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Krugman Wins Nobel Prize:

This morning, the 2008 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Princeton economist Paul Krugman "for his analysis of trade patterns and location of economic activity." The award was bestowed for his academic work — which many have suggested was Nobel-worthy for some time — not his political commentary, though the latter may have played a role. "Krugman is not only a scientist but also an opinion maker," commented one member of the prize committee. Early NYT coverage is here.

UPDATE: I just reread the post and want to make clear that I believe Krugman's Nobel is well-deserved. He is clearly among the most important economists of his generation. My suggestion that his political commentary may have been a factor was not meant to disparage his accomplishment. It was a reaction to the quote in wire story cited above. That said, I will confess some dread at the prospect of hearing "according to Nobel Laureate Paul Krugman . . . " every time someone quotes one of his NYT columns on political issues.

UPDATE: Tyler Cowen discusses the award and Krugman's work here.

Related Posts (on one page):

  1. Henderson on Krugman's Nobel:
  2. Krugman Wins Nobel Prize:
Observer:
Outrageous
10.13.2008 11:03am
byomtov (mail):
Ourageous?

Tell us, Observer, how familiar are you with Krugman's scholarly work? What do you consider its flaws?
10.13.2008 11:12am
F LEE (mail):
Once again, the Nobel givers have made a political decision and tried to stick it in the eye of conservatives. When was the last Republican to win a NoBell? My dog knows more than Krugman about economics.
10.13.2008 11:14am
Tony Tutins (mail):
It struck me some time ago that Economics was the one field in which Nobel laureates could hold completely contradictory views among them, and still be equally worthy of laurels. This tradition is merely being perpetuated with Krugman.
10.13.2008 11:15am
Allan (mail):
Dynamite!
10.13.2008 11:27am
Rodger Lodger (mail):
Not being an economist, I have to act like a juror when I watch the contradictory talking heads on TV. Krugman seemed to me to have a lot of credibility, so I have gone with his views. Am I perpetuating "junk economics"? How does a non-expert select among conflicting experts, anyway?
10.13.2008 11:28am
paul lukasiak (mail):
reading the link describing Krugman's academic work, I was struck by the fact that his accomplishments seemed intuitively obvious.

Is this because his theories have been so widely accepted that they've become conventional wisdom, or because the description of his work has been dumbed down so that people like me can have some idea what it is that Krugman worked on?
10.13.2008 11:31am
EricPWJohnson (mail):
Its interesting to see whether it was submitted or requested.

Further more who submitted it or who requested it.

It is the two pager simplistically describing the Henry Ford 1911 production calculations for the Model T - is the basis for the award - then you can make the judgement for yourself

By the way he is at MIT:


the Ford International Professor of Economics



And this is the summary of his new book - this is why he received the award - its interesting - economics is usually not studied in Communist societies....


America's post-war middle-class society was not the automatic product of a free-market economy, he writes, but was created... by the policies of the Roosevelt Administration. By strengthening labor unions and taxing the rich to fund redistributive programs like Social Security and Medicare, the New Deal consensus narrowed the income gap, lifted the working class out of poverty and made the economy boom. Things went awry, Krugman contends, with the Republican Party's takeover by movement conservatism, practicing a politics of deception [and] distraction to advance the interests of the wealthy. Conservative initiatives to cut taxes for the rich, dismantle social programs and demolish unions, he argues, have led to sharply rising inequality, with the incomes of the wealthiest soaring while those of most workers stagnate
10.13.2008 11:38am
krs:
I propose that those who want to trash Krugman and claim that the decision was political should explain themselves and show some knowledge of Krugman's academic work.

I don't like Krugman's politics or his NYTimes columns, and I think that the Nobel Peace Prize has become a joke, but I have no knowledge of Krugman's academic work and no reason to doubt Prof. Adler's statement that "Krugman's Nobel is well-deserved. He is clearly among the most important economists of his generation."
10.13.2008 11:39am
Mike Keenan:
Congratulations to Professor Krugman. I don't much like his politics, but I enjoy reading him all the same -- especially when he sticks to economics.
10.13.2008 11:41am
krs:
Thanks, Eric. You're clearly able to navigate the MIT faculty website and cut-and-paste from an amazon.com description of a book.

The Conscience of a Liberal is not why Krugman received the award. If you have any evidence to the contrary, please provide it.
10.13.2008 11:43am
alkali (mail):
Allan wins the thread by a tip-in.

@paul lukasiak: [Krugman's] accomplishments seemed intuitively obvious. Is this because his theories have been so widely accepted that they've become conventional wisdom, or because the description of his work has been dumbed down so that people like me can have some idea what it is that Krugman worked on?

Some of both, I think, although probably some of it relates to the fact that concepts that may make intuitive sense are hard to model formally.
10.13.2008 11:49am
Joe - Dallas (mail):
Having read little of his true economic works, I can only comment on his bi-weekly political commentary in the NYT. It is his political commentary that i find laughable. It is common to have at least one and usually two factual errors in his column that will discredit the premise of his that days commentary. For example, he advocated that adoption of France's more socialist policies by comparing Europe's GNP growth (with eastern europes rapid growth factored in after emergng from communisim), ignoring that fact that France's gnp growth was less than 1/2 of both the US and the overall gnp of europe.

Given the frequency of the factual errors and flawed logic in his political commentary, I have my doubts that he had maintained sufficient intellectual and rigous standards necessary to merit a nobel prize in his prior life.
10.13.2008 12:02pm
EricPWJohnson (mail):
KRS

It was mentioned in the Nobel committee press release and it the deciding factor was the Chairman Englund (who BTW actually has the vote - the committee advises only)

Mentioned buried in the Swiss News agency this Quote from Englund wqhen asked why they took a political stance:


I don't think the committee has ever taken a political stance," committee secretary Peter Englund told Reuters. "The real, dramatic crisis is an event of the last month or so, which is in practice after the committee took its decision."

Englund said Krugman was more than a great economist.

"Not only is he a stellar researcher ... but also he is an excellent expositor and that is clear both from textbooks but also, as many of you know, from his columns."


This was politics - or is quoting the man who actually awarded the award cutting and pasting too much?
10.13.2008 12:02pm
PersonFromPorlock:

He is clearly among the most important economists of his generation.

