Refuting Picketty by Mike Hudack

A new IMF working paper refutes Picketty:

Thomas Piketty’s Capital in the Twenty-First Century puts forth a logically consistent explanation for changes in income and wealth inequality patterns. However, while rich in data, the book provides no formal empirical testing for its theoretical causal chain. In this paper, I build a set of Panel SVAR models to check if inequality and capital share in the national income move up as the r-g gap grows. Using a sample of 19 advanced economies spanning over 30 years, I find no empirical evidence that dynamics move in the way Piketty suggests. Results are robust to several alternative estimates of r-g.

From the conclusion:

On inequality, the evidence against Piketty’s predictions is even stronger: for at least 75% of the countries, the response of inequality to increases in r − g has the opposite sign to that postulated by Piketty.

This finding makes sense to me since Picketty doesn’t make sense to me. I find it much more likely that power is shifting  away from financial capital than that financial capital is accumulating unchallengable power. 

What I mean by this is that capital is no longer scarce — it’s productive applications of capital that are scarce. If this is true I think it means that Picketty is wrong. 

The biggest problem with Alexa by Mike Hudack

We have three Echoes in our house. The one in the kitchen gets the most use. We use it to listen to the radio in the morning, to play music, set timers and do kitchen conversions.

We don’t use it for anything complicated. We’ve tried, but gotten frustrated quickly and given up. The reason is that Echo is bad at keeping state. It can’t have a conversation. I think part of this is a simple UI problem: it’s hard to have a conversation with a black cylinder. Humans offer lots of non-verbal feedback during conversations, and Alexa offers virtually none. Even if her software were capable of maintaining state during a complicated conversation as a human does a person talking with her would likely lose track because there’s no feedback mechanism other than words. She doesn’t even have different tones of voice.

Changes in intonation, posture, raised eyebrows, glances and shifting weight all help us keep track of where we are in a conversation. Absent these cues we use conversational pauses and tone. Absent these rougher cues — in messenger platforms or e-mail — we use written history to keep track of our conversation.

Alexa offers none of these affordances, and so she’s hard to have a conversation with. It strikes me that until she offers some kind of feedback other than words spoken in a monotone we won’t find it easy to do much with her other than ask for Radio 4 or an alarm when the boiled eggs are ready.