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Liberty and Power

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  • Cherry-Pikettying

    by Phillip Magness

    My previous posts on the data problems in Piketty’s Capital in the Twenty First Century have focused almost entirely on errors contained within his data charts and files. But what happens when one tries to reconstruct those files?

    To find out, I conducted a simple experiment using Piketty’s Figure 10.5 – the widely cited depiction of wealth inequality in the United States over the past century. I previously deconstructed and critiqued this chart at length, concluding that it is essentially a Frankenstein graph – a clunky assemblage of cherry-picked data points from multiple divergent sources and arranged in an order that seems to confirm Piketty’s historical narrative about a dramatic upturn in inequality since the early 1980s. The purpose was to reconstruct Piketty’s chart using his own source data and techniques, only I would cherry-pick different “representative” numbers than Piketty did from within those sources as needed.

    The rules:

    1. I had to use the same data sources that Piketty used in constructing the original. These consist of the estate tax study by Kopczuk & Saez (2004) and SCF studies by Wolff (1994, 2010) and Kennickell (2009, 2011).


  • Piketty goes cherry-picking for US Wealth Inequality

    by Phillip Magness

    One of the main critiques I’ve made of Thomas Piketty’s data, starting on this blog last May and appearing in my newly released paper with Robert Murphy on the subject, concerns his Figure 10.5, purporting to show the trend of wealth inequality in the United States. As I pointed out at the time, this chart suffers from severe distortions starting in the 1970s that come about from Piketty’s unconventional decennial averaging techniques. The result is a downward distortion that gives the appearance of a clear bottom point in 1970, followed by a steady increase in inequality through the present day. Piketty attains this composite trend by essentially cherrypicking from different data sources until he produces the story he wants to depict, even as the trend he claims is far more ambiguous in the raw numbers.

    Though his citation practices are often opaque, I reconstructed and labeled the source match-up for Figure 10.5 in the following graph so you can see the cherrypicking at play:


  • An Empirical Critique of Thomas Piketty’s “Capital in the 21st Century”

    by Phillip Magness

    I first became aware of Thomas Piketty’s book Capital in the 21st Century last spring, though not from the onset of “Pikettymania” amidst its skyrocketing to the top of the best seller list. Rather, a couple of faculty colleagues brought it to my attention for its data. Knowing of my own research interests in historical tax data from the turn of the century United States, they suggested it as a new and relevant contribution with a fair amount of empirical overlap with what I was doing. I began reading the book as it gained attention for other reasons – mostly its prescriptive recommendation for an intentionally punitive global wealth tax, with rates not unlike the 75% top income tax bracket that had recently been enacted in Piketty’s native France.


  • APUSH: A Tempest in a Teapot

    by Jonathan J. Bean

    I have read the APUSH document. Frankly, it is not as bad as I thought it might be - certainly far short of the hard-core agenda pushed by the multiculturalist authors of the National History Standards in the 1990s. Yes, APUSH has a "progressive" slant but not as much as some college textbooks. Furthermore, it leaves ample room for AP faculty to pick a college textbook (presumably of their own choosing) and work within the APUSH framework. If I were a contrarian high school teacher teaching AP under the APUSH guidelines, I would roll my eyes at the examples of bias cited by critics but could easily work with it. 

    Criticism of APUSH ranges from it is a "stealth agenda perpetrated by those who failed with the National History Standards” (Peter Wood) to “AP is bad in and of itself” (a sentiment K.C. Johnson seems to embrace in rejecting the entire AP enterprise). I agree with much that Johnson has to say but AP isn’t going away. ‘Tis far better to “light a candle than curse the darkness" by offering workshops on teaching "traditional" history the way critics believe it ought to be taught.

    Preliminary observations on some of the criticisms I have read:


  • My Response to Mike Konczal ("The Voluntarism Fantasy")

    by David T. Beito

    On Thursday night, a segment of the John Stossel Show (9:00 p.m. eastern) on the Fox Business Channel will air a short "debate" which was taped last week between yours truly and  Mike Konczal on the historical viability, or lack thereof, of non-governmental alternatives to the welfare state.  Several months ago, I wrote a rough draft of a response after Konczal's article, "The Voluntarism Fantasy," appeared in Democracy Journal.  In the segment on the Stossel Show, Konczal (who I found to be quite a pleasant fellow) put forward many of the same points raised in his article.

    I did not revise my response or publish it because of other priorities.  In anticipation of the show's airing, however, I am putting it up now.  My sources can be found in From Mutual Aid to the Welfare State.  I can also provide them upon request.


  • The Free Market Kicks It Some Ebola Ass

    by Wendy McElroy

    The Ebola hysteria raises questions about how a free society would handle contagious diseases. Critics of freedom argue: libertarian principles, like the right against involuntary confinement, means that half the people on the planet could literally die from a lack of centralized state control. Left to their own devices, average people cannot solve their own problems.

