One one hand, Krugman argues that the U.S. federal government should mandate an increased minimum wage of $9, so that workers will have more income with which to spend (which is where Krugman thinks economic growth comes from), and that increasing the minimum wage will not exacerbate unemployment (by pricing low-wage earners right out of a job).
On the other hand, Krugman argues that there is a problem in the U.S. of “downward nominal wage rigidity”, meaning that “people are very reluctant to demand or accept actual wage cuts”, which is necessary in order to reduce unemployment, and that price inflation resulting from central bank money printing is therefore a good thing, since it reduces workers’ real wages by decreasing their purchasing power.
(See also my FPJ article “Krugman vs. Hazlitt on Minimum Wage: Who Is Really ‘Wrong About Everything’?“
@jeremyrhammond Great article!
— Mises Institute (@mises) August 1, 2013