Lazy Saturday Reads: Economics Food Fight, Drive-By Mass Murder, and Other News

Thomas Picketty

Thomas Picketty

Have a Stupendous Saturday!

It’s too bad Dakinikat is so busy today, because there’s an economics food fight brewing. Perhaps she’ll still find time to comment on the controversy later the evening after she returns home with her newly adopted canine family member, Temple. Meanwhile, I’ll do my best to describe the dispute over Thomas Picketty’s conclusions about wealth inequality, published in his book Capital in the Twenty-first Century.

The Accusations:

At the Financial Times, Economics Editor Chris Giles has claims to have found problems with Picketty’s work: Piketty findings undercut by errors.

Thomas Piketty’s book, ‘Capital in the Twenty-First Century’, has been the publishing sensation of the year. Its thesis of rising inequality tapped into the zeitgeist and electrified the post-financial crisis public policy debate.

But, according to a Financial Times investigation, the rock-star French economist appears to have got his sums wrong.

The data underpinning Professor Piketty’s 577-page tome, which has dominated best-seller lists in recent weeks, contain a series of errors that skew his findings. The FT found mistakes and unexplained entries in his spreadsheets, similar to those which last year undermined the work on public debt and growth of Carmen Reinhart and Kenneth Rogoff.

The central theme of Prof Piketty’s work is that wealth inequalities are heading back up to levels last seen before the first world war. The investigation undercuts this claim, indicating there is little evidence in Prof Piketty’s original sources to bear out the thesis that an increasing share of total wealth is held by the richest few.

Prof Piketty, 43, provides detailed sourcing for his estimates of wealth inequality in Europe and the US over the past 200 years. In his spreadsheets, however, there are transcription errors from the original sources and incorrect formulas. It also appears that some of the data are cherry-picked or constructed without an original source.

John Maynard Keynes

John Maynard Keynes

In one specific example, Giles says the corrected data do not show significant growth in Europe since 1970. In a second article, Giles goes into more detail. In addition, he argues that the U.S. data doesn’t support the conclusion that a greater proportion of the wealth is controlled by top 1% than in recent decades. He does admit to the top 10% controlling a greater share of wealth than previously.

An investigation by the Financial Times, however, has revealed many unexplained data entries and errors in the figures underlying some of the book’s key charts.

These are sufficiently serious to undermine Prof Piketty’s claim that the share of wealth owned by the richest in society has been rising and “the reason why wealth today is not as unequally distributed as in the past is simply that not enough time has passed since 1945”.

After referring back to the original data sources, the investigation found numerous mistakes in Prof Piketty’s work: simple fat-finger errors of transcription; suboptimal averaging techniques; multiple unexplained adjustments to the numbers; data entries with no sourcing, unexplained use of different time periods and inconsistent uses of source data….

A second class of problems relates to unexplained alterations of the original source data. Prof Piketty adjusts his own French data on wealth inequality at death to obtain inequality among the living. However, he used a larger adjustment scale for 1910 than for all the other years, without explaining why.

In the UK data, instead of using his source for the wealth of the top 10 per cent population during the 19th century, Prof Piketty inexplicably adds 26 percentage points to the wealth share of the top 1 per cent for 1870 and 28 percentage points for 1810.

A third problem is that when averaging different countries to estimate wealth in Europe, Prof Piketty gives the same weight to Sweden as to France and the UK – even though it only has one-seventh of the population.

Get even more detail and charts here: Data problems with Capital in the 21st Century.

Karl Marx

Karl Marx

The Pushback So Far:

Paul Krugman: Is Piketty All Wrong?

Great buzz in the blogosphere over Chris Giles’s attack on Thomas Piketty’s Capital in the 21st Century. Giles finds a few clear errors, although they don’t seem to matter much; more important, he questions some of the assumptions and imputations Piketty uses to deal with gaps in the data and the way he switches sources. Neil Irwin and Justin Wolfers have good discussions of the complaints; Piketty will have to answer these questions in detail, and we’ll see how well he does it.

