sábado, 27 de junho de 2015

Lunch with the FT: Thomas Piketty

picnic in the sun on the lawn of the Paris School of Economics would have been better, but it’s too late. We are at Les Jardins de Paul Ha, a bakery turned deli in the 14th arrondissement, and Thomas Piketty is already biting into a hard-boiled egg.
It’s a five-minute walk from the office of the man the media refer to as a “rock-star economist” but it’s hard to find much glamour here or in his life these days. The success of Piketty’s bookCapital in the Twenty-First Century(2013), a surprise 700-page bestseller, threw him into a year-long media whirlwind. But now its author longs for normality. And so here we are in a deserted backroom eating our meal from plastic containers on dark-blue trays, a faded, peeling poster of a beach in the Seychelles on the wall beside us.
“I have had phases of promotion and conferences, which I enjoy very much, but I need to get back to normal life,” Piketty explains, crossing his legs and leaning on the empty chair next to him. “Normal life is sitting at my desk from 9am to 7pm, with no one bothering me. People don’t realise that research requires time and quiet. So a two-hour break for lunch . . . ” he sighs, rolling his eyes.
I had caught a glimpse of Piketty’s natural habitat when I picked the 44-year-old scholar up from his 12 sq m office, a stuffy room located in a grey postwar building that is home to the research institution he helped set up in 2006.
With its claim that capitalism, by its nature, worsens inequality, Capital in the Twenty-First Century (first published in French in 2013 and then in English eight months later) caused a transatlantic furore, pitting proponents of state intervention against believers in the free market. While the book’s extensive compilation of data on income and wealth distribution has been widely praised, Piketty’s theories and conclusions — that the proportion of income and wealth going to the richest 1 per cent has reached a historic high; that return on capital usually exceeds economic growth, resulting in an automatic increase in inequality — have also been attacked. With his calls for higher taxes and more regulation, he has become the darling of the left and the enemy of the right.
While I wait for my microwaved pasta bolognese to cool down, I ask him how it feels to be a celebrity. Piketty, wearing a close-fitting light-blue shirt with the top two buttons undone, says he welcomes it as long as it translates into selling more books. Two million copies have been bought so far, he says with pleasure.
Do you really need to pay someone 100 or 200 times the average worker’s salary to get their arses in gear?
“The success of my book shows there are a lot of people who are not economists but are tired of being told that those questions are too complicated for them,” he says, picking at a mayonnaise-soaked slice of cucumber. He speaks fast and with plenty of hand gestures. He is curious about my age — “Oh, you’re younger than my sister” — and inquires about my career. He exudes self-confidence.
“Too often, economists build very complex mathematical models to look scientific and impress people. I have nothing against mathematics — I initially trained as a mathematician — but it’s usually to hide a lack of ideas. What pleases me is that this book reaches ‘normal’ people, a rather wide public. My mother is one example,” he says, adding that she rarely reads big academic books yet understood everything in his.
. . .
When I ask if Piketty’s left-leaning family background has anything to do with his initial interest in inequality, he dismisses the link. Politics were not discussed at home, he says. In their youth his parents were Trotskyist militants with the Lutte Ouvrière but they quit the far-left party before he was born. Like many young radicals living in post-May 1968 France, they were lured by life in the countryside and moved out of the capital in the mid-1970s. For three years, they raised goats and sold cheese on markets in Castelnau-d’Aude, a village near Narbonne in southern France. Though neither parent has the baccalaureate, the national high school degree, Piketty’s mother later took night classes to train as a primary school teacher, and his father became a research technician at Institut National de la Recherche Agronomique.
Both cheered when Socialist leader François Mitterrand was elected president in 1981. “They had long been waiting for the left to come to power,” says Piketty. But his grandfather on his father’s side, “from a bourgeois background,” voted for the centre-right candidate Valéry Giscard d’Estaing, he says. “Like in any other family, some vote for the left, some vote for the right. I love them all!”
His parents were the opposite of pushy, he says. They had little to do with his getting into the École Normale Supérieure, one of France’s most competitive “grandes écoles”, when he was 18, or his teaching at the Massachusetts Institute of Technology after earning a PhD at just 22. But they taught him “autonomy, to trust myself” — an approach he says that he replicates with his three daughters, Juliette, 18, Deborah, 15, and Hélène, 12.
