Prior Tanner Lecture 2001-2002

Current year program 2003-2004
Prior year program 2002-2003

Stanford University was proud to welcome 2002 Tanner Lecturer, Paul Krugman (http://web.mit.edu/krugman/www/), (http://www.nytimes.com/pages/opinion/columns/), to campus from March 18-20. Krugman is a faculty member in Economics at Princeton University, and has been on the faculty at MIT, Stanford, and Yale. In 1991, he was awarded the John Bates Clark Medal, given by the American Economic Association every two years to the best American economist under the age of 40. He has written a twice-weekly column for the New York Times since 2000, and has also written for Slate and Fortune. Krugman is regarded as one of the world's most eminent trade theorists and is an expert on international trade, money and banking and macroeconomics. He has authored or co-authored 22 books and has taken his theories to the masses via op-ed pieces and short articles in lay magazines. He is known for his penetrating analysis, his willingness to stake out a position, and his sharp wit.

The two lectures Paul Krugman gave were:

"Intractable Slumps"
Monday, March 18, 2002
Commentators for the ensuing seminar were Kenneth Arrow (http://www-econ.stanford.edu/faculty/arrow.html), the Joan Kennedy Professor of Economics & Professor of Operations Research, Emeritus and Mike Tomz (http://www.stanford.edu/~tomz/), Assistant Professor of Political Science

AND

"Currency Crises"
Tuesday, March 19, 2002
Commentators for the ensuing seminar were (Ronald McKinnon ), Eberle Professor of Economics & Senior Fellow at the Center for Research on Economic Development and (Judith Goldstein), Professor of Political Science & Senior Fellow at the Institute for International Studies.

Below is a critique of Paul Krugman's lectures by Ethics in Society student Joseph Shapiro ('03)

Paul Krugman's Tanner Lectures
Joseph S. Shapiro

The National Bureau of Economic Research defines a recession as two quarters of negative growth. Paul Krugman gave a more accessible definition in his Tanner Lectures on March 18-19. Envision couples that exchange babysitting services. A couple "pays" scrip to another couple to watch their kids for an evening. A group of Washington lawyers founded a babysitting coop on this model in the 80s. But they printed such little scrip that families quickly began stockpiling scrip and refusing to go out; extravagant nights of dinner and opera disappeared and evenings on the couch with popcorn and TV ensued; social lives eroded. Explained Paul Krugman, "They got themselves into a recession."

Paul Krugman's talents are his intellect and expression. Krugman explained "Intractable Slumps" and "Currency Crises" to filled auditoriums of Stanford faculty, students, and community members in the Graduate School of Business and in Encina Hall. Krugman is Professor of Economics at Princeton and columnist for The New York Times. Discussants of his lectures were Kenneth Arrow, Mike Tomz, Ronald McKinnon, and Judith Goldstein, all current Stanford faculty.

Krugman first explained how Japan's economy has become mostly unresponsive to traditional monetary and fiscal policy tools. His second lecture highlighted our incomplete understanding of currency crises - Mexico in 1995, Indonesia in 1997, Russia, Brazil, and now Argentina have all undergone painful periods of adjustment after sudden currency devaluations.

Wit and accessibly lucid explanation filled both talks. Krugman's Times column achieves wide appeal by explaining dense models in clear language; his speeches did the same. An economic textbook might explain, "Low interest rates deter consumer purchase of bonds and fixed income securities." Krugman: "The only consumer durable that sells in Japan these days are safes."

Macroeconomics textbook: freedom in capital flow ensures subject to volatility that currencies will equilibrate to their competitive value. Krugman: "The dollar's got to come down - if you ask when, I'll say a year ago."

Economics textbook: uncertainty in central banks prevents the efficacy of monetary policy from ensuring stable growth. Krugman: "Al Greenspan is not omniscient, but omnipotent." Argentina, he argued, is not a case of excess debt, but an economy that crippled itself by "reading too much recent economics," refusing to spark demand by government spending, and thwarting exports by maintaining an overvalued peso.

But Krugman's necessary predictive caution left few country episodes that the audience could declare that economics does fully understand. As Kenneth Arrow emphasized in his discussion, "Macro is impossible"; Judith Goldstein expressed similar sentiments. Economists see their field as scientific, but academic caution left listeners without a clear understanding of how to prevent an intractable slump, or why the Russian Ruble lost much value in little time.

Krugman's discussion focused on economic problems but applied them infrequently to human values. Goldstein emphasized that prolonged recessions demoralize citizens and undermine democratic institutions. Krugman at one point emphasized the harm to "200 million people in Indonesia who thought they were on the track to a better life, but found out they were getting into something else." It seems obvious that recessions, currency crises, and hyperinflation are all bad. But why should we allow unemployed workers to wander streets to maintain low inflation? Does recession only cause economic harm? Does a lasting recession abridge liberty or worsen equality? What values do economic problems threaten?

These questions might be more pertinent to a philosopher or political scientist. But as Robert Solow emphasized in his Tanner Lectures at Princeton in 1997, economics is a science of human values. Discussing economic problems without emphasizing their significance for life, health, family - all core human values - fails to show the crucial importance of why avoiding recessions must be a top priority.