OK, but I gotta ask: given the disparity of views - amounting, sometimes, to flat contradiction - among economists, what are the odds that even the 'most important' of them are right?
10.13.2008 12:02pm
EricPWJohnson (mail):
So I would in the future actually ask the committee why they awarded the award before assuming it was actually from research

Ask Yassar
10.13.2008 12:04pm
M. Gross (mail):
If only Professor Krugman would write more often on the subject for which he is internationally famous, and less about whatever political kerfuffle he thinks it necessary to drone on and on about.
10.13.2008 12:11pm
EricPWJohnson (mail):
And its not actually a true Nobel prize - its a think tank in Sweden established in the 60's its not in any way affiliated with the Alfred Nobel Committee which did not recognize economics as a true science - which it is not - its a political social science.


The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in the late 1960s and is not part of the original group of awards set out in Alfred Nobel's 1895 will.
10.13.2008 12:11pm
therut (mail):
Excellent. He was a pseudo Nobel prize. That he deserves. As his politics is pseudoscientific. Great. Now I can applaude. I am sure many of you have watched him on cable networks. Has anyone else noticed he seems a little off. He speaks like a mouse and his beady eyes have a strange stare. He looks like if someone droped a glass he would scream.
10.13.2008 12:21pm
Glenn W. Bowen (mail):
They have no shame, I'm laughing my ass off.
10.13.2008 12:22pm
Brian Mac:

And its not actually a true Nobel

Take that, Krugman! And I can't wait to see the look on his face when he realises that the cash prize is made up of Monopoly money...
10.13.2008 12:27pm
therut (mail):
Is he going to give his cash prize to the .gov or the poor or keep it himself like a greedy capitalist???? Anyone want to bet?
10.13.2008 12:30pm
frankcross (mail):
From Bryan Caplan:

I'm very happy to have him around. Think about it: The world's most famous left-wing economist:

1. Blames European unemployment on labor market regulations that hold wages above the market-clearing level. (The Accidental Theorist, Part 1)

2. Publicly and articulately advocates free trade without hemming or hawing. (Pop Internationalism)

3. Identifies anti-globalization activists as the enemies of the world's poor. (The Accidental Theorist, Part 3)

4. Titles an essay "In Praise of Cheap Labor: Bad Jobs at Bad Wages Are Better than No Jobs at All" (The Accidental Theorist, Part 3)


don't be so partisan, the work underlying the Nobel is good free market economics
10.13.2008 12:33pm
BCN:
In a previous life I was an economist and studied International Trade and Finance. Krugman is actually a very good economist, and he does deserve to win this prize. I am in agreement with some that he should spend more time writing about that which he knows and not the everyday political issues that he seems to write about now, but his academic work is top notch.
BCN
10.13.2008 12:34pm
Pauldom:
EricPWJohnson:

"Not only is he a stellar researcher ... but also he is an excellent expositor and that is clear both from textbooks but also, as many of you know, from his columns."

This was politics - or is quoting the man who actually awarded the award cutting and pasting too much?

Expositor means "one who explains." Someone's ability to explain things clearly would be apparent from textbooks and columns written for a lay audience.

The problem with your "this was politics" claim isn't that you cut/pasted, it's that you mischaracterized the statement you copied. Krugman's expository accomplishments are not the same as his research accomplishments, and on top of that, it's entirely possible to recognize clear communication whether or not you agree with it.
10.13.2008 12:39pm
adjust:
He's a leading academic economist, top textbook writer, and major public figure. He knows how to generate cash.

Nice discussion of his work at Marginal Revolution.
10.13.2008 12:41pm
EricPWJohnson (mail):
The reality is that Krugman recognizes in his economic theories that large corporations are the key to large scale efficiencies...

Whereas his heroes labor unions who built America are not

Also note 95% of the draconian justification paper from the NOT REALLY THE NOBLE COMMITTEE quotes other economists and actually criticizes Krugmans work a simple and single factor


His short paper in the Journal of International
Economics, entitled “Increasing Returns, Monopolistic Competition and International Trade”
(1979a), is twofold. It contains not only a new trade theory that allows us to explain observed
patterns of intra-industry trade, but also the seeds of a new economic geography where the
location of production factors and economic activity can be stringently analyzed within the
framework of a general-equilibrium model. Remarkably, the paper achieves all of this in only
ten pages, and in a very simple and transparent fashion. The model is extremely simple
. There
is only one production factor, and returns to scale are represented by a linear cost function
with fixed costs.
But due to its simplicity, it illustrates the key mechanisms in a particularly
clear way.



E=mc2 its not

And then Krugman finally mentions and admits corporations which he renames as "the firm"

The central feature in Krugman’s approach is economies of scale that are internal to the firm,
i.e., the firm itself can reduce its own average cost by expanding production.




2008 Committee Paper
10.13.2008 12:41pm
Hoosier:
I'm with Porlock. In fact, I don't think Krugman should have won the Nobel. Nor should anyone else.

As for Krugman, and not his profession: I'm just going to have to assume that he's deserving, since I have no way to evaluate his work. But the thing that bothered me about NYT's decision to give him a column was that he could leverage his prestige in his academic field to give himself credibility on issues about which he can't claim any expertise.

This sort of thing happens in academia, though not often at Krugman's level of visibility. (Think of Victor Davis Hanson on the right, although he generally will stick to military topics.) Those in academia know, however, how narrow academic specialties have become. We can't speak with authority on issues outside of our purview.

The fact that Krugman is not bothered by this bothers me.
10.13.2008 12:43pm
paul lukasiak (mail):
And its not actually a true Nobel prize

does anyone else suspect that this point has never been made by Eric with regard to Milton Friedman?
10.13.2008 12:44pm
Accountant Ed (mail):
But...but...but he has beady eyes! And he doesn't think Bush is a genius! He can't possibly be smart!
But anyway, it's not a "real" Nobel, so there. (Relax, conservatives, take a deep breath, it'll all be OK. And therut, I'll bet he pays his taxes like everybody else.)
10.13.2008 12:47pm
EricPWJohnson (mail):
Pauldom

Ummm they (the not really the Nobel Committee) clearly felt the need to mention his many political columns - why? and actually - if you were a true student of his work, the last decade has been purely marxist political economic studies criticizing capitalism from A to Z as causing all the misery in the world.

