Krugman: Nobel Prize Can Quiet Some Critics, But Not All

By: Joe Strupp Winning a Nobel Prize in economics might give Paul Krugman license to shoot back at some of his critics who have claimed his politics and financial views are wrong. The 55-year-old Princeton University professor and eight-year New York Times columnist is willing to let loose on them a bit, but not too much.

"I do know some economics," he joked Tuesday, about 24 hours after being advised he had won the award. "There has been a tendency for people who don't like my policies to claim I don't know anything about anything. This shows the Swedes disagree."

Still, Krugman says even the award does not absolve him completely from failing to see how big the current economic crisis would get. While he takes credit for warning early on that the housing crash would be a problem, he admits not knowing how bad it would affect other economic indicators.

"I didn?t see the full extent of it," says Krugman. "I saw the housing bust, but I did not think we would come this close to the end of the world. What I hadn't realized is the extent to which the housing bust would cause a banking bust.

"A couple of months ago, I settled on a view that has held up," he added. "Stage one is the housing bust, but it got magnified on the balance sheets of financial institutions. It was not well-defined until a couple of months ago."

Krugman also pointed to his past views of the Asian economic crisis in the 90s, noting he had properly forecast problems then. "The prize for the most part is for work on international trade and economic geography," he said. "But one of my lines of work has, in fact, been economic crises, financial crises."

But, he adds, "I am actually kicking myself for not seeing earlier some of the parallels" between the Asian and U.S. financial downfalls.

Despite the day-long accolades, interviews and well-wishers, Krugman said Monday night's celebration was limited to dinner with his wife, Robin, at a local Princeton bistro and an early bedtime. Fighting a cold, Krugman said he is skipping classes today, but will be "back in the saddle" on Thursday, his next day of class work.

"I was too wired to sleep," he said about last night. "It is not something that happens to you every day."

In Washington, D.C., on Monday for an international banking seminar win he received the Nobel call, Krugman said he still plans to attend Princeton's weekly economic workshop on Wednesday.

Krugman admits he has thought about the Nobel honor, but sought not to let it become an obsession over the years. "One of the things I have tried to position myself from is academic anxiety," he said. "I know people who obsess over those honors."

Ironically, Krugman has never been a finalist or winner of a Pulitzer Prize, despite his twice-weekly Times column dating back to 2000. "That is not a surprise," he says, adding "I have been an economist a lot longer than I have been a columnist."

Asked if this award might make a Pulitzer more attainable, he said: "I have no idea, I don?t know anything about it. I know more about how the Nobel selection process takes place."

When discussion of the $1.4 million Nobel cash prize came up, Krugman said he had not even thought about what to do with the money. But like any economist, he first noted the uncertainty the U.S. dollar might have on it: "It is in Swedish Kronas, so I don?t know what it will be worth."