I've said it before and I'll say it again, one of the quickest ways to peel away the rhetoric and wishy-washiness and get to the bedrock bottom of someone's political beliefs is to find out how they feel about wealth.   Tell me what a man thinks about income inequality and I'll tell you a good bit about how he looks at the entire world.

Daniel Drezner has a GREAT post - worthy of the Krugman Truth Squad - that fisks the latest conspiracy-laden balderdash from the erstwhile professor. 

There are three big ways in which Krugman is wrong -- his emphasis on inequality in the first place, his failure to distinguish between the different causes for inequality, and his assumptions about the political effects of rising inequality.

Of the 3 issues, I'm particularly and always have been attracted to income mobility statistics.   [Kling had a great article about this a while back] Folks who are quick to point out the intuitive "guy next door" reasons why income inequality is bad always seem like the last to see the "guy next door" reasons why income mobility is so pervasive.  

They'll say "the bottom 10% makes 20K / yr - the same as they did 10 years ago!  While the top 10% has gone from 400K / yr to 800K / yr!!!"  The mistake is to assume that folks in a given income tier now are the exact same folks who were there 10 years ago.  

Ask how much does your grad student friend make now?    How much will he make in 10 years?   What tier(s) would that place him in?  How much did your immigrant parents make when they came to the country?   How much do they make now?   How much income does a Burger King owner make in Year 1 of his franchise?   How about Year 10?   ... and so on. 

The source of "stagnation" is because you can be sure that there will be new grad students in 10 yrs whose incomes won't look that different from today's grad students.   New BK owners.  New Immigrants.   And so on.    Folks tend to "enter" the economy at a certain rung that's relatively "stagnant" over time but have a surprising tendency to climb to rungs that grow over time.