when krugman was sane

At some point in the last decade or so, a very good economist by the name of Paul Krugman morphed into a very bad rhetorician. My own personal theory is that he saw a very lucrative opportunity to fill the leftist void for economic theory, and decided fame, fortune, and power were better than humble truth seeking.

Of course, this opened Krugman up for humorous criticism pitting Krugman the economist against Krugman the rhetorician. But it is good to remember that Krugman was once a solid read. In his article Ricardo’s Difficult Idea he examines why people do not understand comparative advantage. Here is a section in which he gets to the heart of the modern terrible quality of economics reporting in the news:

And yet if one tries to explain the basic model to a non‐economist, it soon becomes clear that it really isn’t that simple after all. Teaching the model, to docile students, is one thing: they get the model in the course of a broader study of economics, and in any case they are obliged to pay attention and learn it the way you teach it if they want to pass the exam. But try to explain the model to an adult, especially one who already has opinions about the subject, and you continually find yourself obliged to backtrack, realizing that yet another proposition you thought was obvious actually isn’t. Just before this paper was written, I was trying to explain to an editorial writer for a major U.S. newspaper why international trade is probably not the main cause of the country’s ills. After a confused interlude, it became clear what one of the blocks was: he just didn’t understand, even after being told the numbers, why a situation in which productivity increases were not being shared with workers would necessarily be reflected in a decline in the labor share of income ‐‐ and therefore why the stability of that share in practice is a crucial piece of evidence. Eventually I was reduced nearly to baby‐talk (“suppose the factory produces 10 tons of cheese, and pays out wages equal in value to 6 tons; now suppose that the workers become more productive and turn out 12 tons of cheese, but that wages haven’t changed …”). This was not a successful conversation: he wanted to talk about global trends, and instead I was teaching him first‐grade arithmetic.

Also see Krugman’s In Praise of Cheap Labor.

About christopher fisher

The blog is meant for educational/entertainment purposes. All material can be used and reproduced in any length for any purpose as long as I am cited as the source.
This entry was posted in Econ 101, Economics, Human Nature, Trade. Bookmark the permalink.

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