  • Of Irish Famines, Slavery, and the libeling of laissez-faire

    by Phillip Magness

    In a recent column for the Washington Post, political scientist Henry Farrell attempted to lay part of the blame of two notorious historical events on what he sees as a “laissez faire” mentality that operates at the expense of human suffering. The occasion for Farrell’s claim is a curious one. He employed an ill-worded and somewhat tactless review of a recent book about slavery in the Economist magazine to remind readers that the same magazine had made similarly callous remarks about the victims of the Irish famine.

    While his observation might carry some weight if it illustrated a standing pattern, his particular offense in the second case comes from a much older column – as in something that was published in 1847.

    If taking modern publications to task for the uncouth musings of long-dead editors sounds slightly odd, it might be similarly observed that the Washington Post is far from immune from an ignominious publication record as this racially charged 1902 headline attests:

    Turning specifically to the famine, a studious reader might also notice that Mr. Farrell seems to have a strange affinity  for flogging this 167 year old hobgoblin whenever the Economist’s masthead comes up for discussion. More problematic from a historical perspective though is the argument he attempts to extract from the episode:

    In both instances, The Economist’s deep-rooted fondness of laissez faire slipped into a shameful tendency to minimize the human costs of those at the wrong end of the system, whether it was those who suffered and were murdered beneath the whip of slavery or those who starved to death, in part thanks to The Economist’s own vigorous advocacy.

    A damning indictment of laissez faire capitalism, one might conclude, if only it were true! Unfortunately for Mr. Farrell, he has his 19th century politics confused, and confused badly at that.

    Consider the repeal of the Corn Laws in 1846. This hallmark of the very same 19th century “laissez faire” philosophy he derides as callous was actually carried to fruition as part of a conscious effort to relieve famine-plagued Ireland from the artificially onerous food prices that came about under Britain’s agricultural protective tariff regime. Now consider Farrell’s harsh depiction of free markets against the open humanitarian appeal of the following passage from an 1845 free trade speech by Richard Cobden, the chief architect of the Corn Law repeal:


  • Democrats are part of the problem in Ferguson, too

    by Wendy McElroy

    The halls of an adjourned Congress are ringing with passionate calls to address the civil unrest in Ferguson, Mo., which resulted from the lethal shooting of an unarmed black teen by police. The response of militarized law enforcement who view protesters as "the enemy" and the city as a war zone has become a particular focus. But, even if the cries are sincere, every congressional word or movement until November will reflect election maneuvering.
    Democrats quickly staked a claim to the moral high ground. Rep. John Conyers Jr. (D-Mich.) and Bobby Scott (D-Va.) are prominent members of both the House Judiciary Committee and the Congressional Black Caucus. Along with Rep. Steve Cohen (D-Tenn.), they initiated a call for a congressional hearing on the use of excessive force by American law enforcement. The Republicans will almost certainly cooperate, if only because it would be impolitic not to do so. Moreover, the hearing would be post-election and not necessarily lead to a change in law or policy.

  • Devil is in the Details of the Campus Accountability and Safety Act

    by Wendy McElroy

    On Aug. 7, Hans Bader, a senior attorney at the Competitive Enterprise Institute, reported on one. CASA regulates how universities must approach sexual assault, including producing an annual survey of students' experiences, which will be published online. The penalties for non-compliance are massive: an initial penalty of up to 1 percent of the institution's operating budget and a potential $150,000 fine for each additional violation or misrepresentation — $150,000 per month if surveys are not completed to the standard required. Bader observed, "that [initial offense] would be a whopping $42 million for Harvard alone, since its budget is $4.2 billion."
    Even worse, "a provision ... lets the money be kept by the agency imposing the fine, the Education Department's (DOE) Office for Civil Rights (OCR)." This creates a huge incentive for OCR to be aggressively punitive or to accuse innocent universities of misrepresentation or substandard compliance. Even an inability to comply would not exempt institutions from fines. For example, they are required to enter into a "memorandum of understanding" with local law enforcement. If the latter refuses, then "[t]he Secretary of Education will then have the discretion to grant the waiver." Not the obligation but the discretion.

