Piketty's wealth inequality book a 'big mess': AEI

The Piketty debate
The Piketty debate

The highly acclaimed book on wealth inequality, "Capital in the Twenty-First Century" by French economist Thomas Piketty, is "fundamentally flawed," said Kevin Hassett, director of economic policy studies at the conservative American Enterprise Institute.

Hassett, a former adviser to Republican presidential campaigns, was responding to a Financial Times investigation into Piketty's data. The FT said it found problems, including unexplained entries in the author's spreadsheets, cherry-picking of sources and transcription errors.

"The book is really a big mess," Hassett said in an interview Tuesday on CNBC. "The whole second half of the book where he talks about the demise of capitalism is just fundamentally flawed. And the FT is just the tip of the iceberg."

Appearing with Hassett on "Squawk Box," Jared Bernstein, former chief economist to Vice President Joe Biden, said he's also "critical of the mistakes" the FT uncovered.

But the discrepancies are only on the wealth data, he added. "So the income data still looks solid." He also said it looks like the data issues only impact wealth trends of the U.K., with the rest of the countries' numbers only slightly affected.

In an interview with Agence France-Presse, Piketty called the FT's criticism of his work ridiculous and dishonest. He said his "historical data series can be improved and will be improved in the future," but his conclusions remain unchanged.

The gap between "the haves and have-nots" is going to back to levels not seen in 100 years, according to the book, which also proposes a host of policy changes, including an international wealth tax.

Bernstein was leery of that approach. "If you just say, 'Let the … income equality just grow and we'll fix it with taxes and transfers,' that means you have to ratchet up redistribution year after year."

"I don't think that's 'A,' a good idea or 'B,' going to happen," he concluded.

—By CNBC's Matthew J. Belvedere