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Just in time for the Friday afternoon news dump (on a holiday weekend!), the FT’s Chris Giles dropped a bombshell: Thomas Piketty’s “Capital in the Twenty-First Century,” he alleged, is full of data errors. After correcting the mistakes, he says (in a separate post), “two of Capital in the 21st Century’s central findings – that wealth inequality has begun to rise over the past 30 years and that the US obviously has a more unequal distribution of wealth than Europe – no longer seem to hold”.
Giles’ allegations boil down to three points, detailed in a long blog post: first, Piketty transcribed some numbers into Excel wrong. Second, Piketty made some unexplained changes to the data. Finally, Piketty used questionable methods to arrive at his conclusions. In addition, Giles takes very specific issue with Piketty’s data on wealth inequality in Britain, claiming that “once more reliable British results are included, there is no sign that wealth inequality in Europe is rising again”.
“That is a damning conclusion, and if it holds up to scrutiny, would significantly undermine the case Mr. Piketty mounts,” says Neil Irwin. Piketty, however, responded to Irwin: “Every wealth ranking in the world shows that the top is rising faster than average wealth. If the FT comes with a wealth ranking showing a different conclusion, they should publish it!” Paul Krugman adds that “the fact that Giles reaches that conclusion is a strong indicator that he himself is doing something wrong”.
Piketty’s response is slowly emerging. He published a robust, but fairly general, post in the FT. However, he also told Newsweek’s Leah McGrath Goodman that he was ambushed by the FT and not given proper time to respond. To AFP, he said the FT “is being dishonest is to suggest that this changes things in the conclusions I make”.
from Tales from the Trail:
President Barack Obama broke from his standard campaign speech on Tuesday to show his running mate Joe Biden some love, heaping praise onto the vice president less than 24 hours after he put Biden under a harsh spotlight during the final presidential debate.
When explaining his decision to kill Osama bin Laden, Obama said in the debate to his Republican opponent Mitt Romney that "even some in my own party, including my current vice president, had the same critique as you did."
from David Rohde:
During last night’s foreign policy debate, the Mitt Romney of the Republican primaries disappeared. Romney’s April criticism of Obama’s decision to commit the United States military to helping oust Muammar Qaddafi in Libya disappeared. Missing was a promise on his website to reduce foreign aid by $100 million. Romney’s past criticism of what he called Obama’s rushed exit from Afghanistan vanished as well.
Given his lurch to the center on domestic policy, that comes as no surprise. But it does not make Romney’s record – or his willingness to change positions – a nonissue. If Romney wins this election, it will be arguably the latest and greatest shift to the center in presidential campaign history.
from Tales from the Trail:
Hype for the third and final presidential debate tonight has been considerably less than for the two previous face-offs -- perhaps for good reason. The debate is focused on foreign policy, and Americans don’t seem to care that much about it.
“War/foreign conflicts” and “terrorism/terrorist attacks” tied for a spot near the bottom of a list of issues from which respondents were asked to identify the most important, in Reuters/Ipsos polls conducted since January. Only 2 percent of likely voters saw each of those two as issues of top importance.
from Ian Bremmer:
There will always be a wide gap between what candidates promise and what they deliver once elected, particularly when it comes to foreign policy. After all, this is an area where U.S. presidents have less control than either candidate will ever admit near a microphone. But this year, there are contradictions that cut straight to the heart of debates over American power and how it should be used. With that in mind, here are the questions I would like to see each candidate answer.
THE CHINA CONUNDRUM
President Obama, given how much money the United States borrows from China each day, how can your administration expect to persuade the Chinese government to do anything it wouldn’t otherwise do?
Governor Romney, you have pledged that, if elected, you will formally label China a “currency manipulator” on day one of your presidency. This decision would surely provoke a sharp response from China. Are you risking a trade war, and how could the United States win a trade war with China?
China-bashing has figured into many a U.S. presidential campaign. As China’s economy and geopolitical importance has grown — and as U.S. manufacturing jobs have moved from U.S. swing states to China and other foreign countries — both sides have tried to score points by promising to “get tough” with Beijing. Given the economic interdependence of the two countries and continued Chinese willingness to loan money to the United States, voters are right to wonder how seriously they should take all this anti-Chinese rhetoric.
from The Great Debate:
It can be hard to find areas of agreement between the presidential candidates on economic or domestic policy. Tuesday night's debate, though, revealed one exception: energy policy. Alas, what it also revealed is that both President Obama and Governor Romney are making their policies based on a false premise, and they are pandering to Americans' ignorance instead of telling them the truth.
The second question in the debate at Hofstra University came from audience member Phillip Tricolla, and was directed to Obama: "Your energy secretary, Steven Chu, has now been on record three times stating it's not policy of his department to help lower gas prices. Do you agree with Secretary Chu that this is not the job of the Energy Department?" The premise that the Energy Department can lower gas prices is incorrect. But Obama chose not to confront Tricolla with the hard truth -- that global economic forces have put gasoline prices on a long-term upwards trajectory, and that trajectory is beyond our government's control.
from Anatole Kaletsky:
Where will jobs and growth come from? As we enter the fifth year of the Great Recession, people all over the world are asking this question, but their political leaders are not providing any convincing answers, as has been made obvious in the U.S. presidential debate and the European Union summit this week.
The second presidential debate started with Jeremy Epstein, a 20-year old college student, pointing out that he had “little chance to get employment” and asking the two candidates for some reassurance and an explanation of how this would change. Mitt Romney offered lots of reassurance but not much explanation:
Edited by Richard Beales
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
America is divided. That at least is the message from the two parties in the run up to Nov. 6 U.S. presidential and congressional votes. With Barack Obama and Mitt Romney neck-and-neck in polls, our latest e-book examines how we got here, and the main fiscal and economic challenges facing the next American president.
Download the e-book
from Unstructured Finance:
By Sam Forgione
This week’s Weekend Reads may drive you back to the big news of the week: The Debates.
Just as the candidates’ tone and tenor seemed to drive judgments as to who won and lost, some stories were written about sparring between politicians and bankers, billionaires on whether a bankrupt Mexican company should be let off the hook, the banks and the foreclosed-upon, and the more milder subject of volatility investing. In the case of the Foreign Policy and DealBook links, the attitudes of the parties involved seem more important than their logic. And a winner and a loser probably won’t come to you. At least here, unlike in the voting booths, you can stay undecided.
from The Great Debate:
This piece was updated after GOP presidential nominee Mitt Romney’s major foreign policy address on Monday. It reflects Romney’s remarks.
In the first foreign policy speech following his momentum-gaining debate against President Barack Obama, GOP presidential nominee Mitt Romney expanded on his vision of an “American century,” a view he tied to the legacy of leaders like General George Marshall as he outlined a muscular, moral U.S. foreign policy with American exceptionalism at its core.