Speaker 1: This is Master's in Business with Barry Ridholts on Boomberg Radio.
Speaker 1: This week on the podcast, I have an extra special guest.
Speaker 1: His name is Paul Krugman, and you probably know him
Speaker 1: from his ubiquitous New York Times columns. UH. If you
Speaker 1: don't know him from that, you must know him from
Speaker 1: from television, from all of his books, including his textbooks.
Speaker 1: He was the two thousand and eight winner of the
Speaker 1: Nobel Prize as well as just too many honorifics to list.
Speaker 1: If you are remotely interested in any of the following economics, UH,
Speaker 1: income inequality, climate change, the history of economic development and thought,
Speaker 1: how public policy affects the population, UM, healthcare law, climate change,
Speaker 1: will go down, go down the list. We just walk
Speaker 1: out on everything and it's just been absolutely fascinating conversation. So,
Speaker 1: with no further ado, my m IB interview with Paul Krugman.
Speaker 1: This is Master's in Business with Barry Ridholtz on Boomberg Radio.
Speaker 1: My extra special guest today is Paul Krugman. He is
Speaker 1: the winner of the two thousand and eight Nobel Memorial
Speaker 1: Prize for his contributions UH to new trade theory and
Speaker 1: new economic geography. He is a Distinguished Professor at the
Speaker 1: Quney Graduate Center of the City of New York. He
Speaker 1: spent much of his career teaching at M I T
Speaker 1: and Princeton, where he focused on economics. He has either
Speaker 1: authored or edited twenty seven books, published over two hundred
Speaker 1: scholarly articles. Most recently, his book Arguing with Zombies, Economics, Politics,
Speaker 1: and a Fight for a Better Future just came out.
Speaker 1: He is the second most cited author on the College
Speaker 1: syllabi for economics, and is perhaps best known as a
Speaker 1: columnist for The New York Times. Paul Krugman, Welcome back
Speaker 1: to Bloomberg. Hi there, it's good to see you again.
Speaker 1: Let's jump right into this. So I recall you telling
Speaker 1: a story that you were a science fiction geek as
Speaker 1: a kid. How did Isaac Asimov's Foundation trilogy lead you
Speaker 1: to economics? Isaac Asimov wrote this, you know these books,
Speaker 1: uh thereabouts, which are you know? It's the Galactic Empire
Speaker 1: and people use blasters and have spaceships. But actually the
Speaker 1: science fiction e part is the least of it. It's
Speaker 1: social science fiction. The core of the story is there's
Speaker 1: this group of mathematical social scientists, the Psychohistorians, who have
Speaker 1: figured out that galactic civilization is falling and have discovered
Speaker 1: that if they intervene in just the right way, they
Speaker 1: can limit the period of barbarism. So it's basically social
Speaker 1: scientists save the universe. I want to be one of
Speaker 1: those guys. Economics was as close as I could get.
Speaker 1: That's pretty amusing. People may not know that you are
Speaker 1: an economics textbook author. You and your wife wrote what
Speaker 1: is today the second most popular economics textbook in colleges today.
Speaker 1: Who who's the lead? Is that? Mank You? Ah? Yeah,
Speaker 1: I'm afraid it's Greg mank You. So whatever led you
Speaker 1: to write a textbook that sounds like a lot of work? Actually? Yeah?
Speaker 1: So the first thing about it is that nobody writes
Speaker 1: one of the those principles books except out of ignorance
Speaker 1: of how much work it's going to involve. The actual
Speaker 1: the labor that's involved in producing, especially the first edition,
Speaker 1: but even the revisions is enormous. Partly it's a it's
Speaker 1: a reasonably honest way to make a living. Since it
Speaker 1: is my book, teaching is not well, it's supplemental. So
Speaker 1: since my wife is my co author, our in house
Speaker 1: name for the book is Economics for one k um.
Speaker 1: But it was also we thought that we could have
Speaker 1: a different kind of textbook that people. Most students come
Speaker 1: thinking economicis is this totally dry subject, and you know,
Speaker 1: some of it is, I've got to admit that, but
Speaker 1: there's stories. So we thought we could try to write
Speaker 1: a textbook which was as much as possible story driven.
Speaker 1: It was about real world things, and then we say,
Speaker 1: here's how economics helps me makes sense of these things.
Speaker 1: And so we wrote a textbook that was different and
Speaker 1: a lot of people like it. And you were you
Speaker 1: were still doing the revisions on the textbook while you
Speaker 1: were in Stockholm for the not that that edition, that
Speaker 1: was second edition, and the financial crisis broke as we
Speaker 1: were going through pages, so we already were in galleys
Speaker 1: and suddenly nothing in the money in Banking chapter was
Speaker 1: true anymore, and so we were frantically working to revise
Speaker 1: that that chapter in pages. So every replacement passage had
Speaker 1: to exactly physically fill the space of the stuff it replaced.
Speaker 1: So yeah, we uh, I had a lot of stuff
Speaker 1: I had to do in Stockholm. Robin spent a large
Speaker 1: part of the time on the floor of our hotel room,
Speaker 1: crawling from one set of paper as to another doing
Speaker 1: the revisions that was insane. You had written, or maybe
Speaker 1: I read it in an interview about a decade ago
Speaker 1: that at the top of the dot com bubble you said, Gee,
Speaker 1: the stock market doesn't make any more sense. I'm going
Speaker 1: to pull out of equities. It was a was that true?
Speaker 1: Would be? How did you that was true? Then we
Speaker 1: have in fact gotten back in some Still, I think
Speaker 1: probably our portfolio is less equity heavy than than probably
Speaker 1: the the average. But well, twenty years ago you were
Speaker 1: what early fifties, lates forties. I was, No, twenty years ago,
Speaker 1: I was late forties, late forties, So you should have
Speaker 1: equities then and now less equities. Yeah, yeah, So I
Speaker 1: mean I don't claim to be a great investor. In fact,
Speaker 1: Robbin's got the better head for detail, which is important.
Speaker 1: So we uh uh, we own a lot of you know,
Speaker 1: selective real estate, not not things where we think we
Speaker 1: know something. Okay, Well, real estate goes up over time
Speaker 1: as well. So eight if when you say you've partially
Speaker 1: gotten back in, does that mean your some stocks, some bond,
Speaker 1: some real estate. So you have a diverse portfolio that
Speaker 1: makes a whole lot of sense. There's another issue I
Speaker 1: have to ask you about, which is that of media bias. Um.
Speaker 1: Lots of people these days have accused the media of
Speaker 1: being fake news or biased or whatever. You take a
Speaker 1: decidedly different perspective on bias. Tell us a little bit
Speaker 1: about that. Yeah, the biggest so by and large, the
Speaker 1: media get facts right. Uh. They formal me. I mean
Speaker 1: that's not obviously true of you know, Breitbart or something
Speaker 1: like that, but they But the New York Times gets
Speaker 1: its facts right. The what it doesn't do very well
Speaker 1: is it it doesn't know how to handle things where
Speaker 1: there really aren't two sized to a debate when when
Speaker 1: there's a One of the very first columns I wrote
Speaker 1: back during the two thousand election said that if if
Speaker 1: Bush had had said that the Earth was flat, the
Speaker 1: headline would probably read views differ on shape of the planet. Right.
Speaker 1: The media are really terrible. And that's very hard to
Speaker 1: That's a real problem when you have a not just
Speaker 1: a highly polarized political environment, but an asymmetrically polarized political
Speaker 1: environment where one side of the debate is peddling zombie
Speaker 1: lies uh and the other is is not uh. And
Speaker 1: it's so it's very there's a real failure I think
Speaker 1: to inform. There's a unwillingness to I mean, when I
Speaker 1: started out, I was literally forbidden to use the word
Speaker 1: lie in my columns, and that's no longer true. But
Speaker 1: even so, there's a tremendous bias towards even handedness, even
Speaker 1: when the hands are not remotely even so you get
Speaker 1: this false equivalence where both sides are trade equally. The
Speaker 1: The other thing that you have referenced as a form
Speaker 1: of bias that i'm a has been amused by is
Speaker 1: the concept of quote very serious people. That's right, what
Speaker 1: what are the very serious people? So very serious people?
Speaker 1: The phrase actually a lot of it comes from the
Speaker 1: build up to the Iraq War, when all the serious
Speaker 1: people thought it made that this was a good idea,
Speaker 1: which it wasn't obviously, um, but very serious people are
Speaker 1: people who buy into what is a conventional wisdom of
Speaker 1: the time, something that important people say and everybody thinks
Speaker 1: it's serious because all of the other serious people are
Speaker 1: saying it, and they will nod their head and so
Speaker 1: like you know, the US debt levels are major threats,
Speaker 1: even though it's not really true or the um we
Speaker 1: have a real problem of a skills gap in the workforce.
Speaker 1: And so these are things that so I stole it.
Speaker 1: I think I stole it from the blogger at us.
Speaker 1: But it really works, these things that And that's, by
Speaker 1: the way, where the media drops it's even handled this
Speaker 1: on this So a lot of reporting on debt it
Speaker 1: was uncritically Bowls and Simpson are great national heroes. Uh
Speaker 1: so it's yeah, I remember that, but the but the whole.
Speaker 1: So it's funny that the one place where the news
Speaker 1: media really dropped the false equivalence and started saying one
Speaker 1: side is right is in fact where that side happens
Speaker 1: to be wrong. But they're very impressed by titles and
Speaker 1: by positions and by some academic credentials. And if you're
Speaker 1: the head of a think tank, they think you're actually
Speaker 1: thinking when really you're not thinking. Well they yeah, they
Speaker 1: are impressed by think tanks, which is really a bad
Speaker 1: idea because uh, there a think tanks, and then there
Speaker 1: are think tanks, and a lot of the thing tanks
Speaker 1: don't actually think. Uh they're very impressed by uh, rich people,
Speaker 1: powerful people. So if you're you know, if Jamie Diamond
Speaker 1: says we have a skills gap, that must be serious,
Speaker 1: whereas Jamie Diamond is no doubt a great business person,
Speaker 1: but he doesn't know anything about macroeconomics, so it's a
Speaker 1: really it is a real problem the U on many issues,
Speaker 1: going to important people is absolutely the worst place to
Speaker 1: get information because there are people who have a stake
Speaker 1: in a particular point of view and or or they're
Speaker 1: too busy to actually think hard. So it is a
Speaker 1: you know, that's those are the places. Now it's gotten better,
Speaker 1: I have to say, the The Times um now has
Speaker 1: several people writing who actually do understand some economics, don't
Speaker 1: uncritically accept stuff. We've got a hold section the Upshot,
Speaker 1: which tends to be analytical pieces from multiple disciplines. So
Speaker 1: it's better than it was, but still, uh so, those
Speaker 1: are the biases. It's not liberal bias, it's not even
Speaker 1: actually conservative bios So there does very serious people tend
Speaker 1: to be somewhat right of center, but it's it's mostly
Speaker 1: it's it's seriousness and even handedness on things which are
Speaker 1: in fact not serious and in fact where you shouldn't
Speaker 1: be treating equally both sides equally. Let's talk a little
Speaker 1: bit about free trade, which is what you won your
Speaker 1: Nobel for free trade has been the cornerstone of US
Speaker 1: economic policy. Why has it gotten such a bad reputation
Speaker 1: amongst some economists and a lot of people in this administration.
