someone says something nice about Krugman

On related topics, I wrote an entry on economists and their politics (including Krugman), I've posted a piece by Bill Anderson ripping Krugman, and I wrote a piece taking a few pokes at Krugman on gas prices and drilling for oil...

Here, we have the highly-respected David Henderson in the WSJ describing Krugman's Nobel Prize-winning work on international trade. It's not an area of expertise for me, but from what I understand, he did make valuable contributions to that field.

The Royal Swedish Academy of Sciences announced yesterday that the 2008 winner of the Nobel Prize in Economic Sciences is Paul Krugman. A professor at Princeton University, Mr. Krugman is known to the American public mainly for his column in the New York Times, which reflects his highly partisan political views -- he hates George Bush and Republicans in general -- more than his solid economic understanding. Nevertheless, he is an original theorist in international trade and economic geography. His excellent book, "Pop Internationalism" (1997), and his popular articles of the 1990s (many of them published online, in Slate), make a strong case for free trade.

But Mr. Krugman's defense of free trade is not what earned him the Nobel Prize. Rather, he was honored for his work in the late 1970s explaining patterns of international trade, and for his work in the early 1990s on economic geography.

In the late 1970s, Mr. Krugman noticed that the accepted model economists used to explain patterns of international trade did not fit the data. The Hecksher-Ohlin model predicted that trade would be based on such factors as the ratio of capital to labor, with "capital-rich" countries exporting capital-intensive goods and importing labor-intensive goods from "labor-rich" countries. Mr. Krugman noticed that most international trade takes place between countries with roughly the same ratio of capital to labor. The auto industry in capital-intensive Sweden, for example, exports cars to capital-intensive America, while Swedish consumers also import cars from America.

Mr. Krugman's explanation is based on economies of scale. Both Volvo and General Motors reduce average costs by producing a large output in particular niches of the market. In presenting his trade model, Mr. Krugman planted the seeds for his later work in economic geography, in which he tried to explain the location of economic activity.

He summarized his basic finding (in "Geography and Trade," 1992) as follows: "Because of economies of scale, producers have an incentive to concentrate production of each good or service in a limited number of locations. Because of the cost of transacting across distance, the preferred locations for each individual producer are those where demand is large or supply of inputs is particularly convenient -- which in general are the locations chosen by other producers. Thus [geographical] concentrations of industry, once established, tend to be self-sustaining."...

Henderson continues by describing Krugman's patience and eloquence in discussing free trade-- before concluding...

That kind of common-sense clarity seems noticeably absent in his New York Times columns, in which he often attacks the motives of people who disagree with him and even calls them "liars." This deserving Nobel recipient could set a better example when it comes to academic -- indeed basic human -- courtesy.