Paul Krugman – Iconoclast or Establishment Figure?
The battle between Keynesians and limited government advocates has been raging ever since the time of the Great Depression in the 1930s. The ongoing global economic crisis has given fresh impetus to the debate over whether governments should “pump prime” the economy by fiscal and monetary expansion or should let the market do what it does best i.e. without intervening in the economy.
Among contemporary economists, the Nobel Prize winning economist, Paul Krugman, is a much celebrated and much criticized figure for his uncompromising views on governments and their role in stimulating the economy. Krugman has been especially critical of the Obama administration even though the present dispensation has done everything except drop money from helicopters. Incidentally, this is the recommendation that the present chairperson of the Federal Reserve, Ben Bernanke, had proposed to solve the problem of too much indebtedness and too high unemployment.
Dr. Krugman has also crossed paths with the other Nobel winner, Joseph Stiglitz, on many occasions especially when the question of how much stimulus should be provided is concerned. While Dr. Stiglitz characterizes the present recession as being structural in nature and hence, proposes that the government attack the causes of the problem by initiating deep and lasting changes, Dr. Krugman would have none of it and instead, calls for greater governmental spending. The rhythm of Print Baby! Print is the mantra thatKrugman chants, as he turns hawkish about the Fed and the administration pumping more and money into the economy. On the other hand, economists like Nouriel Roubini, who is known as the uber bear, for this gloom and doom predictions, have pointed to the fact that unless excess debt and too much leverage are tackled, the economy would continue to be in recession.
Dr. Krugman, in recent months, has been sounding alarmist about the state of the global economy even going to the extent of predicting a “social apocalypse” if the crisis in the Eurozone and the looming sovereign debt crises are not tackled with more stimulus. This has understandably met with skepticism in the mainstream press (which until recently was going all out in the praise of him). Either this can be a pointer to the increasingly dire state of the economy, which has befuddled even the most gifted economists, or it can also mean that the lack of consensus among mainstream economists about the ways to end the depression is starting to show up as cracks in the wall.
Whatever be the case, Dr. Krugman, has a lot to answer for because his advocacy of stimulus spending and expansionary policies has not had the desired effect. On the other hand, unemployment remains stubbornly high, and inflationary pressures are beginning to show even in the United States. In conclusion, Paul Krugman is the people’s economist as opposed to the other neoliberals who have the interests of the capitalists and the bankers at heart rather than the average Joe. It is for this reason that Dr. Krugman is widely read and cited.