By Wolfgang Kerler |Inter-Press Service
NEW YORK, Oct 13 – Paul Krugman, a professor at Princeton University who is best known for his New York Times columns — frequently involving scathing assaults on the policies of the George W. Bush administration — was awarded the 2008 Nobel Memorial Prize in Economic Sciences for his research on international trade and economic geography.
“To be absolutely, totally honest I thought this day might come someday, but I was absolutely convinced it wasn’t going to be this day,” Krugman, a 55-year-old U.S. national, said in an interview with The Times Monday.
The Royal Swedish Academy of Sciences, which administers the award, said it was bestowed on Krugman “for his analysis of trade patterns and location of economic activity”.
“This was definitely a ‘real world’ pick and a nod in the direction of economists who are engaged in policy analysis and writing for the broader public,” Tyler Cowen, professor of economics at George Mason University, commented on his weblog “Marginal Revolution”.
Krugman found new ways to explain what goods are produced where, and how capital and labour are distributed over countries and regions.
Most of the discussion going on on the Internet after the announcement of the prize commitee, however, was not about Krugman’s scientific achievement, but about the strong positions he took as a columnist, author and blogger.
Krugman served as an advisor to Bill Clinton’s presidential campaign, and for a short time was a consultant to former president Ronald Reagan.
Back in 2000, a year after he joined The New York Times, Krugman spent a great deal of effort “trying to alert readers to the blatant dishonesty of the Bush campaign’s claims about taxes, spending and Social Security”, as he wrote in a column this year.
A stauch critic of the Iraq war, he has repeatedly cautioned against a potential victory for John McCain, the Republican contender in the Nov. 4 U.S. elections.
Just recently, Krugman stressed that “the Obama campaign is wrong to suggest that a McCain-Palin administration would just be a continuation of Bush-Cheney. If the way John McCain and Sarah Palin are campaigning is any indication, it would be much, much worse.” Many observers are now wondering if the decision of the Swedish prize commitee is sending a political message as well.
With recent publications, Krugman has influenced the arrangement of the federal plan to spend 700 billion dollars to cushion U.S. credit markets — a topic he is long familiar with as his dissertation was on international finance.
Krugman received his B.A. from Yale University in 1974 and his Ph.D. from the Massachusetts Institute of Technology (MIT) in 1977. He went on to teach at Yale, MIT and Stanford, and is now a professor at Princeton University in New Jersey, where he gives a course on international monetary policy and theory.
Starting with a short article published in the Journal of International Economics in 1979, Krugman has lifted the theory of international trade to a new level. His theory explained the increasing trade between countries that produce the same kind of goods — a phenomenom that has grown since World War II.
While traditional theories were based on differences among countries that make them specialise and trade with other countries, Krugman found an explanation why, for example, a car-producing country is not only exporting cars but also importing them.
First, it is about economies of scale: Because mass production diminishes the per unit price of production, it is lucrative for companies to produce many units of a specific good — and therefore develop their own brand.
Second, it is about consumers’ lust for diversity, especially in highly industrialised rich countries: They simply want to chose between a large number of brands.
So while one country may produce luxury cars, another one may build smaller vehicles. And due to lower prices and greater product diversity, wealth and prosperity are increasing for people in both countries.
With his “new economic geography”, Krugman later showed that the distribution of work and capital across regions depends on the trade-off between utilising economies of scale and saving on transport costs. Today’s process of urbanisation can be explained with Krugman’s theory.
The domination of already successful, large countries can also be explained through his findings as economics of scale, lower prices and diversity of products are easier to achieve there.
Krugman is the ninth U.S. laureate of the Nobel Memorial Prize in Economic Sciences in a row — a prize that does not date back to Alfred Nobel, who died in 1896, but was created by the Swedish central bank in 1968.
He is also among a number of Nobel laureates who received the John Bates Clark medal, a renowned prize for young economists under age 40, which he won in 1991.

With 1.3 trillion dollars spent every year on the world’s militaries, countries enmeshed in conflict are often flooded by weapons which are then turned against helpless civilian populations, say human rights organisations pushing for an international treaty to closely regulate arms sales.


Fidel Castro: The Law of the Jungle
October 14, 2008Racism, Obama and the Fall of the American Economy
Fidel Castro | Counterpunch, Oct 13, 2008
Trade, within a society and between countries, is the exchange of goods and services produced by human beings. The owners of the means of production appropriate the profits. As a class, they are the leaders of the capitalist state and they boast of fostering development and social wellbeing through market. This they worship as an infallible God.
In every country there is competition between the strongest and the weakest; the ones with more physical energy and better fed, those who learned how to read and write, who attended school and have more experience accumulated; the ones with more extensive social relations and more resources, and those within society who fail to have these advantages.
