October 24, 2002
A Poison-Pen Attack on Paul Krugman

Andrew Sullivan has apparently taken to posting anonymous poison-pen letters attacking Paul Krugman:


www.AndrewSullivan.com - Daily Dish: ...Keep up the pressure.... I... once regarded [Paul Krugman] as a Nobel Prize possibility. Alas, his politics and ego have become truly insufferable. Can you imagine an economist of his gifts falling back on the argument that the increasing relative compensation of CEOs has been a result of a change in the public's willingness to tolerate inequality in income distribution...

I doubt this poison-pen letter is from a real economist.

You see, and as any real economist interested in income distribution would know, the argument that the big changes in relative inequality have been driven not by changes in relative labor supplies or by the characteristics of technological change but, instead, by shifts in culture--changes in the hearts and minds of Americans--is not original to Paul Krugman. The argument belongs to and is made most fully by Emanuel Saez (six offices to the north of me) and Thomas Piketty. It is made in their NBER working paper Income Inequality in the United States, 1913-1998.

Their argument has traction because--as they argue at length in their working paper--it fits better than any of the alternative explanations.

How are Piketty and Saez regarded? We here at Berkeley cheered when we managed to lure Emmanuel Saez away from Harvard. My friends at MIT were disconsolate when Thomas Piketty decided he would rather live in Paris and work at CEPREMAP. Their reputations are sky-high as among the very best of economists in their thirties.

All the real economists interested in income distribution issues have been thinking about Piketty and Saez's arguments for over a year now. None of the real economists is as dismissive of their argument as is Sullivan's poison-pen correspondent. Indeed, none of the real economists would ever make the blunder of attributing the argument to Krugman's brain all by itself.

In fact, it is astonishing that Andrew Sullivan thinks the "hearts and minds" argument is original to Krugman. Any reader of Krugman's "For Richer," finds Piketty and Saez placed up front as the crucial analyzers of the data and originators of the argument, and referred to no fewer than six times.

Posted by DeLong at October 24, 2002 01:43 PM | Trackback

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Comments

The problem may be more general: is there a scary trend whereby the conservative establishment is trying to systematically discredit all liberal pundits that are too close to establish popularity?

I am too young to say whether this is entirely new though. But it does seem to be gathering momentum. In a world of Rhynos, human beings are increasingly regarded as the beasts...

If Krugman does chant the conservative gospel then it MUST BE that he is lying or worse.

Belief 1. Conservatives are the good and honest guys who workship the holy conservative light (and the Bushies are its prophets)

Belief 2. True conservatism is the devine source of all truth.

=>

corrolary #1: there is no truth outside conservatism; (in fact truth is the phenomenal incarnation of truth, and conservatism the phylosophy emanating from the observation of truth.)

corrolary #2: conservatives always tell the devine truth;

collolary #3: non-believers are telling lies, at best out of ignorance of the true faith or, more likely, because they're evil.

I really wished this kind of thinking was not alive and spreading... It's intellectual integrism at its worse.

Posted by: Jean-Philippe Stijns on October 24, 2002 03:13 PM

Freudian slip, I meant:

If Krugman does NOT chant the conservative gospel then it MUST BE that he is lying or worse.

:-D

Posted by: Jean-Philippe Stijns on October 24, 2002 03:20 PM

This is called the fundamental attribution error..

Posted by: Roland Stephen on October 24, 2002 04:35 PM

Well, that's a relief. I didn't have a real rebuttal to that when I read it, I'm glad one isn't hard to find.

Posted by: Dennis O'Dea on October 24, 2002 04:41 PM

The sad note here is that andrew sullivan is taken seriously, at least in some quarters. His decline has been extraordinary and sad; that his current rantings even enter the public discourse is sadder; that he barely stirs himself to argue anymore, only malign, is saddest of all.

Posted by: howard on October 24, 2002 04:58 PM

not only Piketty and Saez... Krugman also flagged another NBER paper not too long ago on the "outrage constraint" which deals with how CEOs have come to sky rocket their pay through manipulations of the company. Rather than a focus on the general public, they show how the board is loosened up. Not exactly the same argument, but it looks like a functional lever in the larger idea.

Posted by: Brendan on October 24, 2002 06:28 PM

maybe Sullivan and his acolyte haven't realized yet that serious economics is moving beyond neo-classcal economics? maybe these guys think that if an economist is talking about norms and other socio-psychological concepts, that doesn't mean she is a second-rank sociologist, but rather, possibly an economist at the cutting edge of her profession? should we recommend sulli to brush up his economics?

Posted by: Jean-Philippe Stijns on October 24, 2002 06:47 PM

Hehehehe. I believe Krugman, in one of his books, had a rant by a sociologist that the problem with economists was that they didn't think that economics was really part of sociology and that the insights of sociology didn't apply.

I am amused and glad to hear that this is changing. Now, we just need to keep reminding them that there is a reason why the discipline was originally political-economics.

Posted by: Ian Welsh on October 24, 2002 07:04 PM

I agree with Andrew Sullivan most of the time. This is especially true regarding his view on the current Islamic militant threat. However, I suspect that he’s goofed up in this particular instance. My tentative opinion is that the “hearts and mind” argument is right on target. As matter of fact, it’s what I been thinking for a long time! Anybody that agree with me gets my vote.

The study of economics is a primarily a philosophical discipline. Legitimate sociological methods seem entirely sensible. The exaggerated emphasis on math is nutty to the extreme.

Posted by: David Thomson on October 24, 2002 07:23 PM

The paradox is that this new generation of economics is in fact mathematically hairy. Crude behavorial assumptions about rationality and foresignt allow a great deal of simplification of the math and the concepts at hand.

Posted by: Jean-Philippe Stijns on October 24, 2002 07:44 PM

I'm not qualified to speak to the best methods of pursuing economic research, but I'll note that some very prominent economists have had their doubts (such as Keynes, for example.)

Ceter Parabis is all very nice, but all things usually aren't equal...

Posted by: Ian Welsh on October 24, 2002 07:50 PM

Sullivan's a fucking disaster when he writes about economics in general, Krugman in particular. He's shrill, he hectors, he's too often wrong in an ignorant way, and worst of all, he reads as though whatever appears in print or online about finance/economics represents the sum total of what he knows. that is, he'll research a topic just enough to milk a column out of it.

I agree that he's far more interesting on foreign policy and the political dimension of pop culture. His stuff on that murdered gay rightwinger in holland was terrific, better than more mainstream outlets.

on these topics, he's clearly thought about things at great length, his heart's in it, and even when I don't agree, he's almost always provocative.

