A DWT shout-out to Nobel laureate Paul Krugman

Vice President Cheney looks on approvingly as Chimpy the Prez issues a hearty "Well done" in response to news that Paul Krugman has won this year's economics Nobel. (No, not really -- we're just making up the part about Chimpy and Big Dick. But we'd sure love to have seen their pusses when they heard!)

"The moral of this story is that failure to regulate effectively isn’t just bad for consumers, it’s bad for business."

-- Paul Krugman, in a June NYT column
called "Bad Cow Disease"

"At a deep level, I believe that the problem was ideological: policy makers, committed to the view that the market is always right, simply ignored the warning signs."

--Paul Krugman, in a December NYT column
called "Innovating Our Way to Financial Crisis"

by Ken

By now you've no doubt heard the news that Paul Krugman has been awarded this year's Nobel Price in economics, "for his analysis of trade patterns and location of economic activity."

The Royal Swedish Academy of Sciences explains the award of what is officially called The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008:

International Trade and Economic Geography

Patterns of trade and location have always been key issues in the economic debate. What are the effects of free trade and globalization? What are the driving forces behind worldwide urbanization? Paul Krugman has formulated a new theory to answer these questions. He has thereby integrated the previously disparate research fields of international trade and economic geography.

Krugman's approach is based on the premise that many goods and services can be produced more cheaply in long series, a concept generally known as economies of scale. Meanwhile, consumers demand a varied supply of goods. As a result, small-scale production for a local market is replaced by large-scale production for the world market, where firms with similar products compete with one another.

Traditional trade theory assumes that countries are different and explains why some countries export agricultural products whereas others export industrial goods. The new theory clarifies why worldwide trade is in fact dominated by countries which not only have similar conditions, but also trade in similar products -- for instance, a country such as Sweden that both exports and imports cars. This kind of trade enables specialization and large-scale production, which result in lower prices and a greater diversity of commodities.

Economies of scale combined with reduced transport costs also help to explain why an increasingly larger share of the world population lives in cities and why similar economic activities are concentrated in the same locations. Lower transport costs can trigger a self-reinforcing process whereby a growing metropolitan population gives rise to increased large-scale production, higher real wages and a more diversified supply of goods. This, in turn, stimulates further migration to cities. Krugman's theories have shown that the outcome of these processes can well be that regions become divided into a high-technology urbanized core and a less developed "periphery".

Got that? (I'm sorry to have to report that you're responsible for all this material on the midterm.)

We're reminded, of course, that the Nobel is awarded, not for the work we're familiar with, but for this important work done mostly before he entered the current phase of his career, in which he came to be known as perhaps the single most important media voice for political sanity through the darkest years of the Bush regime.

When I heard the Nobel news, the first thing I thought of was the look on "Big Dick" Cheney's and Chimpy the Prez's pusses when they heard the news. Of course by now Big Dick and Chimpy have shrunk to little more than a historical footnote, one that should read something like this:

Between January 2001 and January 2009 they not only won but permanently retired the award for Worst Presidential Administration in the History of the Republic. About all that's left for them is to see how much loot they can still cart off, for themselves and on behalf of their cronies, and all the totalitarian and ideologically extremist rules, regulations, and appointees they can ram into the system in their way out.

So while it's not as sweet as it once might have been, there's still something mighty satisfying about Krugman receiving the Nobel just as Cheney and Chimpy are sliding onto their places on the Dunce Chairs of History. It's just the tiniest sense of order in the universe.

Oh sure, I make fun of all the vacation days the bum takes off from his column-writing. (Really, now, how long does it take to type 750 words?) And if I ever had a job that involved a contract, I'd want written into that contract that I get all "Krugman days" off. The fact remains that Krugman columns have been quoted so often in DWT that the guy is practically and involuntary (and unpaid -- which, come to think of it, means he's on the same pay scale as the rest of us) co-conspirator.

But through the darkest years of the Bush regime, the first term, in which the media conspired to such a large degree with the regime to brand any dissent from regime dogma as unpatriotic, even traitorous, I can't begin to convey how much I depended on Krugman's usually lonely twice-weekly voice of sanity. Through that darkest period of my political life, there was our Paul, and his Sunday NYT colleague Frank Rich, and The Daily Show With Jon Stewart, and eventually Air America Radio, whose potential would never be realized but which offered a roster of hard-hitting, no-bullshit on-air hosts and its best demonstration of what that promise could be in the zany and outrageous morning show, Morning Sedition.

As the story of the Bush regime turned from its extremist ideology and war-mongering to its criminal incompetence, pervasive corruption, and constitutional mayhem, our Paul's economics background came more and more into play. While Alan Greenspan, the Moe of establishment economics stooges, was still saying, "Housing bubble? What housing bubble?," Paul was trying to warn us, to prepare us, for pretty much what has happened.

In the next day or two I want to come back to the specific substantive importance of Paul's contributions, but for now I'm getting a helluva kick out of listening to the right-wingers squeal like stuck pigs about his Nobel.

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