December 16, 2013

"The best argument for putting inequality on the back burner is the depressed state of the economy."

Concedes Krugman. "Isn’t it more important to restore economic growth than to worry about how the gains from growth are distributed?"

Of course, his answer is: "No." Or, to be precise (and to capture the Krugman condescension): "Well, no."

58 comments:

Gahrie said...

People complain that the inequality between rich and poor in America is evil and excessive, without acknowledging that the standard of living for the "poor" is higher in America than the standard of living for the middle class in most of the rest of the world. For some reason, the Left is insistent on punishing the wealthy, even if it results in everyone's standard of living going down.

Carol said...

"People" don't complain about Inequality. It's just coordinated administration/journolist diversionary shtick. You want to see inequality, check out the third world,you know all those places that are morally superior to us because they're poor.

Henry said...

The best argument for putting inequality on the back burner is that you (Krugman) have no clue of what to do differently.

Consider this double-strawman:

Deregulation helped make the crisis possible, and the premature turn to fiscal austerity has done more than anything else to hobble recovery.

Well, no. There is no connective tissue between the specific type of Clinton-era deregulation that actually happened and the specific type of financial crisis that actually happened. As for austerity: What austerity?

Krugman relies upon the magical thinking of his readership. These are intelligent, highly verbal, mostly innumerate people. In this world, talk of deregulation caused the financial crisis while talk of austerity is preventing recovery.

Abdul Abulbul Amir said...


If Bill Gates were to die this minute, it would greatly reduce income inequality in this country. How would that help the poor anyway?

Hagar said...

The present fabulous wealth of the very rich has a lot to do with the stock market, which at present is on a bubble due to all the Monopoly money Bernanke has poured in from the top. That is not natural and cannot last.
I am still expecting a crash that will diminish that perceived "gap between the rich and the poor" with a vengeance.

rhhardin said...

Income inequality raises the poor. Lack of inequality destroys the poor. My argument :

A ditch-digger with heavy equipment earns a lot more than a ditch-digger with a shovel.

The difference is capital. Somebody bought heavy equipment with capital.

Capital is extra money.

The ones with extra money are the rich.

Some rich guy figured out a way to make a ditch-digger more productive than he had been, to make himself richer.

But it also makes the ditch-digger richer.

The extra ditch-digger income is trickle-down.

Trickle-down is not dimes falling from the pockets of the rich but the return to wisely used capital.

When you tax the rich more, their living standard doesn't change. Rather, their investment declines. The extra money goes first.

A tax on the rich is a tax on the earnings of ditch-diggers, not a tax on the life style of the rich.

Think of capital, extra money, as seed corn. Seed corn is extra corn that's not eaten. It's what gives you much more corn next year.

Taxing away the seed corn to distribute it as food is disastrous.

If somebody says, "At some point, you have enough money," he doesn't understand that money beyond enough money is the seed corn.

Hammond X Gritzkofe said...

The best argument for putting inequality on the very backest of burners is that it's a dumb idea.

What seems to be on the table is inequality of wealth. But someone has to decide what 'equal' is. So we have the 'deciders' and those who are 'decided for.'

Hmmmmm. Seems like an unequal distribution of 'deciding power.'

ALL ANIMALS ARE EQUAL (but some are more equal than others).

jacksonjay said...


For a Nobel Laureate and a so-called "thinker", Krugman is a one-trick pony. "Spend more funny money!"

William said...

I'm a child of the lumpen proletariat. I don't recommend poverty. It's embarrassing, sometimes humiliating, and generally a drag. The good thing about it, though, is that in America it's not such an insuperable obstacle. Figuring out how to make money is not life's greatest challenge......In addition to being self conscious about poverty, I was also bummed out about being a borderline klutz so far as athletics were concerned. That never got better. And I don't even want to discuss sexual magnetism.......Why, of all the things that embitter the human spirit, pick out economic inequality?

Brando said...

I think when most otherwise intelligent people (I'm not referring to Krugman here, who is simply willfully obtuse and intellectually dishonest and shouldn't be taken seriously) say they're concerned about "inequality" what they're really referring to is stagnating wages, purchasing power and job prospects for the middle and lower classes. They point out gains by the upper classes as a contrast to suggest that the problem is that the middle and lower classes have a deeper and longer term problem than a mere economic cycle, and this is a fair argument and a worthy concern (though everyone will differ as to what to do about it).

But inequality in and of itself? This shouldn't matter at all. If I earn say $50K this year, and my boss earns $1 million, and then the next year I earn $75K and my boss earns $2 million (and assuming no inflation) then only an idiot would say I'm not better off, even though my boss is even more better off in both dollar amounts and percentage of income. Inequality of outcome is not itself a problem, at least economically.

