Comment by lionhearted | Hacker News Reader

Comment by lionhearted | Hacker News Reader

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A good piece. I have a serious question for people smarter than me about the following:

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"Then there was the 1997 East Asian crisis, during the depths of which Paul Krugman wrote in a Fortune cover essay, "Never in the course of economic events—not even in the early years of the Depression—has so large a part of the world economy experienced so devastating a fall from grace." He went on to argue that if Asian countries did not adopt his radical strategy—currency controls—"we could be looking at the kind of slump that 60 years ago devastated societies, destabilized governments, and eventually led to war." Only one Asian country instituted currency controls, and partial ones at that. All rebounded within two years."

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How'd Krugman ever get accepted as an economist? He seems to be a massive doomcrier who is consistently wrong, and uses a lot of anecdotes and very few hard numbers. Which works great for Gladwell, but not so good for economics (heck, I dropped economics as my major because I didn't want to deal with econometrics - but I still have a healthy respect for it).

There's some tremendously intelligent economists that I disagree with their overall message, but very much respect their contributions. If you take the time to read and decipher Marx, Gramasci, and Keynes, they said some really brilliant things. Very, very smart people.

But Krugman? The guy seems totally bankrupt. And I've tried to read his stuff, and I keep seeing anecdotes, doomcrying, and him just being provably wrong often without being verifiably correct ever. Can someone point me to some smart reading material of his, not babysitter scrip anecdote nonsense? I'd like to learn from the guy if he has made some good contributions, or get to the bottom of why he gets respect if not. Always been curious about this one.

"How'd Krugman ever get accepted as an economist? He seems to be a massive doomcrier who is consistently wrong, and uses a lot of anecdotes and very few hard numbers."

You need to separate Krugman's work as an academic economist from his work as a "popular economist" and political commentator. I'm not an economist, but my understanding is that his academic work is outstanding and has contributed significantly to improving the models for understanding international trade. He also correctly predicted that fixed exchange rate regimes would be dangerously unstable (a lesson that not everybody has learned yet).

As you point out however, he was incorrect in his prescription for how to deal with the currency crisis. I'm going to postulate here that economists don't have really good models for studying how to recover from crisis events because they are relatively rare in comparison to their complexity, so the mathematical tools of economics are unable to explain them well. When you're placed in a situation in which you do not have enough information to make a good recommendation, the correct action is to admit that fact. That goes for the current crisis as well. Krugman seems to have very strong idealogical tendencies, given that he wrote a book called "The Conscience of a Liberal," and thus expresses his opinion about how to handle these matters much more forcefully than is warranted by the information that is provided by economics. In my opinion, this is an abuse of the natural authority provided by his economic credentials, and he should probably stick to writing articles for the academic community and not the popular press.

there is a selection effect going on in the higher levels of economic analysis whereby those who tell politicians the narratives they need to justify power grabbing are the ones promoted into the public sphere. most economists will decry such shameless behavior (but who is to say how much of this is jealousy). the other economists you mention are guilty of the same thing. Keynes in particular just bases entire chapters of his General Theory on trivially fallacious theses. Marx isn't even wrong, he's just exploring a world that isn't related to reality (there is no working model of the labor theory of value that makes predictions).

> there is a selection effect going on in the higher levels of economic analysis whereby those who tell politicians the narratives they need to justify power grabbing are the ones promoted into the public sphere.

That makes sense, good point nazgulnarsil. Thanks.

> Keynes in particular just bases entire chapters of his General Theory on trivially fallacious theses. Marx isn't even wrong, he's just exploring a world that isn't related to reality

Definitely true - but both of them made observations that were true and correct, which lends a bit of credibility to their work. Keynes for instance, "workers resist a reduction in monetary wages, [but] it is not their practice to withdraw their labor whenever there is a rise in the price of wage goods" (General Theory, p9). Which is true and correct - laborers don't notice gradual inflation, so governments can use it to lower wages and increase tax revenues under a progressive tax system (wages gradually rise, tax brackets remain fixed, therefore a greater percentage of GDP goes to tax revenues without an official tax increase).

