HILARY SWIFT/THE NEW YORK TIMES

Priyan Rajdev, who works at an office in New York City, wears hishair in a topknot.

The economists Yannis Ioannidesand Christopher Pissarides, in anew Brookings Paper, talk about theways that a lack of structural reformhas hurt productivity and com-petitiveness in Greece (it’s availablehere: brook.gs/1NuU7nt).

I have no reason to doubt thatthere are big things that shouldchange, and that Greece would bemuch better off if the country couldsomehow break the political barri-ers that are stopping it from makingthese changes.

But I would argue that it’s very,very wrong to point to factors thatare limiting productivity in Greeceand then claim that those factorsare the “cause” of the Greek crisis.Low productivity exacts a price fromany economy; it does not normally,or need not, create a financial crisisand a huge deflationary depression.

Consider, for example, a compari-son between Greece and Poland.The latter, like Greece, exists onEurope’s periphery, yet is closelylinked to the rest of the Continent’seconomy.

Poland is also a country withrelatively low productivity by north-western European standards.

But it has not had a Greek-stylecrisis, or indeed any crisis at all. In-stead, Poland has powered throughthe turmoil of recent years.

What’s the difference? The mainanswer, surely, is the euro. By adopt-ing the euro, Greece firs t brought onmassive capital inflows, then founditself in a trap, unable to achieveneeded real devaluation without in-credibly costly deflation.

Every time someone asserts thatGreece’s problems are really onthe supply side, you should ask notwhether the country has supply-side issues — it does — but why theyshould lead to collapse.

Greece seems to have about 60percent of Germany’s productivity,which means that it should have realwages only about 60 percent as highas Germany’s. It should not have 25percent unemployment.

Multipliers: What We

Should Have Known

The International Monetary Fundrecently published a very nice in-terview with Olivier Blanchard, thechief economist who is leaving theorganization.

And Mr. Blanchard says the rightthing about changing one’s mind:“The issue I have been struck by ishow to indicate a change of viewswithout triggering headlines of‘mistakes,’ ‘fund incompetence’and so on. Here, I am thinking offiscal multipliers. The u nderestima-tion of the drag on output from fiscal

consolidation was not a ‘mistake’ inthe way people think of mistakes,e.g., mixing up two cells on an Excelsheet. It was based on a substantialamount of prior evidence, but evi-dence which turned out to be mis-leading in an environment whereinterest rates are close to zero andmonetary policy cannot offset thenegative effects of budget cuts. Wegot a lot of flak for admitting theunderestimation, and I suspect we

shall continue to get more flak inthe future. But, at the same time, Ibelieve that we, the fund, substan-tially increased our credibility, andused better assumptions later on.It was painful, but it was useful.”(Read the interview here: shar.es/1708Ry.)

Indeed.There are a lot of people out

there whose idea of a substantiveargument is “you used to say X , but

now you say Y” — never mind thereasons you changed your view, orwhether it was right for you to do so.It’s important not to fall into the trapof being afraid to let new evidence oranalysis speak.

However, on this particular issue,the I.M.F. should have known better.Mr. Blanchard says that the evi-dence “turned out to be misleadingin an environment where interestrates are close to zero and monetary

policy cannot offset the negative ef-fects of budget cuts.”

But didn’t we know that? I cer-tainly did.

And let me also beat one of myfavorite drums: Experience hasoverwhelmingly confirmed the pre-diction that multipliers will be muchlarger in a liquidity trap.

So this was yet another victory forKeynesian analysis — the successstory nobody will believe.

KESHAV/ THE HINDU - NEW DELHI/CARTOON ARTS INTERNATIONAL/THE NEW YORK TIMES SYNDICATE

Paul Krugman

 joined The New

York Times in 1999

as a columnist on

the Op-Ed page

and continues

as a professor of

economics and

international

affairs at Princeton

University. He was awarded the

DEBATING POLITICS, ECONOMICS AND OTHER TIMELY TOPICS WITH PAUL KRUGMAN OF THE NEW YORK TIMES FRIDAY, SEPTEMBE R 18, 2015

PAUL KRUGMAN

Greece Got Caught In a Euro Trap

In a Brookings Institution re-

port released earlier this month,

the economists Yannis Ioannides

and Christopher Pissarides ar-

gue that many of Greece’s eco-

nomic woes can be attribut-

ed not only to the nation’s large

debt burden, but also to underly-

ing economic issues that succes-

sive governments have been un-

able to address.

According to a summary of

the report: “While the Greek

debt is too high to allow the gov-

ernment flexibility in its budget-

ary policies, Greece also suffers

from serious structural prob-

lems such as low productivi-

ty and lack of competitiveness.