Speaker 1: Economists love free trade for some good reasons and some
Speaker 1: not so good reasons. We love free trade because, in fact,
Speaker 1: there's a lot to be said for it. It's particularly
Speaker 1: important really for smaller, poorer countries. Try and think about
Speaker 1: what would happen to Bangladesh without the ability to export
Speaker 1: clothing would probably literally be starting to death. So trade
Speaker 1: open markets doesn't have to be precisely free trade, but
Speaker 1: open markets are really important for a lot of the world.
Speaker 1: It's always been the case that if you did it right,
Speaker 1: you understood that while free trade generally makes all countries richer, uh,
Speaker 1: it doesn't make everybody within the country's richer. Has effects,
Speaker 1: possibly strong effects on the distribution of income. Now, we
Speaker 1: tried to quantify that a little bit, and then no
Speaker 1: question that it's it's a growing world. Trade has been
Speaker 1: some a source nowhere near the dominant source, but a
Speaker 1: source of rising inequality within the US. Um What we
Speaker 1: really missed and which has been where a lot of
Speaker 1: the academic research has gotten We missed how concentrated the
Speaker 1: negative effects are. Right, So you take a look and
Speaker 1: you say, look, okay, we're importing a lot of stuff
Speaker 1: from China we didn't used to import. One of the
Speaker 1: things is furniture, So we're importing lots of furniture from China.
Speaker 1: Clothing boys. I like furniture as a particular example, because
Speaker 1: if you ask, all right, how many jobs were displaced
Speaker 1: by Chinese imports of Chinese furniture answers, Maybe it might
Speaker 1: is more, probably more than the duh, maybe even two
Speaker 1: hundred thousand, But you know, the other jobs were created
Speaker 1: lower price to consumers. How big a deal is that? Well,
Speaker 1: if you happen to be in Hickory, North Carolina, which
Speaker 1: is a city that is built entirely around the furniture industry,
Speaker 1: all of a sudden, for that community, it's a devastating impassion.
Speaker 1: So we missed the extent to which the U. S
Speaker 1: economy is gigantic, and it's churning all the time. A
Speaker 1: million and a half people are fired every month. So
Speaker 1: you say, how much difference Canada's trade make? Well, the
Speaker 1: trouble is that the impacts of trade have tended to
Speaker 1: fall quite heavily on specific communities, and I may Apa,
Speaker 1: I didn't see that, and it really took a very
Speaker 1: good paper, you know, published in in in twenty I think,
Speaker 1: on the China shock um that, among other things, written
Speaker 1: by one of my students, uh and to to point
Speaker 1: out how much we were missing that effect. So lots
Speaker 1: of um countries have an industrial policy. Shouldn't there be
Speaker 1: some sort of Hey, if you're in West Virginia coal country,
Speaker 1: or in North Carolina furniture country, or in the broad
Speaker 1: loom and fabric areas that are specifics to certain states.
Speaker 1: When it's apparent that a region is getting estimated because
Speaker 1: the global trade advantages where essentially global labor arbitrage and
Speaker 1: and some of the improved technologies that become specific to
Speaker 1: elsewhere in the world, why don't we do a retrain,
Speaker 1: re educate, give people new skills so they can compete
Speaker 1: even if it's no longer in coal or furniture. Well,
Speaker 1: we try, and actually we've had trade adjustment assistance at
Speaker 1: various points in our history. It's never been tremendously successful.
Speaker 1: And by the way, trade is not unique. You know,
Speaker 1: technology does it? Does it? If you actually want to
Speaker 1: ask what happened to West Virginia. International trade, it turns out,
Speaker 1: is not an important thing for West Virginia. It's changes
Speaker 1: in the technology wracking, fracking, and even before fracking, it
Speaker 1: was mountain top removal. So all of a sudden, instead
Speaker 1: of employing thousands of workers to mind coal, you just
Speaker 1: blow the tops off mountains and use some So um,
Speaker 1: now you can't have a policy too, or it's it's
Speaker 1: hard to have a policy to deal with every shock.
Speaker 1: What you really wanted to straw long safety net so
Speaker 1: that at least some basics are supplies, so at least
Speaker 1: people are the resources, among other things, the resources to
Speaker 1: move or seek different jobs. Whatever. The little secretive American
Speaker 1: policy is that we actually have a lot of that.
Speaker 1: We actually have because the major social programs Social Security, Medicare,
Speaker 1: Medicaid are paid for at the federal level, mostly because
Speaker 1: the tax system is uh, at least the federal tax
Speaker 1: system is fairly progressive, we actually end up providing a
Speaker 1: lot of de facto aid to distressed regions. And you
Speaker 1: take Kentucky, it's receiving net aid from the federal government
Speaker 1: to the tune of about GDP. So you know, we
Speaker 1: don't we actually do do a lot. Now that doesn't
Speaker 1: it's not clear that we have anything that can We
Speaker 1: can replace a fair bit of the income that's lost.
Speaker 1: We can't replace the dignity, and but it's not clear
Speaker 1: that anyone knows how to do that. Another thing that's
Speaker 1: kind of interesting that you've written, quote international trade and
Speaker 1: trade policy aren't nearly as important as people think they are.
Speaker 1: People love to go on about international trade because a
Speaker 1: variety of reasons, but among other things, it sounds important.
Speaker 1: It's international, it's global. Uh. My parents wants gave me
Speaker 1: a sweatshirt that said global Schmobile on it. I said
Speaker 1: what and they said, every time you go off to
Speaker 1: a conference, we ask you what it's about, you say
Speaker 1: global schmobile. You know, people love to talk global and
Speaker 1: u which means that we exaggerate, you know, compare we
Speaker 1: we spent about the same share of our income on
Speaker 1: imports and on healthcare as a nation. Uh. Trade, even
Speaker 1: after even with the Trump tariffs, trade is sort of
Speaker 1: only it's mostly actually pretty clean. Healthcare is a howling mess.
Speaker 1: So health care policy is much much more important than
Speaker 1: trade policy. And but that's not reflected. And the way
Speaker 1: we talk about the world so so let's talk about
Speaker 1: changes to some of the trade policy we had. I
Speaker 1: recall Ross Perow talking about the great sucking sound that
Speaker 1: NAFTA is going to create, pulling all those jobs south
Speaker 1: of the border. Trump effectively ran on that. And now
Speaker 1: we've tossed the side NAFTA with U s m c A.
Speaker 1: We're all so much better now, aren't we. Right? So
Speaker 1: I have people I know have been calling the U
Speaker 1: s m c A the village people who agree. Uh. Um,
Speaker 1: And it's a U s m c A is basically
Speaker 1: NAFTA with Trump's name stuck on it. Um. Is it
Speaker 1: not all that different than what it's of. It is
Speaker 1: just the same thing as before, and there's a few
Speaker 1: other things. The one place where there's some significant differences
Speaker 1: it actually gives a little bit more protection clout to
Speaker 1: labor unions, which is why Democrats voted for it in
Speaker 1: the US. In the US really uh in Mexico to
Speaker 1: but it's it was kind of a pro labor union
Speaker 1: change in policy. Not big deal, but enough so that
Speaker 1: Richard Trumka of the A F L c I O said,
Speaker 1: you know, vote for this, and and the Democratic Caucus
Speaker 1: voted it through um because there was something in it
Speaker 1: for organized labor, which I'm sure was not. I'm not
Speaker 1: sure whether that was, you know, over Trump kicking and screaming,
Speaker 1: or whether he just didn't even know that he'd done that.
Speaker 1: But anyway, that's quite the policy wonk, right, so I
Speaker 1: think that he knows unlike everybody else in Kansas cities
Speaker 1: in Kansas. But the post super Bowl congratulations that was
Speaker 1: pretty so A few people pointed out, um that it's
Speaker 1: actually in Missouri. Yeah, well, kind of people in Missouri
Speaker 1: kind of noticed that. Let's talk a little bit about
Speaker 1: your book, which I found quite intriguing, filled with all
Speaker 1: sorts of fascinating topics. Let's begin with a great financial crisis.
Speaker 1: You had some very prescient columns in O. Five and
Speaker 1: oh seven, running out of bubbles, that hissing sound coming
Speaker 1: out of real estate and innovating our way to financial crisis,
Speaker 1: all of these pre date two thousand and eight. What
Speaker 1: were you looking at that gave you such a clear
Speaker 1: view of the financial crisis? That was it was just
Speaker 1: clear that on the normal metrics, things like the prices
Speaker 1: to rents, uh, the housing had gone way out of sight.
Speaker 1: And he just said, is there there are a good
Speaker 1: reason for this, and then you if you were there
Speaker 1: were the kind of a tell's tale informal signs, you know,
Speaker 1: if if um the dot com bubble, I thought I
Speaker 1: had an inkling that things were gonna be bad when
Speaker 1: I realized that and when you when when you went
Speaker 1: into a bar, they tended to have CNBC on in
Speaker 1: the bar instead of sports. And then I have a
Speaker 1: very vivid recollection of that era where where stocks became
Speaker 1: the national pastime, right and then so if you go
Speaker 1: back to around two thousand five, it was shows like
Speaker 1: Flipped This House, so it was the same kind of
Speaker 1: feel to it. So it just looked way out of whack.
Speaker 1: And I had an inkling, but only a partial inkling,
Speaker 1: that the financial sector was out of control, that that
Speaker 1: we didn't know what we were doing, that things had
Speaker 1: gotten complicated. Was only when the crisis was in full
Speaker 1: swing that it became clear that we were in much
Speaker 1: worse shape than I'd realized, that that more than half
Speaker 1: of the banking sector was was things that weren't called
Speaker 1: banks and therefore weren't regulated like banks. And then so
Speaker 1: shadow banking was was a huge vulnerability. But that was
Speaker 1: one of the few times when it's it really seemed
Speaker 1: obvious that something was majorly out of whack and that
Speaker 1: something bad was gonna happen. So let's fast forward a
Speaker 1: couple of years. During the second Bush term, you had
Speaker 1: been staunchly opposed to privatizing Social Security, and you wrote, quote,
Speaker 1: an amazing thing happened for the first time since I
Speaker 1: became a New York Times columnist in two thousand, my
Speaker 1: side of a policy debate. Actually one, how is that
Speaker 1: possible that you know, for ten years you're not winning
Speaker 1: any debates despite making pretty good arguments. Well if if
Speaker 1: good arguments one, and the world would be a very
Speaker 1: different place from the way it is. And uh, look,
Speaker 1: I I started writing during the two thousand election, and
Speaker 1: the Times, yes, because you have been publishing it's slate
Speaker 1: for a good couple of years. Yeah, unfortunate as well.