So I respectfully disagree based upon the preponderance of evidence and the actual statement of the Man who gave Krugman the Award

His last words in the short interview to justify to the entire world his decision were:

but also he is an excellent expositor and that is clear both from textbooks but also, as many of you know, from his columns
10.13.2008 12:48pm
krs:
But the thing that bothered me about NYT's decision to give him a column was that he could leverage his prestige in his academic field to give himself credibility on issues about which he can't claim any expertise.

This may be how a lot of "public intellectuals" get started. They're extremely credible in an academic field, but find that angry rants about politics sell more books.

Noam Chomsky's work in linguistics is very highly regarded...
10.13.2008 12:51pm
therut (mail):
It is not that he does not think Bush is smart but that he hates Conservatives. I guess I am supposed to love my enemy but with him it is terribly hard.
10.13.2008 12:58pm
John Burgess (mail) (www):
Rodger Lodger: Either by becoming expert enough to tell when someone's talking out of his hat or by abdicating the right to argue economics at all.

One could, of course, try to both have one's cake and eat it, though that's not sound economic (or rational) policy. But it seems that that is indeed what most people do.

Today's financial meltdown provides the Q.E.D.
10.13.2008 1:03pm
Edward A. Hoffman (mail):
F LEE wrote:
When was the last Republican to win a NoBell?
I believe Edmund Phelps (2006) of Columbia University is a Republican (or at least a conservative), as is his colleague Robert Mundell (1999). I don't know the political leanings of other recent laureates, but I suspect there have been other conservatives in recent years. It wasn't very long ago that the Nobel committee was accused of ignoring liberals and recognizing conservatives almost exclusively.


EricPWJohnson wrote:
By the way he is at MIT:
the Ford International Professor of Economics
Krugman was Ford International Professor of Economics at MIT until 1999 or 2000, but he has been at Princeton since then.
10.13.2008 1:03pm
EricPWJohnson (mail):
Paul

Milton Friedmans work completely and totally debunks all of Krugmans - the committee noted Friedmans achievements in advising world leaders and seeing the positive results his theories had when actually used - Krugman was awarded a prize for calling someone stupid since late 2000.

Friedman may also win a real Nobel prize in the future in Mathematics - something that Krugman is lacking sorely in his 1911 model T 10 pager with static labor, demand and other - almost impossible to forecast in the real world -variables.
10.13.2008 1:06pm
Jeff R.:

Friedman may also win a real Nobel prize in the future in Mathematics


This would be a neat trick, since there isn't even a fake Nobel prize for Mathematics. (Cue the apocryphal stories about the reason for that in 1..2..)
10.13.2008 1:10pm
runape (mail):

Friedman may also win a real Nobel prize in the future in Mathematics - something that Krugman is lacking sorely in his 1911 model T 10 pager with static labor, demand and other - almost impossible to forecast in the real world -variables.


er...waiting for Orin to tell you to get back on the meds...
10.13.2008 1:10pm
Anon21:
paul lukasiak:

does anyone else suspect that this point has never been made by Eric with regard to Milton Friedman?

You beat me to it. I'd say that's a fairly safe assumption.
10.13.2008 1:11pm
peter jackson (mail) (www):
For me that has been one of the most maddening things about Krugman. On the one hand he really is a free market technical economist of the first order. His 1994 Foreign Affairs article The Myth of the Asian Miracle is a true classic. But on the other hand his second career as a lefty polemicist seems to fly in the face of what he knows as an economist. Oh well, the silver lining is that at least it's pretty easy to rebut or even refute Krugman's NYT balderdash with excerpts from his own economics work.

yours/
peter.
10.13.2008 1:17pm
peter jackson (mail) (www):
Oops, forgot the link.

~p
10.13.2008 1:17pm
Roger Schlafly (www):
I suggest that we call it the Bank of Sweden Prize. It is just one of several prizes that imitate the Nobel prizes.
10.13.2008 1:18pm
Sua Tremendita (mail):
Here's a nice intro to Krugman. QJAE
10.13.2008 1:18pm
Le Messurier (mail):
I don't read Krugman's columns nor do I read Ann Coulter's for many of the same reasons... they are partisan beyond all logic and of no use to me as I seek honesty and truth in an argument.
10.13.2008 1:20pm
The General:
First Enron advisor to win a Nobel Prize?
10.13.2008 1:20pm
Spoilt Victorian Child (mail):

Remarkably, the paper achieves all of this in only
ten pages, and in a very simple and transparent fashion. The model is extremely simple. There
is only one production factor, and returns to scale are represented by a linear cost function
with fixed costs. But due to its simplicity,
it illustrates the key mechanisms in a particularly
clear way.


E=mc2 its not

What extraordinary irony.
10.13.2008 1:21pm
Edward A. Hoffman (mail):
EricPWJohnson wrote:
Krugman was awarded a prize for calling someone stupid since late 2000.
Krugman has criticized Bush since 2000, and he has been awarded a Nobel Prize, but it does not follow that the either of these facts is related to the other.
Friedman may also win a real Nobel prize in the future in Mathematics . . . .
As another commenter has noted, there is no Nobel Prize in mathematics. Additionally, only people who are alive at the time of the announcement are eligible to win a Nobel; Friedman is dead and thus couldn't win a math Nobel even if such a prize existed.
10.13.2008 1:22pm
Franklin Drackman:
I loved him in "Quincy" too.
10.13.2008 1:24pm
commontheme (mail):

That said, I will confess some dread at the prospect of hearing "according to Nobel Laureate Paul Krugman . . . " every time someone quotes one of his NYT columns on political issues.

Ya, I hate it when really smart people reach different conclusions than me.
10.13.2008 1:29pm
Bad English:
The funniest and most telling Krugman anecdote that I know is the following.

He sought to justify nationalized health care at a debate sponsored by NPR; in the audience were a number of Canadians. In an attempt to make a point, he asked the Canadians to identify themselves by raising their hands. He then asked how many of them thought they had terrible health care. All of those people again raised their hands. Krugman then stated, "Bad move on my part," before launching blindly back into his talking points.

