Once again, Don Boudreaux makes a fool of Paul Krugman, this time over the issue of economic mobility.
4 November 2011
Editor, The New York Times
620 Eighth Avenue
New York, NY 10018
Dear Editor:
Paul Krugman labels those who interpret data on income distribution differently
than he does "obfuscators" ("Oligarchy, American Style," Nov. 4). Mr. Krugman
is surely aware, however, that people can legitimately disagree over how best to
construe the vast quantities of data gathered on so complex a topic as the
varied and changing income-earning profiles of 150 million workers living in 121
million households, all in an economy as dynamic as America's.
For example, is Mr. Krugman warranted in dismissing the claim that "the rich are
an ever-changing group" with a simple and parenthesized "not so"? Who are the
"rich"? And how much income mobility is necessary for well-meaning observers to
justifiably claim that "the rich are an ever-changing group"?
Is the following description, from the IRS, of data on individual households
merely obfuscatory - something that no reasonable person can possibly interpret
as evidence of substantial income mobility - or might it describe a plausible
reason for well-meaning people to disagree with Mr. Krugman's insistence that
the rich are NOT an ever-changing group?: "More than half (57.4 percent = 100 -
42.6) of the top 1 percent of households in 1996 had dropped to a lower income
group by 2005. This statistic illustrates that the top income groups as
measured by a single year of income (i.e., cross-sectional analysis) often
include a large share of individuals or households whose income is only
temporarily high. Put differently, more than half of the households in the top
1 percent in 2005 were not there nine years earlier. Thus, while the share of
income of the top 1 percent is higher than in prior years, it is not a fixed
group of households receiving this larger share of income."*
Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
