Monday, October 13, 2008

Paul Krugman Wins the Nobel Prize; and Democratic Economics

From a review of Krugman's work, Tyler Cowen:

He is cited for trade theory and, appropriately, location theory and economic geography. He could have been cited for his work on currency crises as well. Here are the most basic links on Paul, it is hard to know where to start. I have to say I did not expect him to win until Bush left office, as I thought the Swedes wanted the resulting discussion to focus on Paul's academic work rather than on issues of politics. So I am surprised by the timing but not by the choice.

Here's Krugman's NYT column from today; there is so so much on him and by him. Here is his blog. Here is a short post-prize interview. He has been influential in pushing the United States toward a bank recapitalization plan. Here is Krugman on video, from just the other day, talking about the crisis and how bad it might get. Krugman, of course, also called the housing bubble in advance.


And here's Yglesias on what this might mean for the public's perception of economics as it relates to politics:

One hopes that this will open doors for a somewhat broader public understanding of what the field of economics is all about. In the public debate, my sense is that “economics” tends to be understood as mostly comprising a series of very simple models indicating the desirability of laissez faire (make it more expensive to hire workers by raising the minimum wage and the level of employment will go down — supply and demand, economics 101, QED) that leave it somewhat puzzling as to how this is even a field in which people do PhD-level research. That, of course, isn’t right as you can see from The Economist’s poll of economists or John McCain’s struggle to find 100 economists who’ll back up his campaign’s assertions.

Meanwhile, Krugman has become known to a wide audience as a left-of-center newspaper columnist. The fact that he’s a credentialed economist has always been well-known, but the point that he’s actually a really well-regarded economist is not all that well-understand. But a Nobel Prize is something people understand. It doesn’t make his political pronouncements the word of God, of course, and there are Nobel Prize winning economists on the right as well. But it does underscore the fact that very many people who really and truly know what they’re talking about think the progressive approach to economic and social policy is the way to go.


Personally, I'm skeptical. (Big surprise, right?) Conservatives (I'm looking at you, Ezzie) will continue to insist that liberals/progressives/Democrats just don't understand economics. The Nobels are biased. The academy is biased. Income growth is significantly higher under Democratic presidents by lucky coincidence. The stock market is almost twice as good under Democratic presidents (and that's not including this month's crash!) by lucky coincidence. Etc. The whole world is conspiring to hide the fact that Republican economics would work, really, if ever they just got a fair shake. You know, just like "real communism" would.

6 comments:

Frank said...

I still think that the stock market thing is a happy coincidence. However, I'm glad to see that Krugman won.

Holy Hyrax said...

>Income growth is significantly higher under Democratic presidents

Question: When people say this, are they referring to the Clinton years, or others before him, like Carter as well?

Jewish Atheist said...

HH:

Others before him as well. I posted a graph that covered 1948-2001 here.

Random said...

This may sound like a nitpick, but it really isn't - the "Nobel Prize" in economics isn't a Nobel Prize. It's proper name is the Nobel *Memorial* Prize, and it has nothing to do with the Nobel Foundation that issues the other prizes (the foundation itself simply refers to it as "the economics prize"). Simply calling it the Nobel Prize is to claim a level of distinction for the award that it's not really entitled to - it's a bit like if a guy called Joe Harvard who lived in your town were to set up a school and you enrolled in it, then no matter what the objective quality of the relevant education you received was, if you were to claim to have received a "Harvard degree" some people might think you were misrepresenting.

Yes, the Nobel Memorial Prize is a significant award in economics, and Krugman did well to get it, but it's not a Nobel Prize and Yglesias is being deceptive in presenting it as such. This does not make Krugman the Einstein of economics.

Random said...

Some additional thoughts...

" Conservatives will continue to insist that liberals/progressives/Democrats just don't understand economics."

I'm sure plenty do. I would however add the caveat that anybody who thinks you can tax and regulate your way to prosperity (and any such people are far more likely to be L/P/D's than conservatives) certainly does not.

I would also add that for the most parts the Democrats are only liberal/left in the US political spectrum. In most of the rest of the world they would be centrists or even centre-right. There is no equivalent of, say, the British Labour Party or French Socialist Party in the US. It certainly is not a coincidence that the lack of a truly left wing party of government occurs alongside the most successful economy in the developed world.

"The Nobels are biased."

The Nobels *are* biased. I defy you to defend the decision to award Al Gore the Peace Prize as being solely awarded on the merits of the case rather than out of an a desire to irritate the Bush administration, for example.

As for income growth and the stock market - lies, damn lies and statistics. Much of the difference is due to picking the right start date(the difference in stock market growth almost disappears if you start from 1953 instead of 1900 for example), and no attempt at all is made to account for administrative lag (the simple fact that it takes time for even the most radical policies to affect something the size of the US economy), which will often mean that one administration gets to benefit from the policies of it's predecessor.

Ezzie said...

LOL. And I thought it was something real.