Reynolds on Krugman and DeLong
By David Henderson
Alan Reynolds has posted two excellent responses to criticisms of him by Paul Krugman and Brad DeLong. They are “Imaginary Squabbles Part 3: Krugman and DeLong’s Changing Theories and Missing Facts” and “Imaginary Squabbles Part 4: Krugman and DeLong on the Top 1 Percent.” My favorite of two is the second one above, probably because it addresses issues I have followed more closely.
You could easily spend hours clicking on all the links and then judging, against these links, both Reynolds’ claims on the one hand and Krugman’s and DeLong’s claims on the other. I have spent only about 90 minutes and so it’s possible that Reynolds made mistakes that I didn’t notice.
Two key paragraphs from the second of the posts above:
The disgraceful thing about the October 15, 2011 CBO report was stopping the data with the cyclical peak of 2007 even though the CBO knew perfectly well that many “top 1 percent” businesses and investors were devastated by crashing real estate and stocks. CBO estimates that the top 1 percent’s share of after tax income fell to 11.5 percent in 2009 – down from 17.4 percent in 2000 and unchanged from the 11.4 percent average of 1986-89.
Incomes of the top 1 percent did not bounce back after 2009, according to Piketty and Saez, merely rising from 18.1 percent of “market income” in 2009 (which arbitrarily excludes rising transfer payments from total incomes) to 19.8 percent in 2011. Piketty and Saez estimate that average real income of the top 1 percent was $1,322,635 in 2000 (measured in 2011 dollars) but real income dropped 20.7 percent by 2011 to $1,048, 234. Does a 20.7 percent drop over eleven years justify Krugman’s anguish about “rising income” among the top 1 percent?
I would have to say, though, that Krugman’s strangest claim is that people like Reynolds are “hired guns.” Read Alan’s response to this claim and judge the claim for yourself. I think it’s strange not just in itself but in its origin: Paul Krugman is not exactly badly paid. He is hired. Is he hired to say the things he says? On an individual issue basis, no. But ask yourself this: if Krugman suddenly became a nice guy and starting arguing reasonably, granting points the other side makes, would his income go up, stay the same, or fall?