These aren't good reasons to do what he advocates, but Keynes at least has some correct observations. Really insightful ones actually, if you listen to people who violently disagree with Keynesian economics, many of them have the utmost respect for him. (Friedman is the first one to come to mind, who always spoke well of Keynes).

But bringing it back around - Krugman... I haven't seen anything intelligent from him, ever. Not a single observation of the way the world works or implication that seems correct. He seems like a two-bit fearmonger, and he doesn't back off when he's proven wrong. I'd like to be wrong though, if there's any admirers of him that have links to good work by him. It doesn't have to be popular economics either - a link to a good academic paper would work too, if there is one. I really cling to a hope that it's not possible for an economist to get mainstream recognition just by partisan sucking up - I really hope so, as economics has such huge implications for society.

Krugman's contributions aren't widely discussed because they are in the realm of quantitative economic analysis. Heavy in math and not prone to simple explanations. Most of quant econ revolves around trying to use mathematical techniques to derive a more accurate model of what's going on with large scale scale economic aggregates (GDP and CPI are the most well known due to the media).

Of course the critique of the entire field is that it is blatant curve fitting, descriptive rather than prescriptive.

P.S. The nobel prize in economics was not one of the prizes originally enumerated by Alfred Nobel.

Krugman was very influential in the development of a theory of international trade not involving perfect competition. Whatever you think about economics in general, it seems to be a pretty clear step towards more closely modeling reality.

Can you name anything that Krugman said that was both a) novel and b) true? Can anyone? Did he really say anything about trade that wasn't known to Alexander Hamiliton? Did he say it in a way that wasn't already said more eloquently by Jane Jacobs? Sure he added a lot of mathematics, but the Wikipedia article is pretty damning on that front: "The econometric evidence for NTT was mixed, and again, highly technical. Due to the time-scales required and the particular nature of production in each 'monopolizable' sector, statistical judgements have been hard to make. In many ways, there is too limited a dataset to produce a reliable test of the hypothesis which doesn't require arbitrary judgements from the researchers." http://en.wikipedia.org/wiki/New_Trade_Theory

In other words, Krugman's contribution is a lot of math that has never been shown to work. When you add math to a theory in a way that does not improve people's understandings of the issue, you have not added to the world's store of knowledge.

the problem is that it is impossible to audit said models. unlike real science the social sciences can't isolate variables in order to test predictive power.

Like e.g. palaeontology, economists can't do experiments. You must remember that about economy.

I've read a bit too much criticism of economy as a science using the same argument you see from creationists against palaeontology. (That is, assumptions that all researchers are idiots and/or in a conspiracy against the creationists/left wing extremists.)

well pure paleontology is abduction is a sense. but the thing about paleontology is that it is based on biology in which we can do experiments.

Economy is arguably based on cognitive psychology and game theory. (A bit less strictly, but it should even out with all the lacking environmental parameters in paleontology...)

I'm not a Krugman apologist, and can't bear to read his NYT columns, but he does actually have academic credibility ( even though it is from work he did a fair while ago).

This is a good analysis of Krugman's contributions to international trade from when he won the John Bates Clark medal in 1991 - http://web.mit.edu/krugman/www/dixit.html. I'm not sure he's done anything too groundbreaking since then.

He's also co-written the textbook most undergraduate economists use (including me) for international trade - http://www.amazon.com/International-Economics-Theory-Policy-...

Here is a summary of Krugman's work leading to the Nobel Prize with all the references for you to follow up on. If you don't have journal access, email me with a link to the paywall site and I can send you the articles you want.

http://www.economics.ox.ac.uk/Research/wp/pdf/paper423.pdf

Basically, you have to separate his work as an economist from his politics or make a general distinction between quantitative and literary economics. Quantitative economics involves functions and calculus. Literary economics involves English words. I respect Krugman's intuitions even if his predictions are often wrong. It's hard to predict the future, even for a noted economist.

> Basically, you have to separate his work as an economist from his politics or make a general distinction between quantitative and literary economics.

And we think that the Nobel folks made that separation and didn't do it to "kick Bush in the leg" (to quote a committee member's comment in a previous year about a given award)....

> I respect Krugman's intuitions even if his predictions are often wrong. It's hard to predict the future, even for a noted economist.

The point of science is to predict the future....

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