December 20, 2000:
Pundit and professor
Paul Krugman explains economics
in print and in class
By Caroline Moseley
Krugman is opinionated. And a lot of people are interested in what
he thinks. Professor of economics and international affairs, he
has been writing twice-weekly Op-Ed pieces for the New York Times
since January. Recent topics have included AT&T, fuel crises,
Amazon.com, and the election, the election, the election. Determined
to "help people get things right," Krugman is worried
- irritated? Incensed? - by fuzzy thinking about economic and social
policy. "I often feel there are glaringly obvious things that
just aren't being picked up," he says, "For example, George
W. Bush promising the same Social Security money to two different
sets of people." His disdain for shoddy, even duplicitous,
arithmetic is nonpartisan, and Democrats as well as Republicans
- not to mention some fellow economists - have been on the receiving
end of Krugman's urge "to set the record straight."
What it takes to write about such matters, says
Krugman, is "not a deep fundamental insight - such as the concept
of supply and demand - but rather, an apprehension of something
important that you don't feel is being addressed correctly, or that
people are just not noticing. There are potential topics en masse."
Krugman's voice has been heard with increasing
frequency outside the academy since the late 1980s, when "I
started taking on some causes, trying to speak to wider audiences.
For example, I was upset that confused notions about international
trade were driving public debate on economic policy - such as the
whole competitiveness issue, the commonly used metaphor of international
trade as a war with winners and losers.
Not that he is a full-time pundit. This semester,
Krugman teaches almost 400 undergraduates in Economics 102, Description
and Analysis of Price Systems, a beginning microeconomics course.
"To do economics, you have to build a lot of machinery,"
he says. "We're talking about 'the fate of empires' here, but
that means talking about curve shifts and new equilibria."
Still, while introducing students to necessary analytical tools,
"I like to feel that some of the excitement comes through."
Krugman came to economics somewhat indirectly.
"I was truly interested in history," he recalls, "but
wanted to know, not just what happened, but why. That drew me into
social science, and economics seemed to me the social science closest
to having a real working methodology." In addition, he recalls,
"I was a big science fiction fan when I was a young, influenced
by Azimov's Foundation trilogy; psychohistory appealed to
me, and, again, economics is the closest you can get.
"Economic behavior is one part of human behavior
where we really do have some powerful insights," he says.
Krugman, a graduate of Yale University, received
his Ph.D. from MIT, and has taught at Yale, Stanford and, most recently,
MIT before "leaving one outstanding program to join another"
at Princeton this past summer.
Winner of the 1991 John Bates Clark Medal, awarded
by the American Economic Association to "that American economist
under 40 who is adjudged to have made a significant contribution
to economic thought and knowledge," Krugman has written several
hundred articles in scholarly journals and the popular press, and
written or edited some 18 books - among them, The Age of Diminished
Expectations (1990), which explains cutting-edge economics to the
general public. Within the profession, he is a specialist in international
trade and finance, known, for among other things, New Trade Theory.
"Traditional trade theory is based on perfect competition and
constant returns to scale," he explains. "New trade theory
is about imperfect competition and increasing returns."
He is also credited with identifying currency crises
as an academic field. "Obviously, I didn't invent currency
crises," he says, "but they had not previously been studied."
Krugman admits to being "attracted to crises
- to the bizarre and violent events in economics. And the nice thing
about economics is that the world keeps on changing. There's almost
always a crisis somewhere," he observes cheerfully.
Still, as the presidential election tally dragged
on, Krugman noted, "However it comes out, I'm afraid economic
policy will fare badly." The next administration, he believes,
faces "two big economic tests. One is whether it can stick
to a fiscal policy, including a policy toward Social Security, that
prepares the country for the coming demographic deluge. The other
is whether it can deal adequately with the risk of economic instability,
here and abroad.
"We are likely to botch one or both
tests," he predicts.
This year, in addition to teaching Economics 102
and providing the Times with trenchant commentaries, he is
leading a graduate macroeconomics seminar in Domestic Policy Issues.
He is also working on a textbook, Principles of Economics, coauthored
with his wife, Robin Wells, who is a member of the research staff
in the economics department. Recovered from election fatigue, he
continues to write opinion pieces, but will concentrate on non-election-related
topics such as "urban sprawl, or the WTO." And he is eager
to continue his investigation of "the impact of globalization
on income distribution in developing countries."
For more about Krugman, go to his Web site (still
on the MIT server, soon to move to Princeton): http://web.mit.edu/~krugman/www.