Krugman vs. Stiglitz

[kent nickell]

I was surprised to see Krugman take on Stiglitz so strongly in a recent editorial basically saying that Stiglitz is having trouble understanding a basic premise of economics Both are Nobel prize winning economists...

Interestingly Krugman got slammed in the comment section by most people agreeing with Stiglitz...

Part of the argument seems to relate to Krugman wanting to get tough on China with strong tariffs while Stiglitz thinks it is more complicated and would suggest that the US is also manipulating its currency by extraordinary measures to keep interest rates low... I included one comment that I thought was interesting..

http://community.nytimes.com/commen...r-strikes-again/?sort=oldest&offset=2#preview

From the back cover of Freefall by Joe Stiglitz... ""Joseph Stiglitz is an insanely great economist"" Paul Krugman, New York Times

Of course Paul Krugman is also an insanely great economist with many years of profound thinking.

But I do like Stiglitz' ability to focus on externalities and being able to adroitly use mathematical models combined with a keen sense of social forces.

I would like to see Roubini, Taleb, Simon Johnson, Robert Reich and Volcker brought into this roundtable.

But we need to address our own fallibilities as well as those of China.

 

[sharon sanders]

Re: Krugman vs. Stiglitz

Thanks Kent. Very Interesting.

There is the old joke that if you ask 5 economists for their opinions on something, you will get 6 opinions.

I think most of them miss the mark totally.

It seems to me that they have never had to meet a payroll. Find tenants. Design an effective marketing campaign. Leverage cash flow.

I think all countries follow monetary and fiscal policy that is in their best interest. And the World Bank and International Monetary Fund try to keep all of this floating.

Afterall what is currency in the real world? It is a promise of a country to back that paper. So who will back their paper with legal and financial support and even defend it militarily if need be?

 

[kent nickell]

Re: Krugman vs. Stiglitz

Yes, accountability and transparency are very important... from the chapter The Great American Robbery from Stiglitz' Freefall...


The real tip-off that something was awry came when Paulson went to Congress and presented a three-page TARP bill giving him a blank check for $700 billion, with no congressional oversight or judicial review. As chief economist of the World Bank, I had seen gambits of this kind. If this had happened in a Third World banana republic, we would know what was about to happen - a massive redistribution from the taxpayers to the banks and their friends. The World Bank would have threatened cutting off all assistance. We could not condone public money being used in this way, without the normal checks and balances.