Krugman’s Bizarre Comparison

According to a news report about Paul Krugman’s selection to receive the Nobel Memorial Prize in Economic Sciences:

Commenting on the global economic meltdown, Krugman told a news conference in Stockholm by telephone from the United States that some of his research was linked to currency crises and related issues.

“This is terrifying,” he said, comparing it to the financial crisis that gripped Asia in the 1990s. “I had never thought that in my lifetime I would see anything that resembles the Great Depression, but this in fact does.”

This statement shows either (1) that Krugman knows nothing about economic conditions during the Great Depression or (2) that he knows nothing about economic conditions at present. An unemployment rate of 20-25 percent is not comparable to an unemployment rate of 6 percent. A decline in real GDP of 30 percent is not comparable to ongoing growth in real GDP. Approximately 10,000 commercial bank failures are not comparable to a handful of such failures recently. Deflation of 20-25 percent is not comparable to the inflation we presently experience. Many other gross differences might be mentioned, as well.

For economists who would like the Nobel Prize to mean something, today is a very sad day. Besides making a travesty of the prize, Krugman’s selection constitutes an insult to the few excellent economists (I am thinking especially of F. A. Hayek and James Buchanan) who have received the prize in the past.