Paul Krugman has been awarded the 2008 Nobel prize for economics[1]. The rules of the prize, honoured more in the breach than in the observance in economics, say that it is supposed to be given for a specific discovery, and Krugman is cited for his groundbreaking work in the economics of location done from the late 1970s to the early 1990s.
The reality, though, is that economics prizes are awarded for careers. Krugman’s early work put him on the list of likely Nobelists, but his career took an unusual turn around the time of the 2000 election campaign. While he has still been active in academic research, Krugman’s career for the last eight years or more has been dominated by his struggle (initially a very lonely one) against the lies of the Bush Administration, its supporters and enablers. Undoubtedly, the award of the prize in this of all years, reflects an appreciation of this work on behalf of truth in economics and politics more generally.[2]
The crew at Crooked Timber, of which I’m part, have a more parochial reason for cheering this outcome. Paul has generously agreed to take a part in a CT seminar on the work of Charles Stross, which should be published in the next month or so. Without giving too much away, there are some Nobel-related insights in his contribution.
fn1. Strictly speaking, the Bank of Sweden prize in Economic Sciences in honour of Alfred Nobel, or something like that.
fn2. Doubtless, Republicans will complain about being implicitly identified, yet again, as enemies of science and of truth. But they’ve made their bed and must lie in it (in both senses of the word).
John Quiggin 
You mean the PRETEND noble prize in economics?
I think you will find the full title “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008”
No he and NO economist deserves such prizes, they are why we are in the mess we are.
“for his analysis of trade patterns and location of economic activity”
ALL PRIZES IN THE PSEUDO SCIENCE OF ECONOMICS SHOULD BE BANNED AT ONCE.
Well done Paul Krugman! Who said that lefties were all emotion and no analysis? Good on ya Paul!!!
Had a quick scan of the work he got his “nobel” for.
In short “protectionism” and as my late grandfather who was a liberator of Belsen concentration camp said “if trade does not cross the border than tanks surely will”
Sean, you might want to read Footnote 1. In fact, you might want to read.
Congratulations to Krugman. I agree the stated reasons are a bit of a pretext. But for pursuing results of analysis irrespective of being unfashionable and not being blinded by an ideology I think this prize is richly deserved.
I agree with Sean that the Nobel prize in economics is not a good thing. It has become a tool to promote economics ahead of other social sciences that are no less credible. Still, if someone has to win the prize, its nice to see it go to someone I respect.
I did read it you missed the “2008” in fact i am good at reading, I read mathematics as a language not a science.
“Doubtless, Republicans will complain about being implicitly identified, yet again, as enemies of science and of truth. But they’ve made their bed and must lie in it (in both senses of the word).”
So must those with their good war and bad war theories in the long run-
‘BRITISH troops are no longer needed for the security of Iraq and should go home, Prime Minister Nuri al-Maliki has told a British newspaper.
“We thank them for the role they have played, but I think that their stay is not necessary for maintaining security and control,” Mr Maliki told the Times.
“There might be a need for their experience in training and some technological issues, but as a fighting force, I don’t think that is necessary.”
I guess wall to wall Democrats will be able to road test those theories for us all fairly soon, along with those economic ones of theirs.
“I guess wall to wall Democrats will be able to road test those theories for us all fairly soon, along with those economic ones of theirs.”
From one fundamentalism to another, you would have thought by now the trial and error method at the heart of modern science would at least be acknowledged if not respected by economists?
Feeling financial pain? First, blame all the scientists
Mr Q might like to also acknowledge that the same systematic thinking is at the heart of so called “climate science”?
Onya Paul, worlds best economist and columnist – well deserved prize. And Hat Tip to our own Australian Krugman, Quiggin.
Just read Sean’s comment, you are an idiot. Krugman a protectionist? Have you actually read any of his work?
Its interesting that you are also (surprise surprise) a global warming denialist. You really do have to prove you are smarter with home grown theories than people that have actually studied things etc.
Why dont you take John’s advice and actually read things for a change?
I find Krugman a decent public intellectual, a fair economist, but a terribly misguided one.
This is yet another political appointment that discredits the prize.
The committee has a political agenda and that is it’s only reason for picking Krugman. It’s like picking a Polish Pope, back in the day: to further the agenda.
You can have fun with that analogy for a bit. But in the end Krugman is not someone who should be given a Nobel prize by any stretch of the imagination.
