Monday, July 21, 2014

George Mason professor tries to play Washington Generals to Thomas Piketty’s Harlem Globetrotters

By Marc Jampole

Another transparently deceptive article on wealth inequality by George Mason economics professor Tyler Cowen has me wondering if Cowen has decided to play Washington Generals to Thomas Piketty’s Harlem Globetrotters.

The Harlem Globetrotters is an exhibition basketball team known for its entertaining feats of dribbling, passing and scoring, often to a catchy version of the 1920’s jazz standard “Sweet Georgia Brown.” The Globetrotters have rarely lost, thanks to the fact that they usually play the Washington Generals, an exhibition team put together for the sole purpose of serving the Globetrotters’ on-court foil.

Over the past several months, Cowen has published a number of articles that have tried to refute the main premise of Piketty’s Capital in the 21st Century, which is that inequality of wealth and income is growing in the world. His obviously fallacious reasoning makes me wonder if Cowen decided to play Washington General as his contribution to disseminating Piketty’s important theories. Just as the Generals’ weak defense have allowed such stars as Wilt Chamberlain, Connie Hawkins, Meadowlark Lemon and Curly Neal to wow spectators, so Cowen’s weak and typically devious arguments have made Piketty look good (as if the spot-on and factually-scrupulous Piketty needed any help!) 

First Cowen made a feeble attempt in Foreign Affairs to prove that wealth doesn’t tend to concentrate.  Instead of looking at the class of the wealthy, Cowen zeroed in on wealthy individuals, pointing out that old fortunes like the Rockefellers and the Astors get diluted over time. If he had instead looked at the wealthy as a class, Cowen would see that Piketty is right to conclude that inequality has increased because the numbers say it.  Call this flaw in reasoning a failure to think in terms of class.  

Cowen is at it again in a Sunday New York Times business article in which he claims that even though inequality is rising in many countries, it is easing globally. Cowen presents no statistics to prove the point, but gives a bunch of reasons why it must be true. Most of his reasons turn out to be trends that do act against greater inequality, but do not change the overall flow of wealth away from the poor and middle class and to the wealthy.  Yes, Cowen is right to say that international trade has improved the standard of living in developing countries, but the fact that there are more middle class people in China and fewer in the United States does not address the question of whether inequality is growing or not. 

In Capital in the 21st Century, Piketty provides statistics that demonstrate that the wealthiest are grabbing a greater share of the wealth and income pie than they used to in every single country of the world.  The most extreme difference in wealth and income between the top one percent and everyone else is currently in the United States. So the fact that there has been some movement up the economic ladder for some people in some non-western countries does not mitigate the overall picture of growing inequality in the world.

Cowen makes the same logical flaw in his New York Times piece as he does in the Foreign Affairs article: instead of looking at the totality of the statistics he looks at individual subsets from which he draws a generalized conclusion. In a metaphorical sense, Cowen’s reasoning is similar to a 2-3 zone defense with slow guards, which makes a basketball team vulnerable to both the three-point shot and drives to the basket. In other words, the careful reader or anyone who has read Piketty’s book observes Cowen trip himself up with his own words.

But the mainstream media loves deceptive arguments and outrageous statements if they support the free market or advocate against higher taxes. That explains why his mostly nonsense articles have found favor in The New Republic, Wall Street Journal, Forbes, Newsweek, Wilson Quarterly, Foreign Affairs and New York Times.  In fact, three years ago Business Week declared Cowen to be “America’s hottest economist.” That’s kind of like the newsletter of the corporation that owns the Washington Generals declaring the team the “best professional basketball team” of the century.

Except, of course, for all the others.

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