Paul Krugman Quotes

Milton Friedman was not surprised. In 1968, in one of the decisive intellectual achievements of postwar economics, Friedman not only showed why the apparent tradeoff embodied in the idea of the Phillips curve was wrong; he also predicted the emergence of combined inflation and high unemployment, which Paul Samuelson dubbed "."

Things could have been even worse. This week, we managed to avoid driving off a cliff. But we’re still on the road to nowhere.

In the court of conventional wisdom, Ronald Reagan stands accused of inflicting a huge burden of debt upon his country. He cut taxes on the rich, increased military spending, and failed to cut enough spending elsewhere to pay for his largesse. The result was a string of unprecedented peacetime deficits, and a debt that will be a drag on the national for decades to come.
Reagan is guilty as charged. The supply-side apologists' claim that some extraordinary economic success vindicates in spite of the deficits just doesn't hold up in the face of the evidence. The question, however, is whether the crime was a felony or a misdemeanor.
The answer proposed here will not satisfy those with a taste for drama. Reagan created a deficit, and it hurt American economic growth. But even if the effects of the visible deficit are supplemented with appeals to several alleged hidden deficits of the 1980s, the cost was not catastrophic. The deficit is not nearly the monster some people imagine.

By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's.

You can’t explain the votes of places like Clay County as a response to disagreements about trade policy. The only way to make sense of what happened is to see the vote as an expression of, well, identity politics — some combination of white resentment at what voters see as favoritism toward nonwhites (even though it isn’t) and anger on the part of the less educated at liberal elites whom they imagine look down on them.

Equally important, the financial industry’s political power has not gone away. Banks have waged a fierce campaign against what many expected to be an easily passed reform proposal, the creation of a new agency to protect financial consumers. Despite the steady drumbeat of scandalous revelations—most recently, the discovery that Goldman Sachs helped Greece cook its books, while Lehman cooked its own books—top financial executives continue to have ready access to the corridors of power. And as many have noted, President Obama’s chief economic and financial officials are men closely associated with Clinton-era deregulation and financial triumphalism; they may have revised their views but the continuity remains striking.
In that sense, this time really is different: while the first great global financial crisis was followed by major reforms, it’s not clear that anything comparable will happen after the second. And history tells us what will happen if those reforms don’t take place. There will be a resurgence of financial folly, which always flourishes given a chance. And the consequence of that folly will be more and quite possibly worse crises in the years to come.

...and Newt <nowiki>[Gingrich]</nowiki> — although somebody said "he’s a stupid man’s idea of what a smart person sounds like," but he is more plausible than the other guys that they’ve been pushing up.

Like any major intellectual contribution, Keynes's ideas were bitterly criticized. To many people it seems obvious that massive economic slumps must have deep roots. To them, Keynes's argument that they are essentially no more than a problem of mixed signals, which can be cured by printing a bit more money, seems unbelievable.

To make a harsh but not entirely unjustified analogy, a government wedded to the ideology of competitiveness is as unlikely to make good economic policy as a government committed to creationism is to make good science policy, even in areas that have no direct relationship to the theory of evolution.

I believe in a relatively equal society, supported by institutions that limit extremes of wealth and poverty. I believe in democracy, civil liberties, and the rule of law. That makes me a liberal, and I’m proud of it.

… politics determine who has the power, not who has the truth.

What saved the economy, and the New Deal was the enormous public-works project known as World War II, which finally provided a fiscal stimulus adequate to the economy's needs.

The irony... is that high development theory was right. By this I do not mean that the Big Push is really the right story of how development takes place, or even that the issues raised in high development theory are necessarily the key ones for making poor countries rich. What I do mean is that the unconventional themes put forth by the high development theorists—their emphasis on strategic complementarity in investment decisions and on the problem of coordination failure—did... identify important possibilities that are neglected in models. But the high development theorists failed to convince their colleagues of the importance of those possibilities. Worse, they failed even to communicate clearly what they were talking about. And so good ideas, important ideas, were ignored for a generation...

From the point of view of a modern economist, the most striking feature of the works of high is their adherence to a discursive, nonmathematical style. Economics has, of course, become vastly more mathematical over time. Nonetheless, development economics was archaic in style even for its own time. Of the four most famous high development works, Rosenstein-Rodan's was approximately contemporary with Samuelson's formulation of the Heckscher–Ohlin model, while Lewis, Myrdal, and Hirschman were all roughly contemporary with Solow's initial statement of growth theory.
This lack of formality was not because development economists were peculiarly mathematically incapable. Hirschman made a significant contribution to the formal theory of in the 1940s, while Fleming helped create the still influential of s. Moreover, the development field itself was at the same time generating mathematical planning models—first Harrod–Domar type growth models, then linear programming approaches that were actually quite technically advanced for their time.
So why didn't high development theory get expressed in formal models? Almost certainly for one basic reason: the difficulty of reconciling economies of scale with a competitive market structure.

Economics is harder than physics; luckily it is not quite as hard as sociology. Why is economics such a hard subject? Part of the answer has to do with complexity. The economy cannot be put in a box. [...] Another reason economics is hard is that the critical sociologist is right: it involves human beings, who do not behave in simple, mechanical ways.