Paul Krugman! Who knew that before he started his new life as Chief Priest of the Order of the Shrill, he was an impertinent scamp?
The first joke in Paul Krugman's newly-scanned and liberated to the Internet tour-de-farce, "The Theory of Interstellar Trade," comes at you on the title page, in which he notes that the "research was supported by a grant from the Committee to Re-Elect William Proxmire."
Proxmire was the Senator from Wisconsin who created the Golden Fleece Awards, designed to highlight particularly egregious examples of government waste of taxpayer money. So right off, Krugman makes it clear that he is about to launch readers into a brave new world of nonsense. Or as he puts it later, "this paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics."
And the jokes just keep on coming! As well as the "Star Trek," "Star Wars," and Isaac Asimov references.
The problem Krugman sets out to solve has to do with the confusing effects of space travel at near light speeds on the human experience of time.
It is chiefly concerned with the following question: how should interest charges on goods in transit be computed when the goods travel at close to the speed of light? This is a problem because the time taken in transit will appear less to an observer traveling with the goods than to a stationary observer. A solution is derived from economic theory, and two useless but true theorems are proved.
I'm no economist, but Krugman's reasoning appears iron-clad to me, although I am skeptical of his assumption that "investors, human or otherwise" will be "able to make perfect forecasts of prices over indefinite periods." I think even Krugman would have to agree that current events do not support this thesis, although, who knows, we may do much better in the future, provided we have effective government oversight and functional artificial intelligence. But ultimately I am prepared to believe his conclusion that interest rates on planets sharing the same inertial frame will converge, even if I don't know what to do with this information, or how it applies to U.S.-Chinese trade relations. Such questions can be left to bloggers yet unborn.
We don't get enough of these hijinks in Krugman's current column. But if you're wondering why, I can only observe that "The Theory of International Trade" was written in 1978, when Krugman was an assistant professor at Yale. This was, of course, two years before Ronald Reagan was elected president, movement conservativism entrenched itself in Washington's halls of power, and the great rollback of the New Deal gained unstoppable momentum. So if you're wondering where the laughter has gone, you know who to blame.
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