Timely Words

Nobel Laureate Paul Krugman Discusses Current Economic Situation

March 17, 2009

By Pamela McLaren

Members of the campus community came out in force to hear a March 6 talk by Paul Krugman, 2008 recipient of the Nobel Prize in Economics Sciences. The talk — part of an economics teaching symposia sponsored by Worth Publishing, the Center for Economic Education and the Economics Department — centered on the current economic situation in the United States with some comparisons to the 1990 Japanese economic crisis. The hourlong talk was followed by a question and answer period.

“What we believed, circa 1997,” the economist said, “was that the monetary policy was effective and a discretionary fiscal policy was unnecessary and usually counterproductive.

“Our success of bringing down inflation in the 1980s and ’90s, actually set us up for what is happening now,” Krugman said. “How hopeful should we be? We’re not completely in the dark but …. Even those of us who know what’s happening, we’re still finding it hard to see what we can do in the next two years. We better figure it out.”

“Given his connections to the Federal Reserve chairman — both having taught at Princeton — I was surprised as his comments,” said Morteza Rahmatian, acting chair and professor of economics. “After laying out all the problems, he basically said we don’t know how to change the situation. It was very important to have him here but I had hoped, and expected him to have a more optimistic view of the situation and what the government was doing to solve it.”

Also in the audience was Denise L. Stanley, associate professor of economics and a former Fulbright Scholar. “It was incredible to have an economist who is such an expert on the economic crisis, given the precise timing of the events around us,” she said. “The fact that the jobs numbers were so bad yesterday and Krugman was speaking today was not just a stroke of luck.”

That sentiment was echoed by many in attendance at the event, including Sheila Faris-Penn, director of University Advancement web communications, who appreciated seeing the author of “The Return of Depression Economics,” “The Great Unraveling: Losing Our Way in the New Century” and “The Age of Diminished Expectations.”

“This is one of the benefits of working on a college campus — hearing from people of this caliber here,” said Faris-Penn.