Speaker 1: So but for right for the Times, I've only got
Speaker 1: really political during the two thousand election because it was
Speaker 1: obvious to me that then candidate George W. Bush was
Speaker 1: lying through his teeth about his policies. Um. But the
Speaker 1: uh so it was our period of Republican ascendency, and
Speaker 1: the Republican Party uh already then, although not as much now.
Speaker 1: Was dominated by zombie ideas, by beliefs and the magical
Speaker 1: power of tax cuts and so on. So I was
Speaker 1: on the losing side of most of the political stuff,
Speaker 1: and it was you tell me, you don't believe the
Speaker 1: laugh of curve is a real Oh. I believe that
Speaker 1: there is a laugh of curve, and there is a
Speaker 1: some tax rate beyond which you actually lose revenue. But
Speaker 1: I suspect that that tax rate is on the order
Speaker 1: of or, and I suspect I actually estimated the laugh
Speaker 1: of curve is not relevant for the U. S. Economy.
Speaker 1: And yeah, So between the fact that you have a
Speaker 1: very powerful right wing which has is committed to things
Speaker 1: that are not true, and the fact that the very
Speaker 1: serious people tend to go for things that are serious
Speaker 1: but not actually serious. So let's talk about a very
Speaker 1: serious person that you seem to have a constant um
Speaker 1: ongoing argument with, Paul Ryan. You you have a section
Speaker 1: called fiscal phonies. You specifically point out, Paul Ryan, I
Speaker 1: have a problem with the group I call the UH
Speaker 1: deficit chicken hawks. They're chicken hawks, They're they're big deficit
Speaker 1: hawks as long as they're out of power. Once they
Speaker 1: get into power, suddenly the deficit doesn't matter. What's your
Speaker 1: beef with Paul Ryan? Well, I wasn't really with him.
Speaker 1: I mean fact, I'm not a uh you know me personally,
Speaker 1: I'm not I'm not a person that's particularly into grudges,
Speaker 1: personal feuds whatever. I don't uh, But Paul Ryan was
Speaker 1: as symboled both of where the Republican Party has gone,
Speaker 1: but also of what's wrong with with me? Your coverage,
Speaker 1: I mean, the the the media equivalence required that there
Speaker 1: be serious, honest conservatives, the people who are really earnest
Speaker 1: had interesting ideas. So there was a role that someone
Speaker 1: had to feel except there actually is nobody like that.
Speaker 1: So they promoted Paul Ryan into that role because he
Speaker 1: pretended to be that kind of person, not actually very
Speaker 1: good imitation. It was pretty obvious if you took even
Speaker 1: a few minutes reading his stuff that he was a phony.
Speaker 1: But that wasn't what people wanted to hear. So I
Speaker 1: was out there, you know, years ahead of of almost
Speaker 1: anybody else, saying, Hey, this guy that you're claiming it
Speaker 1: to be the you know, the the intellectual leader of
Speaker 1: the Republican Party is a flat out phony and an
Speaker 1: obvious one, and actually a pretty clumsy one. So uh,
Speaker 1: I returned to him as as an example both of
Speaker 1: where the GOP has gone and how the media can
Speaker 1: go wrong. So you said, uh, I know you personally,
Speaker 1: and I want to put a little color on that.
Speaker 1: I probably know you pretty well for is it a decade?
Speaker 1: Probably it was before of the financial crisis that more
Speaker 1: than a decade, So it's more than a decade. But
Speaker 1: the thing that I find fascinating about you, and full disclosure,
Speaker 1: we have these monthly salons, we go to dinner. I
Speaker 1: see you pretty regularly. I think that something I wrote
Speaker 1: was the subject of your very first blog post and
Speaker 1: conscious of a liberal you'd since backfield. So it's hard
Speaker 1: to judge, but I recall seeing that in posting and saying, oh, look,
Speaker 1: Paul Krugman is a blogging Um. I'm fascinated by your
Speaker 1: public persona and how what people think of you because
Speaker 1: of your columns is nothing like what you're like in
Speaker 1: the real world. You're a very different person in the
Speaker 1: real world in reality. Then I think what people see
Speaker 1: in terms of your columns. Yeah, I'm a pussycat. I mean,
Speaker 1: I'm I'm quiet, shy, uh, not at all, you know,
Speaker 1: I'm not a very angry person or any of those,
Speaker 1: not at all. You're You're optimistic, your upbeat, you're funny.
Speaker 1: People don't realize you have a sense of humor. Um
Speaker 1: sometimes a sharp sense of humor. But still, I don't
Speaker 1: know if I would use the phrase happy, go lucky,
Speaker 1: but you're pretty easy going, happy person. Yeah. It's not
Speaker 1: your image. Yeah, because people look and say, well, those
Speaker 1: are tough columns. Yeah, but I'm not angry. I'm just realistic.
Speaker 1: I mean sometimes I'm angry. But that's a but it's
Speaker 1: it's it's a it's a policy anger, it's a it's
Speaker 1: about uh, about about how we how we handle the
Speaker 1: world person to person, I'm you know, mild mannered to
Speaker 1: Clark Kent or something. Okay, that's that's that's pretty fair
Speaker 1: collect Kent. And And one of the things that I
Speaker 1: find fascinating is that you're much more right than wrong.
Speaker 1: I don't mean right versus left, but on a lot
Speaker 1: of things you've discussed broad policy issues, the result of
Speaker 1: certain things, You've been pretty dead on on everything. On
Speaker 1: the rare occasions where you get something wrong, people like
Speaker 1: jump on it and beat on it. But I always
Speaker 1: want to say, hey, that's the exception that proves the
Speaker 1: rule if you have to. My favorite example is, you know,
Speaker 1: if Trump gets elected, we're gonna have a recession or
Speaker 1: the market's gonna crash or something like that. People pound
Speaker 1: that beat that drum constantly, and I always say, what
Speaker 1: else has he gotten wrong? It's hard to find broad
Speaker 1: pronouncements that are widely apptable that you weren't. And I
Speaker 1: retracted that called three days later, they don't. No one
Speaker 1: wants to talk about that. Yeah. I protracted that call
Speaker 1: and said that that Trump was going to run bigger death,
Speaker 1: that that was probably going to provide some some stimulus,
Speaker 1: and he has and it has so well. But that
Speaker 1: but that's you know, that's part of um. Why do
Speaker 1: zombie ideas persist? Well, because there's a network, there's a
Speaker 1: there's money behind it. I mean it used to be
Speaker 1: a guy at National Review whose full time job was
Speaker 1: basically the stalk me. You know too. He wrote more
Speaker 1: blog posts attacking my columns than I wrote columns. And
Speaker 1: so there's a whole industry. They go after lots of people,
Speaker 1: but it's a but I seem to be a particular favorite.
Speaker 1: And so yeah, there there's that means. That means because
Speaker 1: you're effective. Well it's yeah, it's a bit of a compliment.
Speaker 1: And you know, in terms of getting now, if you
Speaker 1: never make a mistake, if you never get something wrong,
Speaker 1: then you're not taking enough risks. So but but of course,
Speaker 1: if you're in a position like mine, where there are
Speaker 1: people you know, I'm probably I'm I am paranoid, but
Speaker 1: there are in fact also people out to get me.
Speaker 1: Just that's the old old line. Just because your paranoid
Speaker 1: doesn't mean they're not some there are, there are well
Speaker 1: financed people out to get me. And by the way,
Speaker 1: that might be Philip K. Dick, although I could be wrong,
Speaker 1: since I know you're a sci fi buff. I don't know.
Speaker 1: I don't remember whether he used that. But anyway, um
Speaker 1: and sure, uh so, uh yeah, I think if you
Speaker 1: take it as a whole. In fact, look the the
Speaker 1: five years or so after the financial crisis, we're in
Speaker 1: a peculiar way. They were glory days because the models worked.
Speaker 1: You know, people like me who had an update and
Speaker 1: modernized but still fundamentally Kenzie and approach to things made
Speaker 1: predictions about what would happen to interest rates, to inflation,
Speaker 1: what the effects of austerity policies would be that all
Speaker 1: came out right and all the very serious people who
Speaker 1: said something different turned out to be wrong. So hyper
Speaker 1: inflation didn't happen, Austerity would bring us out of the
Speaker 1: Our economic doll drums, especially in the UK didn't work. Um, basically,
Speaker 1: keenes knew what he was talking about. I mean, you
Speaker 1: Kansians came in thinking that the multiplier the the impact
Speaker 1: on GDP about one dollar cutting government spending would be
Speaker 1: around one point five. And after we had five years
Speaker 1: or so of hard evidence, it turns out that the
Speaker 1: multiplayer is one point five. I mean, it wasn't just
Speaker 1: the quality, even even the quantitative stuff was dead on.
Speaker 1: Quite fascinating. I want to talk about politics because some
Speaker 1: of the reviews of this book and other books that
Speaker 1: you've written have described you as a political animal. But really,
Speaker 1: if you go back to the early history of Paul Krugman,
Speaker 1: Newsweek did a profile of you and called you ideologically
Speaker 1: color blind. I think a lot of people don't know
Speaker 1: you worked in the Reagan White House. Yeah, that was interest,
Speaker 1: that was a sub political level. I was the senior
Speaker 1: international economic staffer at the Council of Economic Advisors. So
Speaker 1: no Senate approval. No. Yeah, the senior domestic staff Stafford
Speaker 1: was a guy what was his name, Larry Summers. Don't
Speaker 1: know what happened to him. Uh So, yeah, that was
Speaker 1: I mean, it was high level but technical position. And
Speaker 1: uh um, I mean I was already I was a
Speaker 1: registered Democrat, as was Larry Um, but willing to work,
Speaker 1: and my job did not require that I'd be in
Speaker 1: public defending positions. And of course being at the Reagan administration.
Speaker 1: Although Marty Feldstein, who was the Chair of the Council
Speaker 1: and who brought Larry and me down, although he was
Speaker 1: a Princeton Marty Felds Harvard, although he was a you know,
Speaker 1: a conservative, Um, he was reasonable and on any internal
Speaker 1: debate within the Reagan administration, I always was happy to
Speaker 1: back Marty's side of that debate. So, but it was interesting,
Speaker 1: I mean it was it was. It was partially I
Speaker 1: hope I did some good, but it was also a
Speaker 1: little bit of tourism, got to see government from the inside.
Speaker 1: So that was a different era in conservatism. They seemed
Speaker 1: to be a little more um, rational, fact based. Yeah. No,
Speaker 1: there were a fair number of strange people even in
Speaker 1: the Reagan administration. I mean some of the people I
Speaker 1: dealt with me and are dealt with people that economics
Speaker 1: people at the National Security Council who I who were
Speaker 1: crazy And I thought, wow, but this is not their
Speaker 1: real thing. I'm sure the actual security people are better.
