Two Ways of Thinking About Economics
7th March 2016
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Tyler Cowen has argued that Paul Krugman is the Milton Friedman of the early 21st century, and in many ways that’s true. Among all economists, he is clearly the most influential public intellectual. But an even better comparison might be John Kenneth Galbraith, who was the favorite economist of intellectuals who hated economics.
I’ve noticed that if you explain to intellectuals that a minimum wage will hurt the poor by increasing unemployment, or that rent controls hurt renters by creating shortages, or that unemployment insurance increases unemployment, or that taxes on investment income should be abolished, they’ll give you this look like “I don’t know whether this guy is evil or crazy.” Non-economists strongly resent the implications of much of economic theory, as it punctures holes in all their pet theories. So when a Nobel Prize winner comes along that confirms all their political views, he’s going to be extremely popular among intellectuals. Especially when he’s as brilliant and witty as Paul Krugman.
I don’t want this too sound too negative. Just to be clear, Krugman is 10 times the economist that Galbraith was. I often disagree with him on macroeconomics, but his views are defensible and brilliantly explained. He’s a great writer, and a superb theoretician. Galbraith was a great writer and . . . and that’s about it.