“How Do You Maintain Such A Lovely Beard?”

Full, but not unruly. (Image by Prolineserver.)

Two questions from the excellent Ask Me Anything that Paul Krugman just did on Reddit, one about the cause of American income disparity and one about his fabulous beard:

[–]Ashoat 382 points  ago

I want to ask about your perspective on increasing wealth and income disparities. There a couple camps on this issue, and it seems that mainstream economists haven’t yet formed a consensus on the cause for this.

Greg Mankiw and others seem to believe that the main cause of increasing income and wealth inequality is a changing labor market that rewards and values high-skilled laborers more and more. Consequently, he argues that attempts at addressing income inequality issues should be heavily based on education reform.

On the other hand, you’ve made the point that a lot of the increases in income and wealth inequality come from shifting fiscal policies and government regulation. You seem to argue that decreased taxes on the rich and more lenient policies in regards to financial industry have resulted in an economy that unduly favors certain individuals. Sorry if I’m putting words in your mouth!

I have the following two questions:

  • Do you think any of the increased disparity has resulted from the shifting labor market?
  • Do you think it makes sense to focus efforts on improving higher education and increasing access to it?

[–]nytimeskrugman[S] 573 points  ago

Well, if you look at the Congressional Budget Office report from last fall, it shows that about half the rise in income inequality is accounted for by the divergence of the 1 percent from everyone else. That part is NOT about education and returns to skills — the next 19 have about as much education as the top 1, or if you prefer, hedge fund managers and high school teachers have roughly comparable education levels. So something else is driving at least half the rise in inequality, and probably more.

That doesn’t mean that market forces play no role, but it says that it’s nowhere close to the whole story, or even most of it — a point that people like Mankiw refuse to acknowledge.

By all means let’s expand access to higher education — but I’d say that the biggest reason to do that it is not so much to reverse inequality as to stop the ongoing decline in social mobility. Horatio Alger has left the building; it’s getting ever harder for Americans born into the lower half of the income distribution to move up. And more aid for college would help make climbing the ladder easier.

[–]lifeofquill 114 points  ago

How do you maintain such a lovely beard?

[–]nytimeskrugman[S] 140 points  ago

Shave around it every day, and get your wife to clip it fairly often.”