Nobel Prize winning economist Paul Krugman came to Ann Arbor Friday, October 2, to deliver a lecture in conjunction with a weekend long conference to recognize the contribution of Alan Deardorff, a U-M professor of international economics. Krugman commanded the lectern at Hill Auditorium for over an hour, speaking about the fundamentals of international trade and globalization and their impact on the current world economy.
Krugman spoke fairly conservatively in front of a reverent and supportive crowd. "Nothing that we didn't know before," stated Adam Levin, a graduate student in political science. It just "wasn't very polemical," said Kharis Thompson, another graduate student, echoing the resentment of many attendees anticipating more opinion from the often controversial Krugman.
The first half of Krugman's lecture felt like an afternoon in Lorch Hall listening to Prof. Deardorff. He touched on fundamentals of international economics as well as a short history of protectionism and the role of international trade in combating past national and global crises. Krugman segued into a discussion on the current global crisis, reasoning that financial globalization could be considered a cause, particularly the Chinese accumulation of reserves that led to the devaluation of the U.S. dollar and the subsequent credit bubble. He said that globalization was responsible for "propagating the crisis", as evidenced by "falls in GDP to [….] exporters of durable manufacturing goods, such as Germany and Japan."
Krugman concluded by referring to this crisis as a "historically standard banking crisis, dressed in different clothes"; referring to new age banks where funds can be transferred with the click of a mouse. Krugman believes that the economic situation "does appear to have stabilized" and "armaggedon has been postponed" due in part to a "vigorous emergency response." Krugman concentrated on the role of globalization, but avoided other causes. "He was not tough enough on the irresponsible, on the banking system," thought LSA senior Lolita Moss.
Krugman added that the formula for recovery from a crisis such as this is a significant trade surplus, something that appears impossible for the United States in the near future. He said that the global economy needs 'adult supervision,' because it cannot be trusted to properly adjust and grow without regulatory institutions in place.
The discussion of the crisis picked up during the question and answer session. He was skeptical of Ron Paul and his bill to audit the Fed, and Detroit's ability to turn back the clock and become an auto production giant, although he thought that the U.S. will experience manufacturing growth with a weakening U.S. dollar. He received the most crowd approval when asked about his view on health care, he claimed that the French health care system was the most favorable and that a half dozen benevolent systems exist, just not in the United States.
Although Krugman may not have wowed the audience, he did deliver a reasoned and simple lecture. Templeman remarked that Krugman has an uncanny ability to
"turn complex economic ideas into something everyone can understand." Moss agreed. "Overall, [he was] very interesting and clear," she concluded.
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