A Nobel-Bound Economist Punctures the C[onventional] W[isdom]--and Not a Few Big-Name Washington Egos
by Michael Hirsh
from Newsweek, March 4, 1996, pp. 40-41. Copyright Newsweek
1996
SYNOPSIS: Reviews Krugman. Pays particular attention to his role as puncturing conventional wisdom.
Paul Krugman leans back in his chair, arms behind his head, relishing
his notoriety. He is reciting, like verse, his favorite hate mail. "Your
article made me want to throw up." says one letter. "Stanford
should fire you." says another. "You snide elitist." writes
a third fan. Vicious epithets are everyday fare in the voluminous correspondence
of America's most controversial economist. "'Arrogant ass---e' is
the best phrase I've heard lately." Krugman chuckles, a little nervously.
The anonymous missives can occasionally be scary, he admits, like the one
that warned him to stay out of Washington--adding, for good measure, "Jew
boy."
Who is Paul Krugman and why do people say such nasty things about him?
And why is a mere economist drawing the kind of fire usually reserved for
real celebrities--say, Rush Limbaugh? Simple. The Stanford University scholar
has been puncturing the reputations of policy wonks all over Washington.
In a prodigious spate of essays and books--the latest, Pop Internationalism
(221 pages. MIT Press), hits the stores next week--Krugman has launched
a one-man crusade to shatter the era's most cherished economic myths. Among
the most pernicious: the very C[onventional] W[isdom] idea that in our
dog-eat-dog, post-cold-war world, America must viciously compete for jobs
and markets against other nations.
But more on that in a moment. What most riles the wonks is that Krugman
is impossible to ignore. Born on New York's Long Island, educated at MIT,
he's one of the world's most eminent trade theorists--a future Nobel Prize
winner, in the view of his peers. He's not just some ivory-tower type,
either; he writes eloquently and simply for the public. "A lot of
dumb stuff passes for sophistication out there," says the frenetic,
gnomishly handsome Krugman, his brown eyes darting to and fro as a cascade
of ideas tumbles from his mouth. "What amazes me is that people will
have a vast thesis of the world economy and what it's doing to us--and
not check their facts."
Since his popular 1994 book, Peddling Prosperity, Krugman has been
asserting "the facts" as he sees them. Along the way, he's debunked
the conventional wideom on nearly every hot-button issue dear to Washington--not
to mention the Pat Buchanan parade. There is a Krugman take on the trade
deficit with Japan. (Unimportant. An infinitesimal impact on GDP.) On jobs
and wages lost to cheap Third World labor. (Hugely overstated; far less
damaging than lagging productivity and new technology.) On the notion that
economic war has replaced the cold war. (Gibberish; unlike war, trade is
not a zero-sum game.) On the idea that nations compete with each other.
(They don't, because unlike corporations, they can't go bankrupt and their
"employees"--the citizens--mainly buy and sell among themselves.)
You could think of Krugman as a sort of highbrow version of James (The
Amazing) Randi, the magician who goes around telling the real story
of how rivals bend spoons using the power of their minds, and such stuff.
For he delights in skewering the fallacies and errors of math made by what
he calls Washington's ever-growing legions of "policy entrepreneurs."
Nor is he shy about naming names, some of them very prominent Washingtonians
indeed. Labor Secretary Reich, a much-quoted proponent of national competitiveness,
is an "offensive figure, a brilliant coiner of one-liners but not
a serious thinker." Trade maven Clyde Prestowitz, a hard-liner on
Japan, is little more than an intellectual snake-oil salesman, by Krugman's
lights. Lester Thurow, the MIT economist and author of the best-selling
Head to Head: The Coming Battle Among America, Japan, and Europe,
is a "silly" writer who doesn't do his homework.
Say this for Krugman: though an unabashed liberal (he plans to vote for
Bill Clinton), he's ideologically colorblind. He savages the supply-siders
of the Reagan-Bush era with the same glee as he does the "strategic
traders" of the Clinton administration. "Paul's great strength,"
says Fareed Zakari, managing editor of Foreign Affairs, which publishes
some of his most inflammatory stuff, "is that he's not intimidated
by authority--either intellectual or political." In a recent New
York Times op-ed piece, Krugman accused flat-taxer Steve Forbes of
dwelling in economic "never-never land." He blames Buchanan's
rise partly on the Clintonians--for feeding an atmosphere of xenophobia
(aobut Japan, in particular) that played to the new front runner's primitive
populism. "Buchanan wouldn't be able to get away with this,"
he says, "if policy entrepreneurs hand't created an intellectual rationale
for it."
Buchanan is an easy target for any Econ 101 graduate. He's a protectionist
Visigoth rattling at the hallowed gates of free trade. But there's probably
no one better qualified to challenge the Republian candidate on these issues
than Krugman. Among his Nobel-caliber work, he has shown that trade barriers
not only boost prices at home and give consumers less choice, the usual
opposing arguments. They also "fragment" markets globally--and
in doing so make everyone poorer.
Krugman doesn't short-sell America's economic problems. He is alarmed at
the country's widening income gap, for one thing. He was also among the
first to warn of the blue- and white-collar backlash against corporate
layoffs--which Buchanan is effectiveley exploiting. "I'm terrified
of what's happening to our society," says Krugman. But the remedies
he would propose "mostly involve improving and strengthening what
we're tearing apart--health care for our children, a decent education for
poor kids, things like the earned income tax credit." What he's after,
he says, is a sense of proportion." If this administration would put
a tenth as much of its attention into trying to prevent a million kids
from being thorwn into poverty as it did into extracting a few more exports
from Japan, "we'd all be better off."