10
Mar
2014
Krugman on Levels vs. Growth
I am a cheeky little imp and lecture the Nobel laureate on first derivatives. Excerpt:
So to sum up: Before posting the actual data, Krugman made his hypothetical opponent argue in terms of actual wages, with Krugman then responding in terms of actual wages. But when he posted the data–which show that wages have been rising steadily all along, with year/year growth only dipping below 1.5% on two occasions–he was forced to switch the argument to one about wage growth accelerating.
Maybe every time he thinks of “wages” he thinks of “wage growth”, and inadvertently switches back and forth kind of like how some folks do that with “inflation” and “price inflation”?
Couldn’t he just say he meant real wages and not nominal wages ?
No. That would force him to acknowledge out that inflation actually exists and is happening.
Hey Bob, I haven’t commented much lately but I’ve been mostly keeping up. Your “cheeky little imp” line rang a bell for me: http://en.wikipedia.org/wiki/The_Imp_of_the_Perverse
I first encountered this in Neal Stephenson’s Baroque Cycle of novels, describing the metaphorical motivation for Jack Shaftoe’s hijinks and misadventures. The imp has my ear, too, and I’d like to blame him for a small fraction of my previous comments. Cheers.
Is the average hourly wage series nominal, or do they adjust it for inflation?
If it is nominal, it’s interesting to note that real wages would be growing right now as well, and faster than in 2011, when they actually shrank a little. It’s also interesting to note how high the rate of real wage growth was during the recession, as officially delineated.
Bob, I think Krugman just made a mistake. Look at this post from yesterday:
http://krugman.blogs.nytimes.com/2014/03/12/wages-of-fear-somewhat-wonkish
Here he says “Wage increases are running far below their pre-crisis levels.” I think previously he just left out the word “increase”.