I find this telling because he felt that exposure to facts from people damaged by nationalized health care was a "bad move." Considering exposure to facts a "bad move" is antithetical to scholarly, yet some people allege him to be a scholar.

Further, instead of addressing their concerns, or reconsidering his position in the light of facts, he simply ignored them in favor of resuming his memorized presentation, facts be damned. In short, he has a position -- a theory -- that facts cannot be allowed to affect.

Given that, he's more of an academic than a scholar.
10.13.2008 1:32pm
Cactus Jack:
Outrageous indeed! Anyone with sense knows that the only legitimate recipients of this so-called award are Milton Friedman, Ronald Coase, Friedrich Hayek and their ghosts and/or zombies.
10.13.2008 1:32pm
Dilan Esper (mail) (www):
When was the last Republican to win a NoBell?

Gary Becker won it, and plenty of other Chicago school economists (such as Friedman) have as well.

Krugman is a great economist, especially on trade issues. (You will notice, by the way, that for all his criticism of Republican economic positions, he very rarely goes after conservatives on trade (and when he does, it's usually because of a departure from free-trade orthodoxy).)

It's also clear that the Nobel committee liked his politics. So what?

I would also note something else. While conservatives have many valid points about economics, a lot of conservative POLITICAL rhetoric about economics (that markets always work, that regulation is always more costly than deregulation, that tax cuts raise revenue, and, on the nuttier fringe, that Austrian school economics was right about monetary policy) is dead wrong.

If you want to be purists about Krugman's political commentary, it seems to me that conservatives need to take the log out of their own eye first.
10.13.2008 1:35pm
Cornellian (mail):
He sought to justify nationalized health care at a debate sponsored by NPR; in the audience were a number of Canadians. In an attempt to make a point, he asked the Canadians to identify themselves by raising their hands. He then asked how many of them thought they had terrible health care. All of those people again raised their hands. Krugman then stated, "Bad move on my part," before launching blindly back into his talking points.

He should have asked the follow up question "How many of you would like to trade your health care system for the American one?" I doubt he'd see any hands go up at that point.
10.13.2008 1:36pm
Oren:

Ya, I hate it when really smart people reach different conclusions than me.

Sometime I even wonder why God created a world in which conflicting positions can even exist . . .
10.13.2008 1:36pm
commontheme (mail):

Sometime I even wonder why God created a world in which conflicting positions can even exist . . .

Indeed, but he intends such conflicts to test my faith in my certitude, which only increases it.
10.13.2008 1:41pm
Mahan Atma (mail):
"And then Krugman finally mentions and admits corporations which he renames as 'the firm'"


"Firm" is standard econ lingo, perhaps because not all firms are corporations.

See, for example, "The Nature of the Firm", written by Ronald Coase in 1937.
10.13.2008 1:41pm
ShelbyC:
Well, what do you expect? If Yassar Arafat can win the Nobel Peace Prize, Krugman can win it in economics.
10.13.2008 1:42pm
commontheme (mail):

Well, what do you expect? If Yassar Arafat can win the Nobel Peace Prize, Krugman can win it in economics.

Next up on Fox News: "Paul Krugman pals around with terrorists."
10.13.2008 1:52pm
Commenterlein (mail):
Wow. This thread is deeply, deeply embarrassing. I remember when conservatives prided themselves on actually knowing stuff.

For those who are interested in learning more about Krugman's contributions to economic theory, which are beyond doubt to anyone who as any knowledge of international econ at all, Marginal Revolution delivers (as always):

MR 1

MR 2
10.13.2008 1:53pm
Random Commenter:
"Not being an economist, I have to act like a juror when I watch the contradictory talking heads on TV. Krugman seemed to me to have a lot of credibility, so I have gone with his views. Am I perpetuating "junk economics"? How does a non-expert select among conflicting experts, anyway?"

This is a good question. Krugman is obviously a smart guy, and I'm willing to give the Nobel committee the benefit of the doubt that he's worthy. However, this award makes me uneasy, and not only because Krugman had no self-esteem issues even before receiving it. It's hard to know whether to trust the secular work of a highly ideological polemicist who registers Krugmanian levels of disdain or even hatred toward people who disagree with him. Was he like this back when he was thinking for a living? If so, can those of us who disagree with his politics trust him to have played it straight?

I'd also be suspicious of a similarly situated conservative recipient. But Milton Friedman, to take an example raised in this thread, was either less religious (for want of a better word) about his conservatism than Krugman is about his liberalism, or simply better disciplined.
10.13.2008 1:57pm
Random Commenter:
"Wow. This thread is deeply, deeply embarrassing. I remember when conservatives prided themselves on actually knowing stuff."

Thanks for raising the level of the discourse.
10.13.2008 1:58pm
josh:
Cactus Jack: "Outrageous indeed! Anyone with sense knows that the only legitimate recipients of this so-called award are Milton Friedman, Ronald Coase, Friedrich Hayek and their ghosts and/or zombies."

Please. If you're going to try to ask VC commenters (and two posters I can think of) to take intellectually honest and consistent positions, the whole site is going to implode.
10.13.2008 2:04pm
commontheme (mail):

Thanks for raising the level of the discourse.

He posted links that did just that. What's on Fox News now?
10.13.2008 2:05pm
Cityduck (mail):
The discourse on this thread hit rock bottom early on.

Witness: "my dog knows more about economics than Krugman."

I thought this was a site populated by serious thinkers on the law and economics. It this instead a site for folks who scorn ideas?
10.13.2008 2:10pm
martinned (mail) (www):
Just to support some of the previous commenters: Yes, I've had the opportunity to study prof. Krugman's work, and yes, he certainly deserves his Nobel Prize. It is good to see that, while the Peace prize is inherently political and the Literature prize usually goes to someone no one's ever heard of, the Economics prize, like the prizes for the "real sciences" usually goes to those that really did make the major contributions. My personal favourite is his other big Foreign Affairs article, Competitiveness, a dangerous obsession, which is no less true for its left-wing implications. (It argues that using the competition metaphor for countries is wrong, and can lead to disastrously erroneous policy choices.)


peter jackson:
For me that has been one of the most maddening things about Krugman. On the one hand he really is a free market technical economist of the first order. His 1994 Foreign Affairs article The Myth of the Asian Miracle is a true classic. But on the other hand his second career as a lefty polemicist seems to fly in the face of what he knows as an economist. Oh well, the silver lining is that at least it's pretty easy to rebut or even refute Krugman's NYT balderdash with excerpts from his own economics work.