Now, something could be said for the political effects of inequality--the more distant the middle and lower classes feel from the elites the more likely they become restless and do things like vote for 90% marginal tax rates, perhaps. But this doesn't seem the concern of the Ezra Kleins and Paul Krugmans, does it? Are they worried about the political divide, or simply trying to exploit it for their less thoughtful readers?

rehajm said...

With inequality there's only two choices-

1. Some people are poor

2. Everyone is poor.

chrisnavin.com said...

You mean siphoning off the extra capital through higher taxes and bad incentives actually hurts poor people, slows economic growth, and chokes off innovation leading to even more chutes and ladders in D.C.?

This has got to be a teachable moment for a reachable demographic out there.



chrisnavin.com said...

But that would involve entire range of moral thinking, value judgments, social institutions and life experience that much of our culture doesn't seem to be rewarding at the moment.

Ignorance is Bliss said...

You can't continually build, grow and life in comfort at the expense of other humans, and expect your system to survive indefinitely.

Under capitalism you don't do it at the expense of others, you do it to their benefit. Otherwise they would not freely choose to engage in trade with you.

It's only when things are done under the threat of force, including government force, that they are done at someone's expense.

( I know, that is a bit of an oversimplification. When someone creates pollution, they do that at other's expense. But such things are the exception, not the rule. )

EDH said...

PK:Beyond that, inequality probably played an important role in creating our economic mess, and has played a crucial role in our failure to clean it up.

Yea, but wasn't it lending programs intended to lower inequality by spreading wealth accumulation through home ownership?

PK:Start with the numbers. On average, Americans remain a lot poorer today than they were before the economic crisis.

That's Bush's fault?

Brennan said...

As for austerity: What austerity?

That is austerity according to Paul "Krugtron the invincible" Krugman. Since the Federal government is not deficit spending on a massive proportion, he claims we are in effect passing an austerity budget every year.

I'm afraid we should not expect much truth or reality form, former Enron adviser and opponent of increasing the minimum wage, Paul Krugman.

Brennan said...

I can help Paul Krugman out in a few short sentences.

The financial elite are growing their property because they have the ways and means to profit off the exportation of inflation by the United States' monetary policy.

The poor, sadly enough, do not have these resources available to them. Government can do absolutely nothing to insulate them from the effects of exporting inflation. Government can regulate markets to further constrict competition which does great damage to the poor by squeezing the supply chain.

William said...

Krugman is a poor spokesman for any cause. He looks fat but not in the way of someone who enjoys good food.

OldManRick said...

Since inequality is based only the ratio of a poor person's income to a rich person's income, it says nothing about the absolute well being. Warren Meyer from Coyote blog and Forbes magazine has an interesting graph of the differences in spendable income between the United States (high inequality) and Sweden (very low inequality). For the top 90%, the high inequality system provides more disposable income, than the low inequality system. At the 50% mark, people in the US have 50% more disposable income than do Swedes. You can read the whole thing here.

If you real were concerned about the quality of life, you wouldn't worry about the ratio of low to high but about the absolute values along the range.

Inequality is disguised envy. There is a reason envy is one of the seven deadly sins.

Bruce Hayden said...

The absurdity is that the harder they try to reduce inequality, the greater the inequality. Which works well for the left - the more money that they can grab and reallocaate in the name of income redistribution, the more inequality there is, and the more that they can rant about inequality - while getting rich themselves on the money siphoned off or through inside dealings. Add a trillion dollars a year to the baseline budget, and 5% of GDP to federal spending, and what did they get? More inequaity, and a lot of very rich Democrats.

I think that some of those who are pushing the reducing inequality the hardest know about the cynicism involved in this, and are on-board for that reason. And, then, I think that there are some who are so dense that they actually believe in progressive ideology, and don't understand the harm that they cause. I actually think that Nancy Pelosi, and maybe even President Obama may be in the latter category, whereas I suspect that Harry Reid, along with some of his other Senate colleages, including Schumer and Feinstein, are likely in the former, cynically opportunistic, category.

Ignorance is Bliss said...

I was referring to the workers without Constitutional protections. To me, capitalism works best when you acknowledge the players at the table, and their roles in society.

Do you believe that those workers without Constitutional protections do not benefit from working? If they do not benefit then why do they choose to work? If they do benefit, then how is it at their expense?

Brennan said...

I think that some of those who are pushing the reducing inequality the hardest know about the cynicism involved in this, and are on-board for that reason. And, then, I think that there are some who are so dense that they actually believe in progressive ideology, and don't understand the harm that they cause. I actually think that Nancy Pelosi, and maybe even President Obama may be in the latter category, whereas I suspect that Harry Reid, along with some of his other Senate colleages, including Schumer and Feinstein, are likely in the former, cynically opportunistic, category.