Speaker 1: Then along came Iran Contra, and it turned out, no,
Speaker 1: they're all crazy. One of the things about where we
Speaker 1: are now is that each successive Republican president is managing
Speaker 1: to make his predecessor look good by comparison. So it
Speaker 1: would certainly looked better. So but it was it was
Speaker 1: still It was true that that there was a lot
Speaker 1: more room for rationality then than there is now. So
Speaker 1: most of your career not a partisan, more of a technocrat.
Speaker 1: Your role is to provide policymakers with information about what
Speaker 1: did and didn't work. What changed? How did you flick
Speaker 1: a switch from being an ideological, color blind technocrat to
Speaker 1: someone who has been described as a hardcore partisan. Well,
Speaker 1: two things happened. One is that change jobs. So what
Speaker 1: you want to write if you're writing working papers and
Speaker 1: publishing an academic journalism very different from what you want
Speaker 1: to write if you're writing columns in the New York Times.
Speaker 1: But also the world changed and a particularly the Republican
Speaker 1: Party changed. So the Republican Party of the nineteen eighties
Speaker 1: was still a fairly diverse group. And while there were
Speaker 1: some voodoo economics types, and we were still in some
Speaker 1: to some degree in a space where we were having
Speaker 1: real arguments about real issues. Uh. Today it's a monolithic
Speaker 1: Uh it's been completely taken over by zombies that have
Speaker 1: eaten the party's brains. Uh. So, actually, just saying things
Speaker 1: that are true, it's just saying, you know, I'm not
Speaker 1: gonna I'm not going to give credence to stuff that's
Speaker 1: obviously false is a part as an act. And since
Speaker 1: you're gonna be doing that, you might as well try
Speaker 1: and make that case in a strong way and not
Speaker 1: not pretend that you're having a serious argument when you aren't. So,
Speaker 1: once facts are no longer um indisputable ones, once people
Speaker 1: can say what they want to believe, how can you
Speaker 1: have an intelligent debate about economic policy, well across party lines.
Speaker 1: You can't. Mean, it's just now they're not everything is
Speaker 1: party politics. You know. If we want to talk about
Speaker 1: military policy, the federal reserve is still a zone of
Speaker 1: actual discussion and relatively non politicized, although Trump is trying
Speaker 1: to put some very uh, strange people on the Federal
Speaker 1: Reserve Board, right, goldbugs and and all sorts of whack.
Speaker 1: So that may change, but for now it's it's a
Speaker 1: place where you're gonna have honest arguments, and of course
Speaker 1: within the Democratic Party their serious discussion. There's no no
Speaker 1: question that there were real debates about the shape of
Speaker 1: stimulus or the TPP or whatever where you were having.
Speaker 1: But it's true that half the political spectrum is just
Speaker 1: a complete dead zone for actual debate. So let me
Speaker 1: switch gears with you and talk about something related to
Speaker 1: this that you wrote a New York Times Sunday magazine
Speaker 1: article about, which is how did economists get it so wrong?
Speaker 1: So let me throw the question back to you. Why
Speaker 1: did the profession fail to anticipate the Great Financial Crisis? Okay,
Speaker 1: so that actually at some level we have prediction. Predictions
Speaker 1: are hard, especially about the future, uh, and failing to
Speaker 1: see the financial crisis. I think that people should have
Speaker 1: seen the housing bubble, because that seemed pretty obvious. But
Speaker 1: that's not the major sin. The major sin was that
Speaker 1: a substantial number of economists um enthusiastically embraced financial deregulation
Speaker 1: before the crisis, UM, and at least for the decades
Speaker 1: before the crisis, going back to UM, the repeal of
Speaker 1: Glass Stiegel, and much more than that. Wait, wait, even
Speaker 1: before that, yeah, and and and then post crisis, many
Speaker 1: of them were extremely critical of fiscal stimulus, even though
Speaker 1: they should have known better. Um. And what happened there.
Speaker 1: So this is academic economics, And to a large extent,
Speaker 1: what happened there was that look there, partly its ideology,
Speaker 1: it was a kind of conservatism that the economics profession
Speaker 1: is kind of center right on on average. Um. So
Speaker 1: there was something political about it, but it was also
Speaker 1: we have these beautiful models in the bottle of an
Speaker 1: efficient market. Efficient financial market where asset prices are always right.
Speaker 1: Is gorgeous. It's esthetically pleasing, it's it's it feels great
Speaker 1: to to play with it. Um. Happens not to be true,
Speaker 1: but it's it's a huge lure for the profession. And
Speaker 1: then uh, after the crisis, it turned out also that
Speaker 1: the years and years of railing against Kenzie and economics
Speaker 1: as being too ad Hawkins on that had led to
Speaker 1: a lot of people just not actually understanding. You know,
Speaker 1: if we had this. If we had the financial crisis
Speaker 1: instead of in two thousand eight, we would have had
Speaker 1: a much better policy response because it was Unfortunately, the
Speaker 1: evolution of the economics profession UH in the seventies and
Speaker 1: the eighties and the nineties took us away from understanding
Speaker 1: what we needed to understand UH in in the aftermath
Speaker 1: of two thou eight. So, so let's talk about how
Speaker 1: where you physically were at different schools around the country
Speaker 1: impact your understanding of that You you describe this in
Speaker 1: that same column as the difference between salt water and
Speaker 1: freshwater economists. Yeah, that's love. I love that that. Yeah,
Speaker 1: it's actually Hole came up with that one. But it's
Speaker 1: a um. It turns out that the places that kept
Speaker 1: the memory of Knes alive tended to be places like
Speaker 1: m I. T And Yale and Princeton, and the places
Speaker 1: that forgot all about it tended to be places like
Speaker 1: Chicago and UH Minnesota and Carnegie UH. And so the
Speaker 1: it just so turns it just so happens the places
Speaker 1: that that I would say, maintain a fairly realistic view
Speaker 1: of how macroeconomics works, that we're willing to actually look
Speaker 1: at the facts and not insist on the perfection of
Speaker 1: their models. Um tended to be places that were on
Speaker 1: the coasts of the US as opposed to in the middle.
Speaker 1: So I'm gonna throw a curve ball at you. Berkeley
Speaker 1: clearly is a salt water economics thesis. Where do you
Speaker 1: put Stanford and the Hoover Institute? Oh, the Hoover Institute
Speaker 1: is a is a peculiar thing within Stanford. It's it's
Speaker 1: it's an odd thing. It's not actually the uh and
Speaker 1: and the Stanford is a mix ideologically and Hoover is
Speaker 1: this independent entity really within it? So uh yeah, so
Speaker 1: what what can you say? But but no, definitely, I
Speaker 1: mean the uh you know, Bernankee hired me at Princeton
Speaker 1: and then actually promptly left for the FED. But still um.
Speaker 1: But Princeton was a hotbed of people who worried about
Speaker 1: Japan because we thought that Japan's problems were a possible
Speaker 1: omen for the rest of us, and that turned out
Speaker 1: to be exactly right. Can you stick around a bit?
Speaker 1: I have a ton of questions we can do that.
Speaker 1: We have been speaking with Paul Krugman, professor at Keuni
Speaker 1: Graduate Center and author of the book arguing with zombies.
Speaker 1: If you enjoy this conversation, be sure and come back
Speaker 1: for the podcast extras, where we keep the tape rolling
Speaker 1: and continue discussing all things economics. We love your comments,
Speaker 1: feedback and suggestions right to us at m IB podcast
Speaker 1: at Bloomberg dot net. Be sure and check out my
Speaker 1: weekly column on Bloomberg dot com slash Opinion. Follow me
Speaker 1: on Twitter at Ridholts. I'm Barry Riholts. You're listening to
Speaker 1: Masters in Business on Bloomberg Radio. Welcome to the podcast, Paul.
Speaker 1: Thank you so much for doing this. I've been looking
Speaker 1: forward to discussing your new book, which I have right here,
Speaker 1: and just talking about um so many other things. How
Speaker 1: goes the book slog? I know, and I know it's
Speaker 1: a slog. Yeah, I'm just in the early stages, as
Speaker 1: we said here. I've just on two events so far. Actually,
Speaker 1: Samantha b in New York. She's so funny, isn't yeah?
Speaker 1: And then Marks Andy in Philadelphia who was not quite
Speaker 1: as funny, but it was also really good. So right,
Speaker 1: so so sad, Samdy, It's hard not When I did
Speaker 1: the Daily Show, she was the one who ran that segment,
Speaker 1: and you just so many takes ruin because she just
Speaker 1: makes you laugh. You can't not laugh. No, we did.
Speaker 1: That was fine. Yeah, but you know, I'm I'm not
Speaker 1: Spring Chicken anymore, so I'm not doing the crazy change
Speaker 1: cities every coast to coast. So you should do Bill Maher.
Speaker 1: He would have you on in a hard too far
Speaker 1: to fly. Yeah, although I'm actually I'm doing London and
Speaker 1: Madrid because I'm big in Spain. For some very peculiar reason,
Speaker 1: I'm big in Spain. Aren't you affiliated with London School
Speaker 1: of Economics? All? Yeah, but it's a it's a very
Speaker 1: loose thing. But yeah. But but they advertised my books
Speaker 1: on the side of buses in Spain for some reason.
Speaker 1: Really yeah, And Spanish language edition came out the same
Speaker 1: day as the English edition. So so where are you
Speaker 1: going in Spain? It's all going to be in Madrid.
Speaker 1: But even so, so we were about two maybe three
Speaker 1: timers ago. We were in um San Sebastian and it's
Speaker 1: in deep in the Hinchel lands of Spain and it's
Speaker 1: just spectacular. I I've spent a fair bit of time
Speaker 1: in Santiago to Compostela, which is really great. Uh. The climate,
Speaker 1: it's really weird. The climate feels like whales and it's
Speaker 1: uh uh and they still take siesta's but it's uh
Speaker 1: but it's it's really there's a lot of great stuff.
Speaker 1: But I've been I've been around with a fair bit
Speaker 1: of Spain. They know how to live there, they know
Speaker 1: how to kick relax enjoy food and wine there. Really
Speaker 1: it's a whole different head space. Yeah, Paul, What do
Speaker 1: you think are the two most important zombies that you
Speaker 1: discuss in the book? Oh, clearly it's the belief that
Speaker 1: tax cuts pay for themselves. I thought they do. You're
Speaker 1: telling me they don't. Didn't the laugh for curve on
Speaker 1: that Napkins say that you could cut taxes and they
Speaker 1: pay for themselves. Yeah, it turns out we've had an
Speaker 1: erroneous napkin and it is has never once happened. So
Speaker 1: that's the one that in terms of our political life matter,
Speaker 1: I had no idea. Um. And the other one is
Speaker 1: climate change denial. It's a hoax. It's a Chinese un
Speaker 1: that's right. The belief that it's a hoax, or at
Speaker 1: least that it's not really serious or anyway there's nothing
Speaker 1: we can do about it. Um. That's you know, as
Speaker 1: the evidence keeps on piling in and as the consequences
Speaker 1: start to show the fact that that is still I
Speaker 1: mean sixty of Republicans and congress our climate deniers. They
Speaker 1: deny the climate change is happening at all. The only
Speaker 1: major political party in the world with the majority that
Speaker 1: believes climate change isn't real. Yeah, although I'm not entirely
Speaker 1: sure about the current governing party in Australia. But yes, um,
Speaker 1: but yes, this is and this is really that. Those
Speaker 1: are those are enough to go on. There are there
Speaker 1: are other zombies out there, but those are the two
Speaker 1: really big ones. Those are the big ones. Fascinating, all right.