Krugman suggests that Giles may be doing something wrong.

I don’t know the European evidence too well, but the notion of stable wealth concentration in the United States is at odds with many sources of evidence. Take, for example, the landmark CBO study on the distribution of income; it shows the distribution of income by type, and capital income has become much more concentrated over time:

It’s just not plausible that this increase in the concentration of income from capital doesn’t reflect a more or less comparable increase in the concentration of capital itself….

And there’s also the economic story. In the United States, income inequality has soared since 1980 by any measure you use. Unless the affluent starting saving less than the working class, this rise in income disparity must have led to a rise in wealth disparity over time.

At Mother Jones, Kevin Drum notes that

Giles’ objections are mostly to the data regarding increases in wealth inequality over the past few decades, and the funny thing is that even Piketty never claims that this has changed dramatically. The end result of Giles’ re-analysis of Piketty’s data is [below] with Piketty in blue and Giles in red. As you can see, Piketty estimates a very small increase since 1970.

blog_ft_piketty_wealth_inequality_europe

 

R.A. at The Economist: A Piketty problem?

Milton Friedman

Milton Friedman

Mr Giles’s analysis is impressive, and one certainly hopes that further work by Mr Giles, Mr Piketty or others will clarify whether mistakes have been made, how they came to be introduced and what their effects are. Based on the information Mr Giles has provided so far, however, the analysis does not seem to support many of the allegations made by the FT, or the conclusion that the book’s argument is wrong.

There are four important questions raised by the FT‘s work. First, which data are wrong? Second, how did errors in the work, if they are errors, come to be introduced? Third, how do the errors affect the specific points made in the relevant chapters? And fourth, how do the errors affect the fundamental conclusions of the book?

Mr Giles focuses on wealth inequality, to which Mr Piketty turns in Chapter 10 of his book. Mr Piketty has not published nearly as much research on the question of wealth inequality, and it seems that much of the analysis in Chapter 10 was done specifically for the book, based on others’ research. Mr Piketty’s wealth-inequality analysis certainly matters as a component of the book’s argument, but it is not accurate to say, as Mr Giles does, that the results in Chapter 10 constitute the “central theme” of the book.

Are the data wrong? Mr Giles identifies discrepancies between source material cited by Mr Piketty and the figures that appear in the book. He identifies cases in which Mr Piketty appears to have chosen to use data from one source when another would have made more sense. Further, the calculations in Mr Piketty’s spreadsheets (which have been available online since the book’s publication) seem to include adjustments in the data that are not adequately explained, and some figures for which Mr Giles cannot find a documented source. Finally, Mr Piketty has made choices concerning weighting of data used in averages, and assigning of data from one year (1935, for example) to another (1930) when such assignments seem unnecessary or inadvisable.

Alan Greenspan

Alan Greenspan

The author concludes that, unfortunately, ideology will determine how many people respond to the Giles critique. Much more extensive analysis at the link.

Here is Picketty’s–presumably preliminary–response to Giles in a letter to the Financial Times:

Let me also say that I certainly agree that available data sources on wealth are much less systematic than for income. In fact, one of the main reasons why I am in favor of wealth taxation and automatic exchange of bank information is that this would be a way to develop more financial transparency and more reliable sources of information on wealth dynamics (even if the tax was charged at very low rates, which you might agree with).

For the time being, we have to do with what we have, that is, a very diverse and heterogeneous set of data sources on wealth: historical inheritance declarations and estate tax statistics, scarce property and wealth tax data, and household surveys with self-reported data on wealth (with typically a lot of under-reporting at the top). As I make clear in the book, in the on-line appendix, and in the many technical papers I have published on this topic, one needs to make a number of adjustments to the raw data sources so as to make them more homogenous over time and across countries. I have tried in the context of this book to make the most justified choices and arbitrages about data sources and adjustments. I have no doubt that my historical data series can be improved and will be improved in the future (this is why I put everything on line). In fact, the “World Top Incomes Database” (WTID) is set to become a “World Wealth and Income Database” in the coming years, and we will put on-line updated estimates covering more countries. But I would be very surprised if any of the substantive conclusion about the long run evolution of wealth distributions was much affected by these improvements.

