Obama’s Nobel Headache

Krugman is not likely to show up in an administration job in part because he has a noble—but not government-career-enhancing—history of speaking truth to power. With dry humor, he once told a friend the story of attending an economic summit in Little Rock after Bill Clinton was elected president in 1992. As the friend recounted the story to NEWSWEEK, "Clinton asked Paul, 'Can we have a balanced budget and health-care reform?'—essentially, can we have it all? And Paul said, 'No, you have to be disciplined. You have to make choices.' Then Paul says to me (deadpan), 'That was the wrong answer.' Then Clinton turns to Laura Tyson and asks the same questions, and she says, 'Yes, it's all possible, you have your cake and eat it too.' And then [Paul] says, 'That was the right answer'." (Tyson became chairman of Clinton's Council of Economic Advisers; she did not respond to requests to comment.) Krugman confirmed the story to NEWSWEEK WITH a smile. "I'm more tolerant now," he says. But at the time, he was bitter that he was kept out of the Clinton administration.

Krugman has a bit of a reputation for settling scores. "He doesn't suffer fools. He doesn't like hauteur in any shape or form. He doesn't like to be f––ked with," says his friend and colleague Princeton history professor Sean Wilentz. "He's not a Jim Baker; he's not that kind of Princeton," says Wilentz, referring to the ur-establishment operator who was Reagan's secretary of the Treasury and George H.W. Bush's secretary of state. But Wilentz went on to say that Krugman is "not a prima donna, he wears his fame lightly," and that Krugman is not resented among his academic colleagues, who can be a jealous lot. Krugman's fellow geniuses sometimes tease him or intentionally provoke his wrath. At an economic conference in Tokyo in 1994, Krugman spent so much time berating others that his friends purposely started telling him things that they knew weren't true, just to see him get riled up. "He fell for it every time," said a journalist who was there but asked not to be identified so she could speak candidly. "You'd think that eventually, he would say, 'Oh, come on, you're just jerking my chain'." Krugman says he doesn't recall the incident, but says it's "possible."

Born of poor Russian-immigrant stock, raised in a small suburban house on middle-class Long Island, Krugman, 56, has never pretended to be in the cool crowd. Taunted in school as a nerd, he came home one day with a bloody nose—but told his parents to stay out of it, he would take care of himself. "He was so shy as a child that I'm shocked at the way he turned out," says his mother, Anita. Krugman says he found himself in the science fiction of Isaac Asimov, especially the "Foundation" series—"It was nerds saving civilization, quants who had a theory of society, people writing equations on a blackboard, saying, 'See, unless you follow this formula, the empire will fail and be followed by a thousand years of barbarism'."

His Yale was "not George Bush's Yale," he says—no boola-boola, no frats or secret societies, rather "drinking coffee in the Economics Department lounge." Social science, he says, offered the promise of what he dreamed of in science fiction—"the beauty of pushing a button to solve problems. Sometimes there really are simple solutions: you really can have a grand idea."

Searching for his own grand idea (his model and hero is John Maynard Keynes) Krugman became one of the top economists in the country before he turned 30. He took a job on the Council of Economic Advisers in the Reagan administration at the age of 29. His colleague and rival was another brilliant young economist named Larry Summers. The two share a kind of edgy braininess, but they took different career paths—Summers as an inside player, working his way up to become Treasury secretary under Clinton and president of Harvard, then Obama's chief economic adviser. Krugman preferred to stay in the world of ideas, as an "irresponsible academic," he puts it, half jokingly, teaching at Yale, MIT, Stanford and Princeton. In 1999 he almost turned down the extraordinary opportunity to become the economic op-ed columnist for The New York Times. He was afraid that if he became a mere popularizer he'd blow his shot at a Nobel Prize.

Last October, he won his Nobel. Most economists interviewed by NEWSWEEK agreed that he richly deserved it for his pathbreaking work on global trade—his discovery that traditional theories of comparative advantage between nations often do not work in practice. He was stepping into the shower at a hotel when his cell phone rang with the news that he had achieved his life's ambition. At first, he thought the call might be a hoax. His wife Robin's reaction, once the initial thrill wore off, was, "Paul, you don't have time for this." He is, to be sure, insanely busy, producing two columns a week, teaching two courses and still writing books (his latest is "The Return of Depression Economics and the Crisis of 2008"). He posts to his blog as many as six times a day. Last Thursday morning, he was gleeful because he was able to thump a blogger who insisted, wrongly, that Keynes did not use much math in his work.

In class that day, discussing global currency exchange with a score of undergraduates, he was gentle, bemused, a little absent-minded, occasionally cracking mordant jokes (on trade with China: "They give us poisoned products, we give them worthless paper"). He says he plans to reduce his teaching load a little, and his colleagues say his best academic work is behind him. "His academic career culminated with him winning the prize," says his Princeton colleague and friend Gene Grossman. "He's not that engaged anymore with academic research. He has a public career now. That's what he views as his main avocation now—as a public intellectual."