Posted 3:06 PM by Robert

Where's The Rumor?

It's autumn again! There's a snap in the air. New England trees are beginning preparations for their technicolor displays. Birds are flying south. And, of course, Brad Delong is predicting that Herr Doktorprofessor Paul Von Krugman will win the Nobel Prize in economics this year, just as he did at this time in 2003 and again in 2004 - although he did diversify his bet last year into near-meaninglessness when he formulated it this way:

I think that we should be thinking not in terms of people but of fields, and the Bhagwati-Dixit-Krugman Nobel looks to me like the best bet. (Of course, it seemed to me to be the best bet last year.)

Uh, sure, Brad, whatever you say.

But wait! This year pleas to the Corpulent Oracle of Berkeley to prognostify on Herr Doktorprofessor's Nobel chances are met with only the silence of the tomb!

What's wrong? Not even a heavily diluted prediction? Is Herr Doktorprofessor's name not written in the chicken entrails at all this year? Nothing in the rumor mill to post - nothing at all? What could have changed? Dear me! Dear me!

Given the sometimes hysterically anti-American tenor of some Nobel awards (Jimmy Carter for Peace? Please.) it is not inconceivable that the Nobelists might extend their blessings to Herr Doktorprofessor. The people who award the economics prize are not, of course, the same loons who hand out the Literature and Peace Nobels - but some economics prize picks have been pretty strange in their own right.

There may be another reason Plump Brad isn't plumping for Herr Doktorprofessor this year. Sweden is, after all, a member of the EU, which was rocked this year by the defeat of its purported "constitution" in various referenda, especially in France - largely on fears relating to possible and feared effects of international trade. It’s hard to imagine that this Nobel committee wasn't aware of the fuss. So it seems an appropriate time to repeat some observations I made at the time of that constitutional defeat:

Within the past few weeks the Man Without Qualities has spent a good deal of time in France, where the EU Constitution is in trouble, largely (but not solely, more on that in a subsequent post) on concerns regarding international trade. ... There's lots of argument and discussion going on. Cafes, homes, faculty lounges, commuter trains - you name it - percolate with Constitutional chatter and especially chatter about international trade. And from the airiest and most gaseous academic to the most loquacious cabby, absolutely nobody in France is talking about anything Herr Doktorprofessor Paul Von Krugman ever wrote, thought or believed. How can this be? Herr Doktorprofessor's most important works by far are supposedly his early papers in international trade and competition (as discussed here and here and here). In those early papers Herr Doktorprofessor crafted a new way of viewing international trade - one that supposedly displaced old fashioned David Ricardo's comparative advantage "factors" such as relative costs of production, labor and other inputs with fancier concepts like "home market effect." ... The Constitution's advocates do not speak of "home market effects" or other Krugmania in answer to economic arguments proffered by the Constitution's opponents. Nor do the Constitution's pro-business advocates tremble at the thought that the "comparative advantage" factor considerations (which those advocates count on to increase competition and the profitable flow of investment to Eastern Europe) will be swamped by Herr Doktorprofessor's fancy theories. ... Herr Doktorprofessor Paul Von Krugman could not be less relevant to this very real world debate - and yet this is the kind of debate in which his most important theories are supposed to have paramount significance. One may contrast the insignificance of Herr Doktorprofessor's work on its home turf with the very real and important work of Nobelist Robert Mundell. His work formed the basis of the creation of the Euro and all discussions of the Euro (and most discussion of world currency issues generally) use his thinking and insights in many essential ways every single day. .... And neither [do] the EU ... debates involve a word about Herr Doktorprofessor's "New Geography." It's all about the Old Geography. You know, what's really, geometrically, located close to something else. As in: ... The EU is all about Europe and how Europeans should relate to each other. Yet Herr Doktorprofessor himself wrote about his still-born baby that the field has been given a big boost in particular by plans to unify the European market. Odd, then that nobody in France is talking about "the field" now - at least not in Herr Doktorprofessor's terms or framework. .... As the French and Dutch referenda approach, one might think that Herr Doktorprofessor, at least, would weigh in on the applicability of his work on the economics of international trade. After all, he has a New York Times column at his disposal. The topic is timely, interesting - even fascinating. He, himself, has argued that his work has special relevance to the EU - especially Herr Doktorprofessor's "New Geography", since "the field has been given a big boost in particular by plans to unify the European market." And the need is urgent - since the French supporters of the Constitution are in disarray and throwing in the towel! How can this be when the fate of the Constitution is admitted by all sides to turn in large measure on considerations of international trade - and Herr Doktorprofessor's essential contributions have not even been discussed by anyone at all! But Herr Doktorprofessor is silent! Yes, the fact appears to be that the most important works of Herr Doktorprofessor Paul Von Krugman are so utterly and completely irrelevant to the current international trade discussions pertaining to the EU Constitution that even Herr Doktorprofessor doesn't think they're worth the mention in one of his own columns.Sad, that. Of course, he recently wrote a column on Chinese/US trade and currency matters. That column didn't invoke a word of his own work (even indirectly) on either international trade or currency, either. Perhaps Herr Doktorprofessor has learned in at least this one area the wisdom of Dirty Harry's sage maxim: A man has to know his limitations. ...

The Man Without Qualities is fully aware of the silly talk that circulates about Paul Krugman maybe winning the Nobel Prize someday, and not just from the intellectually flatulent Brad Delong. For example, Greg Mankiw recently said: I was a junior staffer in the Reagan administration. Two members of the senior staff were Krugman and (former Harvard economics professor, Clinton Treasury Secretary and current Harvard president Lawrence) Summers. At that time he was a brilliant economist. I thought he'd win a Nobel prize. I think there's a good chance he still will. His early work on international trade theory deserves it. Perhaps Professor Mania meant what he said and I am wrong. But I think it is more likely that Professor Mania was anointing himself with the balm of reason in the form of a suggestion he believes is highly improbable while elsewhere in this interview absolutely savaging Herr Doktorprofessor as a kind of Jerry Springer manque.

In any event, it would be amusing to see the Nobel Prize committee explaining such an award after what appears at this time to be a looming EU Constitution debacle: "And, most of all, we have given this award to Paul Krugman as the only international economist whose work featured in no significant manner in the discussions or analyses leading up to the recent EU Constitutional catastrophe!"

It would take a lot of top drawer anti-Bush palaver from Herr Doktorprofessor to get the often anti-American Nobel Committee to choke that nugget down. In any event, I take as evidence (but far from proof) that Professor Mankiw was speaking tongue in cheek the fact that he mentions absolutely nothing for which Herr Doktorprofessor's work is or has been used. Such allusions to the use of complimented work are normal in genuine comments of this type. For example, if Professor Mankiw had opined that the work of Nobelist Robert Mundell deserved that Prize, the compliment would naturally and likely have been accompanied with a brief statement along the lines of "His work formed the basis of the creation of the Euro and all discussions of the Euro use his thinking and insights in many essential ways every single day." In addition, Paul Krugman himself seems to consider his own work in currency - not international trade - his strongest.

Time will tell. And not that much time, at that.

A RUMOR: But it's just from the nutty, left-wing Guardian:

Here is a shortlist of economists who are good contenders for this year's prize: Robert Barro, Jagdish Bhagwati, Eugene Fama, Paul Krugman and Paul Romer.

Of course, nutty, left wing people can sometimes be correct, especially when predicting an award of a prize given out by other people who are often nutty, left-wing types.

Krugman over Fama? O, lordy, lordy.