I cringe when I see he's about to bash Krugman again. Inevitably, he'll be wrong.

Posted by: kit on October 24, 2002 08:04 PM

If Professor DeLong will put aside his pique for a moment, I think he will change his mind on the claim that Sullivan is not getting these comments from an economist. There are how many economists in the US? Tens of thousands, even by a strict definition, I am sure. I can not imagine a plausible distribution along an axis of respect for NYT columnists (or whatever you want to call it) that does not have at least a few economists at the tail where they don't much care for Krugman and are willing to write Sullivan about it. (All that assumes you are correct about the thinking of economists. Know any polls to support your thinking?)

And an ethical thought, which I hope will not be too out of place, even at the University of California. If you are going to accuse Sullivan of lying, you should send him an email and do so directly. (Which reminds me - I should send him an email myself, since I mentioned an error he had made on public opinion.)

Posted by: Jim Miller on October 24, 2002 08:09 PM

This supposed economist is obviously jealous of Krugman's intelligence and accomplishments, which bar far overshadow those of any economist who would touch Sully with a ten foot pole -- the letter-writer is possibly a hired gun from CATO or some other think tank. Krugman is also actually a pretty nice guy, and these personal attacks about him having a big ego are flat untrue.

Posted by: Bobby on October 24, 2002 08:27 PM

Economist is an awefully expansive term these days- I coul dhave accepted a job out of college at the BLS and called myself and economist. The person who sent it is probably an economist, but not one qualified to speak about what are and are not credible theories.

Posted by: Dennis O'Dea on October 24, 2002 09:12 PM

No economist at Cato or Heritage would be reluctant to criticize Krugman publicly. If they chose to bother, I'd be very surprised if it wasn't along principled lines. I'd also be surprised if they were correct in their criticism, but that's a different matter and not a moral failing.

Max Sawicky
Economic Policy Institute
[I do not write about trade deficits.]


Posted by: Max Sawicky on October 24, 2002 09:13 PM

Um, any chance to get a free copy of this paper somewhere? The link provided would charge me 5 bucks, and I'd like to read it withouth increasing income inequality (poor readers towards rich economists) in the year 2002.

Posted by: Andrew Boucher on October 24, 2002 09:34 PM

Jim Miller -- DeLong was pointing out that good economists do not make their critiques via anonymous letters to journalists, and that good economists understand the material better than Sullivan's informant did. He was not really denying that maybe some guy with an economics PhD from Northern Alabama Tech might have talked to Sullivan.

Yeah yeah, I'm a reverse bigot. And proud.

Posted by: on October 24, 2002 09:37 PM

Jim Miller -- DeLong was pointing out that good economists do not make their critiques via anonymous letters to journalists, and that good economists understand the material better than Sullivan's informant did. He was not really denying that maybe some guy with an economics PhD from Northern Alabama Tech might have talked to Sullivan.

Yeah yeah, I'm a reverse bigot. And proud.

Posted by: on October 24, 2002 09:38 PM

I use to read Sullivan's site every day, but it got so weak it just dropped off my list of things to bother with. Haven't been there in a month at least. Seems to have been a good time management choice.

Posted by: pj on October 24, 2002 09:40 PM

In all fairness, Sullivan's site only actually claims that the correspondent has "known him for more than twenty years". I guess that there are non-economists who Krugman has known for twenty years, and none of us can ever be sure that our acquaintances don't include a few of the type of people who write letters like that, try as we might.

Posted by: Daniel Davies on October 24, 2002 11:48 PM

One month Sulli-sober, pj. Congratulations!!!

Perhaps should you advise Professor DeLong who, not so long ago, was looking for a twelve step program for exactly the same thing... :-D

Posted by: Jean-Philippe Stijns on October 24, 2002 11:52 PM

Andrew: ask and your wish shall be granted:

http://emlab.berkeley.edu/users/saez/w8467.pdf

Posted by: Daniel Davies on October 24, 2002 11:53 PM

P.S. And as far as Sullivan is concerned, I think the bare minimum of decency requires that he reveals the indentity of the would-be sender of this email. Who votes for this?

Posted by: Jean-Philippe Stijns on October 24, 2002 11:56 PM

Well, there are all sorts of reasons, some legitimate, some not, a real economist might choose to be anonymous. Lack of tenure, for example. or a government post. Or a personal contact with Krugman. I might add that, since there are so many poltical tests in academia, old fashioned liberals, moderates, and conservatives are often wise to conceal their views, if they are exposed in any way.

Posted by: Jim Miller on October 25, 2002 06:08 AM

I have to agree with Kit. (A disclaimer: I know Sullivan casually and have had discussions with him about economics.) Sullivan is a very thoughtful individual most of the time, especially when he's focused on squishy subjects like popular culture. When it comes to economics, however, he's an intellectual dud. His contempt (and I do mean CONTEMPT) for Krugman derives from several sources:
1. Krugman's criticism of Bushian fiscal policy, which has largely been spot on.
2. Krugman's criticism of Bushian plutocracy, which is big-picture correct even if some of the smaller points are either untrue or have yet to be established.
3. Sullivan has oddly come to worship Bush almost to the point of idolatry, in part because he hates (and I do mean HATES) Clinton and Gore.
4. Krugman trajectory is generally upward (successful academic => successful popular writer about subjects economics => ?). Sullivan's is largely downward. At some point along the way, the two paths crossed, and Sullivan is jealous.

Posted by: Anon on October 25, 2002 06:54 AM

There are a number of right-wing 'thinkers' (Sullivan, Kelly, and Safire come to mind) who I've written off because of their obsessive hatred of Bill, Hillary, and Al. I'm convinced that they are simply at the mercy of uncontrollable fury-- which is not a benefit for anyone trying to do political analysis. But what's it about, exactly?

Posted by: Matt on October 25, 2002 07:59 AM

Um, if you knew how Sullivan's letters worked, you would realize that he NEVER posts the identity of a correspondent. Go to his website, click on Letters to bring up the subblog, and you'll see this disclaimer, "Letters will be published anonymously, for the point is the debate itself, not the identity of the participants." While one could quibble with the "for the point is the debate itself" part, one can not fault Sully for publishing this letter anonymously, since that's his policy and I've never seen him make an exception. (If you look you'll see that he doesn't even edit the letters himself, Reihan Salam does.)

