Financial Times' Giles Finds Economist's 'Wealth Inequality' Work Riddled With 'Data Problems'—And Wrong --Oh, that

Chris Giles, Economics Editor
 Financial Times

By Tom Blumner, May 23, 2014, Newsbusters.org

French economist Thomas Piketty has become a darling of the left for allegedly "proving" that, as paraphrased by Chris Giles at the Financial Times, "wealth inequalities are heading back up to levels last seen before the first world war." The Media Research Center's Julia Seymour has described Piketty as a "'rock star' of the far-left," an accurate assessment given praises heaped upon his book and especially his public policy prescriptions by the likes of Alternet and Vox's especially gullible Matthew Yglesias. Seymour also notes that Piketty's work has received a great deal of favorable notice in the establishment press, and that he has met "with the Treasury Secretary" and "(President) Obama’s Council of Economic Advisers."

Of course these "oligarch groupies," as Jeffrey Lord describes them, love him. Piketty favors an 80 percent tax on incomes above $500,000 and a progressive global tax on real wealth (i.e., after subtracting debt). The problem is that FT's Giles, having done a deep dive into the economist's data and spreadsheets, has found serious problems in the professor's work which nullify his conclusions.

Giles has documented his findings in a summary article and a thoroughly detailed blog post. He has found "a series of errors that skew his (Piketty's) findings" consisting of "mistakes and unexplained entries in his spreadsheets."

Here are several paragraphs from Giles's summary published early Friday afternoon (Eastern Time US):

... 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. 

... In his spreadsheets ... 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. 

... For example, once the FT cleaned up and simplified the data, the European numbers do not show any tendency towards rising wealth inequality after 1970. An independent specialist in measuring inequality shared the FT’s concerns. 

Contacted by the FT, Prof Piketty said he had used “a very diverse and heterogeneous set of data sources ... [on which] one needs to make a number of adjustments to the raw data sources. 

“I have no doubt that my historical data series can be improved and will be improved in the future ... 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,” he said.

At the very least, Piketty has admitted that he didn't mind making "a number of adjustments to the raw data sources" without telling anyone that he had made them.

But it gets worse — much worse — once one looks at Giles's detailed blog post:

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