| Photograph by David Levene/eyevine via Redux. |
Tim Worstall’s recent Forbes.com piece, “Paul Krugman’s Amazing About Face On The Minimum Wage”, reminds me very much of the old joke that either came from or found its way into the musical Chicago: The woman who comes home to
find her husband in bed with another woman. In the middle of protesting his innocence, the cad asks his angry spouse, “Who you gonna believe, me or your own eyes?”
Worstall’s piece is all about the differences between “good Krugman”, who in September 1998 published an article derisively dismissing minimum-wage arguments (because “the amorality of the market economy is part of its essence, and cannot be legislated away”), and “bad Krugman”, whose March 2 NYT op-ed “Walmart’s Visible Hand” made a devastating concession: “… [E]xtreme inequality and the falling fortunes of America’s workers are a choice, not a destiny imposed by the gods of the market. And we can change that choice if we want to.”
Old Krugman said that Walmart paying higher wages might lead to less turnover, better morale and higher productivity. But only at Walmart because the operative part was “higher wages than other employers”. And that’s the one thing that a general rise in wages, for example a rise in the minimum wage, cannot accomplish.
New Krugman tells us that a rise in the minimum wage will accomplish exactly that thing that Old Krugman tells us is impossible.
What might be the difference between Old Krugman and New Krugman? Seventeen years of observation? The intervention of a recession which exposed underlying fallacies in free-market thinking? Oh, no: according to Worstall, the difference is a paycheck from that “hotbed of liberal ideology,” the New York Times.
And that, my friends, is pretty much the full substance of Worstall’s refutation of Krugman: He writes for “Hell’s Bible”.