That being said, I must say that I, like PJ, used to go to his website everyday but now never do. I count on the people who still bother - like Brad and - to bring any of his more important(hysterical) slanders to my attention. Actually, it was his ridiculous crusade against Krugman that hastened my withdrawal from his plot of cyberspace. The problem with Sullivan's take on Krugman lies not with his understanding of economics, but with his understanding of argument and principle. Sullivan doesn't get the concept that people are allowed to disagree with him (or with the Bush administration, for he has fallen into the lazy shorthand of Bush=right and those who disagree=wrong, the most common form of political/ideological sloth.) He does not understand principled disagreement with his views; you either agree and, as he writes almost daily, "get it" or you don't and are wrong. (Yesterday he titled a post "Safire Gets It", e.g.) Krugman has earned his unrelenting attacks because not only does he have the temerity to disagree with nearly every economic decision Bush has made, but he does so from a media perch Sullivan is envious of (the NYT's op-ed page) and has the knowledge, training and numbers to back up these criticisms. To my mind, Sullivan is worthy of pity - in one respect, not wholly - in that it seems as if he wants desperately to believe in something, some eternal, unassailable truth, so much so that he has wilfully blinded himself to the merits of many and the flaws of the rest. We see this with his beatification of the White House and the demonization of the Democrats; nothing gives him more pleasure than providing instance after instance of how noble and right-minded the former is and how depraved and unworthy the latter are. It is necessary to sustain the simplistic black/white world that he craves. Many, many people seek refuge in this type of approach to life; he is not the first nor will he be the last. I do not know why he has chosen this increasingly difficult, hateful and unfulfilling path in life but I think it is worthy of pity on some level. Perhaps it is because, in his heart of heart, he knows that his Church considers him morally deficient and perverse, or perhaps because of that he has been forced to question his belief in God and the Church themeselves; perhaps it is due to the trauma of contracting AIDS and almost dying. I do not know and it does not matter. What matters is that he now is reduced to attacking with unremitting hate those who threaten his belief system and praising with oft-undeserved praise those who undergird it, and this is how the belief-seeking of this belief-less man draws others into his hate-filled net. For in truth, this worldview requires constant effort and tending to pulling out the weeds of truth, as they so often crop up, and what better way than to have others do the work for him?

"All of them, all except Phineas, constructed at infinite cost to themselves these Maginot Lines against this enemy they thought they saw across the frontier, this enemy who never attacked that way - if he ever attacked at all; if he was indeed the enemy." - A Separate Peace, final paragraph

Posted by: PR on October 25, 2002 08:25 AM

>> as far as Sullivan is concerned, I think the bare minimum of decency requires that he reveals the indentity of the would-be sender of this email. <<

Yes, it's a terrible thing to quote e-mail obtained from an anonymous source you won't reveal in support of your publishing nasty personal charges about someone.

If Sully gets called on this, let's hope it turns out at least that the e-mail actually exists! ;-)

Posted by: Jim Glass on October 25, 2002 08:48 AM

Don't you think that the most likely explanation is that the "letter" that Sullivan is quoting doesn't exist; Sullivan has simply fabricated a phoney letter to make it seem that his anti-Krugman crusade is more than the obsessive ranting of a single loser.

Posted by: Paul Gottlieb on October 25, 2002 08:59 AM

PR refers to an Andrew Sullivan that is unknown to me. I have often seen him take the Bush administration to task. He did so especially when it hypocritically came out in support of the steel industry protectionist measures. Do I always agree with everything he says? No, as matter of fact I tend to support Krugman in a few instances. Nonetheless, Sullivan and many others argue that the esteemed economist fails to be objective regarding the White House. My guess is that Krugman panders to the American Left to ensure that he continues receiving invitations to their white wine and brie cheese parties.

Sullivan is at his very best when addressing the threat of Islamic radicalism. This critical issue alone justifies, if not even mandates, that you visit Sullivan's site each and every day.

Posted by: David Thomson on October 25, 2002 09:04 AM

Yes, it is horrible how some people use anonymous sources to slander people. Say, the guy who wrote this in the NY Times:

" One theory I've heard is that [Thomas] White can't be fired: that there are facts about the administration's relationship with Enron that it doesn't want to come out, and that Mr. White knows where the bodies are buried."

Posted by: Patrick R. Sullivan on October 25, 2002 09:42 AM

PR points out: "if you knew how Sullivan's letters worked, you would realize that he NEVER posts the identity of a correspondent. Go to his website, click on Letters to bring up the subblog, and you'll see this disclaimer, `Letters will be published anonymously, for the point is the debate itself, not the identity of the participants.'"

The problem is that the letter in question is notable only because the author "has known [Krugman] for more than twenty years and, as I told you in an email sent a year or so ago, once regarded him as a Nobel Prize possibility [but does no longer]" and has "served on boards of public companies for three decades and having looked at board composition from, say, the 1950s" (and so his knowledge of how boards work is based on experience).

Those facts (if they are such) are supposed to make the reader believe that the author's opinions are relevant, so the truth of those facts are essential to the debate. But they are utterly uncheckable because the letter writer is anonymous.

Posted by: David Margolies on October 25, 2002 09:42 AM

OK, on David Thomson's recommendation, I just read Andrew Sullivan's latest blog. He juxtaposes the suspect's Islamic conversion with the sniping, under the title "Islamic Terror?" I guess the implication is that Islam is somehow a motivator for the sniping, though maybe Sullivan's thinks the use of the question mark shields him from such an stupid, bigoted conclusion. Is this an example of the "very best when addressing the threat of Islamic radicalism"?

Though not addressing Sullivan specifically, Max Sawicky said it best on his blog maxspeak.org yesterday: "Question: is there any event you would not exploit for the sake of harping on your theme of a worldwide war on Islam?"

The most powerful refutation of Bush's policies is to contrast what he promised with his taxcut versus what we have now: a deficit and continued sluggishness bordering on a double dip recession. Rather than face up to that, some would rather attack the messengers, such as Krugman.

Posted by: Rich Phillips on October 25, 2002 10:03 AM

"Well, there are all sorts of reasons, some legitimate, some not, a real economist might choose to be anonymous. Lack of tenure, for example. or a government post. Or a personal contact with Krugman. I might add that, since there are so many poltical tests in academia, old fashioned liberals, moderates, and conservatives are often wise to conceal their views, if they are exposed in any way. "

Posted by Jim Miller at October 25, 2002 06:08 AM

You're suggesting that an academic economist would feel the need to disguise right-wing views?

Barry

Posted by: Barry on October 25, 2002 10:11 AM

What is so bothersome is that Paul Krugman knows economics and knows where present policy is leading. Away with such a bother. We are all among the most wealthy, are we not?

