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Nobel Prize Dud

The "economist" Paul Krugman was awarded the 2008 Nobel Prize for economics this week.  While I have grown to expect the Nobel Prize committee to award the Literature prize to lesser lights in the world of letters, I did not expect that the award committee's myopia would extend to economics.  Over the last decade, at least, Mr. Krugman has made statements that suggest he no longer understands some of the fundamental principles of economics.  For example, writing in the New York Times he stated:

"Although America has higher per capita income than other advanced countries, it turns out that that's mainly because our rich are much richer. And here's a radical thought: if the rich get more, that leaves less for everyone else. "

The mistaken notion that the wealth of the world, or even one country, is a static amount that is unchanged by the productive effort of those who engage in economic activity is a fundamental fallacy.  It leads to statements like Krugman's that suggest the economy is like a pie and if  someone gets more everyone else must get less;  thus ignoring the continual production of new pies made more efficiently by pioneers in the world of pie creation.  For someone who now wears the mantel of "nobel laureate" it is a sad commentary on his lack of economic understanding.  For the rest of us it is a sad day for our overall economic knowledge, even as the entrepreneurs among us continue to create wealth.


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