Huge argument breaks out over economist Thomas Piketty’s thesis of an increasing gap between rich and poor

A “rock star” economist who wrote a bestselling book about the growing wealth gap between the rich and poor appears to have got his sums wrong.

Thomas Piketty, 42, included a number of errors and spreadsheets in Capital in the Twenty-First Century, which has dominated book charts around the world in recent weeks. The 577-page thesis, which claims wealth inequality has been soaring since the First World War, uses a huge amount of statistics as evidence.

But an investigation found there were errors in transcripts from original sources and incorrect forumulae.

For example, his figures claim wealth became more concentrated in Britain during the 1980s, but his sources do not back it up. He is also alleged to have cherry-picked some of the information.

When The Financial Times stripped down the data, they found that there was no evidence of rising wealth inequality from 1970.

In the book, he urges that income taxes should be increased to 80% on earnings in excess of either £300,000 or £500,000 a year.

He also suggests a global wealth tax, imposed at the rate of 1 per cent a year on fortunes of £600,000 to £3 million, up to as much as 10% for those earning more than a billion.

Defending the claims, Professor Piketty said he has made it clear that some of the statistics need changing and has published his work online so it can be altered in the future.

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I have not read the book and only read about the controversy last night. The above piece is from The Daily Mail. Other relevant articles are, at the moment, all at news sites with reader restrictions. You can read a certain number of article for free at the Financial Times, The Wall Street Journal and the New York Times (which also waded into the conflict last night), but I am not certain of the details.  I do know you have to register at FT.

The relevant articles at FT are Piketty findings undercut by errors and on FT blogs (you just need to register) Data problems with Capital in the 21st Century and Piketty response to FT data concerns.

WSJ has a short piece on a blog (free to read, I think) Piketty Pushes Back as His “Capital” Findings Come Under Fire.

NYT is having none of it, and disagrees with FT: Did Thomas Piketty Get His Math Wrong?

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