Remember in his recent Walmart piece that Krugman wrote:
Conservatives — with the backing, I have to admit, of many economists — normally argue that the market for labor is like the market for anything else. The law of supply and demand, they say, determines the level of wages, and the invisible hand of the market will punish anyone who tries to defy this law.
But labor economists have long questioned this view. …[B]ecause workers are people, wages are not, in fact, like the price of butter, and how much workers are paid depends as much on social forces and political power as it does on simple supply and demand.
In my response at Mises CA, I pointed out that in his own textbook, Krugman himself first used supply & demand to show that price floors on butter lead to “butter mountains,” and then he went right into saying that price floors on labor lead to unemployment.
Yet here is another example of an economist doing the very thing that Krugman criticizes in his recent Walmart piece:
So what are the effects of increasing minimum wages? Any Econ 101 student can tell you the answer: The higher wage reduces the quantity of labor demanded, and hence leads to unemployment. This theoretical prediction has, however, been hard to confirm with actual data. Indeed, much-cited studies by two well-regarded labor economists, David Card and Alan Krueger, find that where there have been more or less controlled experiments, for example when New Jersey raised minimum wages but Pennsylvania did not, the effects of the increase on employment have been negligible or even positive. Exactly what to make of this result is a source of great dispute. Card and Krueger offered some complex theoretical rationales, but most of their colleagues are unconvinced; the centrist view is probably that minimum wages “do,” in fact, reduce employment, but that the effects are small and swamped by other forces.
What is remarkable, however, is how this rather iffy result has been seized upon by some liberals as a rationale for making large minimum wage increases a core component of the liberal agenda–for arguing that living wages “can play an important role in reversing the 25-year decline in wages experienced by most working people in America”…Clearly these advocates very much want to believe that the price of labor–unlike that of gasoline, or Manhattan apartments–can be set based on considerations of justice, not supply and demand, without unpleasant side effects….
…[The authors of the book being reviewed] also argue that because there are cases in which companies paying above-market wages reap offsetting gains in the form of lower turnover and greater worker loyalty, raising minimum wages will lead to similar gains. The obvious economist’s reply is, if paying higher wages is such a good idea, why aren’t companies doing it voluntarily? But in any case there is a fundamental flaw in the argument: Surely the benefits of low turnover and high morale in your work force come not from paying a high wage, but from paying a high wage “compared with other companies” — and that is precisely what mandating an increase in the minimum wage for all companies cannot accomplish. What makes this an odd oversight is that the book contains a lengthy and rather well-done critique of attempts by local governments to create jobs through investment incentives, arguing that they mainly end up in a zero-sum poaching war; how could the authors have failed to notice the parallel?
… what the living wage is really about is not living standards, or even economics, but morality. Its advocates are basically opposed to the idea that wages are a market price–determined by supply and demand, the same as the price of apples or coal. And it is for that reason, rather than the practical details, that the broader political movement of which the demand for a living wage is the leading edge is ultimately doomed to failure: For the amorality of the market economy is part of its essence, and cannot be legislated away.
By the way, look at how Krugman’s archives classified the piece above. It’s filed under “cranks.” In other words, it’s not merely that Krugman in 1998 held the view that Krugman in 2015 is ridiculing conservatives for holding. Rather, back in 1998, he considered someone who holds the view of Krugman 2015 to be a crank.
People are allowed to change their minds. But I don’t think polite, intellectually honest people can mock others for holding views that they themselves had in the past, when they are now pushing views that their old self thought were evidence of being a crank.
P.S. David R. Henderson had written about this before, but I’d forgotten.
UPDATE: Someone pointed out on Twitter that the archives holding this old Krugman essay are billed on the main page as the “Unofficial Paul Krugman Archive.” I had thought this was maintained by Krugman himself, because (I think?) he occasionally links to it from his blog posts. But, in light of this new information, I now retract the claim that Krugman himself is calling Krugman a crank. At best, all we can say is that Krugman’s fan, relying on Krugman’s 1998 book review, would classify Krugman 2015 as a crank.