“It’s remarks like that which explain why people hate economists!”

A lot of heterodox economists are sympathetic to Paul Krugman because he seems to have argued for fiscal expansion.


First, we are in this mess because of people like Paul Krugman who has promoted free trade – which has been destructive to the world economy as a whole and has prevented debtor nations from engaging in fiscal expansion to reflate their economies. The creditor nations won’t reflate their economies by fiscal expansion so easily – just barely the minimal needed to prevent social tensions from building up – because they don’t want to become debtors down the road. They overdo this but free trade has created this situation in the first place.

This crisis has made nations realize the importance of exports in growth and nations will want to improve their international investment position should there be growth in the rest of the world and they will want to wait sufficiently for exports to improve before expanding domestic demand. This creates a game theory like problem for growth of the world as a whole.

Now, Krugman is a smart man. He will make it look as if he was not all that dogmatic. And now ridicules everyone who opposes fiscal expansion. While it is good in a sense because the world needs a worldwide fiscal expansion (but this needs to be coordinated at least), it is nowhere close to the simplistic solutions Krugman presents with his comical IS/LM diagrams and liquidity trap theories and confusions with his notions of exogenous money – which is only a smart way of defending his earlier positions – even though we hear frequent Mea Culpas on his blog.

I came across this article by William Greider – Why Paul Krugman Is So Wrong in which he reminds the readers of how the mania of free trade has been promoted by Paul Krugman and how he has ridiculed everyone showing dissent.

It is generally nice in parts and is worth reading. I like the part in which Greider says that even though free trade has created problems for the United States, it wants to get out of the problems by promoting more free trade!

I am also reminded of a sacred tenet article of Paul Krugman making the case for free trade. The article titled Ricardo’s Difficult Idea not only ridicules anyone arguing against free trade but also gives out strategies on how to promote it.

Here is one paragraph which is worth quoting:

During the NAFTA debates I shared a podium with an experienced, highly regarded U.S. trade negotiator, a strong NAFTA suppporter [sic]. At one point a member of the audience asked me what I thought the effect of NAFTA would be on the number of jobs in the United States; when I replied “none”, based on the standard arguments, the trade official exploded in anger: “It’s remarks like that which explain why people hate economists!”

I like this quote by Francis Cripps from an article in The Guardian from 27 Feb 1979: Economists With A Mission:

Francis Cripps - If Economists Did Not Exist

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