In the pub last night I mentioned a coupla interesting Paul Krugman articles without quite managing to communicate what is interesting about them. The first is his pioneering opus ‘The Theory of Interstellar Trade‘:

This paper extends interplanetary trade theory to an interstellar setting. 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 travelling with the goods than to a stationary observer. a solution is derived from economic theory, and two useless but true theorems are proved. This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics.

The second is this piece from 1991 discussing his major breakthroughs in economic theory and why most people who are not economists wouldn’t consider them major breakthroughs at all. Krugman readily supplies a certain amount of ammunition for the Post-Autistic Economics set by ‘fessing up to the fact that economists ‘just don’t see what we can’t formalize’. I think economists as a profession would probably meet with a lot less criticism if they followed Krugman’s lead in being more open about the limits of their analysis, with his interstellar providing another nice example:

To conclude this section, we should say something about the assumption that the trading planets lie in the same inertial frame. This will turn out to be a useful simplification, permitting us to limit ourselves to consideration of special relativity. It is also a reasonable approximation for those planets with which we are likely to trade. Readers may, however, wish to use general relativity to extend the analysis to trade between planets with large relative motion. This extension is left as an exercise for interested readers because the author does not understand the theory of relativity, and therefore cannot do it himself.

Here’s a great way you can get your hands on a brand new Ferrari…

Brian Lenihan. No matter what you think of the man, there’s no denying that he is Ireland’s minister for finance. It’s true that he was recently ranked as the second worst finance minister in Europe, for what appears to be no particular reason. But with Ireland’s finances in such a bad way, what with the recession, plunging tax receipts and rocketing unemployment and all, there’s just no time for popularity contests or thinking about things. Here he is, talking, on the radio:

“If you shop at home this Christmas, and shop a little bit more this Christmas and if you recognise that money is going to help educate your children and care for people in hospitals and pay for our medical expenses, which the State has to pay for, I think you’ll realise that it is important to shop at home.”

I’m not above doing my bit. For Christmas, I’m going to buy Brian a time machine, so he can go back ten years, apply the same splendid logic to income tax, and we can at least endure the hard times with a decade of decent investment in health, education and public services behind us.