Speaker 1: So so let me jump through a couple of questions
Speaker 1: we missed during the broadcast portion. Um. The two things
Speaker 1: I didn't get to, um that I felt were important were, Well,
Speaker 1: let's start with climate change, a well known Chinese hoax, right,
Speaker 1: climate change created by the Chinese so they could continue
Speaker 1: to dominate us on the industrial side. You call it
Speaker 1: quote an existential threat and a priority above health for reform, income, inequality,
Speaker 1: and financial crisis. That's a big statement, yeah, because if
Speaker 1: you make the plan an unlivable or large portion of
Speaker 1: the planet on livable, that I was about to say
Speaker 1: Trump's everything else, and now that's uh, and it's and
Speaker 1: that is you know, we're on track to really catastrophic outcomes.
Speaker 1: It's the climate models have been surprisingly accurate so far,
Speaker 1: and they there was just a big piece, Um, I
Speaker 1: don't remember was Bloomberg at the Times about I think
Speaker 1: it was Bloomberg? Was the nineteen eight forecast turned out
Speaker 1: to be dead accurate? Yeah? Yeah, So that it's that.
Speaker 1: This is you know, it's good science, it's real science,
Speaker 1: and it's scary as hell. And the thing about it
Speaker 1: also has an issue is it happens to be something
Speaker 1: we know how to deal with. We a little a
Speaker 1: mixture of public investment in new technologies plus putting a
Speaker 1: price on carbon. Uh, it would make an enormous difference.
Speaker 1: And technology is is our friend here. Renewable technology has
Speaker 1: made enormous advances. So all the ingredients are in place
Speaker 1: for solving this existential threat, except that we have the leadership. Well,
Speaker 1: we we have leadership which is trying to make sure
Speaker 1: that the catastrophe happens. So what about a technological solution?
Speaker 1: So if we don't get a change in leadership, and
Speaker 1: ten years from now we find ourselves with a rising
Speaker 1: global temperature and rising sea levels. What about seating the
Speaker 1: clouds or some magic bullet that will make all this
Speaker 1: go away? Well, you know that's the last resort. I'm
Speaker 1: not going to rule it out. Uh, but there's enormous
Speaker 1: problems if you start to think about that, because anything
Speaker 1: you do that is actually geoengineering is it's going to
Speaker 1: have very uneven impacts. It's gonna it may stop the
Speaker 1: planet from cooking, but it will um cause worsening of
Speaker 1: the climate in some places. It will be very uneven.
Speaker 1: So if you're upper lower Slabstan and turns out that
Speaker 1: the United States and the European Union are planning a
Speaker 1: project of geo engineering that just has as a small
Speaker 1: side effect is going to turn your country into a desert. Uh,
Speaker 1: how are we gonna deal with the political fallout of that?
Speaker 1: That's a it's a I mean, it's better than than
Speaker 1: than than total doom, but it's really not the route
Speaker 1: we want to go down. Have you been following the
Speaker 1: debate about climate change in Australia. It's quite fascinating some
Speaker 1: of it. And they you know that they're they're deep
Speaker 1: in denial, at least the elected officials, elected officials are
Speaker 1: So it's it's a lot like our situation, like Florida. Yeah,
Speaker 1: it's a it's it's a place which is is really
Speaker 1: on the as it happens. They have to be right
Speaker 1: at sort of the leading edge of disaster then that
Speaker 1: the continent is burning. Um. But they have like us,
Speaker 1: they have people who have an ideological opposition to any
Speaker 1: form of government action. They have powerful fossil fuel interests,
Speaker 1: huge mineral and timber interests that don't want to change.
Speaker 1: So um. Yeah, to Australia. If you really want to
Speaker 1: feel depressed, look at Australia, where on the one hand,
Speaker 1: you can see what the shape of things to come
Speaker 1: in terms of disaster, and you can also see politically
Speaker 1: how hard it is to do the right thing. There's
Speaker 1: a wonderful book called Windfall came out about four years
Speaker 1: ago that traces the history of investment in climate change
Speaker 1: and new technology and all these things. And the conclusion
Speaker 1: of the book is essentially, Areas that are hot are
Speaker 1: going to get hotter, Areas that are dryer are gonna
Speaker 1: get drier, Areas that are cold are gonna get colder.
Speaker 1: Areas that a wet are going to get wetter. And
Speaker 1: it's not so much that the climate is going to change,
Speaker 1: as it's just going to be so much more intense everywhere.
Speaker 1: Desertification is going to continue expanding. Places that suffer coastal
Speaker 1: flooding are going to be overwrought. It's whatever you have
Speaker 1: just multiple times. That's simple. But it's but yeah, there's
Speaker 1: a lot of things. It's not it's not linear. It's
Speaker 1: not just that every place gets two degrees warmer. It
Speaker 1: is that a lot of stuff happens in addition to that,
Speaker 1: and um, yeah, it's it's and it really really uh
Speaker 1: it's it's quite terrifying and um, um really we fossil
Speaker 1: I talked in the book about zombie ideas. Fossil fuels
Speaker 1: is basically a zombie sector. We shouldn't be uh, we
Speaker 1: should be phasing out fossil fuels entirely, quite quickly, and
Speaker 1: in fact, we have the technology to do that. So
Speaker 1: they Uh, if we had any kind of realistic pricing,
Speaker 1: we wouldn't be we wouldn't be digging coal, we wouldn't
Speaker 1: be Uh, we might be doing every bit of subsidized
Speaker 1: this solar is more so at this point and PCT
Speaker 1: me at the moment, Cole is losing the battle against
Speaker 1: solar and wind um just on pure cost grounds. And
Speaker 1: and you have the Trump administration trying desperately to force
Speaker 1: people to burn coal, and and the electrical electric production facilities,
Speaker 1: all of all of the big plants that are making electricity,
Speaker 1: they're all moving to natural gas. It's so much cheaper
Speaker 1: and cleaner. Well, they're moving to natural gas and to
Speaker 1: uh and a lot of wind and solar and natural gas.
Speaker 1: Fracking is one of those things which it uh there,
Speaker 1: there's a lot of It turns out we're releasing a
Speaker 1: lot of greenhouse gases because of lacks regulation. But if
Speaker 1: we did it right, fracking is a good transition technology
Speaker 1: because hydrocarbons methane has a lot less carbon per btu
Speaker 1: than coal does, so and it's good for sarge capacity.
Speaker 1: So you know, we we could in a rational world,
Speaker 1: we'd be we'd be using a natural gas to provide
Speaker 1: searge capacity, were using renewables to provide based capacity. Uh
Speaker 1: some nuclear I'm I'm okay with that. Um, we would
Speaker 1: be getting it completely out of the coal business. We'd
Speaker 1: be shifting to electric vehicles, all of it. Fraction of
Speaker 1: a percent of g d P in terms of what
Speaker 1: it would actually do to growth, um, but of course
Speaker 1: not under current management. Interesting. And then the other thing
Speaker 1: we didn't get to during the broadcast portion that I
Speaker 1: have to talk about because you've written about it so
Speaker 1: much and it's such a giant issue, is the income
Speaker 1: and wealth inequality that's in our our society. And I
Speaker 1: have to point out that back in you were first
Speaker 1: writing about this. Yeah, I wasn't the first person to
Speaker 1: notice it, but it was already obvious. So yeah, piece
Speaker 1: called the Rich, the Right and the Facts, um, which
Speaker 1: goes through you know, a lot of the bad arguments
Speaker 1: that people were making against worrying about rising in comm inequality,
Speaker 1: all of which all of those arguments, by the way,
Speaker 1: still being live because there's zombie ideas that won't go away. Um.
Speaker 1: So yeah, this was now it's gotten substantially worse since then,
Speaker 1: you know, by by modern standards. Gordon Getko was a piker. Uh.
Speaker 1: But theh this is definitely um uh and it it
Speaker 1: colors everything. I mean, the fact that we have a
Speaker 1: society where a few people have so much money, so
Speaker 1: much influence, and also where people aren't living in the
Speaker 1: same universe, so we're socially divided part because we don't
Speaker 1: live in the at all in the same material universe,
Speaker 1: which is not the kind of the America I grew
Speaker 1: up in. Right, So so let's put some some numbers,
Speaker 1: some flesh on the bone. You wrote quote, CEO is
Speaker 1: now get paid more than three hundred times as much
Speaker 1: as the average worker. So how did that come about?
Speaker 1: How was it formally x or thirty X to now three?
Speaker 1: Now that's a that's actually quite an interesting story, right,
Speaker 1: it's um, it's now. CEOs have always pretty much appointed
Speaker 1: the people who decide how much that they'll be they'll
Speaker 1: be paid. So in some sense it was always a
Speaker 1: game where CEO appoints some people who have every incentive
Speaker 1: to say this guy is great, he needs to be
Speaker 1: paid ins. But they didn't used to exercise that power
Speaker 1: to anything like the extent that they do now. Um.
Speaker 1: What changed? Um, there was big shift in power. Relations
Speaker 1: used to be that if you have paid an extravagance
Speaker 1: some uh, your union would kick up, and of course
Speaker 1: we think the death of private sector unions has meant
Speaker 1: that that's gone away. Um. It used to be that
Speaker 1: if you got yourself paid an enormous salary, Uh, the
Speaker 1: Farawore government would take a lot of it away in
Speaker 1: higher taxes. So at some level, if there was a
Speaker 1: question of shall I piss off my entire workforce in
Speaker 1: order to be able to take home an extra in
Speaker 1: order to get paid an extra million dollars? Uh, Well,
Speaker 1: if I'm only gonna be able to take home and
Speaker 1: fifty thousand of that, I might not want to do it.
Speaker 1: If I can get take home a much larger share
Speaker 1: of it than then maybe I will. So that changed.
Speaker 1: And then just a general set of norms expectations. One
Speaker 1: thing is clear. It's not because we're that we have
Speaker 1: better c e O s, right that what's the same
Speaker 1: pool they're coming from? This? And then and look at
Speaker 1: how much money disastrous CEOs end up getting in their
Speaker 1: severance packages. Right, So yeah, that's kind of surprising. It's
Speaker 1: really that sort of thing used to be if you're
Speaker 1: really screwed up, they would hit hand you your hat
Speaker 1: and send you on your way, not with the million
Speaker 1: dollar exit pack. Yeah anyway, but yeah, so so so
Speaker 1: this is a real This is one of the key
Speaker 1: pieces of evidence that says that if you think that
Speaker 1: technology and globalization explains why we've gotten so unequal. You know,
Speaker 1: explained to me how that has means that incompeten CEOs
Speaker 1: get paid as much money as they get paid doesn't.