I am determined to give the bolognese a chance but the floppy, overcooked fusilli brings back bad memories of my school canteen. Given the history of controversy between the French scholar and the Financial Times, I wonder if our lunch destination may be retaliation. After all, Piketty referred to the contentious article that highlighted discrepancies in his research as soon as we stepped in to the deli, joking that he didn’t want to cost the FT too much money given all the “free publicity” it has granted him.
The FT analysis notably questioned Piketty’s conclusion that wealth inequality had widened in the UK. He responded to the allegations in detail and defended his methodology, arguing that, even if the criticisms were real, the inconsistencies would not change his findings.
“The FT? I never really read it. Sorry I shouldn’t have said that!” he says mischievously. “I find it a bit predictable. You know, when I read the first two sentences, I feel I know the rest of the story. OK, not always. And then there was the prize. It all looked a bit confused,” he says, referring to the fact that Capital in the Twenty-First Century won the FT & McKinsey Business Book of the Year 2014.
It would be a mistake, he continues, clearly warming to his theme, for the FT to deny the widening of inequalities in the UK “to defend the interest of your readers”. As I object, it dawns on me that Piketty thinks I am here simply to represent the interests of the top 1 per cent. When we agreed to meet, he said we would walk “to a simple salad and sandwich bar,” emphasising how much “the bill will interest the FT readers.”

Les Jardins de Paul Ha

57 Rue du Pere Corentin
Egg and tuna salad
Half pineapple
Diet Coke €7.20
Pasta bolognese
Half pineapple
Strawberry juice €7.50
Crepe x 2 €1.80
Espresso x 2 €3.00
Total €19.50
Piketty says his interest in inequality crystallised after the collapse of the Berlin Wall and the first Gulf war. He recalls visiting Moscow in 1991 and being struck by “the lines in front of shops”. He came back vaccinated against communism — “I believe in capitalism, private property, the market” — but also with a question central to his work: “How come those people had been so afraid of inequality and capitalism in the 19th and 20th century that they created such a monstrosity? How can we tackle inequality without repeating
this disaster?”
The first Gulf war, he believed, demonstrated the cynicism of the west: “We are told constantly that states can’t do anything, that it’s impossible to regulate the Cayman Islands and the other tax havens because they are too powerful, and all of a sudden we send a million soldiers 10,000km from home to allow the emir of Kuwait to keep his oil.”
I am halfway through the now tepid bolognese when I ask him why his work had such an impact in the US without causing anything like such a stir in France at the time of its original publication. Piketty says he caught American attention in 2003 when, together with Emmanuel Saez, a fellow French economist who teaches at the University of California, he first compiled historical data on the US’s wealthiest people. In 2009, newly elected President Obama used the French economists’ graph that showed inequality was back to its 1929 peak. “We became the target of Republican think-tanks,” he recalls. The French version of the book acted as a teaser to those critics, he believes, helping propel it to the top of Amazon’s bestseller list for three weeks when it was released in English.
“The rise of the top 1 per cent is an American thing. It’s not by chance that Occupy Wall Street happened in Wall Street, and not in Brussels, Paris or Tokyo,” he says. “It’s different in Europe. Here, inequality takes the form of unemployment and public debt.”
Though Piketty concedes that the global wealth tax he recommends is a “utopian” dream, he also says a confiscatory tax rate of more than 80 per cent on earnings exceeding $1m would work. In fact, he continues, such a rate was in place for five decades before the presidency of Ronald Reagan, and would curb exuberant executive pay without hurting productivity. “It did not kill US capitalism then — productivity grew the fastest during that time,” he notes. “This idea, according to which no one will accept to work hard for less than $10m per year . . .  It’s OK to pay someone 10, 20 times the average worker’s salary but do you really need to pay them 100 or 200 times to get their arses in gear?”
