Paul Krugman wins Nobel Prize in Economics

[lisab]

I've always enjoyed reading Krugman's columns, but I wasn't aware he did work at this level.

http://www.msnbc.msn.com/id/27159654/

 

[Gokul43201]

Neither was I - I was pretty surprised when I read the news.

Here's the award page: http://nobelprize.org/nobel_prizes/economics/laureates/2008/

And an interesting quote from back in 2005:

These days Mr. Greenspan expresses concern about the financial risks created by "the prevalence of interest-only loans and the introduction of more-exotic forms of adjustable-rate mortgages." But last year he encouraged families to take on those very risks, touting the advantages of adjustable-rate mortgages and declaring that "American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage."

If Mr. Greenspan had said two years ago what he's saying now, people might have borrowed less and bought more wisely. But he didn't, and now it's too late. There are signs that the housing market either has peaked already or soon will. And it will be up to Mr. Greenspan's successor to manage the bubble's aftermath.

How bad will that aftermath be? The U.S. economy is currently suffering from twin imbalances. On one side, domestic spending is swollen by the housing bubble, which has led both to a huge surge in construction and to high consumer spending, as people extract equity from their homes. On the other side, we have a huge trade deficit, which we cover by selling bonds to foreigners. As I like to say, these days Americans make a living by selling each other houses, paid for with money borrowed from China.

One way or another, the economy will eventually eliminate both imbalances.

http://www.nytimes.com/2005/08/29/opinion/29krugman.html?_r=1&oref=slogin

 

[Moonbear]

Neither was I - I was pretty surprised when I read the news.

Here's the award page: http://nobelprize.org/nobel_prizes/economics/laureates/2008/

Wow, I didn't know that either.

And an interesting quote from back in 2005:

http://www.nytimes.com/2005/08/29/opinion/29krugman.html?_r=1&oref=slogin

I think anyone with half a brain and a lick of common sense would have said the same thing then.

 

[WarPhalange]

The BEST Krugman moment came when he was talking with Keith Olbermann on his show and said "All your decision are belong to me." when referring to the first $700B bailout plan that had Paulson make all the moves.

I was in tears. It was the best moment of Countdown ever, and it was sadly lost to the abyss because I couldn't figure out how to rip it from www.msnbc.com onto Youtube.

For those who don't understand, Google "All your base are belong to us." It's an obvious variation on this ancient meme. That man is awesome to say that on mainstream TV as a professor.

 

[Ivan Seeking]

"The Chinese sell us poison toys and tainted food, and we sell them toxic securities"
- Paul Krugman

 

[Astronuc]

I've always enjoyed reading Krugman's columns, but I wasn't aware he did work at this level.

http://www.msnbc.msn.com/id/27159654/

I was thinking about this the other day while reflecting on someone else who should win a Nobel for his humanitarian work.

I am pleased to see Krugman get! He deserves it, it is timely, and he should be taken more seriously. Krugman is a strong critic of the Bush administration and it's unsound economic policies.

Announcment on Yahoo - Columnist Paul Krugman wins Nobel economics prize (should read Economist and Columnist)
http://news.yahoo.com/s/ap/20081013/ap_on_bi_ge/eu_sweden_nobel_economics

STOCKHOLM, Sweden - Paul Krugman, the Princeton University scholar, New York Times columnist and unabashed liberal, won the Nobel prize in economics Monday for his analysis of how economies of scale can affect international trade patterns.

Krugman has been a harsh critic of the Bush administration and the Republican Party in The New York Times, where he writes a regular column and has a blog called "Conscience of a Liberal."

He has also taken the Bush administration to task over the current financial meltdown, blaming its pursuit of deregulation and unencumbered fiscal policies for the financial crisis that has threatened the global economy with recession.

Perhaps better known as a columnist than an economist to the public, Krugman has also come out forcefully against John McCain during the economic meltdown, saying the Republican presidential candidate is "more frightening now than he was a few weeks ago." Krugman (pronounced KROOG-man) also has derided the Republicans as becoming "the party of stupid."

Tore Ellingsen, a member of the prize committee, acknowledged that Krugman was an "opinion maker" but added that he was honored on the merits of his economic research, not his political commentary.