Posted by: on October 25, 2002 10:37 AM

GRASSLEY DIGS HIS HOLE DEEPER (10/25/02)
By Paul Krugman

Let me assure you that I hardly consume any alcohol - that is, if you don't count the contents of the wine and beer I drink. Similarly, the Bush tax cut isn't all that tilted toward the rich - that is, if you don't count the parts of it that are most tilted toward the rich.

In today's Times Charles Grassley defends himself with a letter pointing out that only 27 percent of the income tax cuts in last year's bill go the the top one percent. Key word: INCOME. That is, he's left out the estate tax, which is more than 20 percent of the total, and mostly goes to, yes, the top one percent. So his numbers aren't a refutation: they're a confirmation. Include the piece he has carefully left out, and you're talking well over 40 percent of the tax cut to the top 1 percent.

Is this misdirection deliberate? Of course it is. Remember what I said in the original column: when advocates of the tax cut are pressed to answer the question, "How much of the tax cut goes to the top percentile?", they always insist on answering some other question. Grassley just did it again.

For reference: the top percentile receives about 17 percent of income, pays about 25 percent of federal taxes (Grassley, of course, only counts income taxes), and receives, let's say, 45 percent of the tax cut.

Posted by: on October 25, 2002 10:40 AM

Dear Senator Paul Wellstone has died in a plane crash. What a fine person.

Posted by: on October 25, 2002 11:00 AM

Daniel (Davies):
Thanks for the link.

Posted by: Andrew Boucher on October 25, 2002 11:59 AM

Hey, props to D-squared. Does one of the "D"s stand for "Deep pockets? Thanks for the free copies, get yourself a copyright lawyer.

As to this comment:

"The problem may be more general: is there a scary trend whereby the conservative establishment is trying to systematically discredit all liberal pundits that are too close to establish popularity?"

from JP Stijns, or this comment

"
There are a number of right-wing 'thinkers' (Sullivan, Kelly, and Safire come to mind) who I've written off because of their obsessive hatred of Bill, Hillary, and Al. I'm convinced that they are simply at the mercy of uncontrollable fury-- which is not a benefit for anyone trying to do political analysis. But what's it about, exactly?"

from Matt, I would note the following:

the world has a greater left-right symmetry than you seem to realize.

Condolences to Wellstone's family, friends, and supporters. Stand up, state your beliefs, vote your principles, take the consequences. Paul Wellstone, 1944-2000.

In seems horribly inapt, but have a good weekend, all.


Posted by: Tom Maguire on October 25, 2002 12:13 PM

Can we agree that both Krugman and Sullivan are damaging their credibility by their partisanship and level of invective? Krugman is mendacious and unfair. The Sullivan-haters here would probably apply those words to AS. The two have a lot in common.

Posted by: JT on October 25, 2002 12:15 PM

Well, change of topic. I am at about page 3 of the 121 page paper D-squared 'gave' us, and I am fascinated by apparent gaps between what they say, and Krugman's NY Times Magazine article.

Highlights:

"we show that top capital incomes were severely hit by major shocks during the 1914-1945
period. The large depressions on the first part of the century destroyed many businesses and thus reduced significantly top capital incomes. "

I think this is the "Great Compression" which Krugman attributed to the New Deal and WII.

Top wage shares have started recovering from the WWII shock since the 1960s and 1970s,"

OK, we are distinguishing capital income and wage income. Still, weren't the 60's and 70's part of the "Golden Era"?

"wage shares seem too sudden to be accounted for by technical change alone, and we emphasize the role of changing social norms as a potential exp lanation for the observed patterns.
Although our proposed interpretation for the observed trends seems plausible to us, we stress that we cannot prove that progressive taxation and
social norms have indeed played the role we attribute to them.
In our view, the primary contribution of this paper is to provide new series on income and wage inequality. Hopefully, other researchers will use our series and complement them with new empirical sources in order to formulate their own hypotheses and
explanations."

Emphasis aded. Well, Krugman used the word "fuzzy" in his article. And the critic at AS did suggest that this stuff wasn't proven.

And, as Brad points out, these are very smart guys who have given this a lot of thought.

And I am only on page 3! What mysteries await?

Regards,

Posted by: Tom Maguire on October 25, 2002 12:33 PM

Sorry, I am driving you all crazy. Here on p 12, TRA86 is the tax reform Act of 1986 - Reagan's second tax cut, top rate dropped from 50% to 28% (OK, with a 33% bubble)

"This transitory effect of TRA 1986 is even
more striking when looking at our appendix series including capital gains as in Figure 4B. The series with full capital gains included both in the ranking of tax units and when computing shares shows indeed a much smaller increase in the
top percentile share from 1985 to 1994 than from 1994 to 1998 or from 1978 to 1984. As a result, it is possible to argue that TRA86 produced no permanent surge in top income shares, but only a transitory blip."

Really? That tax cut produced just a blip? Hmm.


OK, if Blogger comes back, I'll leave. Sort of a reverse hostage situation. Oh, I'll leave anyway. But this is a GREAT paper. Creative excerpters wil go mad!

Regards,

Posted by: Tom Relentless on October 25, 2002 12:44 PM

OK, this is really, really it. But this time I actually have a theory so great that I will need to start working on what I hope will be a very gracious acceptance speech. Or else so stone-obvious that I will be hooted into the outer reaches of cyberspace. Hey, a win-win.

The authors make a point of looking at exec pay from the 70's onward, and see that the top decile is rising. However, my idea, or theory, or question:

1. stock options became more widely used over time.

2. stock options often produce "one-time" surges in the pay of a particular exec. as they exercise options accumulated over many years.

3. Hence, the list of "highest paid execs" will show dramatic turnover, and variance in pay will really reflect timing differences in how execs cash in their options.

To illustrate by example, in a no-option world, we might have 1000 execs each earning $10 million per year, or $100 MM per decade.

Now switch to an option oriented world, where roughly 100 execs cash in each year, good for $90 MM. Meanwhile, each of our execs earns $1 MM per year cash.

So, now exec compensation looks wildly different - each year, we see 100 execs earning $91 MM, and 900 execs earning $1 MM. Oh, the inequality! Except that, ovr a decade, everyone earns $100 MM, and nothing has changed.

SO, in the first world, the highest earners took $10 M. In the second, they took $91 MM. Are the worlds that different?

Now, in the paper, the authors certainly do a lot more work than I can grasp at sorting through different data. However, I did not notice them commenting that a change in the annual variance at the top level of income (with no change in the mean) would produce results consistent with what they seem to be showing. This reflects a problem with the fractile analysis - the populations may not be at all stable.

