The Many Faces of Paul Krugman

by Jan 12, 2014Liberty & Economy0 comments

His numerous contradictions on the subject of minimum wage laws and unemployment benefits reveal the many faces of Paul Krugman.

His numerous contradictions on the subject of minimum wage laws and unemployment benefits reveal the many faces of Paul Krugman. Pay close attention to what he is saying in each of his varying roles!

“President Obama laid out a number of good ideas in his State of the Union address. One major proposal…: the president’s call for a rise in the minimum wage from $7.25 an hour to $9, with subsequent increases in line with inflation. The question we need to ask is: Would this be good policy? And the answer, perhaps surprisingly, is a clear yes.”

— Paul Krugman the liberal pundit, “Raise That Wage“, New York Times, February 17, 2013

“Six years have passed since the United States economy entered the Great Recession, four and a half since it officially began to recover, but long-term unemployment remains disastrously high. And Republicans have a theory about why this is happening. Their theory is, as it happens, completely wrong…. Here’s the world as many Republicans see it: Unemployment insurance, which generally pays eligible workers between 40 and 50 percent of their previous pay, reduces the incentive to search for a new job. As a result, the story goes, workers stay unemployed longer….”

— Paul Krugman the liberal pundit, “The Punishment Cure“, New York Times, December 8, 2013

“Now, you may believe that employment is a market relationship like any other — there’s a buyer and a seller, and it’s just a matter of mutual consent. You may also believe in Santa Claus. The truth is that employment is, in many though not all cases, a power relationship. In good economic times, or where workers’ position is protected by legal restraints and/or strong unions, that relationship may be relatively symmetric. In times like these, it’s hugely asymmetric: employers and employees alike know that workers are easy to replace, lost jobs very hard to replace.”

— Paul Krugman the liberal pundit, “The Plight of the Unemployed“, New York Times, December 24, 2013

“Profits took a hit during the financial crisis, but have soared since then, and are now 60 percent above pre-crisis levels; meanwhile compensation has grown hardly at all, and indeed fallen in real per capita terms.”

— Paul Krugman the liberal pundit, “Why Corporations Might Not Mind Moderate Depression“, New York Times, December 25, 2013

“More than a million unemployed Americans are about to get the cruelest of Christmas ‘gifts.’ They’re about to have their unemployment benefits cut off. You see, Republicans in Congress insist that if you haven’t found a job after months of searching, it must be because you aren’t trying hard enough….

“Some people would have you believe that employment relations are just like any other market transaction; workers have something to sell, employers want to buy what they offer, and they simply make a deal. But anyone who has ever held a job in the real world — or, for that matter, seen a Dilbert cartoon — knows that it’s not like that. The fact is that employment generally involves a power relationship: you have a boss, who tells you what to do, and if you refuse, you may be fired.”

— Paul Krugman the liberal pundit, “The Fear Economy“, New York Times, December 26, 2013

“Long-term unemployment is high because there are not enough jobs, not because millions of Americans have suddenly lost their work ethic.”

— Paul Krugman the liberal pundit, “No Cheers for the Jobless“, New York Times, December 28, 2013

“[W]e’d probably be close to full employment now but for the unprecedented fiscal austerity of the past three years.”

— Paul Krugman the liberal pundit, “Fiscal Fever Breaks“, New York Times, December 29, 2013

“The bottom third of the American work force has seen little or no rise in inflation-adjusted wages since the early 1970s; the bottom third of male workers has experienced a sharp wage decline. This wage stagnation, not social decay, is the reason poverty has proved so hard to eradicate.”

— Paul Krugman the liberal pundit, “The War Over Poverty“, New York Times, January 9, 2014

“Basic supply and demand analysis says that things like that [i.e., “mass unemployment”] aren’t supposed to happen: prices are supposed to rise or fall to clear markets. So what’s this apparent massive and persistent excess supply of labor? In general, market disequilibrium is a sign of prices out of whack; and most people commenting on our mess accept the notion that one or more prices are for some reason not adjusting.”

— Paul Krugman the Keynesian, “The Price is Wrong“, New York Times, March 30, 2013

“So what are the effects of increasing minimum wages? Any Econ 101 student can tell you the answer: The higher wage reduces the quantity of labor demanded, and hence leads to unemployment…. Clearly these advocates [of increasing the minimum wage] very much want to believe that the price of labor–unlike that of gasoline, or Manhattan apartments–can be set based on considerations of justice, not supply and demand, without unpleasant side effects…. In short, what the living wage is really about is not living standards, or even economics, but morality. Its advocates are basically opposed to the idea that wages are a market price–determined by supply and demand, the same as the price of apples or coal. And it is for that reason, rather than the practical details, that the broader political movement of which the demand for a living wage is the leading edge is ultimately doomed to failure: For the amorality of the market economy is part of its essence, and cannot be legislated away.”

— Paul Krugman the Nobel Prize-winning economist, “The Living Wage: What It Is and Why We Need It“, Washington Monthly, September 1, 1998

“This is what happens when there is a price floor on the wage rate paid for an hour of labor, the minimum wage: when the minimum wage is above the equilibrium wage rate, some people who are willing to work — that is, sell labor — cannot find buyers — that is, employers — willing to give them jobs.”

— Paul Krugman the Nobel Prize-winning economist, Macroeconomics2nd Edition (New York: Worth Publishers 2009), p. 128

“This is what happens when there is a price floor on the wage rate paid for an hour of labor, the minimum wage: when the minimum wage is above the equilibrium wage rate, some people who are willing to work — that is, sell labor — cannot find buyers — that is, employers — willing to give them jobs.”

— Paul Krugman the Nobel Prize-winning economist, Essentials of Economics, 2nd Edition (New York: Worth Publishers 2011), p. 114

“[P]ublic policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect…. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job.”

— Paul Krugman the Nobel Prize-winning economist, Macroeconomics2nd Edition (New York: Worth Publishers 2009), p. 210

“[A] a bit more inflation would be a good thing, not a bad thing.”

— Paul Krugman the Keynesian, “Not Enough Inflation“, New York Times, April 5, 2012

“I would add, however, that there’s another case for a higher inflation rate…. It goes like this: even in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis.”

— Paul Krugman the Keynesian, “The Case for Higher Inflation“, New York TimesFebruary 13, 2010

Pop quiz:

1) What is Krugman the liberal pundit’s vs. Krugman the Nobel Prize-winning economist’s view of the effects of unemployment benefits?

2) What is Krugman the liberal pundit’s vs. Krugman the Nobel Prize-winning economist’s view of the consequences of minimum wage laws?

3) What is Krugman the liberal pundit’s vs. Krugman the Keynesian’s view of the effect of wages mandated higher than the market equilibrium price (i.e., the price for labor determined by the supply of labor and the demand for it)? How does this relate to price inflation?

Feel free to discuss in the comments.

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About Jeremy R. Hammond

About Jeremy R. Hammond

I am an independent journalist, political analyst, publisher and editor of Foreign Policy Journal, book author, and writing coach.

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