"We disregard everything except for the scientific merits," Ellingsen told The Associated Press.

The 55-year-old American economist was the lone winner of the 10 million kronor ($1.4 million) award and the latest in a string of American researchers to be honored. It was only the second time since 2000 that a single laureate won the prize, which is typically shared by two or three researchers.

Krugman's blog on NYTimes - http://krugman.blogs.nytimes.com/

Attaboy, Paul!

 

[Ivan Seeking]

...the Republicans as becoming "the party of stupid."

Yep.

 

[edward]

The BEST Krugman moment came when he was talking with Keith Olbermann on his show and said "All your decision are belong to me." when referring to the first $700B bailout plan that had Paulson make all the moves.

I was in tears. It was the best moment of Countdown ever, and it was sadly lost to the abyss because I couldn't figure out how to rip it from www.msnbc.com onto Youtube.

For those who don't understand, Google "All your base are belong to us." It's an obvious variation on this ancient meme. That man is awesome to say that on mainstream TV as a professor.

Is this the Olbermann Krugman interview ? It strarts out typical Olberman then Krugman comes in.

 

[turbo]

Krugman would make a fantastic economic advisor, as the next president tries to undo all the damage done by Gramm, McCain, Greenspan, et al. We need someone sharp enough to re-regulate our financial sectors without being so heavy-handed and arbitrary that more damage ensues. We also need someone who will blithely ignore the pleas for special consideration by the people who have benefited from the shell-games leading to the current mess. Chairman of the SEC, perhaps?

 

[Astronuc]

The Prize in Economic Sciences 2008
http://nobelprize.org/nobel_prizes/economics/laureates/2008/info.pdf
The significance of Krugman's work. Hopefully the Obama administration will pay attention, unlike his predecessors.

This year’s Laureate is awarded the Prize for his research on international trade and economic geography.

By having shown the effects of economies of scale on trade patterns and on the location of economic activity, his ideas have given rise to an extensive reorientation of the research on these issues.

International Trade and Economic Geography

How are we affected by globalization? What are the effects of free trade? Why do increasing numbers of people fl ock to large cities, while rural areas become depopulated?

These questions cannot be answered without a theoretical foundation. For a long time, the analysis of foreign trade had been based on a well-established theory which explained why some countries export certain goods and import others. After World War II, however, it became increasingly obvious that important trade patterns did not quite correspond with that theory. In 1979, the US economist Paul Krugman proposed a new model which provided a better explanation for the observed patterns.

In later research, Krugman has shown that the model he initially developed for international trade could also be used to clarify key issues in economic geography. In the context of both foreign trade and economic geography, the objective is to explain what goods are produced where. Theories of economic geography also attempt to specify the forces whereby labor and capital become located in certain places and not others.

Scientific background on the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008

Trade and Geography – Economies of Scale, Differentiated Products and Transport CostsCompiled by the Prize Committee of the Royal Swedish Academy of Sciences

http://nobelprize.org/nobel_prizes/economics/laureates/2008/ecoadv08.pdf

The document cites a number of papers by Krugman and others. Hopefully the world governments will learn.

 

[Ivan Seeking]

How SciFi helped to produce a Nobel Prize in Economics:

Krugman's early interests
JIM LEHRER: When and why did you decide to become an economist in the first place?

PAUL KRUGMAN: Oh, that's a little embarrassing. I was -- I don't know how many of your viewers watch science fiction, read science fiction, but this very old series by Isaac Asimov, the "Foundation" novels, in which the social scientists who understand the true dynamics save civilization.

And that's what I wanted to be. And it doesn't exist, but economics is as close as you can get. So when I was a teenager, I really got into it.

http://www.pbs.org/newshour/bb/business/july-dec08/nobelkrugman_10-13.html

 

[Astronuc]

This is pretty funny.

Those Hard-Boiled Eggheads by Maureen Dowd
http://www.nytimes.com/2008/10/15/opinion/15dowd.html

I’m not sending Paul Krugman Champagne.