Speaker 1: So there's a couple of bullet points that come from that. Um. First,
Speaker 1: there's a fascinating Planet Money episode on the unintended consequences
Speaker 1: of some of the employment compensation changes under Clinton Bill Clinton.
Speaker 1: That was part of a big set of tax changes
Speaker 1: where they try to cap the dollar payment and allowed
Speaker 1: payment in stock. How much of that is the source
Speaker 1: of this giant because when you look at stock composite compensation,
Speaker 1: it's the lion's share of these giant yeah, um ceo comps. Yeah.
Speaker 1: And it's a whether that's the result of the of
Speaker 1: the policies enacted during the Clinton years, I don't know.
Speaker 1: It's uh, it's certainly as part of the part of
Speaker 1: the issue. And it um. I mean there was a
Speaker 1: period when economists, some of them said, you know, good,
Speaker 1: we should pay people in stock because that gives them
Speaker 1: an incentive to perform well. But it turns out it
Speaker 1: doesn't actually work that way, partly because you get the
Speaker 1: stock options, but they reset the price that the company
Speaker 1: does badly. Um, but aren't CEO is incentive to do
Speaker 1: a good job. Because they're the CEOs, you have to
Speaker 1: incentivize them more. That's that's the point it turns out.
Speaker 1: You know, back in back in the America, I grew
Speaker 1: up in again, I'm an all the cards were here.
Speaker 1: Uh we had think about photos of I always think
Speaker 1: of photos of of NASA and the all of these
Speaker 1: guys and uh in short sleeve white shirts, the pocket
Speaker 1: with the pocket protectors, all of whom are being paid
Speaker 1: not all that well, none of whom have incentive pay
Speaker 1: doing incredible things. You know, it wasn't we think of NASA,
Speaker 1: But the same thing was going on at the great
Speaker 1: technology companies at the time. So it's not it. It's
Speaker 1: amazing actually to think that that. I mean, money matters,
Speaker 1: monetary incentence matter. But people do good work for lots
Speaker 1: of reasons. And we've we've lost the notion that people
Speaker 1: might do good work because they take some pride in
Speaker 1: their work right. Also it's their job not to not
Speaker 1: to go too far on a limb. So you've described
Speaker 1: we we're talking about climate change and denial there before
Speaker 1: you've described um quote, the inequality denial industry that either
Speaker 1: inequality wasn't rising, or that it didn't matter. Who can legitimately,
Speaker 1: with the straight face say there hasn't been a giant
Speaker 1: increase in economic getting. Well, you know, there's a there's
Speaker 1: a good salary to be made from the ability to
Speaker 1: say that with a straight face, and that's really what
Speaker 1: drives it. But yeah, it's it's quite amazing. I mean,
Speaker 1: the numbers, the official numbers show it. Although we actually
Speaker 1: have a problem with many of the standard measures because
Speaker 1: they don't actually keep track of gigantic incomes because that's uh,
Speaker 1: we didn't think we needed to, but because but now
Speaker 1: we do. Um but uh yeah, when when there are
Speaker 1: people out there still trying to claim, uh that inequality
Speaker 1: hasn't gone up much, and then just say, among other things,
Speaker 1: just you walk around, look look look, you know, look
Speaker 1: at look at New York City, look at the um
Speaker 1: at the way we live now. It's just is not
Speaker 1: the same middle class country it used to be. And
Speaker 1: then we do have, uh, you know, we have pretty
Speaker 1: sophisticated ways of h between tax data surveys and so on,
Speaker 1: which the that's new. They never used the slice of
Speaker 1: this fun as they do top one percent, ten percent,
Speaker 1: half and that's a big change the top point of
Speaker 1: one percent. Nobody ever thought that was important. How much
Speaker 1: money could there be up there? But the answer is
Speaker 1: now a lot? And so yeah, so this is not
Speaker 1: there shouldn't be any real question about that. But again,
Speaker 1: it's difficult to get a man to understand something when
Speaker 1: the salary depends on it's not understanding it. So let's
Speaker 1: talk about a headline um from a different writer that
Speaker 1: I had to ask you about because it's so fascinating.
Speaker 1: Derrick Thompson in the Atlantic the weekend before we tape
Speaker 1: this had a column quote, this is the headline boomers
Speaker 1: have socialism? Why not millennials. It's kind of a fascinating take. Well,
Speaker 1: there is a yeah, I mean, it is a peculiar
Speaker 1: thing that when people say, oh, America will never stand
Speaker 1: for government health insurance, every American sixty five and old
Speaker 1: there has government health insurance. When they say Americans won't
Speaker 1: stand for wide, large government guarantees of income so security.
Speaker 1: Uh so we actually do have, in fact, the US
Speaker 1: welfare state. Uh. It's not that it's smaller than that
Speaker 1: of other advanced countries, but not that much smaller, because
Speaker 1: in fact, we do provide healthcare and retirement income to
Speaker 1: people people vote. It's probably people who vote. But I
Speaker 1: think the other thing that happened was that, um, you know,
Speaker 1: I thought, when when Medicare came in, uh uh, why
Speaker 1: was it possible to go and provide government health insurance
Speaker 1: to everybody over sixty five? Why didn't people complain that
Speaker 1: this was taking away private insurance? The answer was that
Speaker 1: private insurers weren't interested in covering people over sixty five.
Speaker 1: There was never an expensive Yeah, they're expensive and unpredictably expensive.
Speaker 1: So the so that you were basically moving into a
Speaker 1: blank space. Um. And the trouble, the reason that it's
Speaker 1: not so easy to just have Medicare for all is
Speaker 1: that people under sixty five, many of them do have
Speaker 1: private health insurance, which both means that you have a
Speaker 1: lobby uh interest group, but I think even more important
Speaker 1: means that you're telling people, you know, we're going to
Speaker 1: take away the insurance you now have, and we're going
Speaker 1: to replace it with something different. Trust us, it will
Speaker 1: be better, probably plus death panels on top of it,
Speaker 1: plus death panels, and it probably will be better in fact,
Speaker 1: but that's a that's a really heavy political lift, and
Speaker 1: it's I mean, if you can start with the Tabla
Speaker 1: raza Um. I dedicate this book to the Arguing Zombies,
Speaker 1: to the to the memory of Uva Reinhardt, healthcare economist
Speaker 1: of Princeton, who helped me a lot. And Uva and
Speaker 1: and his wife May Chung, they actually put together Taiwan's
Speaker 1: healthcare system, which is single payer's basically Medicare for all.
Speaker 1: And how's it working. It's working fine, but the but
Speaker 1: Uva himself said, look, we're not gonna be able to
Speaker 1: do that in the United States. We're if you want,
Speaker 1: if you want to get there, I wouldn't start from here.
Speaker 1: So we're recording this the day of the Iowa Calucus
Speaker 1: is of all the Democrats who were running for office,
Speaker 1: who has the most compelling, workable healthcare proposal of everybody? Oh,
Speaker 1: that's an interesting question because the I mean, they're all
Speaker 1: workable proposals. On the technicalities, Medicare for all would work. Uh,
Speaker 1: Elizabeth Warren has laid out a lot more detail about
Speaker 1: how it would be paid for than Bernie Sanders has,
Speaker 1: But something like that would work. UM enhanced massively enhanced Obamacare,
Speaker 1: which is basically what Joe Biden means, just extended to
Speaker 1: cover everybody and well extend cover. Yeah, so the subsidies
Speaker 1: don't cut off, so that we have much reduced code
Speaker 1: pays and it's just uh that also works. There are
Speaker 1: countries that have universal health coverage that do it through
Speaker 1: private insurance companies, like the Netherlands, so that's also workable.
Speaker 1: So I'm not sure that anyone in terms of of
Speaker 1: who plan is actually the truth is. I believe that
Speaker 1: if any Democrat is elected, what we will in fact
Speaker 1: get is Obamacare two point Oh that Medicare for all
Speaker 1: ain't gonna happen, uh not not for a few years anyway.
Speaker 1: And so what we're actually going to get to something
Speaker 1: that is just a greatly enhanced version of what we
Speaker 1: we we managed to achieve in which is fine with me, right,
Speaker 1: and people have come to like Obamacare. In fact, the
Speaker 1: current administration but for John McCain, would have gotten rid
Speaker 1: of it. I think that is certainly a factor in
Speaker 1: the outcome of the midtime was probably the single biggest factor. Um, yeah,
Speaker 1: that's what most of it's that was largely a healthcare election.
Speaker 1: One thing that worries me about Medicare for all and
Speaker 1: all that is it that instead of people talking about
Speaker 1: the fact that Trump wants to take away what we
Speaker 1: have achieved, that they're gonna be talking about some you know,
Speaker 1: radical new proposal. Um. And we need to keep focused
Speaker 1: because the in fact, if Trump is reelected, there's a
Speaker 1: very good chance that he will find way to kill
Speaker 1: Obamacare in his second term. Um. So what do you
Speaker 1: think the outcome of November is going to be? I
Speaker 1: personally have no idea, although I will t this up
Speaker 1: by saying, it feels it seems like he had a
Speaker 1: thread and needle quite precisely. And it was a hundred
Speaker 1: and fifty thousand votes across five states that put him
Speaker 1: over the team. Yeah, and as he gained votes or
Speaker 1: lost votes since I don't know that, we really don't know.
Speaker 1: I mean, it was also a media obsession with Hillary's
Speaker 1: emails and all of that. And Trump won in large
Speaker 1: part because nobody thought he could possibly win. He benefited
Speaker 1: enormous things drama from you know, coverage that ignored the
Speaker 1: possibility of his winning. And so it was okay to
Speaker 1: beat up on Hillary because obviously Trump can't win. Uh,
Speaker 1: and that won't happen, I hope this time. But God knows.
Speaker 1: I mean, the economy is unemployment is low, although what
Speaker 1: all of the political scientists say is that what matters
Speaker 1: is how fast is the economy growing, not the level
Speaker 1: but the rate of change in the year before the election.
Speaker 1: And two it's kind of a borderline that's that's more
Speaker 1: or less neutral. So but who knows. I mean, Trump
Speaker 1: has certainly not managed to build mass support his core
Speaker 1: his core group. He's still at whatever that is. And
Speaker 1: it's uh, and but electoral college probably still gives him
Speaker 1: an advantage. Um, well, it looks like he's lost Pennsylvania already,
Speaker 1: we hope. And it looks like he's lost Michigan already
Speaker 1: and possibly Wisconsin. Well, it is interesting that to the
Speaker 1: extent that Trump was making the Trump economy overall, I
Speaker 1: have to admit, it's a low unemployment. It's the Obama
Speaker 1: economy extended out for years. But if it feels pretty,
Speaker 1: you know, it feels good. It feels good. But the
Speaker 1: peculiar thing, the amazing thing, actually is that where Trump's
Speaker 1: economy is bad is precisely where he promised to help.
