One of America's new intellectual stars is a young writer named Michael Lind, whose contrarian essays on politics have given him a reputation as a brilliant enfant terrible. In 1994 Lind published an article in Harper's about international trade, which contained the following remarkable passage: "Many advocates of free trade claim that higher productivity growth in the United States will offset pressure on wages caused by the global sweatshop economy, but the appealing theory falls victim to an unpleasant fact. Productivity has been going up, without resulting wage gains for American workers. Between 1977 and 1992, the average productivity of American workers increased by more than 30 percent, while the average real wage fell by 13 percent. The logic is inescapable. No matter how much productivity increases, wages will fall if there is an abundance of workers competing for a scarcity of jobs -- an abundance of the sort created by the globalization of the labor pool for US-based corporations." (Lind 1994: ) What is so remarkable about this passage?...if you are an economist with any familiarity with this area, is that when Lind writes about how the beautiful theory of free trade is refuted by an unpleasant fact, the fact he cites is completely untrue. More specifically: the 30 percent productivity increase he cites was achieved only in the manufacturing sector; in the business sector as a whole the increase was only 13 percent. The 13 percent decline in real wages was true only for production workers, and ignores the increase in their benefits: total compensation of the average worker actually rose 2 percent. And even that remaining gap turns out to be a statistical quirk: it is entirely due to a difference in the price indexes used to deflate business output and consumption (probably reflecting overstatement of both productivity growth and consumer price inflation). When the same price index is used, the increases in productivity and compensation have been almost exactly equal. But then how could it be otherwise? Any difference in the rates of growth of productivity and compensation would necessarily show up as a fall in labor's share of national income -- and as everyone who is even slightly familiar with the numbers knows, the share of compensation in U.S. national income has been quite stable in recent decades, and actually rose slightly over the period Lind describes.
Such scholarship. Such integrity. Such a willingness to say what needs to be said instead of what gets him more readers, book sales and cheers in partisan circles. Would the new Krugman ever have the temerity or the guts to stand up and something like this today? I think not. And by "like this", I mean the act of fearlessly correcting populist nonsense from political writers...even on the Left...in the name of unvarnished truth and good sense. No he wouldn't. Krugman likes his new found celebrity too much. Krugman now uses his economic expertise to give cover to Democrats and liberals...not expose them. Krugman is now selective in who he bashes. The old Krugman would take anyone to task for spewing sophistry and self-serving inaccuracies. I seen many articles like this one. It's truly amazing how much Krugman has changed. Back then, economics came first and his politics seemed more moderate and were definitely more reserved. Now, it's the total opposite. Shameful.