Common Tragedies

Thoughts on Environmental Economics

Thoughts on Krugman

Posted by Evan Herrnstadt on October 24, 2007

I saw Paul Krugman speak last night as he promoted his new book, The Conscience of a Liberal.

Krugman and the “interviewer”, E.J. Dionne of the Washington Post and Georgetown University, talked mostly about Krugman’s concept of the “Great Compression”, the period after WWII during which the income distribution in the U.S. scrunched up considerably. It was sort of scattered, and Dionne often commandeered the conversation. This was okay, as Dionne is an interesting scholar in his own right, but I definitely went to hear the thoughts of his interviewee.

I was struck by the contrast between Krugman the economist and Krugman the columnist. This is not to say that the two sides contradict each other; I just consider him an economist that writes popular criticism, whereas most people see him as a political commentator who happens to be an economist.

I felt that this tension came up as people asked questions about usual liberal issues, hoping for a scholar to confirm their own suspicions, I suppose. However, Krugman didn’t bite for the most part. He generally gave reasoned responses, which may have disappointed some. For example, on the “crumbling economy” (referring to the falling dollar and trade imbalance), he brought up the point that most of our external debt is in dollars, a unique situation which assuages some of the associated danger. He also noted, offhand, that he essentially invented the literature on currency prices. No big deal, huh?

I will pass over many of the other audience questions which, as always, were mostly just opinions with an upturn in pitch at the end (one of which asked whether the money going to CEOs was of real value…good thing Krugman wrote a principles textbook).

The question most relevant to this blog related to urban planning. The audience member made the point that the “Great Compression” largely coincided with an era of immense growth in suburban sprawl. He inquired as to whether this kind of thing is inherent in a more equal society. Krugman responded that a lot of that obviously has to do with the fact that rising incomes lead to car- and homeownership. However, he added that people need to be allowed to make these housing and transit decisions for themselves.

This was a solid (if brief) answer to a very relevant question. Clearly, if a growing middle class arises in the future, there will be more and more commuting and sprawl. If government policy changes in tandem, meaning increased prevalence of fuel and congestion taxation, then we can help point these choices toward optimality. Otherwise, the expanding exurbs and suburbs will impose higher and higher costs on society.
Sorry about the somewhat rambling nature of this post. There was a lot to write about, and not all of it was directly relevant to environmental economics.

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