Now, as far as the countries is concerned, there are differences between those with a better climate and more arable land, more water and more natural resources in the area where they are located, when there are no more territories to conquer; the ones mastering technology, having greater development and handling unlimited media resources and those who, on the contrary, do not enjoy any of these prerogatives. These are the sometimes enormous differences between the rich and the poor nations.
It´s the law of the jungle.
There are no differences between ethnic groups, however, when it comes to the mental faculties of the human being. This has been thoroughly proven by science. The present society is not the natural way in which human life evolved, but rather a creation of the mentally developed man without which his life would be inconceivable. Therefore, what is at stake is whether the human being will be able to survive the privilege of having a creative mind.
The developed capitalist system, epitomized by the country with a privileged nature where the European white man brought his ideas, dreams and ambitions, is today in a crisis. But, it is not the usual crisis happening once in a number of years; not even the traumatic crisis of the 1930s but the worst of all crises since the world started to pursue this growth and development model.
The current crisis of the developed capitalist system is taking place when the empire is about to change leadership in the elections to be held in twenty-five days; it was all that was left to see.
The candidate of the two main parties that will say the last word in these elections are trying to persuade the bewildered voters –many of whom have never cared to cast a vote- that as candidates to the presidency they can secure the wellbeing and consumerism of what they describe as a people of middle class only, even though they are not planning to introduce any real changes to what they consider the most perfect economic system the world has ever known. The same world that, in their respective minds, is less important than the happiness of over three hundred million people who account for less than five percent of the world population. The fate of the remaining ninety-five percent of human beings, peace and war, the fit or unfit-for-breathing air, will highly depend on the decisions of the administrative leader of the empire, whether or not that constitutional position has any power at a time of nuclear weapons and space shields moved by computers in circumstances where every second counts and when ethical principles keep loosing their value. Still, the more or less nefarious role of the President of that country cannot be overlooked.
Racism is deeply-rooted in the United States where the mind of millions of people can hardly reconcile with the notion that a black man, with his wife and children could live in the White House, which is precisely called White.
It´s a miracle that the Democratic candidate has not met the same destiny as Martin Luther King, Malcolm X and others who only a few decades ago dreamed of justice and equality. He is in the habit of looking at his adversary with serenity and of smiling at the dialectic predicament of an opponent gazing into space.
The Republican candidate, on the other hand, who likes to enhance his reputation as a belligerent man, was one of the worst students in his class at West Point. He has confessed that he did not know any Mathematics; it can thus be assumed that he knew less of the complicated economic science.
The truth is his adversary surpasses him in cleverness and composure.
Something McCain has aplenty is age, and his health condition is not safe.
I am bringing up these data to indicate that eventually -if anything went wrong with the candidate´s health, in case he is elected- the lady of the riffle, the inexperienced former governor of Alaska could become President of the United States. It can be noticed that she does not know a thing.
Meditating on the current US public debt -$10,266 trillions- that President Bush is laying on the shoulders of the new generations in that country, I took to calculating how long it would take a man to count the debt that he has doubled in eight years.
A man working eight hours a day, without missing a second, and counting one hundred one-dollar bills per minute, during 300 days in the year, would need 710 billion years to count that amount of money.
I could not find a more graphic way to describe the volume of money that is practically mentioned every day now.
In order to avoid a general state of panic, the US administration has declared that it will secure deposits that do not exceed 250 thousand dollars. It will be managing banks and such funds as Lenin would never have thought of counting with an abacus.
We might be wondering about the contribution of Bush´s administration to Socialism. But, let´s not entertain any illusions. Once the banking operations go back to normal, the imperialists will return the banks to the private business as some other countries in this hemisphere have already done. The peoples always foot the bill.
Capitalism tends to reproduce itself under any social system because it is based on selfishness and on man´s instincts.
The only choice left to human society is to overcome this contradiction; otherwise it would not be able to survive.
At this time, the ocean of money being poured into the world finances by the central banks of the developed capitalist countries is dealing a hard blow to the Stock Exchanges of the countries which resort to these institutions in an effort to beat their economic underdevelopment. Cuba has no Stock Exchange. We shall certainly find more rational and more socialist ways of financing our development.
The current crisis and the brutal measures of the US administration to save itself will bring more inflation, more devaluation of the national currencies, more painful losses in the markets, lower prices for basic export commodities and more unequal exchange. But, they will also bring to the peoples a better understanding of the truth, a greater conscience, more rebelliousness and more revolutions.
We shall see how the crisis develops and what happens in the United States in twenty-five days.
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Tags:capitalist system, ethnicity and mental facullties, European white man, Fidel Castro, law of the jungle, owners of means of production, present economic crisis, racism in America, rich and poor nations, trade, US presidential candiates, US public debt
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