Monday, October 5, 2009

Paul Krugman's Discontents

I do not think it's an exaggeration to say that the single most important topic of intellectual debate today concerns the value and uses of markets.

In the aftermath of a financial crisis that brought us to an edge of an abyss, economists and other brainy commentators have debated whether the fault lay with the markets or with the government.

Ought we to abandon our system of free market capitalism, to say nothing of free trade, because the crisis showed that markets don't work?

In a now well-known New York Times Magazine article, Paul Krugman argued the affirmative. More than that, he indicts his colleagues for having encouraged policies that caused the crisis.

As a newspaper columnist Krugman is more polemicist than economist these days, but he is surely very intelligent. His opinions about matters economic are certainly worth a read. Link here.

Many of us have been waiting anxiously for the empire to strike back. On September 16 John Cochrane, of the University of Chicago Business School, one of the economists derided in Krugman's article, posted a detailed response.
Link here.

If Krugman is worth reading, so is Cochrane. No one was ever harmed by seeing both sides of an argument. After all, that is what the marketplace of ideas is all about.

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