Krugman: US auto industry will probably disappear

[dtotire]

Source: AP


By MALIN RISING – 1 day ago
STOCKHOLM, Sweden (AP) — Nobel economics prize winner Paul Krugman said Sunday that the beleaguered U.S. auto industry will likely disappear.
"It will do so because of the geographical forces that me and my colleagues have discussed," the Princeton University professor and New York Times columnist told reporters in Stockholm. "It is no longer sustained by the current





http://www.google.com/hostednews/ap/article/ALeqM5iTDu0_1uS4AJHEN10aFE75hDSZFQD94TS8KO4

Read more: http://www.google.com/hostednews/ap/article/ALeqM5iTDu0_1uS4AJHEN10aFE75hDSZFQD94TS8KO4

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I hope he is wrong

[pnwmom]

1. Well, he slipped up on his grammar.

So he's not perfect.

:shrug:

[acmavm]

5. Please note:

<snip>

And did I really say “me and my colleagues”? I guess it’s possible — but that doesn’t sound like I speaking.
http://krugman.blogs.nytimes.com/2008/12/08/me-misreported/

[pnwmom]

11. Great news! I'm glad he was misquoted about the auto industry.

How aggravating for him to be misquoted -- and misquoted in a way that made him sound . . . uneducated!

[acmavm]

13. Apparently the grammar thing bothered him as well.

[RaleighNCDUer]

17. It bothers me a bit less, in an odd way, that he should be misquoted

than that the supposedly professional wordsmith would misquote him ungrammatically.

I expect to see such errors on the TV news - most TV reporters seem to concentrate on looking good more than sounding intelligent - but I still hope that print reporters and editors would hold to higher standards.

[Jim__]

2. Does anyone know what geographical forces he's talking about?

The article doesn't clarify the statement and I haven't read anything on this.

[depakid]

15. He won the Nobel Prize "for his analysis of trade patterns and location of economic activity"

A brief synopsis:

Until the end of the 1970s, the Heckscher-Ohlin theory for which Bertil Ohlin won the prize--Eli Heckscher died before the Nobel Prize in economics was instituted--dominated the field. This theory explained well why labor-abundant countries such as South Korea and Taiwan would export labor-intensive products such apparel, toys and footwear and capital-abundant countries such as the United States would export machinery and aircraft.

But it could not satisfactorily explain the two-way trade that was widely known to exist: Many countries exported automobiles and televisions, but they also imported them. The Heckscher-Ohlin theory also did not adequately explain why rich entities such as Europe and the United States, which had very similar endowments of capital and labor, traded more intensively than those with very dissimilar endowments. While descriptive explanations of these phenomena existed, a tight theory explaining them was lacking.

Starting in 1979, Krugman published a series of papers that successfully tackled these and many other related questions. He postulated that consumers like variety in what they consume. For the same expenditure, their satisfaction is greater if they have a larger variety of products available. This creates the incentive for firms to produce a large variety of products. But the production of a new variety has setup costs. This leads to declining per-unit costs as a larger quantity of the variety is produced and places a limit on the number of varieties the market can profitably supply. A firm produces a new variety only if it can capture a large enough market to allow profitable sales.

This seemingly simple structure gives rise to a tight theory that leads to rich implications: Countries gain from trade not only because larger market allows them to better exploit scale economies, but also because consumers can access a larger variety of products. And even identical economies can gain from trade through scale economies and a larger variety of products. The theory also brought imperfect competition into a formal trade model.

In subsequent work, Krugman combined this simple model of product differentiation and scale economies with transport costs. Scale economies push toward production in one location to minimize costs and then shipping the product to the locations where consumers are. But transport costs push toward locating production near consumers. These opposing forces give rise to large concentrations of populations such as those along the East Coast corridor of the United States.

More: http://www.forbes.com/2008/10/13/krugman-nobel-economics-oped-cx_ap_1013panagariya.html

[Jim__]

18. Thanks. That explains some of what he said about geography.

I need to read more about his work. It sounds interesting.

[Doctor_J]

3. Krugman: I didn't say this

http://krugman.blogs.nytimes.com/2008/12/08/me-misreported/

He said it will no longer be concentrated in Detroit

[Phred42]

6. Good ONE! Thanks

:toast:

suggest you post this on it's own to counter the BS head line

[mgc1961]

4. I hope he's wrong too but...

but I'm not optimistic about the chance.

I'm just hoping at this point GM remains in business long enough to get 60,000 more miles out of my '04 Chevrolet. (About 5-6 years at my current rate of driving and frequency of motorcycle use.)

[Phred42]

7. Read #3 Folks - What Krugman actually DID SAY - end of story

[Phred42]

8. Suggest the MOD's DELETE THIS POST because the TITLE is wrong

and destructively misleading.

[pnwmom]

10. Headlines all over the MSM said that. I think it's too late to put that

genie back into the bottle.

[Phred42]

12. Not a good reason to LIE here.

[pnwmom]

14. The poster didn't LIE. S/he probably hadn't seen the correction yet.

I hadn't.

[lumberjack_jeff]

20. The poster posted the actual headline.

The headline's wrong, but posting something other than the actual headline is verboten in LBN.

[BootinUp]

9. This was misreported, see Krugmans blog report nt

[Proud Liberal Dem]

16. The auto industry definitely needs to adapt

However, the complete and utter destruction of the auto industry (with nothing to replace it) wouldn't IMHO be good for all of us right now, particularly for those of us not blessed with living in areas with good (or even available) mass transit systems.

[jetphixer]

19. Transportation

We cant allow this industry to collapse.However it does have to change. POTUS(E) Is correct in both of his statements it can't fail but it needs to change it's way of doing business They need to realize green is here.People want 100 mpg cars or no gasoline. Love it