A good piece. I have a serious question for people smarter than me about the following: -- "Then there was the 1997 East Asian crisis, during the depths of which Paul Krugman wrote in a Fortune cover essay, "Never in the course of economic events—not even in the early years of the Depression—has so large a part of the world economy experienced so devastating a fall from grace." He went on to argue that if Asian count…
You need to separate Krugman's work as an academic economist from his work as a "popular economist" and political commentator. I'm not an economist, but my understanding is that his academic work is outstanding and has contributed significantly to improving the models for understanding international trade. He also correctly predicted that fixed exchange rate regimes would be dangerously unstable (a lesson that not everybody has learned yet).
As you point out however, he was incorrect in his prescription for how to deal with the currency crisis. I'm going to postulate here that economists don't have really good models for studying how to recover from crisis events because they are relatively rare in comparison to their complexity, so the mathematical tools of economics are unable to explain them well. When you're placed in a situation in which you do not have enough information to make a good recommendation, the correct action is to admit that fact. That goes for the current crisis as well. Krugman seems to have very strong idealogical tendencies, given that he wrote a book called "The Conscience of a Liberal," and thus expresses his opinion about how to handle these matters much more forcefully than is warranted by the information that is provided by economics. In my opinion, this is an abuse of the natural authority provided by his economic credentials, and he should probably stick to writing articles for the academic community and not the popular press.