National Commentary

Nicholas F. Benton: Krugman Advises, ‘Don’t Be Depressed!’




When signing for me a copy of his new book, “The Return of Depression Economics and the Crisis of 2008,” at Washington, D.C.’s National Press Club last week, Nobel Prize winning economist Paul Krugman scribbled, “To Nicholas, Don’t be depressed.”

The line is a good one, guaranteed to elicit a chuckle sorely needed after listening to Krugman’s gloomy and indeterminate forecasts during remarks prior at a sold-out, nationally-televised luncheon.

Krugman, who in addition to being a book author and New York Times columnist, is both an economist and Princeton University professor, achieved a major vote of confidence for his views when he was awarded the Nobel Prize in economics earlier this year. It made him substantially more than just another “talking head” infrequently appearing on the Sunday morning political blab shows.

In today’s bizarre television and news commentary environment where all political pundits appear with a swollen sense of entitlement for holding whatever point of view they prefer, no matter how ludicrous, it came as a considerable shock when the Nobel Prize people actually singled out one of them as better than the rest. It was almost as if they’d broken the rules.

No one said so in so many words, but the award has hardly increased Krugman’s air time on those shows. How dare “expertise” interrupt or diminish the free flow of “opinion!”

It is similar to those who soundly denounce economic and financial ideas of George Soros, as in his 2008 book, “The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means.” His opponents feel an urgent need to trash him because of his role in the revival of progressive politics in the U.S., through his bankrolling of the on-line movement, MoveOn.org, among other things.

They conveniently ignore the fact that Soros, in his testimony before Congress last summer when oil was over $140 a barrel and gas prices at the pump more than $4 a gallon, was 100 percent right as he ascribed and explained the soaring prices to factors related to sheer speculation in the commodities markets.

He and others said in those hearings that the price of oil “could drop below $60 a barrel virtually overnight,” if certain constraints on speculation were enforced.

As it turned out, the speculative bubble burst shortly thereafter and the prices came tumbling down. It wasn’t exactly overnight, but it happened very fast.

Naturally, none among his detractors will give Soros his credit due. They prefer to ignore what he said then, and to go on assailing his views to defend and promote their own.

Krugman’s speaking style, and he’s like this when on TV, too, is disarmingly impish and almost self-deprecating. He doesn’t stand tall and read with a booming voice from a script. He has notes, but most of what he says is without aid of them. At the National Press Club, when speaking, his eyes usually looked to the side, as if looking for his ideas from the corresponding part of his brain. He apologized whenever he felt he was too technical, but actually demonstrated real clarity in the presentation of his complex material owing undoubtedly to his teaching role at Princeton.

He pronounced himself an unapologetic Keynesian, a follower of the economics of John Maynard Keynes that were deployed by FDR in the effort to recover from the last Great Depression.

A lot of what he said correlated the Great Depression with what’s happening now. He said that massive investment in national infrastructure development, beginning with “shovel ready” projects, is called for now, but even with all stops pulled out, unemployment will still reach nine and maybe 10 percent in 2009.

The terrible conditions he predicted for next year will be replaced by a definite impulse to recovery in 2010, he said, as the effects of the Obama administration’s stimulus efforts take hold.

But then, there’s no telling what lies beyond that. In one of the most curious things he offered, Krugman confessed that, after the “great stimulus package” of World War II got the U.S. out of the last Great Depression, no one still can figure out why the nation didn’t go back into a depression once the war was over. Not even a Nobel Prize winner.

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