I would say that a good economist also has attention for the limitations of his/her field. Economics is not the answer to all questions, so the proper way to use it is to analyse a problem using economic tools, and then take that answer into account in making a policy decision. For example, economics is deliberately "wertfrei", it tries to stay away from premises that are based on values. That's why we use the (fairly weak) Pareto principle. Everyone would agree that a Pareto suboptimal situation is not desireable. Choosing between different Pareto optima, however, requires moral judgement, so that is something economists don't do.
Similarly, it could be a good thing to sacrifice some efficiency for a degree of social justice. Whether it is, though, is a moral judgement that economics can't impeach.
10.13.2008 2:13pm
Nunzio:
Did anyone read Krugman's NYT column today? It was pretty interesting, pointing out that capital infusion from central banks, as England and other European countries are doing, is better than the original Treasury plan of buying bad assets off the books.

He does take a usual dig at the W. administration saying the FEMAficiation of government under W. (i.e. pushing out competent people in favor of ideological hacks) meant that there was no one at Treasury to tell Paulson his original idea was dumb.

I think this is sort of typical Krugman. Makes some interesting points and then throws a political barb.

Anyway, can't we all agree that it's great an American has won. USA ... USA ... USA
10.13.2008 2:17pm
MarkField (mail):

there is no Nobel Prize in mathematics.


No, but there is the Fields Medal. Friedman couldn't (now) win that either.

No relation, sad to say.
10.13.2008 2:20pm
EricPWJohnson (mail):
Freidman didn't win the Nobel prize either - its a seperate group

And another committee member just has been quoted as saying the award was purely political

But what do I know.....

Krugman is not only a scientist but also an opinion maker," economics prize committee member Tore Ellingsen said.


Nunzio

Actually the original plan by Bush was to own the debt which the government used to anyway until LBJ in efforts to pay for the great society cut Fannie and Freddie off the govt books
10.13.2008 2:28pm
Dilan Esper (mail) (www):
And another committee member just has been quoted as saying the award was purely political But what do I know.....

Krugman is not only a scientist but also an opinion maker," economics prize committee member Tore Ellingsen said.

I don't want to accuse you of rank dishonesty, so I will just say that you need to read the quote again. It clearly says that Krugman is notable both for his economics and his op-ed commentary. And yet you derive from this that the award was "purely" political. How can you possibly reach THAT conclusion?

Isn't the obvious conclusion from the quotation you cite that the award was not "purely" political but rather was motivated by both Krugman's economic accomplishments and his politics?
10.13.2008 2:32pm
martinned (mail) (www):
10.13.2008 2:33pm
Samir Chopra (mail) (www):
The simplicity of Krugman's work (contra the catty remark above about it not being E=MC^2, which as already pointed is pretty ironic) is no argument against its importance. One of John Nash's most important papers was one page long. Both the special and general theories of relativity, while requiring sophisticated mathematical development, are conceptually wonderfully simple (their central theses can be stated in a sentence each). Therein lies their elegance and conceptual sophistication. The search for simplicity is a powerful methodological principle in theory choice in the sciences: the history of science has often confirmed the claim that the simpler theory works better.
10.13.2008 2:36pm
Perseus (mail):
I recall one of my (neoclassical) economics professors dismissing Krugman's argument about welfare-enhancing protectionism as little more than putting the right numbers in matrices (though to be fair to Krugman, he does admit the empirical difficulty of determining which firms the model might apply to).
10.13.2008 2:38pm
EricPWJohnson (mail):
Mahan Atma - I really dislike intellectual disengenuious - for Freidmans papers to work - there has to be large effieicient economies of scale corporations - his use of the "firm" was clear and intended. Not a economic stunt as you were referring to without citation.

For someone like Krugman to profess economies of scale and yet decry capitalism (see Martinned above) this flies in the face of his research which its just an unproven theory -not backed up even by himself anymore. (and he won?)

The Stock Market during Bush has reached heights never before achieved, something Krugman decried at that time was even more dangerous than banking destabilization which Krugman supported in the Clinton years.

The fact that the stock market could fall so far and we could infuse - overnight a trillion dollars without deflation and tanks in the streets is an obvious answer in of its self.

And as we are seeing perhaps 500, 1000, 1500 being possibly gained back in the next week the only people who lost were those who panicked in the very short term.
10.13.2008 2:41pm
Edward A. Hoffman (mail):
MarkField wrote:
No, but there is the Fields Medal. Friedman couldn't (now) win that either.
Friedman's eligibility for the Fields Medal ran out in 1952, since it is not awarded to anyone above the age of 40.
10.13.2008 2:42pm
EricPWJohnson (mail):
Dilan Esper

Two people have mentioned his political commentary as a FACTOR - who were on the committee

Anvil - meet head

A FACTOR is a REASON

They had since 1979 to award him the prize......
10.13.2008 2:44pm
EH (mail):
Cityduck:
I thought this was a site populated by serious thinkers on the law and economics. It this instead a site for folks who scorn ideas?
The comment-tone changed when Palin was announced.