Really? Really?

The Democrats are 100% political. They know what they argue is not supported by any facts accept for those fabricated by their created think tanks. President Clinton was adept at making arguments seem reasonable, but on inequality they created their own metric called "Family Income" to try to make their policy prescription look beneficial to the working class.

They are 100% cynical about their policy prescriptions. They have no facts to support their propositions.

rehajm said...

If you are suffering from a moderate to severe case of chronic Krugman, consult your professor.

Tibore said...

Inequality is only an issue in a society where there's no economic mobility. In those places, it is a legit issue that needs to be addressed via economic liberation, not increased governmental control.

But in nations where mobility exists, inequality is used as a fine sounding cover for government intrusion. As such, it should be treated with skepticism.

rehajm said...

Again, for relief from Krugman, see your professor.

EDH said...

Greg Mankiw of Harvard, often a Krugman critic, has some interesting thoughts on the data behind the inequality debate at his blog today.

So, during this period, has the middle class experienced stagnant real income (a mere 3.2 percent increase) or significant gains (a 36.7 percent increase)? It depends on which measure of income you look at. It seems clear to me that the latter measure is more relevant, but the former measure of income often gets more attention than it deserves.

Take this as a cautionary tale. When people talk about changes in income over time, make sure you know what measure of income they are citing.


http://gregmankiw.blogspot.com/2013/12/on-measuring-changes-in-income.html

Michael said...

Krugman won't discuss one of the main causes of income inequality: the collapse of the family. The income gap fifty years ago was much smaller and the number of married people as a percentage of the population was larger. If you think the gap is going to close with a huge cohort of unmarried mothers with children you are greatly mistaken. Children without fathers in the house are starting out with huge headwinds against their financial survival much less success. Whole generations who have not seen a member of the household get up and go to work are at a bit of a disadvantage as well.

n.n said...
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n.n said...

The issue is cost of living. Perhaps Krugman would be willing to address the need for Obamacare (i.e. progressive inflation and expanded welfare). There is also the cost of environmentalism, activism, regulation, illegal immigration, converged migration, education, abortion, etc.

Rusty said...

PK:Beyond that, inequality probably played an important role in creating our economic mess, and has played a crucial role in our failure to clean it up.

No it hasn't.
Care to try again?

Rusty said...

Government can do absolutely nothing to insulate them from the effects of exporting inflation.

Yes it can. It can quit printing money to pay its debts.

eric said...

About a year ago I had a conversation with my 12 year old daughter that went something like this.

Dad, I wish everyone were rich.

You mean, like everyone could be millionaires?

Yeah! Wouldn't that be great if everyone were millionaires?!

Well, maybe.

What do you mean maybe, dad? Of course it would be awesome!

If everyone were millionaires, where would you get your shoes from?

The store, of course! And I'd have plenty of money to pay for my own shoes!

Who would sell you the shoes?

The lady at the store, of course.

Why would a rich lady work at the store?

It took a few moments, but it finally dawned on her.

Original Mike said...

"...no time to be focusing on potential fiscal problems decades in the future."

Krugman proclaims that "potential" fiscal problems are "decades in the future". Does anybody know if Krugman predicted the housing meltdown?

Tank said...

The inequality argument, like O'Care, is all about taking money from people who mostly earned it, and giving it to people who didn't. It's about using gov't to steal from some, and give to others.

Brennan said...

Does anybody know if Krugman predicted the housing meltdown?

He did not. Paul Krugman advised that a housing bubble be created by design. At the same time, Paul Krugman was advising Enron and we all know how they turned out. This is the period of 1999-2002.

If you'd like to read Krugman's mea culpa then bwahahahahhahahahaha. Sheeah right! Krugtron isn't programmed to offer corrections.

tim in vermont said...

More a matter of taxonomy than name-calling.

Original Mike said...

"Does anybody know if Krugman predicted the housing meltdown?"

"He did not."

Not blessed with an abundance of self-awareness, is he?

Alex said...

Obviously inequality is the #1 injustice in the world.

Alex said...

How are things so bad when everyone owns an iPad? Technology is the great equalizer of our time.

hombre said...

Regardless of the characterization, all comments about the economy offered up by Obama have the same objectives:

To Increase taxes and increase the size of government and its giveaways in order to buy more votes for profligate Democrats. Promoting covetousness is the stock-in-trade of Democrats.

In the Democrat Party economic illiteracy is not a bug, it's a feature. Economic axioms that fail to support the objectives cited above are simply ignored. Krugman is not writing as an economist, but as a pimp for the Dems, as are most journalists.

cubanbob said...

Is Krugman arguing that the owners of the NYT share their wealth with the staff? If he has, no one has noticed that.

eric said...

Is this former Enron employee Paul Krugman?

Archie said...