I thought this was important:

my estimates on wealth concentration do not fully take into account offshore wealth, and are likely to err on the low side. I am certainly not trying to make the picture look darker than it it. As I make clear in chapter 12 of my book (see in particular table 12.1-12.2), top wealth holders have apparently been rising a lot faster average wealth in recent decades, at least according to the wealth rankings published in magazines such as Forbes. This is true not only in the US, but also in Britain and at the global level (see attached table). This is not well taken into account by wealth surveys and official statistics, including the recent statistics that were published for Britain. Of course, as I make clear in my book, wealth rankings published by magazines are far from being a perfectly reliable data source. But for the time being, this is what we have, and what we have suggests that the concentration of wealth at the top is rising pretty much everywhere.

Luckovich shooting

In Other News:

There has been a mass shooting in Southern California–this time perpetrated from behind the wheel of a car. From the LA Times, 7 dead in drive-by shooting near UC Santa Barbara.

The shootings began about 9:30 p.m., a sheriff’s spokeswoman told KEYT-TV. It wasn’t clear what the attacker’s motivation might have been.

An 18-year-old Newport Beach man who was visiting Santa Barbara described a confusing scene as the shots rang out.

Nikolaus Becker was eating outside The Habit, 888 Embarcadero Del Norte,  near the scene when the first set of shots was fired about 9:30 p.m. At first he thought it was firecrackers. A group of three to five police officers who were nearby started to casually walk toward the sounds, said Becker, but ran when a second round of shots broke out.

“That’s when they yelled at us to get inside and take cover,” Becker said.

The BMW took a sharp turn in front of The Habit, Becker said, and moments later a third round of shots was heard. Becker and his friends moved toward the restaurant’s kitchen but were told to wait in the seating area by employees.

He estimates there were at least 13 to 15 shots total at three locations. The locations were about 100 yards from one another.

The shooter, whose motivation is unknown, was found dead in his BMW. It’s not yet clear if he shot himself or was killed by sheriff’s deputies.

In another gun-related story, TPM reports that some gun nuts are reconsidering their campaign of carrying long guns into public places: Scaring The Crap Out of People Oddly Not Winning Fans.

Open Carry Texas and a group of other aggressive gun rights groups have issued a joint statement telling their members, Dudes, let’s stop taking our guns to restaurants. It’s freaking people out and making them hate us.

Read the full statement at TPM.

Shelly-and-Donald-Sterling1

Soon-to-be former LA Clippers owner Donald Sterling has signed over the team to his wife and wants her to negotiate the sale.

Shelly Sterling, who previously shared ownership of the beleaguered NBA franchise with her estranged husband, is now in talks with the NBA over selling the team, the source said.

The NBA banned Donald Sterling for life from all league events after an audio tape became public that caught him on tape uttering racist comments to his assistant V. Stiviano. He told her not to post photos of herself with black people on Instagram — such as Magic Johnson — or bring them to his basketball games.

But the NBA isn’t buying it. From ESPN: Why the NBA won’t allow Shelly Sterling to control the Clippers.

At first glance, Donald Sterling’s gesture may seem like serendipitous news for the NBA. Taking him at his word, Donald Sterling has agreed to leave the league without a fight and has signed off on the sale of his team. Digging deeper, however, reveals possible ulterior motives on Sterling’s part to delay and potentially block the sale of the team. Do not forget a crucial point: capital gain taxes. As first reported by SI.com, the Sterlings have significant incentives under capital gain tax law to avoid the sale of the team and keep it in the Sterling family. Doing so, would save them hundreds of millions of dollars. Also, contrary to some reports, the Sterlings are unlikely to benefit from the “involuntary conversion” tax avoidance provision of the Internal Revenue Code. The bottom line is if the Sterlings have to sell the Clippers, they will probably pay hundreds of millions in state and federal taxes.

