Today, the main tenets of Paul Krugman’s economic theories seem completely alien:

• International trade benefits everyone
• “Economies of scale” generate advantages (example auto industry)
• Implementation of government industrial policies is misguided; globalisation should be left to happen without intervention

Would Karl Marx and John Maynard Keynes be more deserving of a posthumous Prize this year?

A fair argument could be made. The world has never seen fiscal measures to the extent currently being proclaimed throughout the globe. Even in the motherland of free markets, bank nationalisation is no longer a taboo subject. And the discussion about protectionism kindles old memories of the era before European integration.

In the midst of all these headlines, some facts are ignored: for instance that Paul Krugman has correctly explained the reasons behind currency risks over the past several years and that he was one of the first to warn of a real estate bubble in the USA. 

There is an exception to every rule. We are currently suffering from the most extreme example of this – several markets are no longer able to function without government intervention. But, this does not justify a call to shift the paradigm towards a permanent “more government” solution.

“Some people call for change and secretly hope that others will stop it from happening.”
[Pavel Kosorin] 

L.K.