He won the Nobel prize in economics this week, and while I’m sure that’s delightful for him, it has raised the bar to an impossible height for his fellow columnists at The Times. We used to strive for Pulitzers, or simply regional awards, or even just try to top each other on the paper’s most e-mailed list.

Now we’re supposed to compete for Nobels?

It’s a total disaster. Any minute, Krugman might swagger into the office wearing that big old 24-karat-gold-plated medal around his neck like a World Wrestling championship belt, talking about how beautiful Sweden is.

So I must aim higher. Much higher.

A Nobel in economics is out. I didn’t take economics in college because all the classes started at 8 a.m. Physics, chemistry and medicine are out. Literature? They’ve given up giving it to Americans. So it’s going to have to be the Nobel Peace Prize.

. . . .

 

[mheslep]

...He deserves it, ...

Why don't we leave that assessment to Economists that evaluated his body of work.

 

[mheslep]

How SciFi helped to produce a Nobel Prize in Economics:


http://www.pbs.org/newshour/bb/business/july-dec08/nobelkrugman_10-13.html

Dam I read Asimov's Foundation as a teenager and also loved it. Where's my prize?

 

[Ivan Seeking]

I would guess that you just forgot to write a paper.

 

[mheslep]

I would guess that you just forgot to write a paper.

Oh yes the paper. Dam. Points off if its late I suppose.

 

[mheslep]

Mad man Krugman's column today:

...What we need right now is more government spending — but when Mr. McCain was asked in one of the debates how he would deal with the economic crisis, he answered: “Well, the first thing we have to do is get spending under control.”

If Barack Obama becomes president, he won’t have the same knee-jerk opposition to spending. But he will face a chorus of inside-the-Beltway types telling him that he has to be responsible, that the big deficits the government will run next year if it does the right thing are unacceptable.

He should ignore that chorus. The responsible thing, right now, is to give the economy the help it needs. Now is not the time to worry about the deficit.

Pass that pipe Paul.

 

[Ivan Seeking]

Mad man Krugman's column today:
Pass that pipe Paul.

And your credentials would be...?

 

[Ivan Seeking]

Perhaps we need to add Krugman to our long list of Nobel winners supporting Obama.

Nobel laureates for Obama - open letter to America
http://obama.3cdn.net/6667d14fd1301d9e8e_dbg0mvxzz.pdf

 

[Art]

Mad man Krugman's column today:
Pass that pipe Paul.

Are you suggesting the gov't should cut overall spending during a recession? Do you really think that will help lift the economy? Better target the spending by all means, but reducing the deficit at the expense of domestic growth seems a little recessionary to me. As an individual do you think it would be good practice for you to only borrow money when you already have a lot and only pay it off when you are broke??

The US should never have run up it's deficit during the good times but to cut spending now to reduce the deficit during a recession simply compounds the error.

 

[Astronuc]

...What we need right now is more government spending — but when Mr. McCain was asked in one of the debates how he would deal with the economic crisis, he answered: “Well, the first thing we have to do is get spending under control.”

I disagree with Krugman and agree with McCain. It's time to wean the public from the dependency on government spending - for entitlements/subsidies.

Congresswoman Barbara Jordan addressed my high school graduating class during the commencement ceremony - and her theme was 'no free lunch'. She talked about hard work and purpose.

We need more spending but that should come primarily from the private sector. If I was president, I'd be meeting with leaders in various industrial sectors and work on employment and employment issues, particular pensions and health care. Regardless of whether the employer pays (directly or in wages/salary) or government pays, someone has to put into a pool for health insurance. Similar for pension/retirement - either the employer or government pays. If the government pays, it's got to come from taxes - either on trade, or employer and/or employee incomes and assets.

I liked McCain's comment about letting the business man deciding how to redistribute wealth. That puts a lot of faith in the business man to pay reasonable/livable wages.

I would restructure the tax system to weight on a ratio of highest owner/manager compensation to the lowest/entry level. The rational - if a company can pay a CEO/manager 100x, 200x, 300x the lowest (entry level) wage, then they certainly have the cash to pay higher taxes.

