Awwwwww yeah

Paul Krugman just won the Nobel Prize in economics. Yes, that Paul Krugman.

Now, he won it for his theory of "economic geography," which describes how regions are born, grow, shrink, and die. It's a beautiful and powerful theory, based on one very simple concept - the idea that workers are also consumers, so it pays to locate the production of many different goods all in the same area, to minimize transport costs. It was actually the first economic theory I ever learned, and it's still my favorite. The prize is well-deserved - though it should have been shared with his collaborators Anthony Venables and Masahisa Fujita.

But it's interesting that Krugman is also an outspoken liberal and critic of the Bush administration. Just two years ago, everyone in my department was shaking their heads and lamenting the fact that he had "gone political." They all said it put him out of the running for a Nobel.

That they were proven wrong means that a sea change is underway in the field of economics. It's not that "liberal" theories are starting to be accepted over "conservative" ones (though that is also somewhat true). It's that having explicit political opinions is no longer a taboo. Back in the Cold War, economics was highly politicized, and everyone was looking for a pet economist to support their ideology. Economists reacted by retreating from politics and drowning all their theories in bland ultra-technical jargon. That was good, to a certain extent, since it helped economics gain credence as a "real science." But it made a lot of economists forget about the fact that politics is the only way most economic theories can ever be put to good use.

Well, Paul Krugman didn't forget. What Krugman did is to establish a new model for economists: be scientific about your work, and don't be ashamed of stating your political views. In other words, assume that everyone else will understand the difference between science and opinion as well as you do. Looks like that assumption paid off.