EricPWJohnson:
Actually the original plan by Bush was to own the debt which the government used to anyway until LBJ in efforts to pay for the great society cut Fannie and Freddie off the govt books
After reading a sentence like this, it comes as no surprise that you don't know what "but also" means.
10.13.2008 2:45pm
martinned (mail) (www):
@EricPWJohnson: I'm fairly certain that Krugman can't be said to "decry capitalism", but even if he did, how is that an inconsistent position? It could be, but as long as he, as an economist understands the consequences of abolishing capitalism, so what if he thinks that's a price worth paying?
10.13.2008 2:46pm
1 1/2 cheers for Krugman:
Krugman's accolades in the economic field are well deserved. His work is outstanding. His non-academic writing, however, is partisan hackery at its worst. Unfortunately, he has probably influenced far more people through his New York Times column than he ever did writing textbooks.
10.13.2008 2:49pm
hawkins:
Perhaps its indicative of the professors I've had, but in my limited exposure to economics, I have always been taught the economic argument against rent control and other price controls. Is anyone able to point me towards an economic justification for price controls?
10.13.2008 2:51pm
LN (mail):
The best and most objective blog in the world, Powerline, totally nailed Krugman back in 2005:


It must be depressing to be Paul Krugman. No matter how well the economy performs, Krugman's bitter vendetta against the Bush administration requires him to hunt for the black lining in a sky full of silvery clouds. With the economy now booming, what can Krugman possibly have to complain about? In today's column, titled That Hissing Sound, Krugman says there is a housing bubble, and it's about to burst
10.13.2008 2:52pm
martinned (mail) (www):
@hawkins: There isn't one, that I'm aware of. But there is certainly the non-economic justification that, if the total supply is more or less fixed anyway, it's better to have excess demand than to let the property-owning class walk away with all the money...
10.13.2008 2:54pm
EricPWJohnson (mail):
EH

I guess this should clear up any questions you may have

The Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac, have operated since 1968 as government sponsored enterprises (GSEs). This means that, although the two companies are privately owned and operated by shareholders, they are protected financially by the support of the Federal Government. These government protections include access to a line of credit through the U.S. Treasury, exemption from state and local income taxes and exemption from SEC oversight. A recent accounting scandal at Freddie Mac that resulted in the replacement of three of the company's top executives has led to mounting concerns over the privileged status these GSEs enjoy in the marketplace.

Fannie Mae was created in 1938 as part of Franklin Delano Roosevelt's New Deal. The collapse of the national housing market in the wake of the Great Depression discouraged private lenders from investing in home loans. Fannie Mae was established in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing



LBJ tried to lighten the government spending numbers by keeping the debt potential if a housing crisis emerged off the books
10.13.2008 2:56pm
EricPWJohnson (mail):
Martinned..

So what is the opposite of capitalism

I apreciate your defending Krugman - but Krugman's been paid good coin to undermine the United States by his never ending stream of vitrolic and unfounded columns and yet accept an award for a paper espouting conservative priciples will create a perfect marketplace and perfect free trade?

See where I'm coming from?
10.13.2008 3:00pm
martinned (mail) (www):
@EricPWJohnson: I certainly see where you're coming from. What annoys me, though, is people who think economics is the start and end of any policy recommendation. Especially an economist should be expected to understand the limitations of their discipline, as Krugman does.

That said, I think he is often wrong, but it takes more than economics alone to explain why.

Incidentally, do you mind if I have a particular problem with your statement that Krugman somehow "undermine[s] the United States" by writing about his POV in the newspaper? Personally, I'd like to think that freedom of speech is a wonderful thing, and that speech doesn't usually "undermine" countries.
10.13.2008 3:06pm
frankcross (mail):
Eric, you're coming from an obsession. The kind of obsession that hallucinates a Nobel prize in Mathematics and Milton Friedman's health. The kind of obsession which suggests that a short paper is necessarily shallow. The kind of obsession that doesn't understand the commonplace use of the term "the firm" in economic literature for decades

I'm no great fan of Krugman's politics or columns, but if you actually read them you would see that they retain a good bit of his free trade orientation. And all that's irrelevant to the award, which is based on his earlier research.
10.13.2008 3:14pm
Dilan Esper (mail) (www):
Two people have mentioned his political commentary as a FACTOR - who were on the committee Anvil - meet head A FACTOR is a REASON

Eric:

I agreed it was a factor. But that's not what you said. You said the action was "purely political", i.e., that the ONLY reason they gave it to him was politics. And the quotes you pulled up just indicated that there were dual reasons, i.e., that it was about his political work AND his economics work.
10.13.2008 3:17pm
EricPWJohnson (mail):
Martinned

Not if you know what you are saying is wrong.

Krugman was propagandizing which is not free speech,

Perfect example

He praised England for doing the same thing America has done but he condemmed Bush as a far reaching radical (funny a demorat congress introduced the legislation)

So is Krugman a liar, a cheap transparent partisan hack - or a free thinke?

Then he gets an award for a paper he has for the better part of a decade denounced fundamentally in his numerous columns. Go read them - they are disgusting for an academic who has published papers in the opposite direction.

It would be like Enstein stating - hey - It was alll just a joke E=mc2

So did Krugman believe in capitalism in 1979 and socialism in 2009?

Why did he not withdraw the paper?
10.13.2008 3:17pm
Hoosier:
MarkFeild--You beat me to mentioning of the Fields Medal. DAMN YOU!

I have been impressed by all the posters who are saying that the intellectual quality of the blog has gone downhill. They are wrong!

So just shut up, you sweatbeetle-dickweeds.
10.13.2008 3:22pm
EricPWJohnson (mail):
Dilan

1979 to 2000 publishes these supposedly groundbreaking papers that rethink our universe - not a pip from the Good Swedes

2001-2008 NYT Columnist becomes famous for Bush is stupid, Republicans are BAD, America is EVIL ad naseum

refutes 1979 conservative paper

Wins prize


I'm done good night its evening over here
10.13.2008 3:22pm
Dilan Esper (mail) (www):
Eric:

It is rare for any Nobel committee to award any Nobel Prize to someone for something they had done in the immediate past.

Again, no doubt there's politics in the timing. But that's a far cry from "purely political". Your statement implied that there was no non-political justification for the award at all, and that's clearly not true.
10.13.2008 3:27pm
Edward A. Hoffman (mail):
EricPWJohnson:

Nobel Prizes usually recognize work that was done many years earlier. The timing of Krugman's award is thus par for the course. It does not even suggest, let alone prove, that the award was based upon his more recent writings.
10.13.2008 3:29pm
martinned (mail) (www):
@EricPWJohnson: No, it would be like Einstein first laying the groundwork for the Atom Bomb, and then to get involved in the discussion about nuclear proliferation.

Economics is about efficiency, about cost/benefit tradeoffs, about what the least costly way is to achieve a certain goal. Free markets and free trade are the best way to achieve a maximum of welfare for a maximum number of people, but it does come at a cost. Discussing whether those costs are worth it is an appropriate subject matter for newspaper opinion pages and blogs, not economic journals.