Speaker 1: So manufacturing bankratsy is a way up manufacturing. We're in
Speaker 1: a manufacturing recession, even as even as we had so
Speaker 1: it's possible that that that that tips the bottle Ohio, Michigan, Wisconsin.
Speaker 1: That so maybe, but then on you know, the third hand, Uh,
Speaker 1: there may be other factors coming in and it's hard.
Speaker 1: I really have no ability to prognosticate on this. Two
Speaker 1: years ago, I would have bet you a million dollars
Speaker 1: that the Senate would not change hands. And following and
Speaker 1: following the arc of all the news that's come out
Speaker 1: this year, I think it's a better than even chance that, um,
Speaker 1: the Democrats take the Senate or at the very least
Speaker 1: it's yeah, I think that. And that wasn't true to you.
Speaker 1: So that's clear, and it's and in some way map
Speaker 1: but challenging. You know, it's only a third of the
Speaker 1: of the seats ruppied. Everybody said, oh two maybe chance,
Speaker 1: it's a real chance. Now that's one of those things
Speaker 1: that we're there's enough, there are enough really weak uh
Speaker 1: Comlican senators and it uh yeah, Arizona, you know there's
Speaker 1: places she was in point she never won anything, that's right,
Speaker 1: and and and his lacking pretty bad. But I try, actually,
Speaker 1: I try not to running against an by the way
Speaker 1: in Arizona, Yeah, I try not to od on this
Speaker 1: stuff too much. It's it's the fact of the matter
Speaker 1: is is that we don't know. But it's the realm
Speaker 1: of possibilities I think do range from Trump victory and
Speaker 1: Republican Senate probably it's still Democratic House, but to uh,
Speaker 1: democratic victory, democratic sweep, and that would be really interesting.
Speaker 1: I mean, it would be give us a chance to
Speaker 1: do you know about only had two years when he
Speaker 1: was actually able to do anything, so did Trump. Yeah,
Speaker 1: and uh so I think if we actually look at it,
Speaker 1: the the possibility of another you know, we're not we're
Speaker 1: not going to get Medicare for all. We're not going
Speaker 1: to get uh the free college, free college. We're not.
Speaker 1: We're uh, we might get a Green New deal, maybe
Speaker 1: not as big as the one that that advocates want,
Speaker 1: but I would definitely be for that. And um but
Speaker 1: on the other hand, we might, uh we may be
Speaker 1: on a slide into becoming in a authoritarian, one party state.
Speaker 1: That's that has happened, and I'm I'm really quite concerned
Speaker 1: that it could happen to us. That that would be
Speaker 1: bad if it happened. So on that cheerful note, because
Speaker 1: I know you are heading out to seth myers. From here,
Speaker 1: let's jump to our favorite question that we ask all
Speaker 1: of our guests. We call this the speed round, um.
Speaker 1: And I'll just plough through these as quickly as I can,
Speaker 1: and we'll we'll send you on your way, starting with
Speaker 1: what are you watching these days? What are you streaming?
Speaker 1: What's your favorite podcast? What are you what are you
Speaker 1: paying attention to? Okay, I actually shouldn't say that. I
Speaker 1: don't really do podcasts okay, very little. I am listening
Speaker 1: when I can to, uh to the uh Prince Peterson
Speaker 1: Institute Trade talks, which is that's professional listening. Um, the
Speaker 1: uh how about watching? What are you watching? Oh crime?
Speaker 1: I have both Amazon Prime in Netflix, and I watch
Speaker 1: all kinds of of stuff, but mostly not uh not
Speaker 1: you know, nerdy stuff. So I'm a huge fan of
Speaker 1: the Expanse. Oh god, I love that, right, so, I think,
Speaker 1: and it makes me almost forgive Jeffs for all the
Speaker 1: other things he's done that he rescued the Expanse and
Speaker 1: his continued this last season has been spectacular fabulous. So
Speaker 1: actually that's something that's social science nerds like as well,
Speaker 1: which is a whole story. And there's another season now
Speaker 1: coming in the future. There's another season coming. There's also
Speaker 1: gonna be uh. I don't know how many people saw this,
Speaker 1: but Altered Carbon, which was Netflix and that was that
Speaker 1: was a great science fiction novel and they turned into
Speaker 1: a great series and they'll be I think we're having
Speaker 1: a second season coming up the next month. So if
Speaker 1: you like Altered Carbon, you should check out Electra Dreams,
Speaker 1: which is loosely based on Philip K. Dick. Haven't watched really,
Speaker 1: it's the first one is spectacular, and they're all separate.
Speaker 1: There's not a contiguous series. They're all standalone, so really
Speaker 1: really interesting. Um, and I watched lots of concerts. That's right,
Speaker 1: you're a music geek. I'm well, it's kind of weird.
Speaker 1: I'm a I'm a sixty six year old want to
Speaker 1: be hipster. Right, I'll watch a lot of indie music performances. Right.
Speaker 1: Have you seen David Burns on Broadway American Utel? No?
Speaker 1: I have, not so amazing. I've seen it twice already.
Speaker 1: It's done in February sixteen, So you better go hurry
Speaker 1: up and see if you're win because you're leaving the
Speaker 1: out of the country. If you're a Talking Heads fan,
Speaker 1: it's amazing. It's really just amazing. Um and did you
Speaker 1: see it's been you mentioned Amazon Prime. The boys haven't
Speaker 1: watched that yet. So it's like the anti Marvel universe,
Speaker 1: like the opposite where where when you when you look
Speaker 1: at the model, they're super Euros are part of a
Speaker 1: corrupt corporation that abuse their power to obtaining government contracts.
Speaker 1: It's just fascinating. I probably should be in because I'm
Speaker 1: the whole superhero thing, by and large leaves me cold.
Speaker 1: So you would, you would totally. So I only recommended
Speaker 1: this series to two people who could not be more different,
Speaker 1: you and Cliff Fastness, and I'm betting both of you
Speaker 1: are gonna love it. Okay, so put that down. Second,
Speaker 1: what's the most important thing we don't know about Paul Krugman? Okay,
Speaker 1: so we have touched on this before. I think the
Speaker 1: most important thing that people don't know is that I
Speaker 1: is that I'm a pussycat and person. That's right, your
Speaker 1: whole public persona, the public persona somehow even though I
Speaker 1: don't think you know, you don't encourage it. I don't
Speaker 1: encourage it. I don't insult, I don't talk about people's
Speaker 1: personal appearance. Uh. I don't. But your writing is barbed
Speaker 1: and effective, and people interpret that as mean and angry. Yeah,
Speaker 1: but I'm not angry and I'm not a I don't
Speaker 1: hold registered. Yeah, you're a mench um. Let's talk about
Speaker 1: your early mentors who influenced the way you look at
Speaker 1: the world of economics. Okay, So I had two great
Speaker 1: economics mentors. First, Bill Nordhouse uh Yale Yale Nobel or
Speaker 1: right although after me, which is kind of weird, but
Speaker 1: Buddy got it. Um And I was his research assistant
Speaker 1: when I was still an undergraduate, and that was tremendous apprenticeship.
Speaker 1: And then a Rudy dorn Bush and M I T
Speaker 1: was a huge influence on me and on the many students,
Speaker 1: So huge influence. Um So those are the two people
Speaker 1: you know whose personal advice mentorship mattered a huge amount.
Speaker 1: What about economists? What economists have influenced how you think
Speaker 1: of the field? Yeah? So the um So, although I
Speaker 1: wasn't an advisor, but Bob solo of M I T
Speaker 1: just I a whole lot of the way I do economics,
Speaker 1: the whole writing style which fills over to my public
Speaker 1: writing as well. It comes a lot from Robert solo,
Speaker 1: who was this great m I t a commist who
Speaker 1: had this tremendous gift for taking complicated issues and turning
Speaker 1: them into simple models that illuminated the world. And I've
Speaker 1: always been in that. And then um not a simple modeler,
Speaker 1: but John Maynard Keynes. I was waiting for you to
Speaker 1: go there it. Maybe you have to actually do economics
Speaker 1: as a as an advocation to appreciate the greatness Kaynes's
Speaker 1: ability to think his way out of the box in
Speaker 1: which economists were trapped at the time and see things differently.
Speaker 1: There's never been anything like it, I would say, not
Speaker 1: even Adam Smith did as much to really just say
Speaker 1: this is the world is not the way you think
Speaker 1: it is, and it's amazing performance, quite fascinating. Let's talk
Speaker 1: about books. What do you like to read for fun?
Speaker 1: What do you read? What do you recommend to people?
Speaker 1: Tell us some of your favorite books. Okay, so I'm
Speaker 1: a geek. Uh so I read a lot of science fiction. Um,
Speaker 1: I anything by Charlie Strauss, who I consider the greatest
Speaker 1: living uh science fictional author. Um and uh the yeah
Speaker 1: s t R O s s um the but but
Speaker 1: lots of there we are actually if you search, you
Speaker 1: can find uh I have met him. The Frocity Archives, Yeah,
Speaker 1: the laundry, the laundry files. Novels are amazing, they are
Speaker 1: they are, the Annihilation Score, yeah. The But he's he's
Speaker 1: incredibly prolific. And I had a memorable evening with him
Speaker 1: and several other science fiction authors who all live in Edinburgh,
Speaker 1: where we talked science fiction and tasted single malt scotches.
Speaker 1: And I describe it as a half memorable evening because
Speaker 1: I only remember the first half. So give us some
Speaker 1: other books that he's interesting, So, I mean and in
Speaker 1: science fiction. Actually, I just recently, for the first time
Speaker 1: in decades reread Done. You know, it's going to be
Speaker 1: a new version coming out, and you know the previous
Speaker 1: ones they've all screwed it up somehow. But let's see,
Speaker 1: because that is actually an incredible book. The other thing
Speaker 1: I do is I read a lot of history, so
Speaker 1: all kinds of stuff, and I just read a a
Speaker 1: long detailed book on the Peninsular War, which is part
Speaker 1: of the Napoleonic Wars, but it's the piece that where
Speaker 1: the the Spaniards and the Portuguese, with help from the
Speaker 1: Duke of Wellington, were fighting the French in Spain, and
Speaker 1: it's uh. And what was great about that was that
Speaker 1: most of the stuff that you read about that in
Speaker 1: English is very Wellington's centered. It's very much about the
Speaker 1: British army. But this one gives you the whole panorama
Speaker 1: which is much vaster and uh, much more brutal. The
Speaker 1: Peninsula War, Peninsular War. So it's it's really from eighteen
Speaker 1: o eight up until eight thirteen there was this uh, extraordinary,
Speaker 1: very grim but but it's fascinating struggle for for control
Speaker 1: of Spain. Give us one more and then I'm gonna
Speaker 1: ask you about one. Okay, so favorite books, UM, got
Speaker 1: so many things, I mean, uh, I'm I mean actually
Speaker 1: it was very much influenced by I haven't not but
Speaker 1: the philosophy of of David Hume inquiry concerning human understanding,
Speaker 1: How skepticism and demanding evidence made a big difference. That
Speaker 1: was actually only the years later that I realized that
Speaker 1: actually he probably was the first modern economist, even before
Speaker 1: Adam Smith. That's really quite fascinating. So back to science fiction. Um,
Speaker 1: two different people who are sci fi geek friends who
Speaker 1: I I have a giant overlap with their taste. There
Speaker 1: was aspect what they like and don't like. When two
Speaker 1: people recommend the book, I go out and get it,
Speaker 1: but I haven't read it yet. Both recommended The Three
Speaker 1: Body Problem. Yeah, have you have you seen? I have
Speaker 1: read it. You read it? What are your thoughts on?