So, is this a good idea, is it addressed elsewhere, is it answered here but I missed it? What's a comments section for?


Regards,

Posted by: Tom Maguire on October 25, 2002 01:18 PM

"OK, on David Thomson's recommendation, I just read Andrew Sullivan's latest blog. He juxtaposes the suspect's Islamic conversion with the sniping, under the title "Islamic Terror?" I guess the implication is that Islam is somehow a motivator for the sniping, though maybe Sullivan's thinks the use of the question mark shields him from such an stupid, bigoted conclusion. Is this an example of the "very best when addressing the threat of Islamic radicalism"?"

"Bigoted conclusion?" Andrew Sullivan is prudently wondering if whether the sniper converted to an extremist interpretation of the Islam faith. This is a rational and totally justified considering the circumstances.

It is time to put aside political correctness, and wake up to the reality that radical Muslims threaten America. It might behoove you to read both Daniel Pipes' "Militant Islam Reaches America" and Steven Emerson's "Jihad: The Terrorists Living among Us."

The odds are overwhelming that the recent sniper attacks were at least partly premised upon the desire to murder the "infidels." Why is this so hard to comprehend? The politically correct Leftists have caused enormous harm to this country. It is primarily because of them that America was unprepared for 9/11. When will this nonsense cease?

Posted by: David Thomson on October 25, 2002 01:18 PM

I would have agreed with you, David, if it weren't for the fact that the sniper left a message stating that he was God(which would hardly endear him to radical Muslims) and seemed to have a pathological need to humiliate the police and other authorities("duck in a noose"?). This seems more in line with standard serial murderer fare...

Posted by: Nick on October 25, 2002 01:26 PM

I haven't had time to read this paper, but it seems to be taken from income tax returns 1913-1998. How did the authors control for the changes illustrated by this sentence that was in a Seattle Times story a few days ago about the closure of a Weyerhaeuser lumber mill:

"Workers earn an average salary of $17.86, plus another $15 per hour or so in benefits."

Posted by: Patrick R. Sullivan on October 25, 2002 01:42 PM

There is no comparison between Sullivan and Krugman, like JT assumes. The latter is a Princeton economics professor that critiques economic policies--pointing out that Bush's alleged policies are damaging the economy, contrary to Bush's promises, is not "partisan invective." Please point out where Krugman has been mendacious.
Sullivan on the other hand offers no expertise on anything other than his reasoning skills. Thus he extoles testosterone, diagnoses Clinton's "sex addiction," rails against "Islamic fascism," all with negligible research. What are the merits of this anonymous attack on Krugman that led Sullivan to publish it? Is Sullivan just grasping for anything to attack with? The craven Bush-worshippers cannot stand Krugman for his cogent discrediting of Bush's policies.

Posted by: Rich Phillips on October 25, 2002 01:59 PM

Patrick R. Sullivan should read the paper if he doesn't want to make a fool of himself. If it's not too much to ask...

Posted by: Jean-Philippe Stijns on October 25, 2002 02:17 PM

C'mon, JP, I am in perfect sequence then - (1) read paper; (2) be fool.

Either you, or Patrick, or someone is going to put the dunce cap on me. Hmmm. Hey, Patrick, read the paper already!

OK, dueling excerpts:

Krugman's article:

"The explosion in C.E.O. pay over the past 30 years is an amazing story in its own right, and an important one. But it is only the most spectacular indicator of a broader story, the reconcentration of income and wealth in the U.S. The rich have always been different from you and me, but they are far more different now than they were not long ago -- indeed, they are as different now as they were when F. Scott Fitzgerald made his famous remark. "

Saez/Piketty:

One might also be tempted to interpret the large upturn in top income shares observed since the 1970s as a revival of very high capital incomes. The interesting point, however, is that it is not so. In fact, as shown in Figure 6, the
income composition pattern has changed considerably between 1929 and 1998.
In 1998, salary income and business income form the vast majority of the largest incomes. Wage and entrepreneurial income make about 80% of the resources of fractile P99.99-100, and capital income brings a mere 20% income supplement.
Therefore, highest incomes at the end of the 20 th century are very different from the highest incomes in the early part of the century. Before WWII, the highest incomes were overwhelmingly composed of rentiers deriving most of their
incomes from their wealth holdings (mainly in the form of dividends). Today, the “working rich” celebrated by Forbes magazine seem to have overtaken the “coupon-clippers”."

Well, then, the rich may be different from us, but they are also different from each other, across the two eras. Odd that Prof. Krugman missed that.

Regards,

Posted by: Tom Maguire on October 25, 2002 02:49 PM

“I would have agreed with you, David, if it weren't for the fact that the sniper left a message stating that he was God(which would hardly endear him to radical Muslims) and seemed to have a pathological need to humiliate the police and other authorities("duck in a noose"?). This seems more in line with standard serial murderer fare...”

It is obvious that someone is preoccupied with other matters. There is more to be considered than merely the possible message the sniper left. The evidence today so far indicates that John Allen Muhammad is at least favorably inclined toward militant Islamism.

Daniel Pipes wrote the following in this morning’s New York Post:


“It came as no surprise to learn that the lead suspect as the Washington, D.C.,-area sniper is John Allen Muhammad, an African-American who converted to Islam about 17 years ago. Nor that seven years ago he provided security for Louis Farrakhan's "Million Man March." Even less does it amaze that he reportedly sympathized with the 9/11 attacks carried out by militant Islamic elements. All this was near-predictable because it fits into a well-established tradition of American blacks who convert to Islam turning against their country. “

http://www.danielpipes.org/article/492

Posted by: David Thomson on October 25, 2002 05:02 PM

Hmm, printing this NBER piece out is a huge help. There main time series deliberately exclude "lumpy" capital gains.

However, I was stuck on p. 26 of the text, which says:

"To cast additional light on this issue, we look at CEO compensation from 1970 to 1999 using tables published by Forbes magazine since 1971 and
providing compensation levels and composition for CEOs in the 800 largest publicly traded US corporations. Figure 18 displays the average real
compensation level (including stock-option exercised) for the top 100 CEOs from
the Forbes list, along with the compensation of the 50 th and 100 th ranked CEO, and the salary plus bonus level of the top 10 th salary and bonus earner among the top 100 CEOs."

So, where are we?

Also, I do not yet see an adjustment for benefits, which was the other Sully's question.

