I thought this piece was beautifully written and interesting. Here are some bits I found surprising or interesting:
Krugman was buoyed and protected in his youth by an intellectual snobbery so robust that distractions or snobberies of other sorts didn’t stand a chance. “When I was twenty-eight, I wouldn’t have had the time of day for some senator or other,” he says
He was driven mad by Lester Thurow and Robert Reich in particular, both of whom had written books touting a theory that he believed to be nonsense: that America was competing in a global marketplace with other countries in much the same way that corporations competed with one another. In fact, Krugman argued, in a series of contemptuous articles in Foreign Affairs and elsewhere, countries were not at all like corporations. While another country’s success might injure our pride, it would not likely injure our wallets.
He saw that it had been very, very painful during the nineties to get American fiscal policy in order, and he saw all of that being thrown away callously and with very little thought,” Brad DeLong, a professor of economics at Berkeley, says. “And it turned out to be true that Alan Greenspan was going to meetings at the White House saying we’re going to regret this. Paul was simply six years behind those of us who had worked in the Clinton Administration, who found the collapse of reality-based Republicanism coming much earlier.”
Krugman presented his theory to the world in the form of a paper at the National Bureau of Economic Research in July, 1979. “The hour and a half in which I presented that paper was the best ninety minutes of my life,” he wrote later. “There’s a corny scene in the movie ‘Coal Miner’s Daughter,’ in which the young Loretta Lynn performs for the first time in a noisy bar, and little by little everyone gets quiet and starts to listen to her singing. Well, that’s what it felt like: I had, all at once, made it.”
So attached were they to the idea that markets always got things right that some actually suggested that unemployment must be a consequence of workers’ choosing not to work. Saltwater economists were less blinkered in their view of markets and the rationality of investors, Krugman wrote (Larry Summers, a saltwater type, once began a paper on finance by declaring “THERE ARE IDIOTS. Look around”), and had retained a Keynesian view of recessions as crises of insufficient demand. But even saltwater models had no room for such wild imperfections as bubbles and banking-system collapse. “Economists will have to learn to live with messiness,” Krugman concluded.
Anyway, read the whole thing