Economist as Crusader

• Author: Arvind Subramanian interviews economist Paul Krugman
• Position: Division Chief in the IMF's Research Department

Economics made Paul Krugman famous. Punditry has made him a celebrity, famous for being famous. But Krugman aspires to be long remembered, and, in this respect, John Maynard Keynes is the gold standard. Keynes left his mark in three distinct ways: through the power of ideas, through the art of public persuasion, and through the shaping of historic changes. This last is denied to all but those who find themselves at the right place at an epochal time. But on the first two scores, at least, Krugman may well become the first person outside the field of literature to win both the Nobel and Pulitzer Prizes, the acme of achievement in academics and journalism.

The dismal science has produced many versatile economists. Other giants of the 20th century, such as John Hicks, Ken Arrow, and Paul Samuelson, sparkled in several fields. Within international economics, though, specialization has tended to be the rule. Bertil Ohlin, Eli Hecksher, Jagdish Bhagwati, and Elhanan Helpman made seminal contributions in the field of international trade. International macroeconomics has seen many that fall somewhere between the great and the very good, including Robert Mundell, Rudi Dornbusch, Michael Mussa, Maurice Obstfeld, and Kenneth Rogoff.

But Krugman, like James Meade, is a rare economist whose accomplishments at the highest level span both of these subfields. He opened up the study of trade under increasing returns and imperfect competition and later resuscitated the study of economic geography. And his work on currency crises and exchange rates has been highly influential. In 1991, he was awarded the John Bates Clark medal in recognition of his "significant contribution to economic thought and knowledge." The cognoscenti know that this honor, which is awarded once every two years to an economist under 40, is a little more difficult to win than the annually awarded Nobel Prize.

Then there is Krugman the communicator. From writing "Greek letter" academic papers, he moved on to conveying economic ideas to the wider world (see Box 1). His Age of Diminished Expectations and Peddling Prosperity filled the gap between the boringly descriptive genre of "up-and-down economics" books and sensationalist and shallow "airport economics" books. Age of Diminished Expectations, commissioned by the Washington Post, ended up being not just an analysis of the U.S. economy in the postwar period but also a cracklingly lucid primer on international economics. Peddling Prosperity was an incisive and opinionated account of the history of economic ideas. Both books also worked as parables, illustrating Keynes's nostrum that the use and abuse of ideas are the most "dangerous for good and evil."

Box 1 Sharp words

Jagdish Bhagwati tells the story of Krugman's first summer job as his research assistant at MIT. "I was in the middle of a paper on international migration. I gave Paul an outline of my thoughts-when he came back, he already had a finished paper, and I could not change even a comma! So I gave him the lead authorship." Princeton's Avinash Dixit has said that if Krugman were not so valuable to academics, "we should appoint him to a permanent position as the translator of economic journals into English."

Indeed, Krugman is perhaps without peer among economists in the clarity and sharpness of his prose. Commenting on the changing rationale for the tax cuts of the Bush administration, he called them "an obsession in search of a justification." His recipe for the Japanese deflation of the early 2000s was aggressive monetary expansion, and he called upon the ultraorthodox Bank of Japan to "credibly commit itself to being irresponsible."

Keynes's famous remark "In the long run we are all dead" is more widely quoted than understood. Here is how Krugman explains it: "What he meant was recessions may eventually cure themselves. But that's no more a reason to ignore policies that can end them quickly than the fact of eventual mortality is a...