The use of the term "income inequality" is purposefully misleading and politically loaded by the redistributionists and totalitarians. The accurate term is "income difference".

n.n said...
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n.n said...

There is an interesting pattern which emerges from these various schemes, scams, and policies. Democrats in public unions and we have the most expensive education system in the world. Democrats in energy companies and we have managed energy which is unavailable and unaffordable. Democrats in mortgage companies and housing becomes unaffordable without long-term mortgages. Democrats in financial companies and we have embezzlement of private funds. Democrats in private unions and we have chrony socialism. Democrats in environmental movements and we have "green" energy alternatives which are authorized to destroy protected species. Democrats in the White House and we have an uncontested reign of regime change through assassination and "civil war". Democrats in social services and we have over one million human lives aborted annually for money, sex, and ego.

It seems that the Democrats are either incompetent or malicious actors. They create problems to which they then offer solutions, at progressively inflated prices, and then repeat the cycle anew. It's no wonder that so many diverse individuals have hitched their carts to the Democratic Ass. It's brilliant.

I wonder where the Democrats are lurking in the Medical and Pharmaceutical Systems. Obamacare was not exactly what they wanted, but they can probably afford to wait for a single-payer "solution".

garage mahal said...

Does anybody know if Krugman predicted the housing meltdown?

Yep.

Hyphenated American said...

Paul Krugman in 2002: "Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."

Hyphenated American said...

The federal spending is up by nearly 1 trillion dollars since 2007, and yet, inequality grew. Apparently, this trillion dollars simply disappeared.

Sam L. said...

Paullie "The Beard" Krugman don't like no economy, no where, no when, no why.

David said...

Ok, let's assume that excessive income inequality is bad.

Let's further assume that those who decry it most do not intend that everyone have the same income or the same wealth. That's been tried, with disastrous results.

Would one of the proponents please tell us just how much inequality is permissible. Numbers please, not just gauzy concepts.

Then tell us how they intend to achieve the level of inequality that they feel is acceptable. Do you simply tax the wealthy and give the proceeds to the poor? Do you have a better idea than the current administration seems to have about how to do this by increasing jobs and incomes? If the answer is a blend of both of these approaches, what is the mix. How do the numbers work out? What programs will achieve this result?

Until then, until you define equality, it's all bullshit. Inequality is bad? Ok what's equality. Define it.

Drago said...

Yes garage, krugman hilariously announces (in 2006!!) that the "long feared housing bust" that was necessitated by policies he was advocating for 10 years was finally going to hit!!

You really can't make this stuff up.

The Godfather said...

I have no objection if a preacher decries the excesses of the rich and the sufferings of the poor. We all need to hear and heed that. There are very rich people whose behavior is disgusting, and right-thinking people ought to deplore that. A lot of them are quite public, because they are stars and politicians and celebrities. But there are also a lot of anonymous folk who have more than they need and don't even think about helping those who are badly in need. The preacher ought to look them (me) straight in the eye and demand that they (I) do better.

But it is very different when the government -- or government lackeys like Krugman -- start talking about income inequality. That's not a matter of urging better behavior by the well off, it's a matter of developing laws that will supposedly take from those who have more and give to those who have less. If that's what's on the agenda, then they ought to be honest and say, We will take from A and give to B. To claim there's a "moral" basis for that is absurd.

And, no matter what they say, the favored rich will continue to get rich, and the poor will continue to be poor.

David said...

(x>y)2=(x-y)2

If you have x amount of money, and I have y amount of money, and the economy does what it's supposed to do, eventually x doubles, y doubles, and the difference between them necessarily also doubles. The President should be trying to take credit for this.

Q: Does the Vatican have any way of communicating with the outside world at all? Shouldn't it?

Come onnnn!

Douglas said...

If you want to get really depressed about the future of the United States, try reading the comments on the NYT to Krugman's column. Literate but innumerate, as someone up above said, is only part of the story. Oblivious and consumed by envy is another part. Jacobins in short pants. The scary thing is that these folks are representative of the people who occupy the White House, the West Wing and all the regulatory agencies.

Rusty said...

Does anybody know if Krugman predicted the housing meltdown?

Everybody involved in the housing industry knew it was coming.

Henry said...

Does anybody know if Krugman predicted the housing meltdown?

I remember a number of columns and statements in which Krugman warned about liquidity problems in the markets. He actually has a better record here than most.

Of course Krugman also made it a regular practice to be shocked, shocked at Bush-era deficits -- a posture he has made mockery of with his current fulminations about (non-existent) austerity.

This is the problem with Krugman. He is such a creature of politics that you can't separate his serious criticisms from his opportunistic ones. (Secondarily is the problem that his serious criticism are so overfrosted with sneers and accusations as to be revolting to consume.)