Paul Krugman: ‘Nobel’ Laureate?

On October 13, it was announced that controversial New York Times columnist Paul Krugman had been awarded the “Nobel” prize in economics. Yes, “Nobel” appears in quotes for a reason. That’s because, unlike the other Nobel prizes which were established by inventor and philanthropist Alfred Nobel, the “Nobel” prize in economics was established (and funded) by the Sveriges Riksbank – the Swedish central bank.

Not surprisingly, critics of central banking – such as the great Ludwig von Mises and his protege Murray Rothbard – were never tapped by the selection committee. In fact, in the nearly four decades since the first “Alfred Nobel Memorial Prize for Economics” in 1969, the Swedish central bank has only awarded its top honor to one critic of central banking – Austrian economist Friedrich von Hayek – and he had to share the 1974 award with a Swedish socialist.

That the Swedish central bank awards the “Nobel” prize in economics is not well known, but it’s hardly a secret. Wikipedia states plainly: “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is not a Nobel Prize. However, the nomination process, selection criteria, and awards presentation are conducted in a manner similar to the Nobel Prizes.”

So, if I used a “similar nomination process, selection criteria, and awards presentation,” could I establish my own awards for YouTube videos and call them Oscars? Maybe, if I had the power to create money out of thin air like the Sveriges Riksbank.

But what of Krugman? Does he deserve recognition as a great economist? Not according to the Austrian school. Dr. William L. Anderson, an Austrian who teaches economics at Frostburg State University in Maryland and is an adjunct scholar of the Ludwig von Mises Institute, says Krugman isn’t an economist at all: “Yes, Krugman has a Ph.D. from MIT in economics,” says Anderson, “but his writings, both popular and academic, demonstrate that he does not believe in laws of economics.”

Why does Dr. Anderson feel this way? Well, Krugman is described as an “unreformed Keynesian,” meaning a follower of the economist John Maynard Keynes, whose theories were largely the basis for the massive ramp-up of the U.S. welfare state beginning with the New Deal and lasting through the mid-70s. The problem with Keynes’s theories: they’ve been positively refuted.

For example, Keynesianism teaches there’s a “trade-off” between unemployment and inflation. When there’s low unemployment, says the Keynesian Phillips Curve, there will be high inflation, and vice versa. Therefore, if employment is too high, we can “fix” the problem by expanding the money supply – or so thought Keynes. The problem is that, in response to the gross excesses of the Johnson and Nixon administrations, we had “stagflation” in the late 1970s: high unemployment and high inflation. And we’re likely headed there again, particularly if we follow Krugman’s favored policies.

Krugman is more well known for his criticisms of the Bush administration and Iraq War than for his economics. Bush, of course, deserves as much criticism as any president in history, and the war in Iraq deserves even more. But Krugman, who made his name as a polemicist and now has new gravitas as a “Nobel” Laureate, will likely have a prominent role in the nearly inevitable Obama administration. Sadly, this could make us pine for the good ol’ days of Bush/Cheney.

6 comments to Paul Krugman: ‘Nobel’ Laureate?

  • [...] Citizen Economists discusses how critics of central banking rarely get the prize: Not surprisingly, critics of central banking – [...]

  • Really? I like Paul Krugman a lot. I guess it’s good to have a variety of opinions here. It’s hard to imagine anything making me pine for the days of Bush & Cheney though.

    I’ve never seen the U.S. as ideologically divided as I have since the Reagan years. That was a watershed moment, and the country has never recovered IMO, at least so far as unity goes. We’re very divided, more than ever, and I think it does go all the way back to FDR. We’re about to see Act Three of a very scary drama. Who will be right? Who knows. We may find out, or we may shift to ‘D: None of the Above.’

    It’s like that old curse: We live in ‘interesting times’.

    Too bad!

    Thanks for the info on the Nobel prize. Maybe we could start our own here at the blog? I’ll give it to you this year if you give it to me next year!

  • J.D. Seagraves

    How many conservatives would have predicted that George W. Bush would make them pine for Clinton/Gore?

    We will have an Obama administration and here’s something you can take to the bank, Evelyn: You will be VERY disappointed.

  • Thierry Schlagdenhauffen

    What makes someone an economist? Apparently, Dr Anderson (whose name is totally unknown but from a few scholars), being a PhD in economist does not suffice, neither being published. Aha, wait a minute, he said it. To be an economist, you have to embrace the latests fashionable thoughts! Of course! you can’t have your own opinion, if you’re an economist! You just have to support what your colleagues are currently thinking. You can’t be an economist and supporting Adam Smith, Keynes, or Ricardo!

    For sure, Krugman is controversial, because the Faculty is always suspecting people who are mixing academics and medias of having sold they soul to the devil.

    Jealoousy, jeasouly…

  • J.D. Seagraves

    Anderson says:

    “Paul Krugman is not an economist. His colleagues in the economics profession and the editorial board of the Times may call him an economist, but that does not make him one.

    “This is harsh criticism, I realize, so I must explain my views in full. Yes, Krugman has a Ph.D. from MIT in economics, but his writings, both popular and academic, demonstrate that he does not believe in laws of economics. Instead, like most folks with socialist leanings, he believes that the state is both omniscient and omnipotent and simply by fiat can eliminate those pesky little problems caused by scarcity.”

    Dr. Krugman does not “support” Smith and Ricardo, who are at extreme odds with Keynes. He does follow Keynes, whose theories are as discredited as the Greeks’ “humours” theory of illness. And furthermore, Dr. Anderson isn’t being “fashionable” — he follows the always out-of-fashion (because it is anti-state) Austrian school. Anderson himself is a harsher critic of the Bush administration than Krugman (Krugman supported the bailout and bank nationalization), so you can’t blame politics for Anderson’s criticisms of Krugman either.

  • MannyfromNYC

    Initially, I was surprised that Krugman won, but after giving it a bit of thought, it made sense to some degree. He reportedly won because of research he conducted on the impact of globalization, although his views would put him to the left of free market proponents, and at odds with a colleague at the NY Times, the best-selling author Thomas Friedman, who describes himself as a “radical free marketeer.”
    Anyway, I think being awarded the Nobel Prize for economics is simply an acknowledgement that one has done work that is respected and influencial, and probably ideologically compatible with the members of the Nobel committee. Personally, I am still awaiting Nobel Prizes for Jagdish Bhagwati or Douglas Irwin-both of whom I think are more deserving than Paul Krugman.

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