  • Beware of Kafkatrapping

    by Wendy McElroy

    The term "kafkatrapping" describes a logical fallacy that is popular within gender feminism, racial politics and other ideologies of victimhood. It occurs when you are accused of a thought crime such as sexism, racism or homophobia. You respond with an honest denial, which is then used as further confirmation of your guilt. You are now trapped in a circular and unfalsifiable argument; no one who is accused can be innocent because the structure of kafkatrapping precludes that possibility.
    The term derives from Franz Kafka's novel The Trial in which a nondescript bank clerk named Josef K. is arrested; no charges are ever revealed to the character or to the reader. Josef is prosecuted by a bizarre and tyrannical court of unknown authority and he is doomed by impenetrable red tape. In the end, Josef is abducted by two strange men and inexplicably executed by being stabbed through the heart. The Trial is Kafka's comment on totalitarian governments, like the Soviet Union, in which justice is twisted into a bitter, horrifying parody of itself and serves only those in charge

  • Out of Iraq, Etc.!

    by Sheldon Richman

    Nearly a century ago, after four bloody years of World War I, British colonialists created the state of Iraq, complete with their hand-picked monarch. Britain and France were authorized — or, more precisely, authorized themselves — to create states in the Arab world, despite the prior British promise of independence in return for the Arabs’ revolt against the Ottoman Turks, which helped the Allied powers defeat the Central powers. And so European countries drew lines in the sand without much regard for the societies they were constructing from disparate sectarian, tribal, and ethnic populations....
    History alone does not tell us what, if anything, outside powers should do now; there’s no going back in time. But we can say that without foreign interference, even a violent evolution of the region might have been far less violent than it has been during the last century. At least, the violent factions would not be seeking revenge against Americans.

  • The 100th Anniversary of the Great State Crime

    by Sheldon Richman

         Last week marks the 100th anniversary of the start of the First World War, the four-year bloody nightmare that claimed 16 million lives — 7 million of them noncombatants — and wounded over 20 million people.
        That would have been bad enough, but the conflict was merely Act One in a much bigger war. The “peace” settlement vindictively branded Germany uniquely culpable and imposed border adjustments that made Act Two a virtual certainty. The so-called Second World War, which began after the 21-year intermission from 1918 to 1939, claimed at least 60 million lives, at least 19 million of which were noncombatants.

  • The U.S. Government Still Tries to Subvert Cuba

    by Sheldon Richman

    When I saw the headline about the U.S. government and Cuba in my newspaper the other day, I thought I’d awoken in 1961. It was a Twilight Zone moment for sure: “U.S. program aimed to stir dissent in Cuba.” I expected Rod Serling to welcome me to “another dimension." 
    But it was 2014. The AP news report said President Barack Obama and presumably then–secretary of state Hillary Clinton had plotted to incite a popular uprising — to “gin up opposition” — against the Cuban government by sending in young Latin Americans masquerading as tourists and health workers.

  • I Can't Help if I'm a Libertarian

    by Sheldon Richman

    It’s not easy being a libertarian. I am not looking for sympathy when I say that. I just mean to point out that rejecting the conventional wisdom on virtually (do I really need this adverb?) every political question, current and historical, can be wearying. Life could be so much simpler if it were otherwise. No doubt about that. I really don’t like conflict, especially when it can quickly turn personal, as it so often does. (I embrace the advice that one can disagree without being disagreeable.) But for a libertarian, disagreement with most people is not an option. We can’t help it.

  • Borderlands: What's Happening to America?

    by Sheldon Richman

    The U.S. government regards a large part of the country as close enough to a border or coast to justify treating individuals — citizens or not — as though they have no rights whatsoever. People have been beaten and had their personal belongings seized — without warrant or charge — just because they resented being treated like criminals. This should alarm anyone who thinks America is the “land of the free.”

  • Central Bank Theater

    by Wendy McElroy

     As the curtain rose on the economic stage, it revealed politicians and central bankers hand-in-hand, ready to act out a farce. A June 23rd article in Bloomberg constituted the first review. It opened, “Germany has decided its gold is safe in American hands.” The gold in question is the massive German reserve that is allegedly stored at the Federal Reserve Bank of New York (NY Fed). On January 16, 2013 Germany’s central bank, the Bundesbank – or BuBa to its critics -- announced an intention to repatriate a sizable portion of its gold from the NY Fed by 2020. But, now, the government's budget spokesman Norbert Barthle declared, “The Americans are taking good care of our gold. Objectively, there’s absolutely no reason for mistrust.” Objectively, there's no reason for trust. 

  • National monuments, about land or territory?

    by Wendy McElroy

    The Improved National Monument Designation Process Act (H.R. 1459) passed the House on March 26 by a vote of 222 to 201. It is currently before the Senate Committee on Energy and Natural Resources. S. 2608's purpose is "to provide for congressional approval of national monuments" and of restrictions on their use. It would limit President Obama's ability to designate national monuments at his own discretion through executive orders.  But why are they trying to limit the president discretion?  What lies at the root of this proposed law?  

  • The Economics of Marriage and Divorce: Those who get hitched are more likely to get rich

    by Wendy McElroy

    Why are married people richer and divorced people poorer?    Two factors contribute heavily to the financial decline surrounding divorce: losing the inherent wealth-creation aspects of marriage, and State-imposed costs such as alimony and “the divorce industry.”  It is therefore not surprising to find out that it is government's control over marriage that is the culprit.
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