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by bhupy 2135 days ago
First of all, the observation that US's shrinking middle class is attributable to an increasing upper-middle class is objectively true, it's not that controversial [4].

Second of all, Piketty's argument is more that capital's share of growth will necessarily outpace labor's share of growth (r > g).

Third of all, Piketty isn't gospel. There have been a number of rebuttals published since his findings that make fairly strong refutations.

The IMF studied empirical evidence to see if it matches up with Piketty/Saez/Zucman's theoretical models, and was unable to validate their finding[1].

Further studies showed that r > g almost entirely goes away when you exclude land/housing appreciation, mostly attributable to restrictive zoning regulations [2].

Auten & Splinter found that Piketty failed to account for existing taxes and transfers. When you do that, the perceived growth in inequality goes away almost entirely[3][5].

[1] https://www.imf.org/external/pubs/ft/wp/2016/wp16160.pdf

[2] https://core.ac.uk/download/pdf/35310497.pdf

[3] http://davidsplinter.com/AutenSplinter-Tax_Data_and_Inequali...

[4] https://www.nytimes.com/interactive/2015/01/25/upshot/shrink...

[5] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3546668

1 comments

Your link [4] shows that, since 2000, the lower class has been growing and the middle and upper classes have been shrinking.
Sure, but look from 1967. The trend-line is still positive at a macro level. Since 2000 we had a huge recession, so it's not super conclusive.