Tuesday, October 14, 2008

A Glance at Economics Noble Laureate Paul Krugman's Web site.

He has an interesting-looking article (which i didn't read) on 'interstellar trade' (relevant to musical economics, such as Sun Ra's arkestra). In this 1978 paper he cites one of his working papers from 1987; others seemed to have interpreted this to be a relativistic effect (possibly related to Godel's rotating universe), but equally it would seem to be an application of Feynman-Wheeler absorber theory, or even just a simple interpretation of quantum theory in which the present is an average of motions from the past and future.

Another paper on Ricardo discusses his problem with Robert Reich, from the period when Reich was, if I recall, using some ideas found in Krugman's trade work, to argue against 'laisser faire'. I actually looked at Krugman's papers, and Reich's critiques of trade seemed 'spot on', and supported by Krugman. Krugman was essentially arguing about the details, or parameter values---while Reich's critique was possibly sound, "in the real world" the innefficiencies of free trade were actually so small, Krugman seemed to argue, that Reich was misinterpreting the theory (as a non-expert in economics would).

Possibly at Princeton and MIT they don't have Wal-Mart.

(A similar argument by Krugman in Scientific American mostly dismissed the role of trade in rising income inequality, arguing that other factors such as skill based technological change was more important. In other words, "Stolper-Samuelson effects" are possible, but were likely small or irrelevant in the US situation. However, Krugman didn't mention that the S-S result really only applies under condiditions of full employment, among others (likely a frictionless labor market is also required), so his argument was irrelevant.

Similarily, Krugman may have never heard of 'undocumented workers from Mexico".)

Also, Krugman has another paper on some so-called 'new theory of rising income inequality" which essentially makes exactly these points. In other words, Krugman's papers really do contain all the results claimed by critics of free trade, from Reich, to Nader, to the IFG, etc. The main themes of these papers are 'multiple equilibria'----supposedly this is some 'new' idea when in fact even by the time Krugman wrote his paper I think it was already almost beaten to death. Krugman has another paper on such a 'new theory' about income, which essentially appears to be a retread and relabeling of herbert Simon's 1950's work, or even Thurow's 70's work on statistical discrimination (which itself can be viewed as a special case of Simon).

Krugman, in his ricardo paper, also dismisses 'santa fe style modeling' as being both abstruse, overrated (because many results from that approach follow from the standard economic and biological arguments), and too often wrong or innaplicable when applied to real systems. My view of that approach, noted by others, is that it is simply more general, and possibly more 'elegant' (though this may only be for people trained in physics). (Like the income distribution theory, many insights of Krugman's trade work actually appear in previous papers from outside much of economics, and also from less prestigious orthodox places than Princeton or MIT.) It appears most standard classical and neoclassical economics emerge as special cases of the more general case. Standard economists, it may appear, are really just attached to a possibly outmoded formalism, and set of ideas (free trade), and hence are practicing theology and ritual.

None of this actually says that Krugman is not a good economist in the sense of knowing formal modeling and being able to use his models to interpret economic realities. But, it does mean he is likely way overrated, both in terms of the newness, profundity, and applicability of his work. (Like Jeffrey Sachs, Krugman seems to have reversed himself so many times that any of his policy prescriptions and interpretations of reality seem suspect---he might better recuse himself. )

One can ask what the value is of people who practice theology and ritual. I guess at Williamsburg they do historical enactments and get a salary.

The whole idea of the Noble prize' seems suspect because it simply selects one exemplar of what really is a large, contentious, and messy enterprise. Also I dought he needs the money, so it could be invested in something more profitable, or worthy.

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