What's more, the point of much of Krugman's work isn't even free trade, but rather quite simply explaining trade flows. I.e. a positive model, not a normative one. Why does America export computers to Japan, and imports them from Japan at the same time? (I'm not sure if that is true, but it's just an example of intra-industry trade.) He wasn't defending any system.

Finally, just so we're clear, I'm not defending anything in particular Paul Krugman has written. It is quite likely that he has on occasion been wrong, in the sense of writing something objectively incorrect. What's more, it is also quite likely that I would disagree with many of his political views, even when they are not objectively incorrect. The point is to distinguish between his work as an economist and the political views he defends in the NYT.
10.13.2008 3:31pm
U.Va. Grad:
1979 to 2000 publishes these supposedly groundbreaking papers that rethink our universe - not a pip from the Good Swedes

Jack Kilby invented the integrated circuit in 1958. He won the Nobel Prize in Physics in 2000. And however groundbreaking Krugman's work was, it pales in comparison to the invention that made modern computers possible.

Which is a roundabout way of saying that the Nobel Committee (and yes, I know it's a different committee entirely for Economics) tends not to give prizes for something that happened only a short time ago. Hell, even Einstein had to wait 16 years.
10.13.2008 3:31pm
Whining is really hard work:
This is similar to Chomsky's work with linguistics vs his foreign policy diatribes.
10.13.2008 3:45pm
Dan Weber (www):
1815 congratulatory comments on his blog so far

Ah, the person who moderates the comments on Krugman's blog doesn't have time to keep up with all of them, except now he does.

Seriously, though, Krugman is the conservative's best friend. You can point out how Nobel Laureate and unapologetic liberal Paul Krugamn advocates free trade, supports sweatshops, and blames European unemployment on their labor market regulations.

Econlog has more.
10.13.2008 4:17pm
EH (mail):
Dilan:
It is rare for any Nobel committee to award any Nobel Prize to someone for something they had done in the immediate past.
Since the Nobel is given for a body of work, it would indeed be rare for the prize to be awarded for any particular "something." This is pretty much the fatal flaw in every comment so far by EricPWJohnson, but since he's gone off pouting we hopefully don't have to endure any more of his metacommentary.
10.13.2008 4:33pm
Dilan Esper (mail) (www):
EH:

We're on the same side here, but in point of fact, I can think of a few "recent activity" Nobels, like the peace prizes to Al Gore and Jody Williams. It does happen.
10.13.2008 4:36pm
Uh_Clem (mail):
Nobel Peace prizes are usually given for recent activity.

The scientific ones are not.

Different prize, different standard.
10.13.2008 5:09pm
rarango (mail):
Its Sweden's prize and they can award to whomever they choose.
10.13.2008 5:18pm
Dilan Esper (mail) (www):
Uh:

Jimmy Carter's peace prize was for a long period of activities.

It just depends-- sometimes the activities are more recent than others.
10.13.2008 5:20pm
Cityduck (mail):
Maybe EricPWJohnson has gone off to comment on the "derangement syndrome" thread. It seems like he'd have a lot to offer on that topic based on his personal experience here.
10.13.2008 5:23pm
Katl L (mail):
So what? you can answer with :
as Becker a real Nobel laureate said..
As Buchannan a real Nobel Laurearte said...
As Coase...
As Lucas...
They hardly agree in anythinhg with Krugman and are Freedom champions
10.13.2008 5:42pm
sputnik (mail):
check this gem from the Powerline on 8 August 2005:

It must be depressing to be Paul Krugman. No matter how well the economy performs, Krugman’s bitter vendetta against the Bush administration requires him to hunt for the black lining in a sky full of silvery clouds. With the economy now booming, what can Krugman possibly have to complain about? In today’s column, titled That Hissing Sound, Krugman says there is a housing bubble, and it’s about to burst…

There are, of course, obvious differences between houses and stocks. Most people own only one house at a time, and transaction costs make it impractical to buy and sell houses the way you buy and sell stocks. Krugman thinks the fact that James Glassman doesn’t buy the bubble theory is evidence in its favor, but if you read Glassman’s article on the subject, you’ll see that he actually makes some of the same points that Krugman does. But he argues, persuasively in my view, that there is little reason to fear a catastrophic collapse in home prices.

Krugman will have to come up with something much better, I think, to cause many others to share his pessimism.

John Hinderaker, in peak form.

It used to be that people like this were put in straightjackets,heavily medicated and escorted to padded rooms.

Today, they have their own political party.
10.13.2008 6:01pm
Elliot123 (mail):
A few months back Krugman told us Fannie Mae didn't buy any sub prime mortgages and wasn't a problem. I trust his Nobel was for some other area of economics.
10.13.2008 6:01pm
Mike G in Corvallis (mail):
I suspect that many of the people who are criticizing the award to Krugman are doing so, not because they have reason to believe his papers in economics are invalid, but because they believe that his more recent activities reveal him to be a Bad Person (or at least a damned obnoxious one).

But if circumstances were different, I suspect that left-wingers rather than right-wingers would be complaining. Consider: If William Shockley were alive today and had just received the Nobel award, would the people who are snarking at conservatives in this thread be applauding his work in the physics of semiconductors? Or would they take his later theories in eugenics as evidence that he was a Bad Person and didn't deserve a prize for any of his work?

(BTW, I recall a cover story in the UCLA alumni magazine, circa 1975, that argued exactly that.)
10.13.2008 6:14pm
Hoosier:
Whining is really hard work:
This is similar to Chomsky's work with linguistics vs his foreign policy diatribes.


That was the analogy that came to my mind as well. Though Krugman is not as "out there" on policy as is Noam. Chomsky's popular, political books are a disaster when it comes to scholarship. He just doesn't do his homework. I recall Yale's Paul Kennedy getting asked about Chomsky a couple times during a talk he gave in Chicago (early '90s?). He finally got fed up and made this point, with examples.

Yet Chomsky is one of the most accomplished scientific linguists of his generation, and his work on syntax has been hugely influential. Too bad about the other stuff, because I think it makes (some) people shut him out when it comes to his work in the field where he actually does good work.

