Monday, October 13, 2008


I read that Paul Krugman won the Nobel Prize in economics. I squawked.

Krugman deserves the Nobel Prize for anti-economics. I do not seek out his opinions, but when I end up hearing his take on an issue, I can almost guarantee that if there is a clear-cut aspect of efficiency in the issue, Krugman will come down on the other side.

I heard Krugman speak when I was in school at South Carolina. I thought it was odd that this young economist spoke to the international business students and some economics students came along for the ride. In retrospect, that was not so odd. He does not have much in common with economists.

Krugman did one thing worth mentioning--it is, of course, anti-economics in its flavor, but he got it right. Economists can often say, "The answer is free trade--what was the question?" There is a good reason to presume that the answer is free trade. Free trade is efficient.

However, Krugman showed that one could find a set of circumstances under which managed trade is more efficient than free trade. Krugman's set of circumstances in which free trade is suboptimal is not necessarily common, so I still think that free trade is still the answer almost all the time. And, of course, if Krugman's circumstances are met, managed trade is best only if one assumes that government can efficiently manage something (that is known as a heroic assumption, except when it is only meant as a joke).

Given my two objections, I am not interested in putting a footnote by the "free trade answer." But, yes, Krugman took a towering result in economics and showed that another tower could possibly exist under some circumstances, which might be taller. Governments have been trying to build that taller tower for centuries, to the detriment of their citizens.

I guess they gave all the Nobels for economics, so now they have started on anti-economics. Perhaps Ross Perot, Ralph Nader, and Cynthia McKinney should get in line for next year's prize.

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