So did he applaud François Hollande when the Socialist president introduced a 75 per cent levy on earnings exceeding €1m? “He was just showing off,” Piketty says, nibbling baguette crumbs. “First, because there aren’t that many people making that amount of money in France. And because, as I am sure you will have noticed, France is a smaller country than the US. Headquarters can easily move to Amsterdam. You’ve got to be careful.”
. . .
Aware that the topic of personal wealth is tricky territory, I nonetheless decide to test Piketty’s newly acquired status as a millionaire. He must have been subjected to the 75 per cent rate then? To my surprise, he gladly answers with detail: the state will levy between 60 and 70 per cent of his earnings this year. “A 90 per cent tax rate would not bother me,” he says. “There would still be a lot left, since we’re talking about several millions. I benefited from an education system, public infrastructure. I got lucky, too . . . This idea that Bill Gates invented the computer alone, it’s a joke. Without computer sciences researchers who did not patent their work, who would have invented it?”
A 90 per cent tax rate would not bother me
Piketty, who separated from the mother of his daughters some years ago and recently married Julia Cagé, a 31-year-old French economist whom he met at the Paris School of Economics, is not in thrall to money. “I am lucky to have a fabulous job, live in the world’s most beautiful city, have three wonderful daughters, a wonderful wife,” he says.
We stick plastic forks into our pineapples, already cut in small squares, and they turn out to be the culinary apex of this lunch, ripe and soothing. Hollande is “hopeless,” says Piketty, who in January rejected the Légion d’Honneur award because, he said then, the state had “no right to decide who is honourable”. The French president has failed on his campaign promise to change the austerity stance prevailing in Europe, he continues. This makes him as responsible as German chancellor Angela Merkel for the eurozone’s woes.
“We replaced Merkozy with Merkollande,” he sneers. “Europe is choosing the wrong path, the path of eternal penitence . . .  It would be a catastrophe to force Greece out of the eurozone.”
It is ironic, he says, that austerity is imposed on debt-laden Greece by two countries, Germany and France, that benefited from debt cancellations after the second world war: a move that allowed 30 years of growth on the continent. “There’s some sort of collective amnesia,” he says, getting more animated. “It is this cancellation that allowed them to invest in education, innovation and public infrastructure. And now, those same countries tell Greece that it will have to pay 4 per cent of its GDP for 30 years. Who can believe this?” The role of the International Monetary Fund in the Greek talks is a “catastrophe,” he sighs.
The eurozone crisis, according to Piketty, reflects a deeply flawed governance, where only two leaders decide who calls for “a democratic overhaul of European institutions . . .  It’s purely because we are unable to organise ourselves politically that we’re in deep shit,” he says. “From a macroeconomic point of view, Greece is insignificant.”
Your opinion
Which global economic issue concerns you most?
The eurozone is following the example of the UK, he says, which spent the 19th century paying down its huge debt pile inherited from the Napoleonic wars with budget surpluses. It worked — but, he continues, it took 100 years, during which the UK neglected its education system.
He says that he hopes the UK will stay within the EU, and not choose to “become just a tax haven with a big financial centre”. He warns, however, that London needs to realise that Europe is “not about profiting from the free circulation of goods of your neighbours while siphoning off their fiscal base”.
“I would have preferred Tony Blair join the eurozone rather than send troops to Iraq but I can understand why the eurozone is not attractive these days,” says Piketty. “Maybe in 2040, who knows?”
We are told that coffee and crêpes are on their way but Piketty is anxious to return to his office. As I nibble a rubbery crêpe au sucre with my fingers in the absence of cutlery, I negotiate a few more minutes to talk about Piketty’s plans. “Research continues,” he says. He is working to extend his wealth database to Latin America and Africa. He has also agreed to teach four days a year at the London School of Economics — he can hop on a Eurostar easily as he lives near Gare du Nord, an up-and-coming, ethnically diverse neighbourhood in northern Paris. But first he is taking “the girls” on a trip to Morocco in August.
Before we leave, I ask Piketty if he will sign his autograph on the bill. He is a rock star, of course, and he accepts happily. “I am very young,” he says, as we step into the sunshine. “I have got more books to write.”
Anne-Sylvaine Chassany is the FT’s Paris bureau chief
Illustration by James Ferguson