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The New York Times Business Section Goes To War Against Paul Krugman Over Banker Pay

• The Business Insider

You'll recall that a week ago, Paul Krugman wrote a column arguingthat the incentives contained in banker compensation packages had decisively contributed to the financial crisis. He went on to say that if we didn't reform those incentives, we were headed for another crash.

"Indeed, you can make the case that reforming bankers’ compensation is the single best thing we can do to prevent another financial crisis a few years down the road," Krugman argued.

Yesterday, the influential business New York Times writer Joe Nocera took a swipe at that argument, describing the compensation issue as a "sideshow compared to strengthening capital requirements." Nocera went on to explain that the focus on compensation by European politicans was a self-serving ploy intended to evade more serious reforms.

We don't normally focus on such things. It's far better, in most cases, to write about the underlying issue than the personalities who are analyzing it. But in this case we'll make an exception because we've written so extensively about the issue--and because we find the backlash against Krugman's piece so fascinating. It is as if the editors of the business pages were trying to distance themselves very publicly from the op-ed page.

The Sunday Business section today runs a column by Mark Hulbert that runs through many of the points we've made against Krugman's executive compensation theory of the crisis. Briefly those are:

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