Broback's Blog

Paul Krugman used to be an economist. Today he writes for the NYTimes as “The Conscience of a Liberal”, which has his editorial commentaries generally aligning with popular folk economic beliefs.

As one would expect, examples abound of apparent contradictions with what economist Krugman advocated 20 years ago, and what folk economist Krugman advocates today. The most recent example of note is his 180 degree dismissal of the law of supply and demand as forces related to wages.

I would like to suggest that what Krugman is exhibiting is an example of extreme rationality — that is, a strong combination of both epistemic and instrumental rationality. See my post on the topic here.

Krugman (and Stephen Pinker) see how the world really works (epistemic rationality). Unlike language, economics is not intuitive and one swims upstream trying to change the “economically uninformed prejudices of the man-in-the-street”. Swimming upstream is not rational given that swimming downstream is far more productive.

In addition, Krugman takes actions that fall clearly under the heading of instrumental rationality — that is behaving in the world so that you get exactly what you most want, given the resources (physical and mental) available to you.

I would advise those who don’t understand Krugman’s “flip-flops” to read up on the writings of Keith Stanovich.