By Michael Barone • RealClearPolitics
Last spring, you may remember, the French economist Thomas Piketty was all the rage in certain enlightened circles. His book “Capital” shot up to the No. 1 spot on bestseller lists, and many economists praised his statistics showing increased income and wealth inequality. Piketty argued that, absent a world war, returns to capital will exceed economic growth, inevitably producing growing inequality in the 21st century.
There are problems with Piketty’s — or anyone else’s — statistics. Reliance on U.S. income tax returns overlooks the fact that tax cuts encourage people to realize income and misses non-taxable income such as welfare and Social Security payments. [Read more...]