"Mr. Luskin, "I enjoyed the letters in response to Professor Krugman's column on Tuesday. However I think that there is one very important issue that is affecting Wal-Mart's Christmas sales/profits. There is a backlash against Wal-Mart in most communities that is significantly changing the demographics of the people who walk through the automatic doors of the Wal-Mart super centers. The fairly recent raid that produced illegal immigrants working as janitors and the long standing problems with the promotion and treatment of women by middle management personnel at Wal-Mart has turned off many customers that normally head to Wal-Mart for a good deal on frozen vegetables or lawn furniture. I think that this refutes the Krugman assertion that Wal-Mart sales indicate worse wages for working Americans. Instead it shows that expected wages and current wages allow most people to choose between Wal-Mart and their problems or a higher priced grocery and durable goods store that does not have the dilemma of lower prices for compromised ethics."

Matthew A. Wavro

If you look at the actual "calculations" on EPI's website, you won't find much. Just a big bar-chart comparing 3rd and 4th quarter estimated GDP growth to 3rd and 4th quarter estimated wage growth for "blue-collar workers in manufacturing and non-managers in services." Amazingly, EPI cites no source whatsoever for its wage growth figures -- these seem to be less "calculations" than inventions. And I assume the figures are all pre-tax (although, truew to form, it doesn't say one way or the other) -- that way Krugman gets to ignore the positive effects on after-tax wages of Bush's tax cuts. And for all that, the EPI still offers a caveat that Krugman doesn't bother with -- one which renders the "calculations" virtually meaningless:

"Economists correctly point out that wage growth responds to overall growth with a long lag, but this is of little consolation to the working experiencing significant cognitive dissonance as they hear the economic cheerleading coming from most market analysts."

Krugman is simply not one of those economists who "correctly point out." Now, on with the letters.

Why does Krugman assume that the good sales at Neiman Marcus and Sharper Image were strictly a function of higher income earners, and that weak sales at Wal-mart means that lower income earners had a miserable Christmas? There are a number of substitution effects that can account for this not the least of which is that stronger sales at the high end came (to some degree) from those same middle and low wage earners shopping at better stores at the expense of Wal-Mart.

David Ford

Krugman's augmented unemployment rate (including those who have stopped looking for work because there ain't no jobs) is always several percentage points above the official  rate. This time is no different. And it's coming down. Krugman is taking the Bob Herbert approach. I generally stay away from Herbert because when I read him, my reaction is: why doesn't someone put this man out of his misery (or at least ban him from writing about economics)? There will always be one poor soul that Herbert or Louis Uchitelle can find to prove things suck.

Caroline Baum

I loved Krugman's column this morning. Somehow he managed to say that the richest 5% of Americans, who pay 67% of all corporate income taxes, are unfairly benefiting by the increase in corporate profits. He might as well say that they are unfairly benefiting from economic growth. Would Krugman be happier if corporate profits and economic growth were falling? At least then the rich would be suffering most. I don't remember him making this argument during the recession.

Bruce Bartlett

Mr. Krugman's piece today on the "so-called" boom notes that some higher-end chains did well against expectations for Christmas sales while Wal-Mart performed more modestly. Sales at higher-end chains may reflect the democratization of luxury, but that is a trend Mr. Krugman cannot see from his zero-sum, class war perspective. Wal-Mart's sales and those of some other chains may have been lower due to lower prices on things like DVD players. Wal-Mart, of course, does more for working Americans -- through its own low prices and through the efficient standards it sets -- than any policy proffered by liberals, and is starting to do this favor for populations around the world. A supposed free-trade advocate, Mr. Krugman leaves this angle unexplored.

Sales might also be affected by the huge volume of gift cards being redeemed apace in Wal-Mart stores everywhere as I write. Gift cards bring liquidity and choice, improving the utility of gift exchanges for many. Smart, money-conscious shoppers may be finding other ways to capitalize on year-end sales as well. Mr. Krugman does not see this and, no doubt, will not return to the subject in a few days when the figures come in and discredit him. Wal-Mart's figures may also look poor in relation to its own aggressive projections, but the idea of an optimistic outlook is one Mr. Krugman cannot comprehend.

