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Bash-Bushonomics

Paul Krugman is not the first economist with a big public profile to have won the Economics Nobel. Amartya Sen...

Written by Saubhikchakrabarti |
October 15, 2008 4:02:50 am

Paul Krugman is not the first economist with a big public profile to have won the Economics Nobel. Amartya Sen and Joseph Stiglitz in recent years and Milton Friedman earlier fit that description. He isn’t the first economist with punchy public policy views to have won the prize either. Controversy followed Friedman and Stiglitz, too. Krugman isn’t the first trade theorist to be honoured. Bertil Ohlin and James Meade, the 1977 joint winners, were the firsts in that category. Parenthetically, let’s hope that the Nobel to Krugman for his trade theory, which is recognised by his peers as absolutely first class, doesn’t rule out for ever, given the prize committee’s alleged quota system, recognition for the other great trade theorist of our time, Jagdish Bhagwati. There’s something different about Krugman, though, different from Sen, Stiglitz, Friedman, Bhagwati. And it’s a disturbing difference.

Krugman is a public intellectual — his twice weekly column in The New York Times is widely read and reprinted — who often, rather almost always, writes like a party political hack. This makes his journalism entertaining to partisan readers but robs a certain gravitas from it and it sometimes profoundly threatens his economics. Let’s make this point by first pointing to a contrasting example.

Friedman wrote a regular column in Newsweek in the 1970s, at a time everyone was a Keynesian and therefore his arguments engendered ferocious critiques. No one read Friedman and thought he was after Democrats or that he was batting for particular Republican politicians. He was after popularising his brand of ideas through the filter of current political economy — that’s the exact description of an economist who wants to be a public intellectual.

Read Krugman and you get the sense that he will sacrifice almost anything, logic included, to have another go at the George Bush administration. Many, many examples can be given. Let’s take the latest one: the column he wrote a day before he got the Nobel. Krugman praised the British government’s bank bailout strategy — buy equity and therefore infuse funds — and said the Bush administration was hamstrung by its ideology and is only now being forced into taking the same route.

Let’s examine this a little closely. The Paulson-Bernanke plan on buying up toxic financial assets was greeted by howls of protest from the right and the left in America. The right protested because it didn’t want any government support for failed firms. The left protested because it thought government support was a parachute for crooked, greedy bankers. Would a plan that from the beginning spoke of injecting government equity on a mass scale into all big US financial firms have found political acceptance at that time? Plus, it is not as if the Paulson-Bernanke team (Krugman blames Paulson more) was ideologically inflexible on emergency government takeover. What happened to AIG? What happened to Fannie Mae and Freddie Mac? And as for the apparently unwavering brilliance of Britain’s Labour government, it let Northern Rock go under when clearly it should have saved that financial institution.

The sensible thing to observe here is that in this crisis everyone is stumbling and learning, the Bush administration included. The Germans first said Europe could not have a financial crisis like America, then a week later rescued one of their biggest financial firms, then said a Europe-wide plan to buy equity into banks was a bad idea, and now has come up with a big chunk of money to do precisely that. Does that make the German government a schizophrenic incompetent or just another government trying to understand on the fly how to deal with a biggest financial crisis in 75 years? So why only pick on the Bush administration?

Krugman’s journalism is full of stuff like this. He had argued during the first Bush administration that the then Malaysian prime minister, Mahathir Mohammad, had made an anti-Semitic speech because neocons’ over-aggressive foreign policy was forcing him to bolster his own support base. Since Mahathir was stepping down at that time, that Krugman argument was a little hard to accept.

The economist’s critics in America say he seldom lets facts get in the way of a good invective against the Bush White House. Incredibly, Krugman is the only blue-chip academic whose overt partisanship can be easily measured. Visit a website called lyinginponds.com where a fascinating non-partisan exercise measures which American columnists are the most partisan. The measurement is objective in that the site counts negative references to the party the columnist doesn’t favour. In 2006, Krugman was voted jointly as the second most partisan liberal (as Americans define the term, left-of-centre would be a rough Indian translation) columnist. In 2007, he was jointly voted the most partisan liberal columnist. Krugman’s opposite number in these measurements is Ann Coulter, a frequently ranting conservative columnist.

Now Coulter is just a journalist. But Krugman is an economist of great talent. Why would he discharge his role as a public intellectual in a manner that makes him comparable to partisan columnists? Why would he say about himself, as he said during the first Bush administration when his columns took on the bash-Bush mission, that he was a “lonely voice of truth in a sea of corruption”? That has the kind of messianic immodesty that most journalists, no strangers to self-importance, would baulk at.

Economists have often been rightly criticised for not being able to talk to people. The few who can are high price commodities in the marketplace of ideas. Their price is determined by their ability to put politics and policy through the mill of economic logic. But when an economist lets partisan politics determine economic writing, the price of his output drops. Paul Krugman sounds like Ann Coulter. A Nobel Laureate sounds like a biased journo.

And it’s not George Bush’s fault this time.

saubhik.chakrabarti@expressindia.com

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