Bush critic awarded Nobel for economics
October 14th, 2008 | by admin |STOCKHOLM - Princeton University professor Paul Krugman, known as much for his criticism of President Bush’s policies as for his academic work, was awarded the Nobel Prize in economics for his theories on world trade.
Krugman, 55, was honored “for his analysis of trade patterns and location of economic activity,” said the Royal Swedish Academy of Sciences, which selects the winners. His work showed how economies of scale influence trade and urbanization.
While Krugman found broader fame with his New York Times columns attacking Bush, he won his reputation in economics by arguing countries could gain a competitive advantage through subsidies to key industries. His research helped explain how the development of large-scale production for the world market has attracted more people to cities and led to higher wages.
“This award is clearly for Paul Krugman the economist, not for Paul Krugman the journalist or political critic,” said Robert Solow, a 1987 Nobel laureate who once taught Krugman. “What’s remarkable about Paul is he manages to do everything. He’s a contributor to fundamental economic theory and a top-ranked journalist.”
In a brief telephone interview after the award was announced yesterday, Krugman said “it’s a total surprise.”
The Princeton economist’s academic work analyzed how world trade came to be dominated by countries that both import and export similar products - automobiles, for example.
“Prior to Paul, all the models for trade explained why countries that are different trade: You’re a better baker, I’m a better shoemaker,” said Tom Prusa, professor of international economics at Rutgers University in New Brunswick, N.J.
“Paul was one of the first to realize that those kinds of models only explained about half of the trade in the world,” Prusa said. “Paul was the first one to explain economically why it made sense that countries that are similar should trade, as opposed to countries that are different.”
Such trade “enables specialization and large-scale production, which result in lower prices and a greater diversity of commodities,” the Royal Academy said in a statement yesterday.
A self-proclaimed liberal, Krugman has regularly taken Bush to task in his columns for The New York Times, slamming the president for such issues as the war in Iraq and tax cuts.
Krugman was born in Long Island and studied economics at Yale University. In 1977, he earned a Ph.D. from the Massachusetts Institute of Technology. He has taught at Yale, Stanford University, and MIT.
