Econo-spats, Stephen Roach v Paul Krugman edition | FT Alphaville

Econo-spats, Stephen Roach v Paul Krugman edition

It’s become increasingly clear that economists are fractious creatures.

Recent spats include Niall Ferguson v Martin Wolf via Paul Krugman and the legendary dispute between Joseph Stiglitz and Kenneth Rogoff.

Duelling economists seem especially fond of the letters pages of the FT, as with Lord Skidelskey and others v Prof Lord Layard and others on the matter of the timing of UK spending cuts.

And economists at investment banks have proven especially tetchy – Alan Clarke at BNP Paribas and Michael Saunders at Citigroup spring to mind.

So while it is not entirely surprising that Morgan Stanley’s Asia chairman Stephen Roach has found someone to disagree with, we were still a bit taking aback by the vehemence with which he has gone after Paul Krugman.

As Bloomberg reported on Friday (emphasis ours):

Morgan Stanley Asia Chairman Stephen Roach said that Paul Krugman’s call to push China to allow a stronger yuan is “very bad” advice and that increased Chinese spending is a better way of reducing trade imbalances.

“We should take out the baseball bat on Paul Krugman — I mean I think that the advice is completely wrong,” Roach said in an Bloomberg Television interview in Beijing when asked about Krugman’s call, characterized as akin to taking a baseball bat to China. “We’re lashing out at China rather than tending to our own business,” which is raising U.S. savings, Roach said.

Roach was referring to Krugman’s column in the NY Times on March 14, in which the winner of the Nobel memorial argued the US should play “hardball” with China if it maintained its “distortionary exchange rate policy”.

Krugman, for his part, told Bloomberg:

“I’m a little surprised at Steve for saying that,”…“What I said is actually based on pretty careful economic analysis. We have a world economy which is depressed by China artificially keeping its currency undervalued.”

But perhaps he should have seen it coming. After all, The Economist (fittingly) responded to Krugman’s column within 24 hours of its appearance in the NY Times.

As “R.A” put in a post on the Free Exchange blog:

[Krugman’s] view of what ought to be done is perplexing. First, he calls on the Treasury department to label China an official currency manipulator. I’m not sure why he believes that anyone in China or America is confused about what the Obama adminstration thinks of the dollar peg. They’ve been quite clear. I’m also not sure what effect this is supposed to have.

R.A’s tone becomes increasingly withering toward the end, and although it does not quite devolve into Godwinism, the riposte does compare Krugman’s China rhetoric “to the argumentation deployed by the Bush administration as it rushed to war in Iraq.”

And because economists appear to have far too much time on their hands/just don’t know when to quit, Krugman responded in kind. To which R.A, inevitably, replied at length.

Given that in the long run none of this will matter because we will all be dead (etc), FT Alphaville does wonder why economists find these tiffs impossible to resist.

Perhaps the behavioural economists will be able to comment on the motivations of their colleagues?

Related links:
Top Behavioural Economist Invents New Mythical Role for the Invisible Hand – Adam Smith’s Lost Legacy
Craig Pirrong v Gary Gensler: who’s right on OTC derivatives? – FT Alphaville
Taleb vs Tavakoli, a post-it update – FT Alphaville
Battle of the financial pundits – FT Alphaville