Since joining the eurozone, the

Greek government collected less

in taxes than it spent, the coun-

try consumed more than it pro-

duced and had to import well

above its exports.”

In their paper, Mr. Ioannides

and Mr. Pissarides contend that

even if Greece’s large debt bur-

den was relieved, the nation’s

economy would not be able to

grow at a rate comparable to

those of its neighbors without

the implementation of extensive

reforms to boost competitive-

ness in various business sectors.

The country’s economy has

once again slipped into a reces-

sion after a prolonged standoff

with its creditors. Continued un-

certainty over Greece’s future

has caused a massive amount of

capital to flee the country, and a

new bailout agreement signed in

July will subject Greece to even

more austerity measures. Many

analysts expect the economy

to contract by at least 2 percent

this year.

Greek voters will head to the

polls later this month — for the

third time in less than a year

— to elect a new government.

In August, the country’s prime

minister, Alexis Tsipras, re-

signed after left-wing members

of his Syriza Party refused to

support Greece’s new bailout

agreement, leaving Mr. Tsipras

without an effective governing

majority.

BACKSTORY

 Examining the Roots of a Crisis

I went to a Celebrate Brooklynconcert in New York’s ProspectPark recently and had a very goodtime — although the usual close-upseating where you can really seethe performers was given over to athrong of dancers, and whi le I maybe a wannabe h ipster, I’m not goingthat far.

Music aside, one thing I enjoyabout these events is the crowd-watching, which can var y a lot byperformer.

The crowd who came to see theband Lucius, for example, was a realall ages, all subcultures crowd, andincluded everyone from enthusiasticteenagers to fairly sedate, but equal-ly enthusiastic older adults. On theother hand, the people who came outfor Sylvan Esso were total hipsters,which is fine.

I did, however, find myself won-dering a bit about economics. I’mperfectly O.K. with topknots and tat-toos, but obviously a lot of employersaren’t. So where do all these peoplework? They can’t all be baristas.

But that, clearly, is part of thewhole point: This is probably notan original observation, but surelyone main goal of personal stylingis to make it clear that the personso styled is not, in fact, par t of theworkaday bourgeois world. Thesepeople don’t work 9-to-5 office jobsduring the week, then put on trendyattire for the weekend. This ha s to bethe cultural version of Thorstein Ve-blen’s “conspicuous consumption,”where the point is not to display yourwealth, but instead to display yourindie cred.

Again, I’m fine with it — and thescene is producing a lot of music I re-ally like. But sometimes I just c an’tturn off my inner econo-nerd.

Tattoos, Incompetence

And the Heritage Foundation

The economist Henry Farrellwrote to me about my musings onhipster style, and referred me to areview of “Codes of t he Underworld:How Criminals Communicate,” abook published in 2009 about how

tattoos and such serve as signals ofcriminal identity, which work pre-cisely because they make it hard toparticipate in noncriminal society.

But there’s more: Criminalsactively cultivate a reputation forincompetence at noncriminal busi-ness, which is designed to reassureboth their colleagues and theirvictims that they won’t break theirimplicit contracts by going legit.The book’s author, Diego Gambet-ta, adds a wonderful para llel: Ac-cording to his account, some Ital-ian academics, who do a lot of horsetrading with regard to professionalappointments, cultivate a reputa-tion for incompetence at actualresearch, which is again meant toreassure those with whom theydeal.

From the book review, publishedat Inside Higher Ed (here: bit.ly/1isZecL): “ ‘Bei ng incompetentand displaying it,’ [Mr. Gambetta]writes, ‘conveys the message “I willnot run away, for I have no stronglegs to run anywhere else.” In a

corrupt academic market, beinggood at and interested i n one’s ownresearch, by contrast, signals a po-tential for a career independent ofcorrupt reciprocity. ... In the Italianacademic world, the kakistocratsare those who best assure oth-ers by displaying, through lack ofcompetence and lack of interest inresearch, that they will comply withthe pacts.’ ”

And this immediately made methink of one of the mysteries of theeconomic “debate” in America,namely the preference of conserva -tives not only to listen to hacks , butincompetent hacks. Here’s what Iwrote in a New York Times blog postearlier this year: “I suspect that theincompetence is actually desirableat some level — a smart hack mightturn honest, or something.”

But let me hasten to add that I amnot intending to engage in slanderhere. I would never, ever suggestthat Brooklyn hipsters are anythinglike Heritage Foundation econo-mists.

PAUL KRUGMAN

Conspicuous Displays of Indie Cred 

Mr. Krugman, if you are going to

make this argument about Greece,

please explain why Slovakia — a

country that is very similar to Polan d

and also uses the euro — has not

faced an economic crisis.