Regards,

Posted by: Tom Maguire on October 25, 2002 05:19 PM

Footnote 42, p. 28 (pdf), or p.26 (author's numbering)

"Part of the recent increase in top wages is due to the development of stock-options that are
often exercised in a lumpy way. This phenomenon introduces some upward bias in our annual
shares at the very top (top 0.1% and above)."

Hmm, so I had the right direction. And I was right that the odds of this being a new idea were tiny. And we are left to trust their judgement as to the magnitude of the bias being small enough to press on. And a LOT of their other stuff eliminates this bias by ignoring capital gains. OK, works for me.

I'll stick to "dueling quotes".

Regards,

Posted by: on October 25, 2002 09:17 PM

'Suprise, surprise, not all economists admire with far left sleazballs like Paul Krugman. Some of you should get out more and meet real americans who work in business and finance.'

Right. *Real* americans, either own a business or work in finance. The whole 10% of them.....

Posted by: Jason McCullough on October 26, 2002 02:01 PM

I did not say "own" a business. Rewrite history as it happens, eh? Jason McCullough-journalist?

Posted by: Josef on October 27, 2002 07:40 AM

What were you implying then? That those who *work* in a business disagree with Krugman? Seeing how this group contains virtually everyone in the United States, it seems likely that about half of them, based on party registration, would agree with Paul.

Posted by: Jason McCullough on October 27, 2002 11:36 AM

Whether someone agrees or not with Paul is irrelevant. The question is, is Paul correct? And I find that he is correct more often than not.

I might add that the true test is to look at predictions and see if they come true. And while Paul's been wrong, his predictions have been right more than they've been wrong. Few people can say that and fewer economists. Being an economist is generally bad for your predictive record. Strangely, it is especially bad if you work for a think tank or a large company.

Posted by: Ian Welsh on October 27, 2002 12:38 PM

I think it would be more accurate to say being a predictive is bad for your reputation as an economist...

Posted by: Dennis O'Dea on October 27, 2002 08:39 PM

What about this letter? It strikes me as pretty sound. Because I have a great deal of respect for Professor DeLong, I'm curious as to his thoughts. Incidentally, all letters to AndrewSullivan.com are anonymous -- that's been the policy from the beginning, as far as I know.

I've never been a Krugman-basher, but this time he's just gone too far.

In his New York Times Magazine article on the disappearance of the American middle class, Paul Krugman accurately notes that wage inequality has increased in the U.S. over the past three decades. That is more or less where the accuracy ends.

Krugman's most serious conceptual error arises from his lack of faith in incentives: a curious trait in an economist. Underlying most of his analysis is the assumption that inequality is buying us nothing, or next to nothing.

He reasons that today's overpaid, mansion-dwelling captains of industry could not possibly have made contributions equal to their compensation. In Krugman's view, the public outrage that used to keep in check the rent-seeking proclivities of CEOs has disappeared from our culture, letting unreasonable wealth become the norm. The rich and superrich in America are getting a free ride, putting in a little and getting a whole lot.

The responsibilities of a Fortune 500 CEO are an opaque mystery to most of us -- certainly to me -- and so it is difficult to imagine how we would measure their productivity in order to test Krugman's claims. Fortunately there are examples of widening earnings spreads in other, more transparent sectors. Consider, for example, professional sports. As anyone who follows this stuff knows, big players make really, really big money.

Is Shaquille O'Neal worth his pay? Well, probably, or no one would be willing to pay him. And I don't think Shaq "appoint[s] the members of the corporate board that determines [his] compensation," so Krugman's theories don't seem to fit his case very well. More to the point, a casual glance at the classic sports channel reveals that players have gotten much, much better even as salary gaps have widened. Surely this doesn't prove that incentives work, but it's hard to imagine there would be quite so many kids nurturing hoop dreams if the prize for being the best in the world were fifty bucks, or even fifty thousand.

But, even assuming inequality drives productivity gains, does that mean it's fair? Maybe not, but we should resist the temptation to rob from the rich and give to the poor until we've fully imagined the consequences. Suppose, for example, that you were asked to design the wage structure for medical researchers. Would you like to offer a multibillion dollar prize for the person who cures cancer, or would you rather heavily tax earnings above some threshold? Well, if you cared a lot about life expectancies -- as Krugman seems to -- you'd probably like scheme number one a lot better than scheme number two.

This hypothetical also allows us to understand the psychology of would-be Robin Hoods who want the U.S. to have a more Swedish approach to inequality. Once cancer is cured, there will be an enormous temptation to say that the now well-off scientist responsible has too much, far more than she needs, and far more than she deserves. After the fact, the disease is cured and there are no incentive costs to simply reappropriating her wealth. But the next time someone thinks about putting in the hours to cure a major disease, it might not look like such a hot career prospect. As the example illustrates, ex post there is always an urge to tax the winners, but ex ante that looks like a very dangerous proposition.

The importance of incentives to innovate comes up in evaluating Krugman's comparions between the U.S. and countries like Canada and Sweden. Comparing the bottom decile in America to the bottom decile in Sweden is interesting, but fundamentally it cannot tell us what would happen if public policy in America took a hint from the Scandinavians. That's because America--more accurately, the existence of an enormous, relatively free marketplace for new products--has been responsible for much of the innovation that has made living standards elsewhere so high. The median Swede might lose some of her wealth and longevity if it weren't for America's big-winner system producing new computers, software, pharmeceuticals, and other technology that make an hour of work buy a lot more stuff today than it did, say, in 1970. Even if some of those gains come from the minds of non-Americans, we have to ask how many of them we would have seen if it hadn't been possible to sell beneficial new products in such a great big market.

So, while changes in wage inequality are an interesting and important topic for research and discussion, and possibly even a major public policy issue, they are not the harbinger of doom Krugman makes them out to be. In fact, they just might be the opposite: let's not forget that the Gilded Age, to which Krugman compares our current predicament, was home to Thomas Edison. Sure, he made a lot of money, but I think he was worth it.

Posted by: RMS on October 28, 2002 03:16 PM

What about this letter? It strikes me as pretty sound. Because I have a great deal of respect for Professor DeLong, I'm curious as to his thoughts. Incidentally, all letters to AndrewSullivan.com are anonymous -- that's been the policy from the beginning, as far as I know.

I've never been a Krugman-basher, but this time he's just gone too far.

In his New York Times Magazine article on the disappearance of the American middle class, Paul Krugman accurately notes that wage inequality has increased in the U.S. over the past three decades. That is more or less where the accuracy ends.

Krugman's most serious conceptual error arises from his lack of faith in incentives: a curious trait in an economist. Underlying most of his analysis is the assumption that inequality is buying us nothing, or next to nothing.

