In an honest and courageous move, Thomas Piketty, who warned of rising income inequality, now says too much was made of his ideas.
Will Paul Krugman, who used Piketty’s ideas to call for massive tax hikes on the rich, follow suit, and backtrack, too?
Don’t hold your breath…
Via WSJ: Robert Rosenkranz — Piketty Corrects the Inequality Crowd
‘Capital in the 21st Century,” a dense economic tome written by French economist Thomas Piketty, became a publishing sensation last spring when Harvard University Press released its English translation. The book quickly climbed to the top of best-seller lists, and more than 1.5 million copies are now in circulation in several languages.
The book’s central proposition, that inequality in capitalist societies will inevitably grow,…leading inexorably to the dominance of inherited wealth. Progressives such as Princeton economist Paul Krugman seized on Mr. Piketty’s thesis to justify policies they have long wanted—namely, very high taxes on the wealthy.
Now in an extraordinary about-face, Mr. Piketty has backtracked, undermining the policy prescriptions many have based on his conclusions. In “About Capital in the 21st Century,” slated for May publication in the American Economic Review but already available online, Mr. Piketty writes that far too much has been read into his thesis.
When he narrows his focus to what he calls “labor income inequality”—the difference in compensation between front-line workers and CEOs—Mr. Piketty consigns his famous formula to irrelevance….
All of this takes the wind out of enraptured progressives’ interpretation of Mr. Piketty’s book….Writing in the New York Review of Books last May, for example, Mr. Krugman lauded the book as a “magnificent, sweeping meditation on inequality.”
….Mr. Piketty is willing to stand up and say that the material in his book does not support all the uses to which it has been put, that “Capital in the 21st Century” is primarily a work of history. That is certainly admirable. Now it is time for those who cry that we are heading into a new gilded age to follow his lead.
CFO Magazine: Economist Piketty Backtracks on Inequality Theory