The simple fact is that Greek officialscannot deal with the country’s massive,out-of-control public sector.

— TOMASZ, POLAND

It is worth remembering that Po-

land’s Constitution actually requires

balanced budgets.

— DAVID, IRELAND

I think you should be more critical

of this Brookings report, which advo-

cates shrinking the economic sectors

most affected by Greece’s crisis even

more — as if there hasn’t already

been enough tightening of wages

and lost job opportunities. Is an un-employment rate of 25 percent reallynot enough for Greece’s job market tofunction adequately? How many morepeople have to lose their jobs before eco-nomic growth finally arrives?

— PAOUVOUS, GREECE

Mr. Krugman, it seems that you’re

 just compiling more evidence for your

long-running argument that Greece

is hamstrung by the euro. The countryis certainly ha mstrung now, but it didn’tget into this mess because it opted touse a big-boy currency.

— B., FRANCE

Perhaps we Poles have just been

lucky. However, we’ve also taken

advantage of many economic oppor-

tunities.

For example, our proximity to Ger-

many has been crucial for growth, butso has the legacy of Polish emigration.Millions of Poles have been workingabroad since the 1970s, and they main-tain a vast network of business connec-tions around the world.

— S., POLAND

If you want to compare Polan d to a

similar country that uses the euro,

look to Slovakia, whose economy

has been growing at least as fast as

Poland’s since the Berlin Wall came

down.

— NORO, SLOVAKIA

READER COMMENTS FROM NYTIMES.COM

The Currency Union Is Not the Problem

ONLINE: COMMENTS 

Comments have been edited for clarity and

length. For Paul Krugman’s latest thoughts

and to join the debate online, visit his blog at

krugman.blogs.nytimes.com.

The creative and information

technology sectors welcome the

individualism that your hipster

friends were displaying — and one

can actually make a living in those

industries.

I am a senior associate working

for a major law firm in Washing-

ton, D.C., and I see midlevel pro-

fessionals with tattoos and nose

piercings all the time.At work, they just wear more

reasons that the work was attrac-

tive was that no one cared much

about appearance. “Brogram-mers” have taken over the start-upscene in the last decade or so, and Ihave no idea what that culture is like

years. It’s that or neglect new talent,which is competitive suicide in thelong run.

— MARC DONNER, NEW YORK 

I have been an accounting man-

ager for 15 years and have a num-

ber of tattoos.

While they might have kept mefrom working at a large insurancecompany, I have managed to make

more socially acceptable as mem-bers of a younger generation makehiring decisions.

— BETH, VIRGINIA

Assuming that these hipsters

aren’t viably employed in a high-

skill or high-pay indust ry, how

exactly can they afford to live in

New York City, one of the most

expensive housing markets in

READER COMMENTS FROM NYTIMES.COM

Tattoos Are Mainstream Enough for the Office

University. He was awarded the

 Nobel in economic s cience in 2008.

 Mr. Krugman is th e author or editor

of 21 books and more than 200

 papers in prof essional journal s and

edited volumes. His latest book is

“End This Depression Now!” 

industries.

Even corporate America has man-aged to lighten up when it comes tovaluing talent over conformity, espe-cially if you aren’t in a client-facingrole (and sometimes specifically ifyou are). The days of trying desper-ately to impress your boss with yourcountry club bona fides are, thank-fully, dead and gone.

— VINAY, PENNSYLVANIA

At work, they just wear moretasteful jewelry, cover up their tat-toos or work in positions where aconservative appearance is lessimportant. Personal ly, I am moreinterested in good people doing goodwork.

— SIMON ELLIOTT, WASHINGTON, D.C.

When I started working as a pro-

grammer in California, one of the

have no idea what that culture is likenow. Fully stocked liquor cabinetsseem to be the norm in those workenvironments, and that strikes meas stranger than piercings or tat-toos.

— JOSEPH BRENNER, CALIFORNIA

I think a lot of established orga-

nizations have learned to tolerate

various personal styles over the

company, I have managed to makea very nice living working for localcompanies that base their trust inme on the integrity of my work rath-er than on the pictures on my arms.

— ANDREA MANNING, OREGON

It was once taboo to have tat-

toos as a teacher, but many of my colleagues have them — as do I.

I believe tattoos have become

expensive housing markets in

the country? Do they all have trustfunds? If so, T horstein Veblen’s in-sights might be correct.

— SHAUN PETERSON, KANSAS

Tattoos have become so main-

stream that I expect the next

generation of hipsters will reject

them entirely.

— NAME WITHHELD, GEORGIA