Nick Shaxson ■ Why Piketty’s inequality numbers are understated


As we and everyone else have remarked, it’s the book of the moment: Thomas Piketty’s Capital in the 21st Century. We are reading it, and like so many others, we are impressed.

Our main contribution to the debate will be – when we finish our analysis – to argue that the inequality problem is significantly understated. Crucially, it doesn’t take good enough account of the $21-32 trillion stock of offshore wealth – which we already explored, here and here. Piketty does reference our work on p19, but he prefers to endorse much smaller offshore estimates produced by Gabriel Zucman, who worked with Piketty and uses very different methodologies from ours.

We are confident that our bigger estimates are more robust, and we will bring you more on this subject soon.

In addition, read Michael Hudson’s new polemical analysis on Naked Capitalism, which makes some very useful points about taxation, among other things, in explaining why Piketty’s numbers are too small. As he puts it:

“The problem with Piketty’s statistics are that it vastly understates how unequal the world really is.”

Unfortunately, no time to write more on this now; but we will be back with more soon.

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