Page 83 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

capital on a relative basis, distorting the underlying assumptions Piketty made on his visit. In fact, using property growth rates across di erent income segments as a proxy for a measure of inequality within South Africa, the Monocle Research Team is able to conclude that inequality has decreased since the advent of formal democracy within South Africa in 1994.
Another study by the IMF also found no empirical evidence that supported Piketty’s thesis. In fact, for at least 75 percent of the countries examined, the study found that inequality responds negatively to R minus G shocks, which is in line with previous single-equation estimates published by Acemoglu and Robinson (2015).
Although super cially attractive, the idea that equality can be enforced by the state has little empirical and even less ethical support. We would need to look outside Piketty’s “magnum opus” in order to understand inequality in South Africa.
It is particularly di cult to say that South Africa doesn’t have rising inequality, particularly considering that the World Bank and the IMF have shown that it may be true. But when one observes certain data categories, as mentioned above, it can be argued that there might have been, to some extent, a reduction in inequality.
Piketty’s thesis, that R is greater than G in South Africa, is not true; con rmed in several di erent scenarios taking into account investor risk appetite. Most dangerously, Piketty is proposing land reforms and policies that are not based on analysis and data that are contained within his main thesis, as he did not study South Africa. Interestingly, for Western countries, such as his own, he does not propose land reform, he proposes progressive capital gains tax. In South Africa, without an aggressive state-run land appropriation reform programme proposed by Piketty, a large number of South Africans who previously did not have property rights, today do have them, thanks to the work of the South African democratic system.
As responsible analysts, one needs to question why the South African elite would give centre stage to an economist who proposes such radical and dangerous reforms with a more or less complete lack of empirical evidence to support these notions within South Africa. At some point, we will need as a country to be proud of our own heroes rather than heroes from other lands.
“Although super cially attractive, the idea that equality can be enforced by the state has little empirical and even less ethical support.”
pIKetty: pRofIle of AN ecoNomIc ImpeRIAlISt
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