal to $5.25 an hour, and it rose twice under H.W. Bush.
Alone, these factual missteps mean little. But they show Piketty’s carelessness, willingness to deceive, or both. These characteristics may have bled into Piketty’s justifications for his policy recommendations, such as an 80 percent marginal income tax rate and a 5 percent global wealth tax on the wealthy.
The study also finds that Piketty simply manufactured data where none was available. For instance, Piketty uses tax revenue data from the United States Census Bureau going back to 1902. But Piketty’s graphs show data going back to 1870. Examination of his spreadsheet shows Piketty simply added or subtracted digits from other data points for the 1870-1900 data, as opposed to data found through new sources of information.
“Whereas other data critiques including the Financial Times have raised important normative and methodological questions in Piketty’s data presentations, the issues highlighted here suggest an even more fundamental problem of his reliance upon factually mistaken data claims, unsupported assertions of validity, and chart constructions that appear to be distorted by design,” the authors wrote.
The study focused on Piketty’s U.S. history claims, so it’s possible Piketty’s work contains even more errors.