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What do you think of Piketty’s inequality statistics in general Prof. Herbener?
I have heard a lot of criticism of his understanding of inequality and the relation to capital but not read anybody who disputes too much of data of the past 2 centuries.
Ok that seems a more sensible view to take. Having read up on the nature/nurture debate it makes sense that some are much better off because traits follow a normal distribution but this couldn’t make sense of the specific Pareto distribution because it suggests something that is down-right weird if it true.
Thanks Prof. Herbener
I have tried looking at studies of inequality and I have only found 2 that correlate with Pareto’s distribution.
Looking at a lot of different data sets like those made by Piketty it doesn’t show Pareto’s principle at work except that wealth is very concentrated.
Could this be because Pareto’s principle should primarily be understood as one power law among many. Reading Richard Koch’s book on the Pareto principle he suggests it shouldn’t be taken face value even if the precise 80/20 distribution does in fact turn up many times in socal findings. Should I take the principle as a mean from which to measure distributions or rather a metaphor for how small number of actors create a majority of results?
Yes I first read Gary North on this which is what inspired my current project. I was just wondering if you also accepted this or if you can think of objections to it? Because I can’t comprehend why economists(whether free market or not) have ignored this phenomenon for so long. I have only seen Gary North refer to this but no other Austrian. For this reason I’m wondering if perhaps it might not be taken seriously by economists or perhaps the methodology used is the reason the figures come out with close to 20 % owning 80 %.?
The fact that this is a social law would suggest it holds for economics as well and that it is not down to methodology.
Thanks for the link.
Has it been your experience that the Pareto distribution of wealth tends to hold over time regardless of economic policy? If so it seems strange that nobody defending the free market has ever used it as a defence because it seems to indicate that inequality is the norm even if the composition of 20% or the 80 % can change. Have I understood this correct or does this have do with the methodology?
This study seems to focus primarily on countries over time(the third last graph) rather than individuals. Are there studies or histories that focus on this topic over time? Or perhaps even some scattered studies from the past century?
I will focus on the continuity from Pareto’s observation until the present day and to what degree figures have diverged.
Ok but as I understand their argument no country can perpetually rely on those things and that it was governments that helped spur growth in areas in these non-agricultural sectors.
Their point being that simply exporting agricultural goods means that from a competitive point of view, you will eventually get competition and that when it comes to agriculture it is easier to enter and dilute the market. Therefore even a sophisticated agricultural economy would not be able to match a manufactoring economy(19th century context) in terms of creating wealth.
Thank you very much for the links.
Am I right in saying that the critics of free trade are completely avoiding the raising of living standards that is the result of cheaper goods coming into a country?
The focus seems to only be on whether or not a country can compete on producing the same things as other countries. The only counterargument I have heard from critics is that if you only specialize in agriculture then you won’t make the move up to a more industrial economy and that an agricultural economy is more unstable since you are more likely to find developing countries competing on agricultural products.
Thank you that was a great link.
What are you asking for?
Ok then I have understood it correctly. But in my study I kept reading that because of Bretton Woods there was a possibility of arbitrage that started to happen in the 60’s which drained the American gold stock and led to seperate gold markets by law in the late 60’s. If only government institutions could reedem the dollars in gold how was this possible?
Taylor’s book is a classic but I really Patrick Buchanan’s newer book on WWII “The Unnecessary War” which is ideal for the intelligent laymen. He explains WWI as well so it is almost a 2 for 1 deal with this book. In case you might think Buchanan is not a good historian read Robert Higg’s review of the book:
Sorry I should have said that I meant in the Bretton Woods era. As the system was designed was there any way for non-government entities to get part of the American governments gold stock?
How did foreigners get gold?
Are we talking about central banks and governments or does this include commercial banks as well, what about corporations?
I have always assumed that it was just central banks+governments when I read reference to foreigners getting gold but I wonder.
When we talk about the income stagnation on a per capita basis are we also measuring something about social mobility and either way what has the trend been over the past decades? is social mobility declining, rising or stagnating?