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TBTF Erratum, 1998-01-14: A dismal science indeed

Keith Dawson (dawson dot tbtf at gmail dot com )
Wed, 14 Jan 1998 20:08:12 -0400

The New Yorker was misled

And so was TBTF; and so were you

They call economics the Dismal Science and I'm beginning to understand why. MIT economist Paul Krugman has called into question almost everything about the New Yorker article on economist Brian Arthur and his involvement with the theory known as increasing returns, described in TBTF for 1998-01-12 [1]. This theory sheds light on Microsoft's ascent to monopoly status.

In an article [2] titled The Legend of Arthur: A Tale of Gullibility at The New Yorker, published yesterday, Krugman credibly disputes much of the factual basis of New Yorker correspondent John Cassidy's description of the history of the idea of increasing returns:

Increasing returns wasn't a new idea, it wasn't obstinately opposed -- and if increasing returns play a larger role in mainstream economic theory now than they did 20 years ago, Arthur didn't have much to do with that change. Indeed, the spread of the Arthurian legend is a better story than the legend itself: an object lesson in journalistic gullibility.
Here is Krugman's chronology [3] of events in the development of the theory of increasing returns.

In the Dismal Science the facts are hard to discern. The New Yorker's vaunted fact-checkers were, I assume, all fired years ago in the barbarian takeover of that magazine. Please read Krugman and make up your own mind.

Thanks to three alert readers who pointed out Krugman's article to me within 15 minutes of its coming online.

[1] http://www.tbtf.com/archive/1998-01-12.html#s01
[2] http://www.slate.com/Dismal/98-01-14/Dismal.asp
[3] http://web.mit.edu/krugman/www/arthur.html

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