Saturday, February 4

Krugman's intellectual dishonesty

In "The Joyless Economy", Paul Krugman argued that "Over the last few years GDP growth has been reasonably good", but "that growth has failed to trickle down to most Americans." And yet as Jon Henke points out, benefits now account
for 32.2 percent of compensation costs. This is sometimes known as the total compensation package.

Focusing on real wages -- which accounts for changes in inflation, but doesn’t account for compensation that helps to cover those increased costs -- obscures the fact that total compensation has increased faster than inflation. In fact, total compensation has been growing faster than it did during much of the latter half of the 1990s, while inflation, though more volatile, has remained about the same.

and
Real Disposable Personal Income -- the inflation-adjusted portion of compensation that we the proletariat get to pocket (i.e., spend or save) -- has risen by 3.1 percent, 2.4 percent and 3.4 percent over the past three years.

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