In defense of Paul Krugman

Oh dear lord, Paul Krugman is a Nobel laureate and people have decided to politicize it, spewing inaccurate and irrelevant complaints. I don’t have time to write this out as a proper essay, but I have to comment.

Forbes has four columns from economists on the subject. Alongside Arvind Panagariya’s low-tech layperson introduction to Krugman (1979, 1980) and Arvind Subramanian’s longer reflection on Krugman’s three research themes (trade, economic geography, currency crises), parsimonious (specific functional forms) style, and transformation into NYT columnist, we have negative reactions from William Anderson and Peter Boettke.

Let me only briefly address Anderson’s column, since it is atrocious. This is perhaps the worst possible summary of Krugman’s (1979, 1980) trade models:

Krugman contends that nations can create comparative advantages by subsidizing certain industries, something the ancients once called Mercantilism.

Hint: Comparative advantage is nowhere to be found in those papers. They’re single-sector models.

The rest of Anderson’s column is the argument that Krugman’s book was a distorted history of 20th century America (probably true, see Ed Glaeser) and misrepresenting Krugman’s take on the Paulson Plan.

On to Boettke. He also misrepresents Krugman:

Krugman became ideological and partisan more than a decade prior to the announcement of his prize. And he has not really written serious academic papers or books in economics during that time span. Krugman more or less abandoned scientific economics when he decided to start writing for a broader audience in the 1990s.

Gee, what’s this on my bookshelf from my graduate level trade course? Why, it’s The Spatial Economy: Cities, Regions, and International Trade by Fujita, Krugman, and Venables. Copyright? 2001. And here’s Krugman sketching out the dollar crisis last summer. And of course, Krugman has been pushing his thoughts on trade and inequality, to the chagrin of some.

Boettke then goes on to discuss new trade theory, disproportionately emphasizing the potential for strategic protectionism, just like Wikipedia does. He then basically says that Krugman’s work was only necessary because economists insist on mathematical formalism.

Libertarians like Pete Boettke and Russ Roberts (whose “least favorite Krugman quote” is a completely benign explanation that the mean doesn’t characterize a distribution) are worried that the prize may validate Krugman’s partisan NYT column. Russ Roberts even says that he has “talked to a number of people who are depressed and angry at Krugman’s prize.” For truly embarrassing responses to the award, head to Marginal Revolution’s comment section.

This is ridiculous. Paul Krugman is a once-in-a-generation trade theorist who irrevocably shaped the field. He is no less an economist because he disagrees with you on normative public policy questions. Shame on those who try to spoil his well-deserved celebration.