Sean you are a clown. Paul Krugman is a staunch proponent of free trade. get your facts right!
Does sean realise that with “wall to wall” democrats it is likely less American tanks will cross borders?
In fact we may get more and better fair trade if America took all its tanks home.
Trade forced by tanks is bad trade.
Would you get in a plane designed by Krugman?
This is a man who for 8 years as written bile after bile repudiating his own academic work (and yes I do understand Ricardos comparative advantage)
He fits facts to suit his hypothesis, He advocates intervention as an efficiency increasing tool, this is a logical fallacy, when you intervene you pick winners and you choose to protect one side or the other (btw would you say Fannie and Freddie was an efficient way to run the mortgage market?)
And its the same in international trade, either the market decides or you have to pick winners.If you pick winners you have to get into politics, if you get into politics then you take sides as he has done since 2000. (see nyt)
He is getting this award for his bile against Bush and to set the agenda in the coming post bush era, life is not just about what you think, its about living what you think, lets hope he pays tax at his preferred higher rate.
Just because you claim to be not to be a protectionist, is not the same as actually being one, its just words. If you dont accept the free market (and no that is not a market without rules or taxes) then the logical conclusion is that you wish to protect some interest or other*
And least us forget, his attack on the dead. Whatever you do or do not think of Friedman to launch a character assignation on someone who cannot defend themselves is beyond the pale, he owes an apology to Friedmans family.
*I define a free market as one, where you can equally participate under fair and equal rules and the exchange of goods is by mutual consent.
“character assignation”
Is that like a meeting of minds or something?
Well maybe John. So long as you admit that when Robert Mundell won the prize in 1999 it wasn’t just for work on optimal currency areas but also because supply side economics had made a great contribution to humanity and the laffer curve had put some common sense back into public policy.
http://en.wikipedia.org/wiki/Robert_Mundell
You’ve got to admit once the Nobel gets into ‘social science’ it all gets a bit like art awards. I’ll look forward to Obama and Mullar Omar joining illustrious Nobel Peace Prize winners like Carter and Arafat.
My favourite peace price winner just at this moment is that guy who started a bank, Muhammad Yunus and is now poignantly famous for that great line- ‘One day our grandchildren will go to museums to see what poverty was like.’
A museum about socialism do you think. 😉
p.s. Just on the laffer curve can somebody explain what is going on in New Zealand this election. Even the New Zealand Greens want to cut income taxes. I’ve put up a small piece about it on the ALS blog.
This is the best response to the Krugman’s Nobel I’ve seen so far. It gives due credit to his early theoretical accomplishments, points out the shortcomings of those accomplishments, and then makes the point that Krugman is probably the most politically partisan recipient of the prize in recent memory. His NYT columns have done much harm to his reputation; if the Nobel comittee wanted to give it to a neo-Keynesian they could have at least selected someone more academic.
We are all Grameen bankers now Terje.
#16 I don’t think Mundell ever endorsed the Laffer curve (more accurately, the Laffer claim that modern economies are on the descending part of the rates-revenue curve known long before Laffer). This is a very silly idea, and Mundell isn’t silly.
Nor do I think that the committee was necessarily endorsing the particular policy positions taken by Mundell (for that matter, I don’t think they are endorsing Krugman’s policy views).
But I do think that Mundell’s significant contribution to the debate over supply-side economics (whatever exactly that means) played a role in his Nobel award, and so, obviously, did Mundell, judging by his acceptance speech. Similarly, Krugman’s willingness to stand up to the Bush administration has played a major role this time around.
In short “protectionism� and as my late grandfather who was a liberator of Belsen concentration camp said “if trade does not cross the border than tanks surely will�
Krugman is not a protectionist, in practice. He is a free-trader because he recognises government intervention has hidden costs.
In economic theory however, he subscribes to the fashionable “strategic protectionism” models supported by many Australian social democrats. These models show how formalism can be abused (something Austrian economists have long written about), and applying them to policy would have disastrous results.
Sukrit, previous politically active winners of the prize (like Friedman) have been less partisan because the times were less partisan.
It’s absurd, in current circumstances, to suggest a bipartisan stance in support of sound economic policies. The Republican party, on this as on most issues, is unsound from top to bottom. They’ve long since abandoned any notion of budget balance, or rational allocation of public expenditure in favour of an unceasing diet of tax cuts for the rich.
