Sunday, August 21, 2011

Paul Krugman - Proven Absolutely Correct (50% of the Time)

Krugman: Absolutely Correct (50% of the Time)

Another smoking hot day in Texas... so I dimmed the lights, closed the door and spent a few hours drinking in Paul Krugman’s “Pop Internationalism” (aka, economic porn).

Much like Sour Punch candy, the collection of essays had me winching against the sour, then settling into a disturbed, sweet appreciation. Clearly Krugman was not a Reagan fan. Clearly he was not a fan of the Clinton Economic Team. Clearly he was not a fan of most of the popular economic thinkers of the 80's or 90's - he freely disses Thurow and Reich and only gives a “C” to Laura Tyson.

The winching sour personal attacks, attacking both the theory and the theorist, will continue the popular impression of the “two-handed” economist - unable to construct reliable models, unable to construct reliable predictions, and unable to learn and adjust because of their religious devotion to academic dogma. Krugman paints his opposition with a broad brush, managing to spill plenty on himself.


We Need More One-handed Economists

The best essay is Technology’s Revenge which was published in 1994. A key idea is income inequality as “fractal” (p. 199) with wide ranges inside of a profession. Sherwin Rosen proposed this “superstar” hypothesis, a likely precursor to the “personal branding” that is all the rage in 2011. Competency gains little reward, superstars will reap the lion’s share. Krugman uses this point to lever higher education above luxury and into necessity. (p 201) Then he states that technology will allow the less skilled to be more productive. The lawyer, the accountant and the skilled professional will be replaced by technology, while the average service provider (janitors, plumbers, etc.) will persist.

Dear Lord, there is plenty of demand, but no supply,
for a one-handed economist and for a Fed Chairman
that can speak plain English.

Is That a Bazooka in Your Pocket?

Economists seem to have a hard time with adjectives. Small, large, slow, fast, consequential, inconsequential, all littered through-out this work, undefined and unqualified, the same criticism the Krugman levels at others. 

Time is also a tough concept - action and reaction are not instantaneous, leaving opponents open for criticism in the short run, but leaving your own argument open for just a little longer...

Miracles like Russian and Asia (soon: China and India) are reverse-transubstantiated back to water. Massive injections of human resources are one time gains that can raise and economy out of poverty. However, once that gain is captured it is unclear what the next steps are to continue development.
In a similar vein, Perry and the Texas miracle will be vivisected.
The current push for more “education” as a solution for US economic ills would seen to be undermined by Eastern economic history and by the theoretical arguments from Technology’s Revenge.

Why should any government be interventionist if the outcome will be theorized away or be criticized for not being interventionist enough?

Bottom Line

The sweetness of Pop Internationalism is not very satisfying. I can resell the book on Amazon and recapture some of my capital “investment”. Usually a book of this sweep would garner a place on my bookshelf as a reference. 

Krugman so expertly dissects everyone in the room, including himself, so that there is no further reading required. 

[Edit: SOLD! 8/22/2011 07:20pm $0.95 + Shipping. I love Amazon!] 
[Edit: 7/20/2015 - Flip-flop, you have to guess whether old or new Krugman is right]

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