Along those lines, Donald Sterling’s proposed maneuver does not accomplish the NBA’s goal of ousting the entire Sterling family on June 3. As explained in a previous SI.com article, the NBA interprets its constitution to mean that ousting Donald Sterling on June 3 would also automatically oust Shelly Sterling as co-owner, with the Clippers then falling under the control of commissioner Adam Silver. Donald Sterling’s proposed maneuver risks the prospect of Shelly Sterling undertaking a slow-moving effort to sell the team. A sale process that takes months or years would clearly aggravate the NBA, which wants to erase the Sterling family name from the league as quickly as possible. A protracted sale of the Clippers by Shelly Sterling might also constitute a potential rationale for players to boycott NBA games.

Even of greater risk to the NBA, what is to stop Shelly Sterling from deciding to keep the Clippers? She could plausibly reason, on various grounds, that now is not the right time to sell the team. Also, her instruction from her husband to sell the team would not be legally binding; it would be a mere suggestion the moment she takes over the team.

Read much more at the link.

Ta-Nehisi Coates

Ta-Nehisi Coates

I’ll end with a long article that I haven’t gotten to yet, but I’m hearing it’s a must read: The Case for Reparations, by Ta-Nehisi Coates at The Atlantic. Here’s the tagline:

Two hundred fifty years of slavery. Ninety years of Jim Crow. Sixty years of separate but equal. Thirty-five years of racist housing policy. Until we reckon with our compounding moral debts, America will never be whole.”

Some reactions:

The Guardian: The ‘Case for Reparations’ is solid, and it’s long past time to make them.

Slate: An Ingenious and Powerful Case for Reparations.

The Wire: You Should Read “The Case for Reparations.”

NPR: How To Tell Who Hasn’t Read The New ‘Atlantic’ Cover Story.

WaPo: Culture change and Ta-Nehisi Coates’s ‘The Case For Reparations’.

What else is happening? As always, please post your links in the comment thread.

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Monday Reads

Good Morning!  Quelle Surprise! Pop Culture is still Misogynist, Racist, and Homophobic!

Pige-Manga-BWI found some interesting reads over the weekend so I hope you’ll enjoy them!   They are all sort’ve stories that actually reflect a lot of the things that fascinate and entertain me.  I love strategy games and have been playing them on line for quite some time  Actually, it’s been since the early 1990s when most of the games were simply text oriented.  I also love animation art, and books, and of course, music. So, here’s a little bit on that and a little bit of stuff that has to do with social justice too.  If I do a have a consistent train of thought here it is that so much of what should be entertaining and could be informative can sow bad seeds.  I’ve a few examples where the pop and geek culture are taking on hard topics. Some are  successful and examining crucial human stories.  Some rely on the same old misogyny, racism, and homobigotry.

Japanese Manga is a way many creative people in Japan explore how they feel about a variety of things. This article is about a new manga book on the lives of the Fukashima plant workers.

A manga that describes the reality of daily life at the crippled Fukushima No. 1 nuclear power plant through the eyes of a worker is enjoying popularity.

“Ichiefu” (1F), written by Kazuto Tatsuta, 49, first appeared in autumn 2013 as a serial comic in the weekly magazine “Morning,” published by Kodansha Ltd. Ichiefu stands for the Fukushima No. 1 plant among locals.

The comic was published in book form on April 23. The publisher shipped a total of 150,000 copies of the first volume, which is an unusually large number for a little-known manga artist.

Tatsuta said he changed jobs repeatedly after graduating from university. At the same time, he also worked as a comic strip artist.

It was when he was considering another job change that the March 2011 Great East Japan Earthquake and tsunami occurred, triggering the nuclear accident at the Fukushima plant.

While seeking a better-paying job, Tatsuta also wondered what part he could do as a citizen of Japan to help. As a result, he began to work at the Fukushima No. 1 nuclear power plant from June 2012 for a total of six months.

“Ichiefu” describes the situation at the plant in great detail. The descriptions of equipment, such as the masks and protective gear the workers used, and the procedures they took to measure radiation levels make readers feel as if they are there and reading actual worker manuals.

