I have received a number of emails about Paul Krugman’s 1998 prediction that the Internet would have no more economic impact than the fax machine, and I have written a response in my latest post on Krugman-in-Wonderland.

My larger point is that Krugman’s error was fundamental to the way he views the economy, and his views are standard fare among a lot of academic economists. They view the world through static, mathematical models in which prices have meaning only in perfect competition, and unless government strictly regulates the economy, all markets turn into monopolies, and then all is lost. Furthermore, Keynesians and most academic economists have little understanding and no theory of capital, so they really are in an intellectual fog when presented with something like the Internet.