In any event, watch Da Ali G. Show interview with Chomsky on Youtube. How Cohen gets people to take Ali G. seriously is beyond me.
10.13.2008 6:29pm
David Larsomn (mail):
Well Kudos to Krugman on his fake Nobel prize. He's in great and well-deserved company with such illustrious icons of liberal unicorn-riding peacemongery as Yassir Arafat, Jimmy Carter and Al "carbon-neutral lifestyle please buy my indulgences" Gore. Oh wait, those folks won "real" Noble prizes....
10.13.2008 6:32pm
Mike G in Corvallis (mail):
sputnik, check this gem from the New York Times of September 11, 2003:
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

It used to be that people like this were put in straightjackets, heavily medicated and escorted to padded rooms.

Today, they have their own political party.

But you know what? Neither John Hinderaker nor Barney Frank has won a Nobel prize. Shall we stick to the topic?
10.13.2008 6:41pm
first history:
The Nobel Peace Prize's recent history has a spotty record at best: Arafat, Carter, Kissinger, Le Duc Tho, Gore,etc. (I am not equating any of the names with each other, just saying they have been questionable at best.) But the 2008 winner, Martti Ahtisaari, the former president of Finland, for his meditation efforts, seems to be well deserved.

The Prize has done better when it has honored international organizations like the International Committee for the Red Cross (twice, 1917 and again 1944; the founder of the ICRC, Jean Henry Dunant won the first prize in 1901); UNICEF (1965); the UN Office of the High Commissioner for Refugees (1954); and to Médecins Sans Frontières (MSF) - or Doctors Without Borders (1999).

Prominent Americans who have won while in government are Theodore Roosevelt (1906) and George C. Marshall (1953). Other good selections have been Andrei Sakharov (1975); Lech Walesa (1983);and to the 14th Dalai Lama in Tibet, Tenzin Gyatso (1989), the year of the Tiananmen Square massacre.

A good summary of the first hundred years of the Nobel Peace Prize is here. While in the recent past the Prize Committee has gone off its rails, the current award, it seems like the Committee is getting back to its roots.
10.13.2008 7:53pm
Tony Tutins (mail):

The best and most objective blog in the world, Powerline

Great. Now I have to get the snot off my display.

check this gem from the New York Times of September 11, 2003:

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee.

Probably true in 2003, when Fannie Mae and Freddie Mac had only a small exposure to subprime and Alt-A loans. They didn't start buying junk MBS in bulk till 2006. Check out this article from 2007 in the Washington Post
10.13.2008 9:35pm
Mahan Atma (mail):
"check this gem from the New York Times of September 11, 2003:"


Isn't it the case that Fannie and Freddie took on the vast majority of the bad loans after this date?
10.13.2008 9:35pm
Mahan Atma (mail):
"Mahan Atma - I really dislike intellectual disengenuious - for Freidmans papers to work - there has to be large effieicient economies of scale corporations - his use of the "firm" was clear and intended. Not a economic stunt as you were referring to without citation.


I'm not sure I understand your point. Are you saying he should have said "corporations" because he could only have been talking about large companies?

There's nothing that says large companies have to be corporations. Some of the biggest companies in the world are partnerships.
10.13.2008 9:52pm
neurodoc:
Long before Krugman made a name for himself as a political commentator, almost 20 years ago, he won the John Bates Clark Medal, an honor awarded to the person judged the most outstanding young American economist by the American Economics Association. So not as though he hadn't made his mark as an economist prior to joining the punditocracy.

Why not Larry Summers, the youngest person to win tenure at Harvard and nephew of two Nobel Laureate economists (Samuelson and Arrow)?

Finally, a question that might be more pertinent to Nobel prizes for physical and biologic sciences - why are the prizes sometimes awarded so many years after the work was done and its value appreciated? Physics prizes, for example, given three or four decades later, when some who deserved to be so honored have died and are no longer eligible, since the prizes are never awarded posthumously?
10.13.2008 10:56pm
Mahan Atma (mail):
I think it's because typically, cutting edge physics isn't immediately determined to be valid.

Scientists don't immediately accept the new and radical as correct. They fight over it for a couple decades, and eventually, the theory is proved or disproved by further evidence and argument.

For example, Einstein's theories weren't generally accepted for many years.
10.13.2008 11:55pm
Syd Henderson (mail):
There are notable exceptions, though, when the importance of the discovery are immediately obvious and can be immediately verified. For example

Tsung-Dao Lee and C. N. Yang's discover of the law of parity violation in weak nuclear reactions. Discovered in 1957, Nobel Prize the same year.

Johannes Georg Bednorz and Karl Alexander Müller for their discovery of high-temperature superconductors, announced 1986, Nobel Prize 1987.

Another advantage was that both of these discoveries were totally unexpected.

Many of the people who discovered elementary particles, such as the positron, neutron and anti-proton, got their Nobel Prizes just three or four years later.
10.14.2008 12:51am
Mike G in Corvallis (mail):
Tony Tutins wrote:
check this gem from the New York Times of September 11, 2003:

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee.


Probably true in 2003, when Fannie Mae and Freddie Mac had only a small exposure to subprime and Alt-A loans. They didn't start buying junk MBS in bulk till 2006. Check out this article from 2007 in the Washington Post

Sheesh. I really need to put a <sarcasm> tag in the text for some people.

My comment, other than the quote, was a word-for-word recap of what "sputnik" had written, criticizing those Powerline guys that Tony Tutins seems to despise. But sputnik's quote from John Hinderaker at Powerline was from 2005 ... a year that, last time I checked, occurred before the year 2006, when (as you say) Fannie Mae and Freddie Mac started buying junk MBS in bulk. </sarcasm>

So yeah, maybe Frank's quote wasn't quite as stupid as it now seems. But neither was Hinderaker's quote ... the one about which sputnik remarked, "It used to be that people like this were put in straightjackets, heavily medicated and escorted to padded rooms."

Can we go back to the Nobel prizes now?
10.14.2008 4:25am
Mahan Atma (mail):
But the Powerline quote from 2005 was about the housing bubble (or the asserted lack of one), not Fannie/Freddie. The housing bubble was nearly at its height in 2005, and Powerline was criticizing Paul Krugman, who had identified it as such!
10.14.2008 11:50am