With respect to government spending - it is one thing to spend money on research to develop new technologies, e.g. more efficient transporation or energy generation, or infrastructure like bridges and highways, but its another thing for the government to be paying what amounts to subsidies on health care or pensions or food subsidies. Too many people are collecting subsidies. If the government is going to pay people, then people need to be working for that pay!

 

[mheslep]

And your credentials would be...?

I wouldn't be so flippant about a Krugman published academic work. His columns are open season; they apparently come under criticism by professional economists of varying viewpoints because he strays from any recognizable economics framework and he's earned a reputation for loose facts in his columns.* I'd expect that criticism to become noticeably louder soon as he's not a just a columnist in the popular press any more, he represents his peers now.

*NYT Ombudsman:

2. Op-Ed columnist Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults...

http://www.nytimes.com/2005/05/22/weekinreview/22okrent.html?_r=1&oref=slogin

 

[mheslep]

Are you suggesting the gov't should cut overall spending during a recession? Do you really think that will help lift the economy? Better target the spending by all means, but reducing the deficit at the expense of domestic growth seems a little recessionary to me. As an individual do you think it would be good practice for you to only borrow money when you already have a lot and only pay it off when you are broke?...

I argue that a)the US has plenty of spending in place at the moment, the real problem is freeing credit, b) certain types spending doesn't do much stimulation - defense for instance could take some whacks, and c) no, above a certain amount ($ 1/2 trillion seems like a good top end) one doesn't borrow any more as it does more harm than good - gov. starts competing with the market for the money it wants to spend to stimulate the market in the first place.

 

[Ivan Seeking]

I wouldn't be so flippant about a Krugman published academic work. His columns are open season; they apparently come under criticism by professional economists of varying viewpoints because he strays from any recognizable economics framework and he's earned a reputation for loose facts in his columns.* I'd expect that criticism to become noticeably louder soon as he's not a just a columnist in the popular press any more, he represents his peers now.

So your point is that you know when he's right and when he's wrong?

Pass that pipe Paul.

It seems to me that you are the one with a flippant attitude towards people far more accomplished than you.

The question was: What are your credentials?

 

[mheslep]

So your point is that you know when he's right and when he's wrong?


It seems to me that you are the one with a flippant attitude towards people far more accomplished than you.

The question was: What are your credentials?

Yes, to be clear, it was me that was being flippant about his column, not about the quality of his academic economics work which is certainly not my field. And no, I don't need any 'credentials' to be flippant about a political columnist that has reputation with his own paper's ombudsman for being loose with his figures in his columns, and in 2003 claimed that deficit spending would soon send the US 'off the cliff'.

 

[gravenewworld]

Mad man Krugman's column today:
Pass that pipe Paul.

In economics 101 they teach you about spending multipliers. Since government spending is an endogenous variable to total GDP, it has a more potent effect than tax cuts (which rely on people's personal marginal propensity to consume) at stimulating GDP. If you want to get more bang for your dollar at stimulating GDP, the government should really be spending more money, not giving tax cuts.

Tax cuts will increase the deficit and so will increasing government spending, so why not get the most for your money? (This is what Krugman is trying to get at). You can read all about spending & money multipliers here:

http://www.econ.washington.edu/user/cnelson/Chap11.pdf

Because the tax cut multiplier is always smaller
than the spending multiplier, tax cuts are regarded as less potent in
boosting the economy during a recession than are spending increases.

::Sigh:: if only they made learning basic macroeconomics a requirement for citizenship, people wouldn't be so duped by politician's promises of tax cuts.

 

[mheslep]

In economics 101 they teach you about spending multipliers. Since government spending is an endogenous variable to total GDP, it has a more potent effect than tax cuts (which rely on people's personal marginal propensity to consume) at stimulating GDP. If you want to get more bang for your dollar at stimulating GDP, the government should really be spending more money, not giving tax cuts.

Tax cuts will increase the deficit and so will increasing government spending, so why not get the most for your money? (This is what Krugman is trying to get at).

Krugman doesn't mention tax cuts in the column, it was all about spending (and what kind) vs controlling the deficit.
Forgot to link it prior:
http://www.nytimes.com/2008/10/17/opinion/17krugman.html