Krugman's Latest Lie
When will the NY Times wake up and realize that its reputation is being eroded by some of the columnists they continue to employ? Their economic columnist, Paul Krugman is either terrible with math (undoubtedly a sin in economic circles) or a willful liar. Take your pick:
Krugman: . . . let's pretend that the Bush administration really thinks that its $726 billion tax-cut plan will create 1.4 million jobs. At what price would those jobs be created? . . . The average American worker earns only about $40,000 per year; why does the administration, even on its own estimates, need to offer $500,000 in tax cuts for each job created?
The truth: Because $40,000 in earnings for the average worker is a one-year figure, and the tax-cost per job of $500,000 ($726 billion in tax cuts divided by 1.4 million new jobs) is a ten-year figure, you have to divide $500,000 by ten to make the figures comparable. So a $40,000 job is created with only $50,000 in tax cuts, not $500,000. Krugman is off by a factor of 10. It gets worse.
It certainly does get worse. Krugman ends up being off by a factor of 29. Not bad for a politician - but scandalous for an Ivy League economics professor.
Krugman: . . . let's pretend that the Bush administration really thinks that its $726 billion tax-cut plan will create 1.4 million jobs. At what price would those jobs be created? . . . The average American worker earns only about $40,000 per year; why does the administration, even on its own estimates, need to offer $500,000 in tax cuts for each job created?
The truth: Because $40,000 in earnings for the average worker is a one-year figure, and the tax-cost per job of $500,000 ($726 billion in tax cuts divided by 1.4 million new jobs) is a ten-year figure, you have to divide $500,000 by ten to make the figures comparable. So a $40,000 job is created with only $50,000 in tax cuts, not $500,000. Krugman is off by a factor of 10. It gets worse.
It certainly does get worse. Krugman ends up being off by a factor of 29. Not bad for a politician - but scandalous for an Ivy League economics professor.
# | April 23, 2003