October 14, 2008
Paul Krugman Wins Nobel Prize in Economics
By Geoff Mulvihill; Ellen Simon
PRINCETON, N.J. (AP)- Paul Krugman, whose relentless criticism of the Bush administration includes opposition to the $700 billion financial bailout, won the Nobel prize in economics Monday for his work on international trade patterns.The Princeton University professor and New York Times columnist is the best-known American economist to win the prize in decades.
The Nobel committee commended Krugman's work on global trade, beginning with a 10-page paper in 1979 that knit together two fields of study, helping foster a better understanding of why countries produce similar products and why people move from the small towns to cities.
Krugman (pronounced KROOG-man) is best known for his unabashedly liberal column in the Times, which he has written since 1999. In it, he has said Republicans are becoming "the party of the stupid" and that the economic meltdown made GOP presidential nominee John McCain "more frightening now than he was a few weeks ago."
But at a news conference, Krugman said he doesn't think he won the prize because of his political views.
"Nobel prizes are given to intellectuals," he said. "A lot of intellectuals are anti-Bush."
Tore Ellingsen, a member of the prize committee, acknowledged that Krugman was an "opinion maker" but said he was honored solely for his research.
"We disregard everything except for the scientific merits," Ellingsen told The Associated Press.
Following last year's Nobel peace prize award to former Vice President Al Gore and 2002's peace prize to former President Jimmy Carter, some on the right have dismissed the Nobels as politically motivated. By picking one of the best-known voices on the left three weeks before a presidential election, The Royal Swedish Academy is sure to provoke further criticism.
But academic economists said Krugman's work merited the prize.
"The prize was rightly given for his early academic work on the theory of international trade, not his more recent work as a political pundit," said Harvard economist N. Gregory Mankiw, former chairman of President Bush's Council of Economic Advisers.
Krugman, 55, was the lone winner of the $1.4 million award and the latest in a string of Americans to be honored. It was only the second time since 2000 that a single laureate won the prize, which is typically shared by two or three researchers.
Krugman is the rare academic economist who is also part of pop culture. A YouTube video of Krugman's joint appearance with FoxZZTO News pundit Bill O'Reilly on "Meet the Press" has been viewed by more than 100,000 people. Besides co-authoring textbooks, he has written two best-sellers, "The Great Unraveling: Losing Our Way in the New CenturyZZTO" and "The Conscience of a Liberal," which has jumped into the top 25 on Amazon.com and is currently out of stock.
None of the books by last week's winner of the Nobel Prize for literature, Jean-Marie Gustave Le Clezio, reached that high on Amazon.
Always outspoken, Krugman has compared the current financial crisis to the Great Depression, saying Monday that he hoped a global effort to address the crisis might work.
"I'm slightly less terrified today than I was on Friday," he said, referring to the weekend talks among European leaders that led to the partial nationalization of British banks and unlimited access to U.S. dollars for banks worldwide.
That said, he hasn't found much to praise about the Bush administration's actions during the crisis. In a Times column Monday, Krugman commended British Prime Minister Gordon Brown and Chancellor Alistair Darling, saying they "went straight to the heart of the problem ... with stunning speed" by demanding ownership stakes in banks in exchange for financial aid, while U.S. Treasury Secretary Henry Paulson at first rejected that model
"And whaddya know," Krugman continued, "Mr. Paulson - after arguably wasting several precious weeks - has also reversed course, and now plans to buy equity stakes rather than bad mortgage securities."
The Bush administration would not comment Monday on whether Krugman would be invited to the White House, as is custom with American Nobel laureates.
Krugman said he hoped to continue focusing on his research and writing.
"The prize will enhance visibility," he said, "but I hope it does not lead me into going to a lot of purely celebratory events, aside from the Nobel presentation itself.
"I'm a great believer in continuing to do work," he said. "I hope that two weeks from now I'm back to being pretty much the same person I was before."
In awarding Krugman the Nobel, the Swedish academy said his theory helped answer pressing questions and inspired an enormous field of research.
Krugman's work looked at on how economies of scale - the idea that as the volume of production increases, the cost of making each unit falls - worked alongside population levels and transportation costs to affect global trade. Krugman's theory was that because consumers want a diversity of products, and because economies of scale make production cheaper, multiple countries can build similar products, such as cars. Sweden builds its own car brands for export and to sell at home, for example, while also importing cars from other countries.
"Trade theory, like much of economics, used to be discussed in the context of perfect competition: thousands of farmers and thousands of customers meeting in a market," with supply and demand governing prices, said Avinash Dixit, a Princeton economist who specializes in trade theory.
The theory changed as economists realized conditions in the market were imperfect, and that only a small number of companies in certain industries, such as autos, had economies of scale.
"Krugman was the main person who brought all the theory together, recognized its importance to the real world, produced a large expansion of international trade theory to make it more applicable to the modern world," Dixit said.
Krugman graduated with a bachelor's degree from Yale in 1974 and received a Ph.D. from MIT in 1977. Besides teaching at Yale and MIT, he also taught at Stanford. He is a native of Bellmore, N.Y., graduating from John F. Kennedy High School.
The last time an economist who was this well-known outside academia won the Nobel was 1976, when Milton Friedman, a University of Chicago professor who starred in a PBS series called "Free to Choose," took the prize.
The award is the last of the six Nobel prizes announced this year and is not one of the original Nobels. It was created in 1968 by the Swedish central bank in Alfred Nobel's memory.
The Nobels in medicine, chemistry, physics, literature and economics will be handed out in Stockholm by Sweden's King Carl XVI on Dec. 10, the anniversary of Nobel's death in 1896. The Nobel Peace Prize is handed out in Oslo, Norway, on the same date.
At Monday's news conference, Krugman was asked about China's economic future. He said he did not have an answer. "I've spent the last few years trying to save my own damn republic," Krugman said.
Associated Press writers Malin Rising, Karl Ritter and Matt Moore in Stockholm and Polly Anderson in New York contributed to this report.
(c) 2008 Daily Breeze. Provided by ProQuest LLC. All rights Reserved.