A Generous Offer He Couldn't Refuse

The tireless advocate of European-style socialism for America, the New York Times' famous promoter of Keynesian snake-oil, Paul Krugman, has joined the 'war against inequality' by deploying himself right on the front lines.

No, he still isn't going to debate Robert Murphy on economic theory so that $100,000 canbe donated to New York food banks. That would be tantamount toparticipating in a 'circus'. Only 'serious debates' would be of interest to the great man. $106,000 have been pledged to help poor people? Well, f*** the poor people, the great man simply has no time for Mr. Murphy's 'circus'.

So what does he have time for? After all, the poor are dear to his heart, as he never tires to stress when he reminds his followers that the market is far 'too free', and that more regimentation, higher taxes and more deficit spending and money printing are absolutely needed to save the day and help the downtrodden against the nefarious schemes of the plutocrats (this is quite ironic, because the plutocrats probably agree wholeheartedly with Krugman's proposals).

Enter the University of New York (CUNY) and its Luxembourg Income Study Center , a research arm devoted to “studying income patterns and their effect on inequality”. Via 'Gawker' we learn that the institute has hired the selfless crusader to support its work on 'income inequality studies' for the pittance of $225,000, which he will receive for an engagement lasting 9 months. Surely an onerous workload awaits the poor man at the 'Income Study Center' if he should accept.

One imagines that there should at least be some 'serious debate', or perhaps that he will even teach a course that explains to students why free markets are bad. After all, growing inequality is only to be expected if one allows capitalist exploiters to run wild, as is the case in the completely unregulated free-for-all the world is forced to endure at present.

“According to a formal offer letter obtained under New York’s Freedom of Information Law, CUNY intends to pay Krugman $225,000, or $25,000 per month (over two semesters), to “play a modest role in our public events” and “contribute to the build-up” of a new “inequality initiative.”

It is not clear, and neither CUNY nor Krugman was able to explain, what “contribute to the build-up” entails.

It’s certainly not teaching. “You will not be expected to teach or supervise students,” the letter informs Professor Krugman, who replies: “I admit that I had to read it several times to be clear … it’s remarkably generous.” (After his first year, Krugman will be required to host a single seminar.)”

So even Krugman himself was not quite sure at first if they were actually serious or if he was about to fall prey to an April Fool's joke. They're basically offering to pay him $225,000 for absolutely nothing. That is indeed 'remarkably generous'.

Ace of Spades speculates on what might be expected of the professor:

“I assume "playing a modest role in our public events" is similar to Paris Hilton's modest role in public nightclub openings — show up, eat a few shrimp hors d'oevres, chin-chin a champagne fluter or two, go home for the night, watch 30 Rock reruns at 1:00 am.”

He also points out Krugman's remuneration will come not only from the public purse, but also 'out of the hides of students', who have seen their tuition costs at the University of NY skyrocket in recent years in spite of generous public subsidies:

“Despite being lavishly subsidized by the state, CUNY has been escalating student tuition from $4800 in 2011 to $6330 by 2015.”

As one student commented on the most recent hike in tuition fees:

“I just can’t afford that amount. That’s the reason why I came here was because I can afford it. I heard it’s a credible school. And now it’s going up. I’m thinking of finding another school to go to,” Davis told CBS 2′s Hazel Sanchez.

Davis said he already struggles to pay $5,700 per semester with his job at Kmart.

Obviously, Lorenzo Davis' lowly paid job at K-Mart marks him as one of the many victims of income inequality. He should rejoice over the fact that his lamentable situation will now be 'studied' with the invaluable help of the man from Princeton.

A 'Comfortable Perch'

As 'Gawker' notes further, just how generous the offer is, can be deduced from what this publicly funded institution normally pays its tenured professors and other visiting scholars:

“CUNY, which is publicly funded, pays adjunct professors approximately $3,000 per course. The annual salaries of tenured (but undistinguished) professors, meanwhile, top out at $116,364, according to the most recent salary schedule negotiated by the university system’s faculty union. And those professors are expected to teach and publish. Even David Petraeus, whom CUNY initially offered $150,000, conducted a weekly 3-hour seminar.

