The Agenda

Paul Krugman on the Anger of the Rich

Paul Krugman has written a characteristically interesting column today. 

Anger is sweeping America. True, this white-hot rage is a minority phenomenon, not something that characterizes most of our fellow citizens. But the angry minority is angry indeed, consisting of people who feel that things to which they are entitled are being taken away. And they’re out for revenge.

This could apply to many groups in our country. Loss aversion is a powerful phenomenon, and market economies are defined by cascades of change that often lead to moments of cultural and political backlash. The recent defeat of D.C. Mayor Adrian Fenty is just one of many examples. Since the inauguration of Governor Chris Christie in New Jersey, public sector employees have led a strident campaign against his efforts at fiscal consolidation. The New Jersey Education Association sent out an impish memo that floated the idea of praying for the governor’s demise. Anger really is a pervasive phenomenon in our politics, from the right to the left.

No, I’m not talking about the Tea Partiers. I’m talking about the rich.

These are terrible times for many people in this country. Poverty, especially acute poverty, has soared in the economic slump; millions of people have lost their homes. Young people can’t find jobs; laid-off 50-somethings fear that they’ll never work again.

There is no denying that these are serious problems. To be sure, it helps to acknowledge that government transfers have soared to meet the challenge, and that even without ARRA we would have seen an increase in food stamps and EITC benefits that aren’t captured in the poverty statistics.

Yet if you want to find real political rage — the kind of rage that makes people compare President Obama to Hitler, or accuse him of treason — you won’t find it among these suffering Americans. You’ll find it instead among the very privileged, people who don’t have to worry about losing their jobs, their homes, or their health insurance, but who are outraged, outraged, at the thought of paying modestly higher taxes. 

It’s interesting to see that Krugman doesn’t believe that the suffering Americans he has in mind aren’t angry. It helps to define real political rage as narrowly as possible. Many Americans are angry at congressional Republicans and conservative activists, seeing them as the culprits behind macroeconomic policies that have failed to revive the economy. Indeed, this is a view popularized by Paul Krugman, among others. There is some truth to this idea, e.g., Republican obstructionism has delayed the confirmation of two Fed governors, not to mention a number of other senior officials. But the fractiousness of the Democratic coalition seems to be playing at least as significant a role. And the unpopularity of ARRA, the new health law, and other measures seems to reflect longstanding concerns and priorities of U.S. voters that Republican politicians have used to their advantage. 

A large but mostly ignored slice of the U.S. population was angry and disaffected long before the recent economic downturn. For example, there are hundreds of thousands if not millions of ex-offenders and non-custodial fathers who face punishing effective marginal tax rates that relegate them to the shadow economy. Some of us, on the left and the right, have been concerned about these marginalized people for a long time. 

Krugman proceeds to list a series of fanciful and extreme statements made by rich people, he wrongly suggests that we’re about to see a return of Clinton-era tax rates, he advances a fairly convincing sociological notion (politicians are more attuned to the interests of the rich because they pal around together), and, interestingly, he ends his column in an effort to stoke the anger of his readers.

What we don’t see is evidence that poor and middle class people aren’t at least as angry as the rich and that tax hikes on the rich will improve our collective economic prospects more than deficit-closing middle-class tax increases. By focusing exclusively on the $700 billion cost of extending high-income rate reductions, Krugman glosses over the $3 trillion cost of extending the other tax cuts passed under President Bush, which he bitterly opposed in 2001 and 2003, and with good reason. 

Paul Krugman can’t be expected to address all of these concerns in the space of a single column. Even so, one can’t help but think that he’s created a misleading picture for the large number of readers who rely on his incisive, biting columns as a source of reliable news and information and not chest-beating entertainment. 

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