He reasons that today's overpaid, mansion-dwelling captains of industry could not possibly have made contributions equal to their compensation. In Krugman's view, the public outrage that used to keep in check the rent-seeking proclivities of CEOs has disappeared from our culture, letting unreasonable wealth become the norm. The rich and superrich in America are getting a free ride, putting in a little and getting a whole lot.

The responsibilities of a Fortune 500 CEO are an opaque mystery to most of us -- certainly to me -- and so it is difficult to imagine how we would measure their productivity in order to test Krugman's claims. Fortunately there are examples of widening earnings spreads in other, more transparent sectors. Consider, for example, professional sports. As anyone who follows this stuff knows, big players make really, really big money.

Is Shaquille O'Neal worth his pay? Well, probably, or no one would be willing to pay him. And I don't think Shaq "appoint[s] the members of the corporate board that determines [his] compensation," so Krugman's theories don't seem to fit his case very well. More to the point, a casual glance at the classic sports channel reveals that players have gotten much, much better even as salary gaps have widened. Surely this doesn't prove that incentives work, but it's hard to imagine there would be quite so many kids nurturing hoop dreams if the prize for being the best in the world were fifty bucks, or even fifty thousand.

But, even assuming inequality drives productivity gains, does that mean it's fair? Maybe not, but we should resist the temptation to rob from the rich and give to the poor until we've fully imagined the consequences. Suppose, for example, that you were asked to design the wage structure for medical researchers. Would you like to offer a multibillion dollar prize for the person who cures cancer, or would you rather heavily tax earnings above some threshold? Well, if you cared a lot about life expectancies -- as Krugman seems to -- you'd probably like scheme number one a lot better than scheme number two.

This hypothetical also allows us to understand the psychology of would-be Robin Hoods who want the U.S. to have a more Swedish approach to inequality. Once cancer is cured, there will be an enormous temptation to say that the now well-off scientist responsible has too much, far more than she needs, and far more than she deserves. After the fact, the disease is cured and there are no incentive costs to simply reappropriating her wealth. But the next time someone thinks about putting in the hours to cure a major disease, it might not look like such a hot career prospect. As the example illustrates, ex post there is always an urge to tax the winners, but ex ante that looks like a very dangerous proposition.

The importance of incentives to innovate comes up in evaluating Krugman's comparions between the U.S. and countries like Canada and Sweden. Comparing the bottom decile in America to the bottom decile in Sweden is interesting, but fundamentally it cannot tell us what would happen if public policy in America took a hint from the Scandinavians. That's because America--more accurately, the existence of an enormous, relatively free marketplace for new products--has been responsible for much of the innovation that has made living standards elsewhere so high. The median Swede might lose some of her wealth and longevity if it weren't for America's big-winner system producing new computers, software, pharmeceuticals, and other technology that make an hour of work buy a lot more stuff today than it did, say, in 1970. Even if some of those gains come from the minds of non-Americans, we have to ask how many of them we would have seen if it hadn't been possible to sell beneficial new products in such a great big market.

So, while changes in wage inequality are an interesting and important topic for research and discussion, and possibly even a major public policy issue, they are not the harbinger of doom Krugman makes them out to be. In fact, they just might be the opposite: let's not forget that the Gilded Age, to which Krugman compares our current predicament, was home to Thomas Edison. Sure, he made a lot of money, but I think he was worth it.

Posted by: on October 28, 2002 03:17 PM

What about this letter? It strikes me as pretty sound. Because I have a great deal of respect for Professor DeLong, I'm curious as to his thoughts. Incidentally, all letters to AndrewSullivan.com are anonymous -- that's been the policy from the beginning, as far as I know.

I've never been a Krugman-basher, but this time he's just gone too far.

In his New York Times Magazine article on the disappearance of the American middle class, Paul Krugman accurately notes that wage inequality has increased in the U.S. over the past three decades. That is more or less where the accuracy ends.

Krugman's most serious conceptual error arises from his lack of faith in incentives: a curious trait in an economist. Underlying most of his analysis is the assumption that inequality is buying us nothing, or next to nothing.

He reasons that today's overpaid, mansion-dwelling captains of industry could not possibly have made contributions equal to their compensation. In Krugman's view, the public outrage that used to keep in check the rent-seeking proclivities of CEOs has disappeared from our culture, letting unreasonable wealth become the norm. The rich and superrich in America are getting a free ride, putting in a little and getting a whole lot.

The responsibilities of a Fortune 500 CEO are an opaque mystery to most of us -- certainly to me -- and so it is difficult to imagine how we would measure their productivity in order to test Krugman's claims. Fortunately there are examples of widening earnings spreads in other, more transparent sectors. Consider, for example, professional sports. As anyone who follows this stuff knows, big players make really, really big money.

Is Shaquille O'Neal worth his pay? Well, probably, or no one would be willing to pay him. And I don't think Shaq "appoint[s] the members of the corporate board that determines [his] compensation," so Krugman's theories don't seem to fit his case very well. More to the point, a casual glance at the classic sports channel reveals that players have gotten much, much better even as salary gaps have widened. Surely this doesn't prove that incentives work, but it's hard to imagine there would be quite so many kids nurturing hoop dreams if the prize for being the best in the world were fifty bucks, or even fifty thousand.

But, even assuming inequality drives productivity gains, does that mean it's fair? Maybe not, but we should resist the temptation to rob from the rich and give to the poor until we've fully imagined the consequences. Suppose, for example, that you were asked to design the wage structure for medical researchers. Would you like to offer a multibillion dollar prize for the person who cures cancer, or would you rather heavily tax earnings above some threshold? Well, if you cared a lot about life expectancies -- as Krugman seems to -- you'd probably like scheme number one a lot better than scheme number two.

This hypothetical also allows us to understand the psychology of would-be Robin Hoods who want the U.S. to have a more Swedish approach to inequality. Once cancer is cured, there will be an enormous temptation to say that the now well-off scientist responsible has too much, far more than she needs, and far more than she deserves. After the fact, the disease is cured and there are no incentive costs to simply reappropriating her wealth. But the next time someone thinks about putting in the hours to cure a major disease, it might not look like such a hot career prospect. As the example illustrates, ex post there is always an urge to tax the winners, but ex ante that looks like a very dangerous proposition.

