The Slump Before the Slump: Is That Rhetorical?

From the recent release by the Census Bureau of the poverty data for 2010, we find this (graph by CBPP):


Paul Krugman observes:

But what struck me is the extent to which the suffering didn’t begin with the slump — many measures of pain were rising right through the “Bush boom”, and have merely continued that rise.

I’m curious: is Krugman making a ‘rhetorical’ observation, or was he really unaware that incomes have been declining for the last decade unless you’re at the top of the income pyramid?

I don’t mean to bash Krugman, since, even when I don’t agree with him about abstract economics, his heart–and policy–is in the right place. But were economists really this oblivious to how middle-class Americans were doing for the last decade?

That would actually explain quite a lot.

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2 Responses to The Slump Before the Slump: Is That Rhetorical?

  1. Yes, and it’s not just the last decade. For the last three decades at least, household income has only risen when more members of the household went to work.

    Look at the chart on this page. What do you suppose might have driven increases in household income from the late 60s to the 90s? Could it be increasing participation of former housewives in the workforce?

  2. Sailor says:

    I am sure Krugman has been well aware of this, he was just making a point. If you remember Bush came in with a weeny bit of a recession from the end of the Clinton years. His reaction was sort of anti-Keynsian: tax cuts to the rich. With that and making sure no one cared about any regulation, rich people did very well for a while, but the employment never came back properly, thee was no sharing of wealth and rich became obscenely rich. It has come back to haunt us now with so much of the riches sucked up into the top guys, demand has dried up from the bottom. At least Ford had the sense to know he had to pay his workers enough so they could afford his cars.

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