09 Jan 2017

Contra Krugman Ep. 68: Krugman on Corruption

Contra Krugman 9 Comments

This was a fun one. At the suggestion of David R. Henderson, I’ll do outlines of the podcast here on my blog, so that people can zoom in to a particular segment if they’re too busy to listen to the whole thing. (However, I really think you should just treat yourself to the entirety of each and every episode.)

8:30  We point out the double standard on insults by the Left. E.g. it’s fine to make fun of Trump’s personal appearance, or to call Ann Coulter misogynist terms.

9:10  Tom and I discuss the horrible state of our country, which is now facing the prospect of foreign diplomats changing hotel reservations.

10:25  Once again, Krugman makes a claim about a person, then links to a news story quoting someone who denies the allegation.

12:10  Tom does some outside research to find out just how corrupt the Trump picks are. Not much there, there.

18:30  I explain that I was going to give Krugman a +1 for a good zinger against Kudlow…except that when you click through, you find that Krugman totally mischaracterized Kudlow’s argument.

23:00  We talk about the allegedly pro-Trump media.

CORRECTION: I erroneously say that Edward Snowden’s leaks about NSA mass surveillance were distributed through WikiLeaks. Nope, it was through The Guardian originally (via Glenn Greenwald).

28:00  I mention Gene Callahan’s interesting suggestion that Trump has to surround himself with other rich guys because the establishment is set to take him out.

32:00  I use a “Friends” episode to motivate Mises’ point on corruption.

9 Responses to “Contra Krugman Ep. 68: Krugman on Corruption”

  1. Tel says:


    The way Diamond and Saez do the analysis is to argue that because the rich are rich, their marginal utility of income is very low, which means that at the margin their income doesn’t matter for social welfare. So they should be taxed at the rate which maximizes revenue, which is 1/(1+ε) — where ε is the elasticity of labor supply from the rich. And since we have a lot of evidence suggesting that ε is quite low, the appropriate tax rate for the rich is quite high — 70 percent or more.

    So there you go, Krugman himself pointed out that wealthy people hardly care whether they made an extra buck or don’t make it. Seems that he has successfully proven that wealthy people really are less likely to be corruptible.

    It goes without saying that Krugman will insist on having it both ways on this issue.

    • skylien says:

      Nice one. BTW I guess I was wrong. It rather looks like it is becoming even easier to pick on Krugman with Trump coming in.

    • Andrew_FL says:

      Krugman is really committing a schoolboy level error here of the classic “marginal utility does not work that way” variety.

      It does not follow that because one individual derives less utility personally from an additional dollar when he has a million than when the same individual has just one, his utility derived from that additional dollar is less than that some other individual with less than a million dollars-in fact you cannot make those kind of comparisons at all!

      Sumner has made the same kind of error so all the cool kids do it I guess.

      • Tel says:

        Sure, but in his own mind Krugman believes that you can make those interpersonal utility comparisons.

        His entire world view is based on that, so if he switched over it would invalidate his Keynesian economics and also most of his Progressive policy.

    • Tel says:

      Being a bit more formal about it, Krugman’s marginal utility argument implies that the market price of corrupting a rich person is higher than an equivalent level of corruption in bribes to a poor person.

      There’s some evidence to support this: for example, a lot of people sold their votes to Obama in return for a free phone, which is kind of pathetic as bribes go.

      I think the interpersonal utility comparison is tempting because it often give what seems like a common sense result. Mathematically there’s nothing supporting it but intuitively we are all human, thus pretty much the same, we all eat, we all feel the cold. The approximation that all humans want the same things is probably going to work quite often.

      • The Original CC says:

        Good points here, but let me point out that if you want to avoid interpersonal utility comparisons, you can just change your argument as follows: Let’s say I could push a button and create a government transfer of $100 from a rich person to a poor person. Now if you invoke a Rawlsian veil of ignorance, i.e. you don’t know if you’re a rich or poor person, would you push the button?

        A lot of people would say yes, and I think that you can transform a lot of ill-conceived interpersonal utility comparison arguments into Rawlsian arguments and they become stronger.

        • Tel says:

          Now if you invoke a Rawlsian veil of ignorance …

          Maybe I should pretend to be a teapot?

          Probably a teapot would not push the button, but to be honest since I’ve never tried being a teapot before perhaps it does really want to push the button and would do if it had hands.

        • Matt Tanous says:

          >I think that you can transform a lot of ill-conceived interpersonal utility comparison arguments into Rawlsian arguments

          You probably can do that easily

          >and they become stronger

          That presumes that Rawls’ arguments were any good…. and they weren’t.

  2. Greg Morin says:

    “10:25 Once again, Krugman makes a claim about a person, then links to a news story quoting someone who denies the allegation.”

    Krugman seems to be be fond of employing witch hunt argumentation: only a witch would deny they are witch…. therefore only people who actually did X would deny X, therefore, denial of X is proof that they did X. I think he actually must be thinking he is so clever making that argument, like “see guys! he’s denying it, so it MUST be true!”

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