Paul Krugman and Poverty Traps: The Pot Calling the Kettle Hack

Paul Krugman and Poverty Traps: The Pot Calling the Kettle Hack

Yesterday, New York Times columnist and CUNY economics professor Paul Krugman had some very strong words about the position in Republican Congressman Paul Ryan’s new poverty report that American welfare programs discourage work and “actually reduce opportunity, creating a poverty trap.”  In fact, after contrasting the Ryan report’s view on poverty traps with some data on inequality and welfare states, Krugman resoundingly concluded that Ryan’s ideas were a total sham:

So the whole poverty trap line is a falsehood wrapped in a fallacy; the alleged facts about incentive effects are mostly wrong, and in any case the entire premise that work effort = social mobility is wrong.

Despite Krugman’s strong conclusions, however, Ryan’s views about US welfare policies and poverty traps are actually pretty mainstream – cited by people across the political spectrum as a big reason to reform state federal poverty programs.  In fact, a New York Times columnist and Princeton economics professor expressed these widely-held views on the Old Grey Lady’s pages a mere two months ago:

But our patchwork, uncoordinated system of antipoverty programs does have the effect of penalizing efforts by lower-income households to improve their position: the more they earn, the fewer benefits they can collect. In effect, these households face very high marginal tax rates. A large fraction, in some cases 80 cents or more, of each additional dollar they earn is clawed back by the government.”

Even more, the Ryan report’s “poverty trap” analysis is based on the work of the Urban Institute’s Gene Steuerle’s (see p. 7 of the Ryan report), on whom the very same Princeton professor once wrote:

[I]t’s actually a well-documented fact that effective marginal rates are highest, not on the superrich, but on workers toward the lower end of the scale. Why? Partly because of the payroll tax, but largely because of means-tested benefits that fade out as your income rises. Here’s a recent discussion by Eugene Steuerle

That professor, if you haven’t already guessed, was none other than Paul Krugman.  Thus, in the span of only a couple months, Krugman’s views on poverty traps and social mobility are about as different as, well, idyllic Ivy League exurbia and urban commuter school grunge.  And the only thing that’s changed in those months, other than Krugman’s academic address, is the political views of the person fronting the poverty trap message: Steurle (“Poverty traps real!”) or Ryan (“Poverty traps fake! Rawr!”).  Never mind, of course, that Ryan’s views are actually the exact same as Steurle’s.

It’s almost enough to think that Krugman really doesn’t care about poverty traps, or the unfortunate Americans caught in them, as much as he cares about pushing cheap political hits over actual thought or research – the very “hack” markings, ironically, with which he’s repeatedly branded the conservative Heritage Foundation in recent months.  And that’s too bad, really, because, as Krugman noted today, this is an important issue that’s deserving of effort and attention:

The thing is, we could be having a serious discussion about welfare and incentives; there are some real issues. But there isn’t anyone to have that discussion with.

Indeed there are.  So maybe Krugman should talk about them with that smart Princeton Man down the hall.

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The views expressed herein are Scott Lincicome’s alone and do not necessarily represent the views of his employer, White & Case, LLP.

Mr. Lincicome is an international trade attorney, adjunct scholar with the Cato Institute and visiting lecturer at Duke University. The views expressed are his own.
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