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…and then they all ran into the sea

·2 mins

Paul Krugman, Nobel prize winning economist and long-time columnist for The New York Times, is also one of the fathers of New Economic Geography. NEG is described as ‘One Economic Theory to Explain Everything’ by a Bloomberg columnist in a handy explainer. Anyway, I was reading a transcript of a conversation between Krugman and Masahisa Fujita (another parent of NEG) in the journal Papers in Regional Science. Just before the end there’s this helpful reminder of why protectionism and closed borders is so bad for cities:

…agglomeration of a large number of heterogeneous people (essentially, professional workers with heterogeneous skills/knowledge) in a city or industrial district can naturally be expected to contribute to the diffusion, generation/innovation, and accumulation of knowledge, and hence to economic growth. This would certainly be true in the short-run. But this is not assured in the long-run unless there is a sufficient infusion of new blood. (pp.161-162)

Economic growth relies upon new people who help to develop new ideas - clearly endangered by the likes of Brexit. On a lighter note, the transcript (recorded in Puerto Rico) ends as follows:

K: Of course, I agree with you. But, … I: Hey Paul! Why are standing up? Where are you going? K: Talking under the Caribbean sun for over two hours has literally fuelled my now burning desire to jump into that ocean. F: Yeah, all I can think of now is to savour this Caribbean moment with a quick dip and a large beer under the cool shade. K and F (in unison): Hasta la vista! _Sounds of two big splashes _ I: … Hey, Paul, Masa! Wait for me! Another big splash is heard, followed by hearty laughter