Paul Krugman is Wrong About Jobs and Income Inequality

paul krugman

Looking forward to Obama’s State of the Union session, New York Times economic court jester Paul Krugman beats his usual drum about the importance of deficit spending (no, that’s not a joke, it’s what passes for liberal economic wisdom) and then tries to make a case for the left’s latest meme of “inequality” over jobs.

The usual suspects on the right will, as always when questions of income distribution comes up, shriek “Class warfare!” But there will also be seemingly more sober voices arguing that he has picked the wrong target, that jobs, not inequality, should be at the top of his agenda.

Here’s why they’re wrong.

First of all, jobs and inequality are closely linked if not identical issues. There’s a pretty good although not ironclad case that soaring inequality helped set the stage for our economic crisis, and that the highly unequal distribution of income since the crisis has perpetuated the slump, especially by making it hard for families in debt to work their way out.

Moreover, there’s an even stronger case to be made that high unemployment — by destroying workers’ bargaining power — has become a major source of rising inequality and stagnating incomes even for those lucky enough to have jobs.

The second point isn’t even an argument. Obviously unemployment leads to income inequality. If people don’t have jobs, their income falls. But that’s a case for focusing on jobs, the cause, not income inequality, the effect.

Paul Krugman turning that into his “stronger case” is a basic failure of logic.

Krugman’s first point is even more inverted. Income inequality didn’t create the economic crisis, botched attempts to remedy inequality with government subsidies that were monetized by liberal billionaires did.

The roots of the economic crisis lie in the intersection between Wall Street and the welfare state. That same intersection has given us Barack Obama, Paul Krugman and severe unemployment and income inequality.

The drum beaters for endless spending on the welfare state are perpetuating income inequality by pretending to fight it for their own profit.

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  • Douglas J. Bender

    I still think Krugman’s proposal that a space-alien invasion would cure the economy was brilliant. I mean, who else would have thought of such a thing?

    Paul Krugman — Thinking outside the (litter-) box.

    • Daniel Greenfield

      His cat does his thinking for him

    • objectivefactsmatter

      Well, if they bring energy and perpetual motion machines, of course they can help! And they must have some pretty awesome self-sustaining robots too.

      What else could we need? I just hope Darth Vader stays away.

  • ZZ

    Chimp boy Paul Krugman? Is that economic N azi ever right about anything? (Besides hot spot vacation destinations for single gay men with erectile dysfunction.) I’d like to see him in a cage match with fellow National Socialist Robert Reich.

    My money would be on the Oompa Loompa Reich.

  • De Doc

    The norm in Washington, DC now is to deficit spend during the bad times and to deficit spend when the economy is hot. With that fact how does the US ever start paying down its debts?

    Krugman is part of the silly cadre of economists who latch into the fantasy that ‘debt is good.’

  • michael

    You guys are all good at rubbishing each other; the problem still remains. I don’t think any of you give a stuff about working people.

    • objectivefactsmatter

      “You guys are all good at rubbishing each other; the problem still remains. I don’t think any of you give a stuff about working people.”

      You mean that collectively I’m sure. Since working people are too dumb to succeed without elites in Washington working it out for them.

    • Douglas J. Bender

      I am a working people.

    • ZZ

      Because Krugman and Obama love us proletariat soooo much. All they care about is our tax dollars, comrade.

  • objectivefactsmatter

    “First of all, jobs and inequality are closely linked if not identical issues. There’s a pretty good although not ironclad case that soaring inequality helped set the stage for our economic crisis, and that the highly unequal distribution of income since the crisis has perpetuated the slump, especially by making it hard for families in debt to work their way out.”

    It’s complete BS. It was socialist policies that caused it. Full stop. His “not quite ironclad case” supposes that they can “reduce income inequality” to magically assure that all the poor people are competent enough to pay their bills. No, it wasn’t the artificially inflated prices that caused people to stretch their already inadequate (for their delusional dreams) resources, caused by shoehorning people in to homes before they were capable of doing it on their own. It was that mysterious income inequality thing that can only be explained by the genius Karl Marx. More proof of white supremacist racism!

    IOW, when socialist policies fail, the answer is always more socialism.

  • SoCalMike

    Paul Krugman is a doe- eyed jackass masquerading as a thinking man much the same way the manure producers at the NY Times pretend to distribute knowledge.

    • http://tinatrent.com/ Tina Trent

      The NYT headshot of him looks like he’s asking for a bite of your sandwich. It’s creepy.

  • carpe diem 36

    so why don’t we pay each worker as much as each CEO and voila!! equality.