from the New Yorker, right here
Krugman went to Yale, in 1970, intending to study history, but he felt that history was too much about what and not enough about why, so he ended up in economics. Economics, he found, examined the same infinitely complicated social reality that history did but, instead of elucidating its complexity, looked for patterns and rules that made the complexity seem simple. Why did some societies have serfs or slaves and others not? You could talk about culture and national character and climate and changing mores and heroes and revolts and the history of agriculture and the Romans and the Christians and the Middle Ages and all the rest of it; or, like Krugman’s economics teacher Evsey Domar, you could argue that if peasants are barely surviving there’s no point in enslaving them, because they have nothing to give you, but if good new land becomes available it makes sense to enslave them, because you can skim off the difference between their output and what it takes to keep them alive. Suddenly, a simple story made sense of a huge and baffling swath of reality, and Krugman found that enormously satisfying.
This was, he discovered later, a development that Keynes had helped to bring about. In the nineteen-twenties and thirties, economics had been more like history: institutional economics was dominant, and, in opposition to neoclassical economics, emphasized the complicated interactions between political, social, and economic institutions and the complicated motives that drove human economic behavior. Then came the Depression, and the one question that people wanted economists to answer was “What should we do?” “The institutionalists said, ‘Well, it’s very deep, it’s complex, I mean, you just talk about what happened in 1890,’ ” Krugman says. “Keynesian economics, which was coming out of the model-based tradition, even if it was pretty loose-jointed by modern standards, basically said, ‘Push this button.’ ” Push this button—print more money, spend more money—and the button-pushing worked. Push-button economics was not only satisfying to someone of Krugman’s intellectual temperament; it was also, he realized later, politically important. Thinking about economic situations as infinitely complex, with any number of causes going back into the distant past, tended to induce a kind of fatalism: if the origins of a crisis were deeply entangled in a country’s culture, then maybe the crisis was inevitable, perhaps insoluble—even deserved.
Why was it so politically difficult to reregulate the banks? he wondered. Why couldn’t the Administration harness the populist outrage? What good had Wall Street ever done for America? “There must be something useful in there, but it is really hard to see what,” he says. “That’s everybody’s challenge: come up with a clearly beneficial example of financial innovation without mentioning A.T.M.s, and no one can do it. If there are arbitrage opportunities and you’re able to spot them a few seconds before anybody else, you can make a lot of money, but there’s no actual social gain from doing that. We’ve tried talking to our friends in finance, and they say, ‘Liquidity, liquidity, liquidity.’ Well, there is some social loss if people are hanging on to a lot of idle cash, so the financial system, by providing liquid assets that provide a pretty good yield, is supposed to deal with that. But it turns out that, just when you need it most, that liquidity froze.”
and much more about his research, political involvement and everyday life
The first quote makes me wonder if we have to treat today’s preoccupations about « sustainable development » the same way Keynes handled the Great Depression, that is by simplifying things and diffusing short precepts such as « value soberness and self-restriction », « take into account environmental services »… And the whole article made me remember an article in Nature (11/18/2009) on Gretchen Daily in which the journalist said about her: « the experience convinced her of the value of using science and activism to tackle environmental problems ». More generally, does a young scientist have to worry about social implications/understanding at the beginning of his career? How far can we simplify reality when dealing with so-called « complex issues »? While some people say that one start understanding something when one can build it, is this assuming we first need to know how to manipulate/tinker/create things, be it living organisms (think « synthetic biology ») and ecosystems (think « GMO crops »), in order to be sure to understand them, and thus finally apply/monitor/master/govern them? I would rather think that, depending on the status of a given research field, one can, more or less easily, simplify reality. In « mature » fields, simplification and over-simplification are synonyms. Once a model was proposed that explained the basis of a given issue, one need to enter in « dirty » details: for instance, the basis of population genetics can be understood quite quickly and served as foundations for crop breeding. But today’s and future’s challenges require slightly more advanced studies I might say, no?