Does Paul Krugman eat lunch alone?

Paul Krugman[1] (1953- ) is one of the smartest guys alive. He got a BA in Economics from Yale (1974) and a Ph.D. from M.I.T. (1977). He taught at M.I.T. from 1979 to 2000, then moved to Princeton. He has won both the American Economic Association’s John Bates Clark Medal (1991) and the Nobel Prize in Economics (2008). He is a prolific author and a columnist for the New York Times.

Krugman presents himself as a scald to “politicians and pundits who solemnly repeat the conventional wisdom that sounds tough-minded and realistic.” He argues that “some of those seemingly tough-minded positions are actually ways to dodge the truly hard issues.” He cites “Bowles-Simpsonism”[2] as an example of this problem. Elite discourse is diverted from the immediate problem of high unemployment by obsessing over how to pay for Social Security and Medicare/Medicaid in the distant future.

His latest target is efforts to “divert our national discourse about inequality into a discussion of alleged problems with education.”[3] Krugman argues that “soaring inequality isn’t about education; it’s about power.” The conventional wisdom holds that rapid technological change has divided the labor force into those who have adapted (and reaped the rewards) and those who have not (and have suffered the losses). (See: Inequality )

The evidence doesn’t support the contention that “educational failings are at the root of still-weak job creation, stagnating wages, and rising inequality.” First, there’s no sign of high demand for skilled-workers, so the “skills gap” argument doesn’t hold water. Second, the inflation-adjusted incomes of highly-educated people have stayed flat for almost twenty years, so the differentiated income argument doesn’t hold water either.

Krugman sees something different happening. Corporate profits are up without the rate of return on investment having risen. He sees this as a sign of monopoly power. Companies are just squeezing consumers, rather than letting competition drive down prices. Furthermore, incomes are rising sharply for people with “strategic positions” in corporations and Wall Street.

He recommends redistribution through higher taxes on corporations and the rich, spending on programs to help working families, raising the minimum wage, and support for organizing labor to bargain effectively with employers.

There’s a lot to like in Krugman’s arguments. His assault on the inadequate Obama stimulus bill certainly proved correct. However, for someone with such extraordinary intellectual fire-power at his disposal, it’s odd that he doesn’t have more effect. Writing for the NYT is preaching to the converted. It is, perhaps, revealing that he called the British Labour Party leader Gordon Brown “more impressive than any US politician.” Brown is a brilliant man with sadly deficient political skills. The far less capable Tony Blair maneuvered Brown into delaying his claims to the prime ministership for years; then Brown put his foot in his mouth once he had the job. Krugman has explained his own absence from government by saying that he’s “temperamentally unsuited for that kind of role. You have to be very good at people skills, biting your tongue when people say silly things.”

It’s hard to persuade people if they turn down the volume when you start to talk.

[1] Curiously, Krugman’s middle name is Robin. His first wife’s name was Robin Bergman. His second wife’s name is Robin Weiss. This starts to sound a little like Lyndon Johnson.

[2] Krugman does not exactly attack the Commission’s Report itself, so much as a movement that makes use of the report. Erskine Bowles punched back effectively in a letter to the WSJ, 11 February 2015.

[3] Paul Krugman, “Knowledge Isn’t Power,” NYT, 23 February 2015.

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