A few weeks ago, an AB reader asked me what I thought about Income and Wealth by Alan Reynolds. Since I had not read it yet – I tried to find some reviews only to discover the Usual Suspects on the rightwing fringe were all praising this new book. I did read the WSJ oped attacking James Web.
Since then, there have been lots of critiques by economists I trust who have checked out the claims from Reynolds so I don’t have to. Recently, Mark Thoma summarized these critiques in a post entitled Increasing Inequality in Not a Statistical Illusion. Mark also linked to a recent Reynolds reply to his critiques:
Two “liberal” blogs went predictably apoplectic, but in ways that had absolutely nothing to do with what I had written. Berkeley professor Brad DeLong initially said there is never any point in paying attention to anything on the Wall Street Journal editorial page. Someone balked at that, so he tried describing two clear, consistent and distinctly separate statements from my article as “three-card monte.” Such amusing irrelevancies led to the usual swapping of links between like-minded cheerleaders at another blog run by Mark Thoma of the University of Oregon. He somehow imagined my article relied mainly on Census Data, and therefore borrowed some curious comments from a New York Times column by Paul Krugman. Mr. Krugman complained that Census estimates are from a “limited sample” (as if IRS estimates are not) and wrote “the questionnaire is ‘top-coded’: if the individual interviewed has earnings higher than $999,999, those earnings are recorded simply as $999,999.”
Reynolds continues in this vein in manner fitting only for the pages of the Washington Times and then closes with:
If anyone can demonstrate I misquoted such scholars, or am mistaken about any facts in last month’s Wall Street Journal piece, I will gladly correct the record just as readily as I have now corrected the record about my 1992 piece.
Sensing one of his rightwing buddies was in trouble, Donald Luskin weighed in:
What makes Reynolds’ work so powerful is that he’s patiently and systematically demolished the apparent experimental evidence behind that hypothesis, and dared to stand nearly alone against the conventional wisdom of economic science. When it comes to income inequality, Reynolds is a modern Galileo … Thoma then reproduces Reynolds’ op-ed from the Washington Times in which he responds to all his critics. It’s a brilliant and patient defense. Point by point he explains not only why his arguments are correct, but reveals the McCarthyesque nastiness of his critics’ unwarranted and illegitimate accusations against him. At the end, Thoma – who has done a public service by hosting this debate, but at the same time has clearly sided with the liberal attackers — is reduced to what amounts to stunned silence. He has nothing to say after Reynolds’ virtuosic defense but to splutter that the income inequality hypothesis is nevertheless believed by many reputable economists. Which is about like saying, “Don’t confuse me with the facts, Mr. Galileo. All of the finest minds say the universe revolves around the Earth.”
McCarthyesque nastiness? Find for me where the liberals have called Reynolds a Communist or traitor. But I have to wonder if Luskin even understands this debate over the evidence. Has he consulted with Thomas Piketty and Emmanuel Saez as to whether Reynolds has misquoted them or was mistaken about any facts. Luskin must not have realized that Mark Thoma has reviewed the Piketty-Saez review of what Reynolds has claimed.
But who is this Galileo that Luskin refers to? He can’t be referring to Galileo Galilei. That Italian scientist would not need to produce his findings in a rag like the Washington Times.
No – I still have not read Income and Wealth as I see no reason to waste my time.
In “Has U.S. Income Inequality Really Increased?,” Reynolds concludes, “There is no clear evidence of a significant and sustained increase in the inequality of U.S. incomes, wages, consumption, or wealth since the late 1980s.”
Matthew reasonably replies:
Even if you believe that there’s no “clear” evidence of a “significant and sustained” increase in inequality since the late 1980s this, rather clearly, wouldn’t rebut the assertion that “the share of U.S. income going to the top 1 percent has increased substantially since the 1970s.” People who would portray the two claims as contradictory are much more interested in convincing you that there’s no inequality problem than they are in finding out what’s happening with inequality.
Ah but is this Cato claim correct? Brad DeLong says no:
I don’t think that “slipperiness” adequately characterizes what we’re dealing with here. And, of course, there is lots of clear evidence of a significant and sustained increase in inequality since the late 1980s. I would love to believe that U.S. income inequality took an upward leap in the 1970s and 1980s and then settled down again. I can’t.