Piketty > Lewis

thomas-piketty-economist-will-hutton

UPDATE: Here’s the video of the event that my shop recently hosted with Piketty, Paul Krugman, Joe Stiglitz, and others.

Yesterday the Sunday Boston Globe ran a piece that discusses new books by both Michael Lewis and Thomas Piketty. The piece was initially supposed to be focused on Lewis’s new book Flash Boys and all of the legal action that the book has prompted. The more I thought about that, though, the less satisfying I was with the prospect of writing about that book. So I decided to read Lewis’s book through the lens of Piketty’s Capital in the 21st Century. This was a recently assigned, quick turn-around piece, but I think it makes my point. Here’s a link to the piece. And here are a couple of sections:

In Lewis’s telling the explanation and criticism of HFT seem precise. This is Lewis’s cardinal virtue: his ability to take something cripplingly complex and create a distillation, in narrative form, of how complexity tends to shroud and serves something basic. Sins and virtues don’t change. As complex as our world has become, everything serves the same simple goals, such as victory and greed. People don’t evolve at the speed of their tools.

So why has “Flash Boys” become such a flash point? What is it about this book that so threatens to upend the financial world despite years of similar malfeasance? Lewis readily concedes that his book contains little that’s new. Lewis himself writes the “entire history of Wall Street was the story of scandals . . . linked together tail to trunk like circus elephants.”

——————————–Michael Lewis

Given that most Americans remain seduced by the market, regulatory reform seems the only option. “Flash Boys” feels like virtue, but it fails to inspect the underlying assumptions and potential, damaging implications of our continued blind reliance on the fiction of “fairness” in any financial and economic system, let alone on Wall Street.

In other words, Piketty has written a trenchant critique of our current economic system while Lewis has written a book about gaming the system. “Flash Boys” is a symptom of the wealth disparity, and the denial of the disparity, that Piketty skewers.

So there are two ways to look at the “Flash Boys” chatter. As an indictment of Wall Street, it’s highly effective, even great. It’s inspiring that a book like this can catalyze a broad reaction in our culture. But it’s still a book of its time, a time where the vast majority of Americans can’t even get robbed by the people Lewis indicts.

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