I’m mostly posting this because I don’t like it when people have one image of me that turns out to be wrong. So, it’s a good time for me to make sure anybody who reads my stuff realizes: I do consulting for a lot of clients, and it’s all in the genre of “explaining free markets and bad consequences of government policies to the public,” so you do the math.
But, I do want to point out the hilarious bouncing around of Krugman when it comes to demonizing rich people. In the past few years, here are the various positions Krugman has advanced:
==> In July 2012 Krugman said (in a post titled “What You Add Is What You Get”) that according to standard textbook economics, rich people take out of the economy (through their earnings) exactly what they put in, and so that’s why it’s fine to tax the heck out of them. If rich people go Galt and cut their output, it doesn’t matter to anybody else, because it just means rich people take less out of the economy then; the whole thing is a wash. This is why Krugman says we have to stop taking seriously all the standard Republican rhetoric about entrepreneurs being “job creators” and the “engine of the economy”; that is all garbage, according to standard economic theory. (BTW Krugman’s argument is totally wrong, as I pointed out here and cited Karl Smith in support of my response to Krugman.)
==> Now you can see hints of it in the post above, but Krugman doesn’t actually think that ALL rich people truly get paid an income exactly equal to their marginal contribution to the rest of society. No, when it comes to people who earn their income in the financial sector, Krugman actually agrees with Paul Samuelson–as he explains in this June 2013 post–that these people are OVERpaid; they earn much more than they actually contribute. Krugman doesn’t explicitly call for it in the post I linked, but in general Krugman has no problem with various government interventions into the financial sector; he’s certainly not worried about cutting down on all of the “innovation” in the financial sector, since he doesn’t think it’s very socially productive activity anyway.
==> So to sum up, when Krugman wants to justify taxing the crap out of rich people, he tells his readers that standard price theory says rich people take out of the economy in earnings exactly what they contribute; it is a total right-wing myth that entrepreneurs create jobs or introduce new products to benefit the masses, blah blah blah–whatever they give to the masses, they take back with their high incomes. However, when Krugman wants to justify taxing and regulating the crap out of the financial sector, his position becomes more nuanced: Now Krugman tells his readers that standard price theory doesn’t work in this arena; people who get rich in the financial sector actually take out of the economy far MORE than they contribute.
==> Now, in 2014, Krugman wants to justify the Democratic Party’s obvious campaign strategy of going after the Koch brothers. So naturally this is how Krugman spins it:
[T]he Kochs are perfect villains. It’s not just what they are — serious evildoers who use their wealth to push hard-line right-wing, anti-environmental policies that redound very much to their own benefit. It’s also what they aren’t: they’re wealthy heirs, not self-made men, they aren’t identified with innovation (which you can at least argue for Bill Gates), they haven’t made money for other people like Warren Buffett. So focusing on the Kochs is a way to personalize a vision of conservative politics as a defense of people with unearned privilege.
Everyone got that? The super-rich Bill Gates innovates (and so contributed more to society than his immense earnings would indicate he “took back out”?), and at least Warren Buffett got rich by helping others do so as well. I mean, if you’re going to be a rich guy, at least do it in the financial sector and help some people, right?
For the record, this kind of stuff is why I invented the term “Krugman Kontradiction.”