The comic also depicts intimate practices only workers there would know. For example, the workers always say “Be safe” to each other before starting their shifts.

Each of the workers was also required to stop working when his dosimeter issued a fourth warning sound.

I quit playing a few games last year that I had really grown fond of because of the rampant misogyny and homophobia of many of the white male manga-dark-warriorplayers.  I had repeatedly asked them to constrain their language, behavior, and what they posted.  I am fortunately playing a game right now where that’s not the case.  I am still one of the few female players in my alliance.  I believe I am one of two but I have found that I generally enjoy better game play if I am in an alliance where there are many openly gay men.  This NPR article summarizes a series of articles that are focused on white male privilege in the online game atmosphere.

In video games, sexism often comes in the form of male-dominated storylines and character archetypes. In the video game community, it takes a more menacing shape.

It ranges from attempts to silence female critics to the harassment of fellow players. Some harassment even goes so far as phone calls and rape threats, as one female game developer found out last year.

“The issue is often framed as a women’s issue, but sexual harassment, sexism and misogyny in gaming is not a women’s issue — it’s a gaming community issue,” says Jonathan McIntosh, a producer for the Tropes vs. Women in Video Games Web series.

Last week, McIntosh wrote a piece for gaming website Polygon about what he calls the “invisible benefits” that males experience while playing video games. In the post, he lists 25 effects of “male gamer privilege.” Here’s a sample:

  • I can choose to remain completely oblivious, or indifferent to the harassment that many women face in gaming spaces.
  • I am never told that video games or the surrounding culture is not intended for me because I am male.
  • I can publicly post my username, gamertag or contact information online without having to fear being stalked or sexually harassed because of my gender.
  • I will never be asked to “prove my gaming cred” simply because of my gender.
  • I will almost always have the option to play a character of my gender, as most protagonists or heroes will be male by default.
  • If I am trash-talked or verbally berated while playing online, it will not be because I am male nor will my gender be invoked as an insult.
  • My gaming ability, attitude, feelings or capability will never be called into question based on unrelated natural biological functions.

So far, the reaction to his post — both in the more than 700 comments on the piece and elsewhere — has been relatively civil. As McIntosh pointed out on Twitter, he doubts it would have been as civil if he had been a female writer raising the same points.

“I’m saying the same thing that women have been saying for years,” McIntosh says. “There’s nothing in my piece that’s really new, it’s just that it’s coming from me. If my name was Joanna McIntosh … I’d be called irrational, I’d be called hysterical and I’d be called too sensitive.”

One other thing that I did not mention last week but I would like to mention this week is the rape scene between the Lannister twins in Game of Thrones.  The same scene in the book actually was rough but consensual.  

There’s been a lot of discussion, Internet rage, and general overall hoopla following Sunday night’s episode of Game of Thrones, as the television show made the most shocking book-to-screen deviation to date. *Spoiler free for future books.*

Jaime and Cersei finally had their reunited love scene, and suddenly for book readers, Jeyne Westerling seemed like a small cinematic sacrifice to make in comparison. I don’t want to get into a philosophical discussion on whether or not this scene constitutes as rape. Smarter people than I have alreadydonethat.

What we have to work with in the scene is what the characters said and did because we can’t know how they felt. And whether or not the scene was intended to come across as consensual sex, the way the scene was cut by the director makes it definitive to the audience that it was not consensual. Cersei repeatedly said no while Jaime forced himself on top of her and answered that he didn’t care as his creepy voiceover carried out onto a shot of Arya staring at mountains. If that’s all we know about the scene, then yes, in the television show Jaime raped Cersei.

The “debate” about the rape has been nearly as upsetting as the rape itself.  I liked this take clearly stating that rape is not a “narrative device”.