None of these explanations may be complete and there may be many others, but Mr. Krugman can see only his bete noire. He provides a stale recital of wealth inequalities, unable to perceive the size of the pie, nor how big even its smaller slices are nor, amazingly since he recites the data, the tax burden borne by the biggest slice-holders. His wealth indicators conveniently omit the effects of broad-based tax relief despite its evidence impact on consumer spending this year. He ends with a skewed view of job statistics, one negated by the facts every day and one that will grow even more untenable in 2004.

Mr. Krugman just can't describe the numbers as he does unless the script already is written by his narrow, partisan bias.

Richard N. Ericson

I came across the Krugman piece called "Our so-called Boom." This is where Krugman proves that black is white and good is bad. George Orwell, call your lawyer. I am no economist, but a couple of things struck me as worth mentioning:

1. Krugman admits that the current unemployment rate (in our "jobless" recovery), 5.9%, "isn't that high by historical standards." Well its about time someone said it. But he announces that there is something "funny" about that number. He says there is an "unusually" high number of people who have dropped out of the job market, so the number is, I guess, invalid. Of course there are always people who have dropped out of the job market, so we need a little more information to conclude that that number is now "unusually" large. What is that number? And how does it compare to other times when unemployment coming out of a recession had gotten up to 5.9%? We have been using this same rate to measure unemployment for as long as I can remember. So why is it now not good enough? Is it because Krugman doesn't like it so he introduces a "red herring" to show that the number is not valid? And, he says, what about all those people who are underemployed? Well, haven't we always had underemployed people? Is there any reason to believe we have more now? Is that number also "unusually high?" I might also say, what about those people who have decided to go into business for themselves in the growing economy? I read that we don't measure them either. Maybe there is an "unusually" high number of them too.

2. Krugman uses an ingenious device to show that the rich are gaining from the "so-called boom" more than the poor. He takes the CBO measure of who "indirectly" pays most of the tax on the growing profits. (Which is where all the "boom" is, he says). Guess what? The poor pay less tax than the rich, therefore the rich are getting the profits more than the poor. Again, I am no expert, but there seem to be a lot of potential holes in this manner of measuring. I do not know what CBO is measuring, for one thing. Are they measuring who pays taxes on the profits that are distributed as dividends? Because, since most of us "poor" hold our stocks in tax deferred accounts, that measure would not be a measure of my benefit. Or is he measuring the impact that corporate taxes will have on the holders of stock? In that case, does he count my pension plan, which holds millions of dollars in stocks, as a rich person or as an assembly of poor people? And if all he is really saying is that the rich hold a lot more stock than the poor, I could have told him that. But each new dollar is far more important to the poor than each is to the rich. So the comparison is not necessarily valid. The poor may be made a great deal better off by having the extra money, even if it is relatively small compared to the rich. Finally, since I have never heard of anyone using this measure to see who is benefiting from the "boom" I have to assume that he made it up to support the argument he wanted to make, not the other way around.

Rick Evans

Can you please tell Mr Krugman that Sharper Image and Neiman Marcus are poor examples of "luxury" retailers? The argument of whether Neiman Marcus' status as luxury versus "high end" or "nice" might at least get an interesting debate going between a couple of idiots, but calling Sharper Image "luxury" is just plain ridiculous. Funny how his argument in the rest of the article disintegrates without this "fact." Even so, is Mr Krugman saying that poor people can't afford $34.95 for the Sharper Image Automatic Pepper Mill with Light (Item #PD300) for Grandma? God, things must be much worse than I thought.

Secondly, lets just agree that his assumption of Neiman Marcus and Sharper Image as leading luxury indicators really is a fact like he wants readers to believe. Do strong revenue figures at these stores really imply that only affluent people are doing well? One could reasonably argue that these figures point to the exact opposite. Given well documented evidence that the income classes in the US are extremely mobile, couldn't these numbers indicate that the Bush economy is producing a movement of people from lower classes to more affluent classes?

Last, couldn't these numbers prove exactly opposite of what Mr Krugman is trying to Prove? Albeit anecdotal, my observations in life tell me that a lot of poor people are obsessed with buying stuff even if they can't afford it. In fact it is one of the leading reasons my poor friends are always poor. Likewise, we all know rich people who don't spend money on any of this crap.

Doug Parent

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