Paul Krugman’s June 1 New York Times op-ed “On Inequality Denial” makes me mad.
In it, he criticizes Financial Times editor Chris Giles for his allegedly flawed critique of Thomas Piketty’s Capital in the Twenty-First Century. He writes,
We have two sources of evidence on both income and wealth: surveys, in which people are asked about their finances, and tax data. Survey data, while useful for tracking the poor and the middle class, notoriously understate top incomes and wealth — loosely speaking, because it’s hard to interview enough billionaires. So studies of the 1 percent, the 0.1 percent, and so on rely mainly on tax data. The Financial Times critique, however, compared older estimates of wealth concentration based on tax data with more recent estimates based on surveys; this produced an automatic bias against finding an upward trend.
Interesting. I haven’t evaluated Krugman’s claim myself. I haven’t read Giles’ critique. I haven’t even skimmed Piketty’s book. For all I know, Giles could be dead wrong and Krugman spot on.
But what frustrates me about inequality hawks like Krugman is their habitual unwillingness to consider how anything other than tax policy contribute to growing inequality (whether such a trend exists or not). At the end of the post, he writes,
…taxes and benefits don’t greatly change the picture — in fact, since the 1970s big tax cuts at the top have caused after-tax inequality to rise faster than inequality before taxes. This picture makes people uncomfortable, because it plays into the populist demands for higher taxes on the rich. But good ideas don’t need to be sold on false pretenses. If the argument against populism rests on bogus claims against inequality, you should consider the possibility that the populists are right.
If I had time, I’d sift through every other post on Krugman’s blog to mark every mention of how tax breaks for the wealthy and a general lack of state intervention on behalf of the poor contribute to growing income ineaquality. I’d compare these with his mentions of how inflation, bank bailouts, crowding out and regulatory capture make life more expensive all around, thereby harming the poor most of all. I can’t be sure, but from my many years of reading Krugman’s blog, I’m sure the former would outnumber the latter by something like one million percent.
I’m not in the inequality debate for kicks and giggles. I’m not in it to unilaterally defend the 1 percent, corporate America or “right-wing” economics. I’m in it because much of what I read is dead wrong and not enough people are saying the right things.
What the inequality debate needs is less lopsided analysis from the likes of Krugman (and many right-wing economists, for that matter) and more equitable commentary that examines not only how tax rates and loopholes contribute to skyrocketing wealth at the top, but also how existing government policy — QE infinity, inflation, unemployment insurance, minimum wage, etc. — exacerbates the problem. Is that not a compromise partisans are willing to make?