Krugman’s petty patriotism

In: Uncategorized

19 Jun 2010

The more I read Paul Krugman’s work the most I dislike it – and I have read several of his books and countless articles. To me the New York Times columnist and Nobel laureate in economics is the archetypal shrill patriot who sees himself as “liberal” (his description) and cosmopolitan.

His hawkishness has become increasingly apparent in the past few weeks during which he has virtually called for America to wage a trade war against Germany and China. For Krugman the two countries, with their substantial trade surpluses, bear a large share of the blame for the economic crisis. Of course for an establishment figure such as Krugman (although no doubt he would not present himself in that way) it is easier to blame foreign competitors for the world’s economic problems than look to his own country. This is particularly the case with George W Bush (who Krugman turned into a cartoon villain) replaced by Barack Obama (who he broadly supports).

Krugman’s Friday column, date-lined Berlin, attacked Germany for imposing austerity on its population at a time when the world needs continued stimulus. From his perspective the largest European economy is exporting deflation to the rest of the world.

In this argument he fails to distinguish between Germany’s hawkish rhetoric and short-term policy reality. As I argued in my Wednesday post (following from statistics in the Economist) the German authorities are engineering a small fiscal expansion this year – the real pain will probably be inflicted in a couple of years’ time.

It is also misleading for Krugman to present himself as being against austerity. No doubt he would have no compunction in calling for cuts in living standards for American or German workers if he thought the circumstances demanded it. In effect he is simply arguing that Germany (and also China) should bear most of the responsibility for pulling the world out of its economic mess.

Such an emphasis helps absolve the Obama administration of its responsibility for tackling America’s structural economic problems. America remains, after all, the world’s biggest economy.