Along with the offer letter, CUNY released dozens of emails between Krugman and university officials.“Perhaps I’m being premature or forward,” the Graduate Center’s President, Chase Robinson, tells Krugman in one of them, “but I wanted you to have no doubt that we can provide not just a platform for public interventions and a stimulating academic community­—especially, as you will know, because of our investments in the study of inequality—but also a relatively comfortable perch.”

Which is undeniably true: $225,000 is more than quadruple New York City’s median household income.

(emphasis added)

There can be little doubt Krugman has no problem with getting generous pay for little work from an institution that is largely funded with money the State has obtained by political means. However, one can only hope that the institute isn't planning to include any 'circus' activities in its 'build-up to the inequality initiative'.

In that case, Krugman would unfortunately be forced to refuse their generous offer and one can only shudder at what a huge setback this would represent for the war against inequality.

Paul Krugman, offering a silent prayer for the poor.

(Photo source unknown)

Addendum: Krugman's Out-of-Date Views on Inequality

As Brink Lindsay explains in this paper (pdf), which criticizes Paul Krugman's views on inequality, the good professor indulges in 'Nostalgianomics' – he wishes us to return to a time nobody in his right mind should actually miss.

Lindsay focuses on the natural, market-driven increase in income inequality, such as e.g. the fact that increased computerization has given rise to a growing demand for highly skilled labor, which raised the inequality in incomes of unskilled or low-skilled workers and highly skilled ones.

There is actually nothing wrong with such a market-driven increase in income inequality. As we have previously pointed out, inequality can certainly never be a 'problem' as long as all groups in society are able to advance. If one man earns $ 1 million and another earns $100,000 and both see their income increase by 20%, then inequality between them will grow. And yet, why should that bother the man making $100,000? What counts for him is that hisown income has increased. Aside from envy, nothing can possibly worry him about the fact that another person's income has increased even more.

However, there is indeed a problem: statistics clearly show that only the highest earning, wealthiest strata of society have actually seen an increase in their wealth and incomes since the 1970s, while the great mass of people is either treading water or actually falling back. There is however also a clearly identifiable source of this problem: the inflationary policy of the Federal Reserve.  Monetary inflation leads to a 'reverse redistribution' of wealth from the poor to the rich (for more details on this process see our previous article “Wealth and Income Inequality in the US”).

If Krugman and others in his camp (i.e., the so-called 'progressives') were truly serious about ending 'bad' inequality, they would campaign for a free market and sound money. They would demand the abolition of the Fed and the introduction of free banking instead of more socialism. It is true that socialism can also lower inequality – mainly by making lowering everybody to the same level and making all miserable and poor. However, even under socialism there is always a tiny ruling elite to which this doesn't apply.

US broad money supply TMS-2 – the main source of growing inequality – via St. Louis Federal Reserve Research, click to enlarge.

Addendum 2: The Left is Already Manning the Barricades

That didn't take long. Krugman's supporters on the left are already trying to defend his generous pay for doing nothing much at CUNY, as this article at Slate shows. Why, it's actually a bargain!

“But this is one case where I think Krugman is in the right and his critics are in the wrong. Not only should he have had no compunction about accepting CUNY’s offer—he would have been entirely justified in asking for more. And doing so should have no bearing on his credibility as a scourge of rising inequality.”

We would be curious if anyone can spot a tenable explanation of the above assertion in the article. The argument seems to rest on a single point: by leaving Princeton and joining CUNY, Krugman is taking a pay cut. However, it fails to explain why getting paid $225,000 for doing basically nothing should not make Krugman an object for ridicule given the context. Again, if he really is really so concerned about the poor and inequality, why does he refuse to debate Robert Murphy?