The importance of incentives to innovate comes up in evaluating Krugman's comparions between the U.S. and countries like Canada and Sweden. Comparing the bottom decile in America to the bottom decile in Sweden is interesting, but fundamentally it cannot tell us what would happen if public policy in America took a hint from the Scandinavians. That's because America--more accurately, the existence of an enormous, relatively free marketplace for new products--has been responsible for much of the innovation that has made living standards elsewhere so high. The median Swede might lose some of her wealth and longevity if it weren't for America's big-winner system producing new computers, software, pharmeceuticals, and other technology that make an hour of work buy a lot more stuff today than it did, say, in 1970. Even if some of those gains come from the minds of non-Americans, we have to ask how many of them we would have seen if it hadn't been possible to sell beneficial new products in such a great big market.

So, while changes in wage inequality are an interesting and important topic for research and discussion, and possibly even a major public policy issue, they are not the harbinger of doom Krugman makes them out to be. In fact, they just might be the opposite: let's not forget that the Gilded Age, to which Krugman compares our current predicament, was home to Thomas Edison. Sure, he made a lot of money, but I think he was worth it.

Posted by: RMS on October 28, 2002 03:18 PM

What about this letter? It strikes me as pretty sound. Because I have a great deal of respect for Professor DeLong, I'm curious as to his thoughts. Incidentally, all letters to AndrewSullivan.com are anonymous -- that's been the policy from the beginning, as far as I know.

I've never been a Krugman-basher, but this time he's just gone too far.

In his New York Times Magazine article on the disappearance of the American middle class, Paul Krugman accurately notes that wage inequality has increased in the U.S. over the past three decades. That is more or less where the accuracy ends.

Krugman's most serious conceptual error arises from his lack of faith in incentives: a curious trait in an economist. Underlying most of his analysis is the assumption that inequality is buying us nothing, or next to nothing.

He reasons that today's overpaid, mansion-dwelling captains of industry could not possibly have made contributions equal to their compensation. In Krugman's view, the public outrage that used to keep in check the rent-seeking proclivities of CEOs has disappeared from our culture, letting unreasonable wealth become the norm. The rich and superrich in America are getting a free ride, putting in a little and getting a whole lot.

The responsibilities of a Fortune 500 CEO are an opaque mystery to most of us -- certainly to me -- and so it is difficult to imagine how we would measure their productivity in order to test Krugman's claims. Fortunately there are examples of widening earnings spreads in other, more transparent sectors. Consider, for example, professional sports. As anyone who follows this stuff knows, big players make really, really big money.

Is Shaquille O'Neal worth his pay? Well, probably, or no one would be willing to pay him. And I don't think Shaq "appoint[s] the members of the corporate board that determines [his] compensation," so Krugman's theories don't seem to fit his case very well. More to the point, a casual glance at the classic sports channel reveals that players have gotten much, much better even as salary gaps have widened. Surely this doesn't prove that incentives work, but it's hard to imagine there would be quite so many kids nurturing hoop dreams if the prize for being the best in the world were fifty bucks, or even fifty thousand.

But, even assuming inequality drives productivity gains, does that mean it's fair? Maybe not, but we should resist the temptation to rob from the rich and give to the poor until we've fully imagined the consequences. Suppose, for example, that you were asked to design the wage structure for medical researchers. Would you like to offer a multibillion dollar prize for the person who cures cancer, or would you rather heavily tax earnings above some threshold? Well, if you cared a lot about life expectancies -- as Krugman seems to -- you'd probably like scheme number one a lot better than scheme number two.

This hypothetical also allows us to understand the psychology of would-be Robin Hoods who want the U.S. to have a more Swedish approach to inequality. Once cancer is cured, there will be an enormous temptation to say that the now well-off scientist responsible has too much, far more than she needs, and far more than she deserves. After the fact, the disease is cured and there are no incentive costs to simply reappropriating her wealth. But the next time someone thinks about putting in the hours to cure a major disease, it might not look like such a hot career prospect. As the example illustrates, ex post there is always an urge to tax the winners, but ex ante that looks like a very dangerous proposition.

The importance of incentives to innovate comes up in evaluating Krugman's comparions between the U.S. and countries like Canada and Sweden. Comparing the bottom decile in America to the bottom decile in Sweden is interesting, but fundamentally it cannot tell us what would happen if public policy in America took a hint from the Scandinavians. That's because America--more accurately, the existence of an enormous, relatively free marketplace for new products--has been responsible for much of the innovation that has made living standards elsewhere so high. The median Swede might lose some of her wealth and longevity if it weren't for America's big-winner system producing new computers, software, pharmeceuticals, and other technology that make an hour of work buy a lot more stuff today than it did, say, in 1970. Even if some of those gains come from the minds of non-Americans, we have to ask how many of them we would have seen if it hadn't been possible to sell beneficial new products in such a great big market.

So, while changes in wage inequality are an interesting and important topic for research and discussion, and possibly even a major public policy issue, they are not the harbinger of doom Krugman makes them out to be. In fact, they just might be the opposite: let's not forget that the Gilded Age, to which Krugman compares our current predicament, was home to Thomas Edison. Sure, he made a lot of money, but I think he was worth it.

Posted by: RMS on October 28, 2002 03:21 PM

jesus, to be subjected to apologist nonsense, and four times over, at that.

Posted by: Dennis O'Dea on October 28, 2002 03:43 PM

"We should resist the temptation to rob from the rich and give to the poor until we've fully imagined the consequences"? Gadfry, RMS, are you saying that we should COMPLETELY avoid taxing the rich more than the poor? I doubt you go that far -- but if you favor taxing the rich more than the nonrich at all, your little cliche tells us nothing whatsoever about how far we should go in doing so.

And the most worrisome aspect of an increase in inequality of wealth is that to a considerable degree it's self-amplifying, since the rich can buy more political clout to rig the laws in their favor in order to become richer. Which, of course, has always been one of Krugman's chief obsessions. The big question is how far this tendency can go in a democracy, and whether there's any institutional way to reduce it.

Posted by: on November 2, 2002 12:30 AM

Sorry, I plumb forgot to attach my name to the immediately predceding comment.

Posted by: Bruce Moomaw on November 2, 2002 12:32 AM

"jesus, to be subjected to apologist nonsense, and four times over, at that."

What's to "apologize" for, in thinking that people ought to be allowed to keep *their* money?

Or for thinking that people who don't hold a gun to someone's head (or threaten to throw them in prison for tax evasion) actually earn what their employer pays them?

It seems quite logical to me that there is a tendency for people's pay to reflect what they deserve, in a free society. If they didn't deserve what they were paid, the people paying them would decide not to pay them any more.

Posted by: Mark Bahner on November 12, 2002 03:21 PM
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