Krugman: Models Versus Slogans

[Kurt_and_Hunter]

September 30, 2010, 5:22 pm
Models Versus Slogans
Paul Krugman


One thought tying together this post and this post. When it comes to commenting on economics, there are two kinds of people: people who think in terms of models, and people who think in terms of slogans.

If you think in terms of slogans like “free trade good; protectionism evil”, you find it outrageous that a credentialed economist might actually consider trade sanctions on China justified. Sacrilege!

If you think in terms of models, however, you know that the case for free trade is profound, but also conditional: it depends, among other things, on having sufficient policy levers to achieve more or less full employment simultaneously with free trade. Without that, the picture is very different. As Paul Samuelson wrote long ago,

With employment less than full and Net National Product suboptimal, all the debunked mercantilist arguments turn out to be valid.

So what I’ve been saying about China comes out of the same model I’ve been using to make sense of our broader economic problem. That doesn’t mean I’m necessarily right about the policy, since we are talking about political economy rather than straight economics. But if you just start yelling “Protectionist!”, you’re demonstrating that you don’t understand what economics is about.

http://krugman.blogs.nytimes.com/2010/09/30/models-versus-slogans/

[Kurt_and_Hunter]

1. ...

[Kurt_and_Hunter]

4. ...

[unblock]

2. plays on a theme of mine -- we need problem-solvers and engineers instead of ideologues

particularly instead of right-wing ideologues.

[Greyhound]

3. "But if you just start yelling “Protectionist!”, you’re demonstrating that you don’t understand...

economics is about."

K&Rugman!

[Kurt_and_Hunter]

5. This points up something about policy vs. politics...

If an economist or climatologist or sociologist says, "The situation is x; we need to do y" that statement is not testable by doing something sort of kinda like x.

Free trade requires tactical protectionism when participants cheat.

If that isn't done then the underlying model isn't being tested.


Unfortunately, politics is full of compromise on things that cannot afford compromise because they are integrated systems.