NEW YORK (Reuters Blogs) -- Paul Krugman and Dani Rodrik are out with dueling op-eds (the latter written with Arvind Subramanian) on the subject of the latest bout of financial-market craziness in places like Argentina and Turkey. Both men have been following emerging-market crises for decades; both indeed, are world-class experts on such episodes. What's more, both economists have a broadly left-liberal worldview: there's no deep ideological or philosophical rift here. Yet, the two seem diametrically opposed.
Turkey isn't really the problem; neither are South Africa, Russia, Hungary, India, and whoever else is getting hit right now. The real problem is that the world's wealthy economies -- the United States, the euro area, and smaller players, too -- have failed to deal with their own underlying weaknesses.
And here's Rodrik:
Emerging markets aren't hapless and undeserved victims; for the most part they are simply reaping what they sowed...
The fact is that the emerging economies' troubles are domestically generated problems and not the fault of foreigners. The complaint of emerging-market countries seems a classic case of blaming outsiders for choices and actions that have been predominantly domestic.
Take a step back, and you'll find a certain amount of agreement: Both Krugman and Rodrik would accept that a large part of the story here is that the Federal Reserve's QE program caused enormous amounts of cash to flow into the world's emerging markets, thereby helping to inflate the markets which are currently crashing. What goes down must have gone up -- and it's easy to see where the inflows came from.