I have long been fascinated by blind spots--by the way the human mind just doesnt notice what is right in front of it--and by the psychological reasons for those blind spots. I ran across an excellent example of that today in a criticism of Pikettys Capital in the 21st Century by Jonah Goldberg in Commentary. Of the many objections Goldberg raised to Pikettys book, the most fascinating to me related to Pikettys examination of the Forbes list of the wealthiest people in the world. Piketty showed that, between 1987 and today, their wealth grew by an inflation-adjusted 7 percent. He concluded that the return on capital in that period was higher than the normal 4 to 5 percent. But 9 out of 10 names on that list are different today than they were in 1987. If you examine the wealth of individuals on that 1987 list, you find their wealth has actually declined. The rich didnt get richer. They were displaced. That pretty much debunks Pikettys fundamental claim that wealth disparity is due to excessive returns on capital. Thats a pretty embarrassing mistake to make. But the fact that Piketty could make it and not notice is telling. It shows just how prevalent is our tendency is to see people as types rather than as individuals. And it shows how this tendency can lead us to erroneous conclusions.
Posted on: Sun, 03 Aug 2014 15:09:31 +0000
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