Who's the Real Economist?

Who's the Real Economist?

E-mail debates of newsworthy topics.
Nov. 7 1996 12:30 AM

Who's the Real Economist?

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      Clearly, Paul Krugman's response narrows our differences. I do not criticize him for the simplicity and elegance of his math; my linear algebra is not fancy either. We agree that journalists should be careful with numbers. And while I'm quite certain that my own work also contains mistakes, it is gratifying that so far, Paul hasn't found them. His reply also does not repeat the canards about "deconstruction," "anti-academic writers," "lit-crit style," and "intellectuals who can't stand algebra" of his original attack.
       Paul's own past work is probably not available online, so readers may have to go to the library to check whether there isn't, after all, just a hint of that Ricardian vice on his record. Readers should also stay tuned on the great questions of trade and wages that are the subject of the rest of Paul's letter. The real issue here, still very much unresolved between academics, is not the division of income between wages and profits. It is the effect of trade on inequality within the wage structure. It is whether trade has displaced relatively low-wage manufacturing jobs, not high-wage jobs. My present view is that the actual effects of trade on wage inequality are stronger than Paul appears to believe, that they worked mainly through the exchange rate, and that they are, nevertheless, not as strong as the influence of high rates of domestic unemployment. For more details, however, readers will just have to wait--I'm still checking the numbers.

James K. Galbraith, a professor of government at the University of Texas, takes issue with Paul Krugman's recent SLATEcolumn, "Economic Culture Wars." Krugman is a professor of economics at MIT.