[Opinion] Krugman vs. Mankiw

American economists have long taken part in tackling problems in the United States. When the U.S. economy faces challenges, such scholars come up with solutions. This crisis is no exception. Nobel Prize winner Paul Krugman of Princeton University and Gregory Mankiw of Harvard University, who wrote “Mankiw’s Principles of Economics,” are two notable American economists. Both are distinguished scholars and more interestingly, they have supported different presidents and policies.

Critics of Krugman say he supports the Democratic Party. He wrote positive things about Barack Obama’s economic advisers while bluntly criticizing those of George W. Bush. Targeting Bush’s economic team, he said, “Economists who have spent their entire careers on equilibrium business cycle theory are now discovering, in effect, that they invested their savings with Bernie Madoff.” In response, Mankiw hit back by saying Krugman should read books on great equilibrium theorists again.

When the United States experienced recession and inflation after pulling its troops out of Vietnam in the mid-1970s, major discussions took place. Then President Gerald Ford said in Chicago that he would deregulate on a large scale and rid the shackles on American entrepreneurs. The Chicago School promoted the theory of deregulation unlike the mainstream Keynesians. They said the market and prices are the best distributor of resources. With the rise of the Reagan era, the Chicagoans became mainstream.

Though both Krugman and Mankiw claim they are Keynesians, they have opposite views on the solution to the latest global economic crisis. Krugman wants more government budget spending while Mankiw warns against passing down budget deficits to future generations and urging more interest rate cuts. It is difficult to say who is right. Former Federal Reserve Board Chairman Alan Greenspan said, “A theory seems to fit for about a decade.” Unfortunately, Korean economists apparently have no active analysis of the crisis since they have failed to propose solutions or even discuss the problem. Perhaps their silence has brought on the “Minerva syndrome.”

Editorial Writer Park Yeong-kyun (parkyk@donga.com)