In some ways, it’s useful for television shows to acknowledge the extent of sexual violence in our culture. These narratives allow necessary stories to be told. But the execution is too easy. From daytime soap operas to prestige cable shows, rape is all too often used to place the degradation of the female body and a woman’s vulnerability at the center of the narrative. Rape is used to create drama and ratchet up ratings. And it’s rare to see the brutality and complexity of a rape accurately conveyed on-screen. Instead, we are treated to an endless parade of women being forced into submission as the delicate and wilting flowers television writers and producers seem to want them to be.

download (9)I am still wondering why there seems to be a renaissance in misogny, racism and homobigotry.  You would think that the sports arena would have made better strides against racism given that teams and fans are fully integrated to the idea that there are players of many races.  However, it seems the real money and power behind the bread and circuses are still those rich, horrid, white men.  We talked about the Clippers’ owner last week.  There is, of course, more on that.

Deadspin has acquired an extended, 15-minute version of the conversation between Clippers owner Donald Sterling and his then-girlfriend V. Stiviano. If the original nine-minute tape acquired by TMZ left any questions about Sterling’s opinions regarding minorities, the audio here should remove all doubt that he’s a doddering racist with views not too far removed from the plantation.

The Clippers themselves showed some class this week in a protest that was priceless.  There will undoubtedly be more coming and hopefully the NBA can find a way to strip Sterling of the franchise.

The Clippers gathered at center court before a118-97 Game 4 loss in their first-round series against the Golden State Warriors and took off their Clippers warm-up shirts and left them there. They then warmed up wearing inside-out red shooting shirts that did not display the Clippers name or logo. During the game, players wore black arm or wrist bands and black socks.

In other news, water is still wet and Sarah Palin is still one of the dumbest people on the planet.  This is the money quote she gave the NRA: ‘Waterboarding is how we baptize terrorists’.

Former Alaska Gov. Sarah Palin (R) defended the controversial enhanced interrogation technique of waterboarding this weekend, and implied that the practice would still be commonplace “if I were in charge.”

“They obviously have information on plots to carry out Jihad,” she said at the National Rifle Association (NRA) annual meeting on Saturday evening, referring to prisoners. “Oh, but you can’t offend them, can’t make them feel uncomfortable, not even a smidgen. Well, if I were in charge, they would know that waterboarding is how we baptize terrorists.”

The remark stands in stark contrast to the opinion of her former running mate, Sen. John McCain (R-Ariz.).

The former Republican presidential nominee, who spent more than five years in a prison camp during the Vietnam War, has repeatedly denounced the practice, which he says is torture.

In her speech, Palin praised the NRA, a group whose members “are needed now more than ever, because every day we are seeing more and more efforts to strip away our Second Amendment rights,” she said.

I am still waiting for some examples of how any government in the US is stripping away the second amendment rights.  I do, however, have thousands of examples of how women are losing their right to self determination.

My last offering this morning is yet another in depth article on the demise of the middle class in the USA.  Middle class Americans are an endangered species.

Wages for millions of American workers, particularly those without college degrees, have flat-lined. Census figures show the median household income in 2012 was no higher than it was 25 years ago. Men’s median wages were lower than in the early 1970s.

Meanwhile, many of the expenses associated with a middle-class life have increased beyond inflation. This includes college tuition, whose skyrocketing cost has laid siege to a bedrock principle of the American Dream: that your children will do better than you did.

recent poll conducted by the Washington Post and the Miller Center at the University of Virginia found that 40 percent of those calling themselves middle class felt less financially secure than they were just a few years ago. Forty-five percent said they worry “a lot” about having enough money stashed away for retirement, and 57 percent said they worry about meeting their bills. Less than half said they expect their kids to do any better.

Fewer Americans find themselves in the heart of the middle class with every passing year.

In the mid-1970s, the majority of Americans were in the middle, with 52 percent earning the equivalent (in today’s dollars) of $35,000 to $100,000. Today, according to census figures, the share of households earning under $35,000 is virtually unchanged, 35 percent. The shift has occurred in the other two categories. Households with incomes over $100,000 have doubled, to 22 percent, while less than 44 percent are in the middle cluster.

So, what’s on your reading and blogging list today?