Monday, July 25, 2005

Krugman, Krugman, Krugman

For a long time many have suspected that Paul Krugman has abandoned the powerful and clear economic reasoning that made him great. I resisted. I couldn't accept it. But today's column about Canadian health care and Toyota's decision to build its new plant in Ontario has changed my mind:
Funny, isn't it? Pundits tell us that the welfare state is doomed by globalization, that programs like national health insurance have become unsustainable. But Canada's universal health insurance system is handling international competition just fine. It's our own system, which penalizes companies that treat their workers well, that's in trouble.


For now, let me just point out that treating people decently is sometimes a competitive advantage. In America, basic health insurance is a privilege; in Canada, it's a right. And in the auto industry, at least, the good jobs are heading north.
Competitive advantage? How can this be the same Krugman who skewered the concept of international competitiveness over and over again? How can this be the same Krugman who wrote:
[T]he idea that a country's economic fortunes are largely determined by its success on world markets is a hypothesis, not a necessary truth; and as a practical, empirical matter, the hypothesis is flatly wrong. That is, it is simply not the case that the world's leading nations are to any important degree in economic competition with one another, or that any of their major economic problems can be attributed to failures to compete in world markets.
Here, Krugman '94 gives his future self some very good advice:
On the side of hope, many sensible people have imagined that they can appropriate the rhetoric of competitiveness on behalf of desirable economic policies. ... It's tempting to pander to popular prejudices on behalf of a good cause, and I have myself succumbed to that temptation. ... Unfortunately, those economists who have hoped to appropriate the rhetoric of competitiveness for good economic policies have instead had their own credibility appropriated on behalf of bad ideas.
I think this may be what has happened here. He is clearly pushing universal single-payer health care, which may in fact be a good thing. But he shouldn't couch his case for it in terms which he has convincingly argued are meaningless.


Anonymous Blue Cross of California said...

It's interesting to hear how large Krugman's views are on health care.

1:43 AM  

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