Pikettymania has gotten out of control. Thomas Piketty, of course, is the French economist whose book, Capital in the Twenty First Century, has become an international sensation. The American left is treating it like gospel, accepting it uncritically. The American right is treating it like a joke, now that a writer from the Financial Times has pointed out some apparent errors in the work.

Both views are overblown. Piketty has made an important, maybe even historic contribution to our understanding of economics. But he may also be wrong about a few things. As it happens, some of the smartest criticism has come from liberal thinkers obviously sympathetic to Piketty's world view. These thinkers including one former and one present member of the Obama Administration, as well as one very well-known columnist for the New York Times. They’re not rejecting Piketty's arguments outright. They are questioning some of the nuances.

Before discussing why, let’s review what Piketty really says in his book. To simplify just a bit, Piketty argues that there are forces in capitalism that will tend to make wealth inequality worse—specifically, that the gap between the very rich and everybody else will get bigger over time, unless governments act to keep that from happening. Note that this is not the same thing as arguing that rising inequality is inevitable.

Piketty thinks that capitalism widens the wealth gap through two separate mechanisms—what Matt Bruening, of Demos, has dubbed the “Capital Share Effect” and the “Capital Concentration Effect.” The Capital Share Effect is the idea that, with each new year, more of the economic pie will go the people who provide capital and less will go to the people who provide labor. To put that in English, relatively more income will go to the people who own the factories, arrange the financing of businesses, and come up with new software ideas—while relatively less income will go to the people who assemble the cars, answer phones at the bank, and actually write the code. Why? Piketty says that overall economic growth is bound to subside, thanks to demographics; when it does, Piketty argues, the return on investment for capital (r) will fall less than the drop in growth of national incomes (g). That leads directly to an increase in share of total income accruing to owners of capital.

The Capital Concentration Effect means that, absent government action, possession of capital is likely to be distributed less and less evenly over time—with the wealthiest people gaining possession over more and more of it. In other words, we can expect that ownership of those factories, stocks and bonds, and trademarked software ideas will increasingly belong to a group of extremely wealthy people. In econospeak, that means r will reliably be greater than g and the rich will save a sufficient percentage of their income. This is distinct from the Capital Share Effect. Piketty believes both forces are present, but it’s possible that one or the other could exist without the other.