Comparative advantage: how economist Paul Krugman became the most important political columnist in America

But Krugman also found that he liked writing about economic policy, and a seed was planted. The technical papers and books that he produced during the mid- and late 1980s, many of them integrating and extending his earlier work on trade theory, were notable for their creativity and number and helped set Krugman on his way to winning the John Bates Clark Medal, awarded biennially to a rising young economist, in 1991. But Krugman's late-'80s work was also less abstract than his previous efforts, drawing inspiration from real-world policy dilemmas. Eventually, at the suggestion of Michael Barker, a former Hill staffer working at The Washington Post, Krugman, by then ensconced at MIT, sat down to write his first book for a popular audience. The Age of Diminished Expectations, a kind of primer on basic economic principles as they applied to current events, was published in 1990. And while it wasn't a bestseller, the book was lucid, informative, and widely read among journalists and opinion leaders, launching Krugman's career as a bona fide public intellectual.

Very soon, however, Washington disappointed Krugman again. His writing and congressional testimony about income inequality brought him to the attention of Bill Clinton's campaign in 1992, which used some of his findings to attack the Bush administration. When Wannisky and other conservatives argued that skyrocketing income inequality was in fact a myth, Clinton's aides enlisted Krugman to help them fight the ensuing propaganda war. When he published a defense of Clinton's economic plan in the Times that August, it was widely assumed that Krugman would be Clinton's pick, should he win, as chairman of the Council of Economic Advisers.

Clinton did win. But his economic transition team was headed by Robert B. Reich, a Harvard lecturer, journalist, and author who had penned the early '90s other big policy tome, The Work of Nations. Not only had Reich tussled with Krugman over trade policy during the 1980s;. he had also gone to Oxford with Clinton. Eventually, Reich became Secretary of Labor in the new administration, while Stanford economist Laura D'Andrea Tyson was named chair of the CEA. Many other economists were drafted into top administration slots, including Krugman's colleague from the Reagan days, Larry Summers. But Krugman was passed over--largely, say former Clinton officials, because he was deemed too volatile. (After clashing with fellow attendees at Clinton's Little Rock economic summit, for example, he had appeared on "Larry King Live" to declare the meeting "useless.")

Krugman didn't take the rejection well, and lashed out at Clinton's appointees. To Washingtonians, the key division on the Clinton economic team lay between the Stimulators, such as Reich and Tyson, and the deficit hawks, notably Treasury Secretary Lloyd Bentsen and budget director Leon Panetta. But for Krugman, the key division was between real economists qualified to set national policy and policy entrepreneurs, who were not. In a Times article that January, he was quoted as saying Tyson lacked "analytical skills"--just a few weeks after giving a speech at the annual meeting of the American Economic Association lambasting Reich and Ira Magaziner as "pop internationalists" who "repeat silly cliches but imagine themselves to be sophisticated."