Friedman was never a shill for the Republican Party, he didn’t caricature socialism (at least not like Krugman caricatures markets). Indeed, Friedman would have joined the Libertarian Party were it not more expedient to be a Republican.
Democrats are equally committed to unbalanced budgets, tax cuts and the rest of it. As you should know, political reality means both parties are in substance very similar. Democrats aren’t any good on costly foreign wars either – Clinton had a long laundry list of interventions, and Barack Obama is on record stating he would invade Pakistan. So there is no point discussing parties and personalities.
As an academic, Friedman never stooped that low – Krugman, on the other hand, does it regularly. I have no problem with his views on economics. There seems to be bipartisan agreement that he’s good on international trade. But there are others who aren’t as partisan who should have been considered first.
@sean
It seems the only one writing Bile here is you.
Congrats to Paul on the prize. He deserves to be acknowledged for his role in bringing economics to the masses as he does for theoretical work.
“The core-periphery model of Krugman (1991a)”!?
This looks suspiciously like a ripping-off and mathematising of Wallerstein and the dependency theorists, who were saying the same things about inter-regional trade, specialisation, imperfect competition and returns to scale, etc, back in the 50s-70s.
The 2008 Bank of Sweden Nobel Prize in Economics is going to cause serious embarrassment to the many contemporary blogs and policy papers, written by non-economists in public and private institutions, who justify their propaganda with reference to Nobel Prize winners in Economics. Not Arrow, not Debreu, not Sen, not Stieglitz, not, ….. . No, only M. Friedman and v. Hayek are to be found in the said blogs and policy papers. Talking about partisanship, eh?
Those, who feel P. Krugman ought to apologise to M. Friedman’s family (and v. Hayek’s?) ought to get the said bloggers and policy paper propagandists to publicly apologise to all the Bank of Sweden Nobel Prize winners in Economics whom they have left out.
James at 27 – yes and no. Krugman has never denied the influence on him of the dependistas, while criticising both their technical inadequacies and their failure to generalise the mechanisms beyond questions of imperialism (the latter, he would argue, partly a consequence of the former). There’s a fine essay by him on this at http://web.mit.edu/krugman/www/dishpan.html
james, this post is recommended to me as containing a lot of info about his academic career: http://www.marginalrevolution.com/marginalrevolution/2008/10/paul-krugman-wi.html
I’m sure the answers to your question are easy enough to find out.
ha ha
sean made his comment at 10.46 writing the prize off (which i agree with),
and at 10.53 piped in again to comment on the work of krugmans he’d just ‘scanned’
seven minutes of analysis of 40 years work
and an inaccurate slagging off
1+1=3, can you read that
I found this quote on a blog
“Essentially, Krugman argues that we follow the Europeans. We all know what an economic powerhouse Europe is, with its double digit unemployment and exploding government debt. The poor in France are so elated that they regularly celebrate with bon fires made from cars. ~fundamentalist”
I think the bit about europe is true.
Good on Krugman. I’m not totally onside with all of his politics but he is a clear thinker and a fine economist.
For the Krugman fans, a quote from Krugman:
“unsustainable situations usually go on longer than most economists think possible. But they always end, and when they do, it’s often painful.â€?
Krugman economic wisdom.
Ubiquity at #32, that is an impressively wingnutty quote. You could enter it in one of the many contests like this one.
http://crookedtimber.org/2008/10/13/the-name-of-this-band-is-exploding-heads/
As long as we’re quoting Krugman, this is tremendous:
“At the shallowest level, some intellectuals reject comparative advantage simply out of a desire to be intellectually fashionable. Free trade, they are aware, has some sort of iconic status among economists; so, in a culture that always prizes the avant-garde, attacking that icon is seen as a way to seem daring and unconventional.”
jquiggin, it might be wingnutty, but is it wrong? Would you deny that French social democratic labour market policies have something to do with relatively high unemployment rates? Or that high unemployment rates, particularly amongst youth, are a major contributing factor to the social problems that now plague les banlieues?
BBB
France may be a great bogy for Americans, but it is scarcely the obvious candidate as an example of social democracy.
More to the point, the difference between US unemployment (6.1 per cent) and French unemployment (8.0 per cent) is about equal to the proportion of low-skilled Americans in prison (equal to around 1.5 per cent of the labour force).
