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Posted on Monday 13 October 2008


Giving the Nobel Memorial prize to Paul Krugman was not just recognition of his theory of economic geography, but a strong message. This would not be the first time, nor will it be the last time that those awarding the prize have sent a message. One part of this message is on trade and globalization, and why developed nations should not fear global trade, another, however, is more direct and more blunt: it is about a changed world. In a year which has seen more tumult in not only the markets, but the basic institutions that support them, it is a message that the United States can no longer maintain an exceptionalist policy.

It is a message that the Era of Reagan is Over writ in large letters. A message that Europe sees the Republican Party as having turned dangerously towards politics and policies that are coming close to spiraling into the abyss…

One of the people who needs to heed this message is Ben Bernanke, who has been one of the worst central bankers in a developed nation since the Second World War, and to whom Paul Krugman has been a good deal kinder than the record perhaps allows for. That message is that he cannot both be supportive of certain ideological outcomes, and save the banking system…
When I read that one of my favorite columnists, Paul Krugman, had won the Nobel in Economics, I was amazed. Not that he’s not a wonderful thinker [and a right-thinker]. I’m just not used to hearing that people I’ve ever heard of winning that honor – particularly someone who is a New York Times columnist. I actually wondered if it was a message myself, specifically this message – the Era of Reagan is Over. I think that the people who write about Reaganomics or ideology or the "greed is good" era are being too kind. Reagan and the Bushes have given us 20 collective years of the same formula:
  • Cut taxes, particularly for the rich
  • Deregulate everything to give the Capitalists free rein
  • Spend wildly, particularly for Military Contracts
  • Ignore the resulting soaring National Debt in the process
This is not an ideology. This is conscious criminal behavior. Add to that the fact that they are behaving as if they were given a Chinese Credit Card with no limit – so the absurd debt is to China and other emerging countries entering the world market. And the comment that Europe sees the Republican Party as having turned dangerously towards politics and policies that are coming close to spiraling into the abyss is equally naive. We’re not spinning into an abyss. We’re already there, and we took the rest of the world with us. We’ve been fleecing the world, and it has finally caught up with us.

Paul Krugman is a World Economist, not someone narrowly focused on just the American Economy. So, the Reagan/BushI/BushII Administrations’ Project for the New American Century is what’s being repudiated here. This will not be an American century, it will be a World Century. Krugman was chosen because he’s an innovative economist, but the underlying message from Europe is clear – the United States can no longer maintain an exceptionalist policy. The 20th Century was the American Century. Either we get on board the World Economic System as a participant in the 21st Century, or else!

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