Capital in the Twenty-First Century

Economic debates remind me of theological ones.  Where do the souls of babies go? Limbo or the bosom of Abraham?  Free will or predestination?

Keyensianism or neo-classicism? 

Let's leave economics aside for a bit. Have you ever heard of proponents of Einstein arguing with Newtonians? Neither have I.  What we recognize is that Newton had part of the story and Einstein added to it. He did this with observation and data. Physicists and astronomers have an advantage over economists when it comes to observation and data.  Every time there's a refinement in instrumentation, they can look at the same phenomenon again and find new data. Economists need to wait in real time for new data to accumulate.  Since they've been observing--about 200 years--there haven't been a statistically significant number of economic cycles.  Therein is the reason they sometimes sound more like astrologers than astronomers.

Introducing Thomas Piketty.  He's already somewhat known for coining the term "the 1%", referring to the world's richest. His recent book Capital in the Twenty-First Century attempts to explain the growing numeric divide between the 1% and the rest of us. Based on 200 years of data, Piketty posits that historically, wealth has grown about three times faster than productivity.

Predictably the left and right have taken opposing positions.  They've proceeded to attack or defend him based on those positions.  My interest in this is not to take sides.  My interest is in his approach.  He didn't try to find the data that supported his initial premis.  In fact, he criticizes Carl Marx for doing exactly that.  Instead, he collected all the data he could find and looked for what was in it.  

This is a key point for anyone who wishes to criticize Piketty.  It's a key point for understanding why his approach is more science than theology.  His own brief account of his life illustrates the point.  After getting his doctorate in France, Piketty accepted a university position outside Boston. After only a few years, he left.  As he tells it:

I realized that that there had been no significant effort to collect historical data on the dynamics of inequality since [Simon] Kuznets, yet the profession continued to churn out purely theoretical results without even knowing what facts needed to be explained. And it expected me to do the same

My jaw hit the floor when I read this.  My impression of economic debates could easily be dismissed.  I'm not an economist.  I could never be sure that my impression wasn't an artifact of the way economic issues are reported.  Here's a similar idea stated by a top member of the profession.  It's hard to imagine a clearer confirmation of a hypothesis.

It throws down the gauntlet to anyone who wants to challenge Piketty's conclusion.  Any criticism of Piketty has to do it with the same or larger data set. 

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Update: I should have pointed out when I originally published that Piketty has put his data set on line.  What's more, every chart in the book is accompanied by the web address of the data set. This is in the spirit of what real science calls peer review.  Reviews of this data have already generated some criticism, which I hope to write about in the coming week.  If you have the expertise, you can get Piketty's data here. (5/30/14)

Cheaper by the Dozen

This post isn't about curiosity.  It's free hypothesizing.

Here's a bit of freakonomics I can't find discussed anywhere.  Why are laws and contracts thicker now than they were in past decades or centuries?  The meme is that the people writing them are power hungry control freaks, or they need to justify their jobs or something.  I'm not sure I buy it.

Before I explain, let's make sure we're on the same page.  The law of supply and demand: if the cost of production goes down, the supply goes up; if the supply goes up, the cost of use goes down.  Now has anyone noticed that the cost of adding text to laws and contracts has been going down for centuries?

When documents began to replace customs in the 13th century all laws and contracts had to be handwritten.  The cost of hand copying documents, need I say, is prohibitive.  Because of low literacy they had to be read out loud to many.  The printing press changed that. After 1440 a ruler could print as many as were needed.  Drafts of laws were still a little pricy, but we'll solve that shortly.

It was 500 years before other improvements were made.  When they came, change was, in human history terms, rapid. Next came the typewriter in the mid-19th century, the mimeograph in 1890, the Xerox machine in 1949, the word processor, web pages, mobile devices.  As newspapers have discovered, the bottom has fallen out of the cost of producing and distributing text.  Why, then, are we surprised that laws and contracts have gotten more complicated?  

Attributing this phenomenon to some "essential" quality of legislators and lawyers is to mischaracterize the problem. In so doing, do we look to the wrong solutions? Do jokes about lawyers at the bottom of the ocean really help us? I can't say I have a solution either, but I'll confidently say I think we've been looking in the wrong place.

Introduction

"Science is about trying to eliminate pockets of ignorance." Adam Savage

I get curious about things.  Then I look them up and I'm Cliff Clavin for the next few days. I'm always paranoid that what I repeat might be wrong.  Did I remember it correctly? Did I understand it to begin with? Was it up to date?

I conceived this blog as a way to check myself and to exorcise the Cliff demon. The first steps languished in my online accounts for over a year. Then one Christmas one of my Cliff moments went awry.  I was bloviating about something I had read from what I thought was a reputable news source, but my audience knew more about the subject than I did. Even while being conscientious I was caught. How much more likely is it to get something wrong by even intelligent people who don't think to monitor themselves?

I realized what this blog really needs to be about.

This blog is about two things.

• An outlet for sharing my curiosity.
• An exploration of how to be sure of facts in an information sea when that sea is equal parts truth and equal parts nonsense.

The title of this blog is meant to be ironic.  Curiosity killed the cat, the old saying goes. Curiosity doesn't tend to kill anyone.  This blog is a post mortem, as it were, of the results of my curiosity.