Well by your measure John Maynard Keynes
must have been silly because he said it also, and at a time when modern economies were taxed far less than they are today.
Jude Wanniski who coined the term Laffer curve in his 1978 book “The Way the World Works” clearly attributed the idea to both Mundell and Laffer. Here is how Wanniski tells it:-
http://www.polyconomics.com/ssu/ssu-031003.htm
And as you have already noted Robert Mundell made much of supply side economics in his Nobel acceptance speech.
Of course the real interesting work by Mundell relates to currencies and the gold standard.
John, Krugman deserves the Noble Prize for pouring scorn on the neo-liberal conservative Republicans and their political policies in advancing the interests of the wealthy at the expense of not so well off which led to the growing disparity between the rich and poor.
Terje, what John said was:
Your Keynes quote doesn’t get you anywhere.
Unemployment is currently lower than the US in Sweden, Norway, Denmark, Austria; the Netherlands and the UK (not to mention Australia).
http://www.economist.com/markets/indicators/displaystory.cfm?story_id=12381154
Maybe those European social democrats aren’t that dumb after all.
Terje, Jude Wanniski is not an authority on the history of economic thought, or anything else.
In your quote (and, like many soi-disant supply-siders) you are confusing Keynesian demand-side effects with incentive-based supply-side effects. Experience suggests that Keynesian demand-side effects are usually smaller than early Keynesians expected, but still larger than the supply side effects yielded by ‘dynamic scoring’ exercises.
“Unemployment is currently lower than the US in Sweden, Norway, Denmark, Austria; the Netherlands and the UK (not to mention Australia).”
Let’s not oversimplify things. It is higher in Belgium, France, Spain, Germany, Italy, Portugal and Spain. And the UK is a neoliberal place, or so Quiggin tells us (IIRC).
BBB
SJ – why not? Keynes is quite clear. He basically says that today tax rate cuts have a better chance of raising revenue than tax rate increases. Where in the quote is he unclear?
John – Jude may not rate as an authority on the history of economic thought but given he coined the term “Laffer curve” he is an authority on who promoted the idea to him. And he gives almost equal billing to Mundell as to Laffer. He describes Mundell as Laffers mentor on the issue. And even now several years after Jude passed away the website of Robert Mundell links to Judes former consultancy (Polyconomics where the article of Judes I linked to resides) suggesting that Mundell is not interested in distancing himself from Judes claims. In fact the link has been there since 1998 when I first started reading about Robert Mundell and his work on currencies.
http://www.columbia.edu/~ram15/
For what it is worth I personally think the Laffer curve is shaped mostly like the profile of Uluru. There is only really a slop of significance at very high tax rates and at very low tax rates and in most of the middle changes in the tax rate have little impact on tax revenue (the curve being mostly flat in the middle). However tax cuts do have a significant effect on private sector output and hence total welfare (public sector plus private sector) does generally improve significantly with a tax cut.
BBB, I think we agree that simply labeling developed countries as either “social democratic” or “neo-liberal” tells us effectively nothing about their unemployment rate.
Of course, its noteworthy that most of the developed countries with lower unemployment than the US are major energy producers (as is the US) while the major western Euroepan countries with higher unemployment aren’t.
Terrific news John.
Terje, giving the name “Laffer curve” to something well-known for centuries before is evidence of ignorance, not a basis for authority. I could call E=mc^2 the “Petersen equation” if you liked, but that wouldn’t make me an expert on physics.
Terje Says:
Sigh. Because it’s a generic argument for the possible existence of something like the Laffer curve, and says absolutely nothing about the position on the Laffer curve in his own day, let alone about today.
JQ, a bit of an aside. Whilst the idealist philosopher, George Berkeley, did not come up with e=mc^2 he did come with the proposition that all motion is relative, 150 years before Einstein. That is quite an achievement I think. Berkeley was critical of Newton’s assumption of classical empty space as an absolute reference. Physicists will correct me if my last sentence is somewhat loosely expressed.
Berkeley’s Proposition 112 from ‘Concerning Human Understanding’; “..I must confess that it doth not appear to me that there can be any other motion other than relative; so that to conceive motion there must be at least conceived two bodies, whereof the distance or position in regard to each other is varied…”
I am waiting to see if anyone can quote an ancient Greek philosopher who came up with the same idea much earlier. It’s quite possible.