MICROSOFT founder Bill Gates has drawn attention to what he considers some “important flaws” in Thomas Piketty’s best-selling book, Capital in the 21st Century.
In a review of the French economist’s controversial book on his blog, Gates said while he agreed with several points the author had raised, he emphasised that Piketty was wrong to write that inequality was growing.
Gates highlighted the rising middle classes in Mexico, Colombia, Brazil and Thailand, and noted that taking the world as a whole inequality is actually falling not rising.
He welcomed the debate sparked by Piketty over what levels of inequality were beneficial and acceptable. But, said Gates, Piketty gave an insufficient picture of how wealth was created and how it decayed.
Piketty’s focus on income and wealth also presents problems for Gates:
“There are many reasons why income data, in particular, can be misleading. For example, a medical student with no income and lots of student loans would look in the official statistics like she’s in a dire situation but may well have a very high income in the future.
“Or a more extreme example: Some very wealthy people who are not actively working show up below the poverty line in years when they don’t sell any stock or receive other forms of income.”
Gates agreed with Piketty that taxes should be shifted away from labour, but was much more sceptical about the French economist’s plan for a progressive global wealth tax.
Instead, Gates suggested that a move to a progressive consumption tax would be better.
He did finish with some praise. “I do know that, even with its flaws, Piketty’s work contributes at least as much light as heat. And now I’m eager to see research that brings more light to this important topic.”