Speaker 1: I mean, I liked it. It's a full trilogy, and
Speaker 1: it's feel full trilogy, and it's kind of weird. I mean,
Speaker 1: it's it's but it's it's Chinese resiction. It's very different
Speaker 1: in field, and it's it's strange. But it's full of
Speaker 1: interesting ideas and even even some character development. You know
Speaker 1: a lot of science fiction, and I have to admit
Speaker 1: that the characters are kind of too dimensional because it's
Speaker 1: a little bit better than that with with this, and
Speaker 1: it's not it's not the best, uh that I with
Speaker 1: stuff I've read. I mean, I think maybe it may
Speaker 1: lose something in translation. I don't know. But you didn't
Speaker 1: read it any original man, not my man. Darine skills
Speaker 1: are a little so that's probably where where it fell
Speaker 1: a little A little short. Speaking of fail um, tell
Speaker 1: us about it time you failed and what you learned
Speaker 1: from the experience. Oh gosh, I mean, there there have
Speaker 1: been multiples but um, I mean, obviously I made a
Speaker 1: bad call about the economy on election en, didn't you
Speaker 1: roll that back pretty quick? Days? But no one wants
Speaker 1: to hear about that. They just want to beat you
Speaker 1: with the original call. But it is a reminder not
Speaker 1: to let not to let you know. And I've done
Speaker 1: some things before. I mean, I was warning about a
Speaker 1: debt crisis during the Bush years and I never happened.
Speaker 1: And I and usually when I make these things, I
Speaker 1: go back and ask myself, was that actually grounded in
Speaker 1: hard thinking? Or was I letting my my desire to
Speaker 1: see bad things happen to bad people influence my judgment?
Speaker 1: That's usually what what do you think Bush was a
Speaker 1: bad person or was he just an amiable dufast in
Speaker 1: over his head. I think he was not a great person,
Speaker 1: and I think that was he a bad person. So
Speaker 1: if you had to pick Cheney, your Bush, Oh, Cheney
Speaker 1: was a bad Okay. So when I look at Bush,
Speaker 1: I look at like, all right, I don't agree with
Speaker 1: most of his decisions, but he seems kind of like
Speaker 1: a goofy well, utterly lacking an empathy for the people
Speaker 1: who are less fortunate than himself. So that's a that's fair,
Speaker 1: you know, so, but not not actively evil in the
Speaker 1: same way that Cheney was, and certainly not in the
Speaker 1: way that the Trump is. All right, so let's um.
Speaker 1: So the value is there? What do you do for fun?
Speaker 1: What do you do when you're not panning New York
Speaker 1: Times columns? Well? Uh, go to as many indie concerts
Speaker 1: as I can manage. Tell us the last couple you saw? Okay,
Speaker 1: last two I saw We're uh. Most recently Raina del
Speaker 1: Sid which is actually it's the it's an indie band.
Speaker 1: It's also a person, but she's the core of it
Speaker 1: from Minneapolis. Sort of folky stuff but really great fun.
Speaker 1: And I saw that at Rockwood Musical, which is a
Speaker 1: standing only venue. Stand there with a beer in your
Speaker 1: hand and your your five feet from the band. So
Speaker 1: that was great. You stood for two hours in front
Speaker 1: of the band. I imagine, you know, as long as
Speaker 1: I can keep on doing it. Uh And then uh um.
Speaker 1: And then one before that was another Larkin Poe, which
Speaker 1: is blues. There are two sisters from Atlanta and they
Speaker 1: have a band for for touring. They have a band
Speaker 1: and their their records are just them plus various pieces
Speaker 1: like a drummer and a guitarist or a a drummer, and
Speaker 1: they add that, but the two of them are are
Speaker 1: both the one one is slide guitar and one is
Speaker 1: is is regular guitar, and and they do h amazing
Speaker 1: harmony vocals and um and that was just they got hot.
Speaker 1: Recently they got nominated for didn't win one, but they
Speaker 1: got nominated for Grammy and they um no. And I
Speaker 1: saw them at Bowery Ballroom, which is uh five fifty
Speaker 1: instead of one hundred fifty standing room. So so so
Speaker 1: these are standing with a beer in your hand concerts.
Speaker 1: That's a tough kid. The last thing I did that
Speaker 1: for was you two with the Garden, and that has
Speaker 1: to be twelve years ago. And I'm younger than you.
Speaker 1: I can't stand for two hours. Well so far, so far,
Speaker 1: so good. I mean, you know, well time with time
Speaker 1: when I can't. And the other thing I do is
Speaker 1: I I do. I do bike trips. Now I have
Speaker 1: actually done by trips, like the full trip with the
Speaker 1: Chase fin and there there's more for you and saying
Speaker 1: go two hours this direction, and there's a pace vehicle
Speaker 1: in your following, well not pace vehicle, there's a van
Speaker 1: that pops up with with bottles of cold water every
Speaker 1: once in a while and and takes your bags to
Speaker 1: the next hotel. And so I've been doing lately. I've
Speaker 1: been doing two of those years. So so you're biking
Speaker 1: for seven days effectively. Yeah, we're Actually it's the next one,
Speaker 1: which is in Portugal, is gonna be ten days. And
Speaker 1: your wife does this happily with um. She actually has
Speaker 1: the last couple. She's gone and done other things and
Speaker 1: met me at the end. But I have some buddies,
Speaker 1: all of them, you know, sort of my age, who
Speaker 1: are all of us, you know, still saying hey, we
Speaker 1: can still do this, let's do it, and you can
Speaker 1: do that pretty easily in Europe. They're they're built for
Speaker 1: that more than we are. Yeah, you want to go
Speaker 1: village to village, although I've done I've done them in
Speaker 1: Vermont and Donmond, Quebec done you know. So, But it's
Speaker 1: a it's a it's a great way to get out
Speaker 1: of your head right, instead of instead of worrying about
Speaker 1: the fate of the economy or the faith of the
Speaker 1: thing that it's it's just can I actually get up
Speaker 1: that hill? Right? Changes your focus. So so speaking about
Speaker 1: worrying and being pessimistic or not. What are you most
Speaker 1: optimistic about these days? And what are you most pessimistic? Well,
Speaker 1: I'll start with the pessimism. I think. I think there's
Speaker 1: basically an even chance that we're going we're going to
Speaker 1: lose our democracy. You know, that's even if we get
Speaker 1: past Trump. The forces of have been unleashed and that yeah,
Speaker 1: I mean I I for complicated reasons. I tracked the
Speaker 1: collapse of democracy in Hungary pretty closely, and and you
Speaker 1: can easily see. I mean, I if Trump was as
Speaker 1: smart as Victor Orbon, we'd have lost it already. And
Speaker 1: so this is this is what really scares me most. Uh,
Speaker 1: there's my pessimism, my optimism. Um, you know, the Americans
Speaker 1: are just incredibly more open minded than they were as
Speaker 1: partly young people. It's not just young people. I mean
Speaker 1: when I think back to what the country was like
Speaker 1: in in the early nineteen eighties, I mean, and you
Speaker 1: can you can see it both. You can see it
Speaker 1: in in polling, but other things too. I mean we
Speaker 1: I um, as an adult working economist, I lived in
Speaker 1: a country where only a third of white people thought
Speaker 1: interracial marriages were okay, a country where. I mean, as
Speaker 1: recently as two thousand four, gay marriage was a major
Speaker 1: election losing issue. We're just we had a close mindedness
Speaker 1: and prejudice level, and we've gotten vastly more tolerant, and
Speaker 1: that's that's gotta be a good thing. So the pushback
Speaker 1: to that is hasn't the current administration revealed I'm not
Speaker 1: saying they are this. I'm saying Trump has revealed there's
Speaker 1: still big streaks of anti semitism, racism, misogyny, much more
Speaker 1: in the United States than a naive, upper middle class
Speaker 1: white guy like myself would have guessed. No one is
Speaker 1: anti Semitic. To me, how could it exist in the country.
Speaker 1: You don't get my mail, Oh I I get I
Speaker 1: used to get the blog comments. You and I have
Speaker 1: had conversations about how horrific some of the comments used
Speaker 1: to be, and I just, you know, I just chucked
Speaker 1: it up to hey, people are getting killed in the
Speaker 1: financial crisis. No one wants to read me yammering about it,
Speaker 1: but they do, And then they would make a really
Speaker 1: obnoxious comment that said I didn't think that that was
Speaker 1: I didn't never repulated that to the rest of American society.
Speaker 1: I think that but that stuff is always there, and
Speaker 1: that's what you think of it as a streak is
Speaker 1: like you know, a couple of outsider cranks. No, it's
Speaker 1: it's it kind of feels like it's a little more
Speaker 1: expansive than it was. I actually wrote something it's not
Speaker 1: it's not in arguing with zombies, but I wrote something,
Speaker 1: uh early two thousand's about about actually about France, where
Speaker 1: at the National Front had gotten a lot of votes
Speaker 1: in an election and saying that there that there are
Speaker 1: angry people, that there's something like a quarter of the population,
Speaker 1: and every advanced country who are who are all of
Speaker 1: these things? And that doesn't go away the idea that
Speaker 1: we're every disenfranchise frustrated and will express it in kicking
Speaker 1: the cat in any way they can. Yeah, and does
Speaker 1: anybody uh? And as it's always the usual things, it's
Speaker 1: always about brown people, it's always um. I don't know
Speaker 1: if anybody listens to Tom Lear or anymore, but he
Speaker 1: had a great satirical song from nineteen one about uh
Speaker 1: that that choruses the Protestants hate the Catholics, and the
Speaker 1: Catholics hate the Protestants, and they hate the Muslims and
Speaker 1: everybody hates the Jews, and uh, and that's uh, so
Speaker 1: that's always there. But the point is that there was
Speaker 1: a sort of assumption that that majority, the majority of
Speaker 1: the population was like that, which was probably true in
Speaker 1: the in the fifties, and it's not. Uh, it's a
Speaker 1: lot better now. So just just as economics advances one
Speaker 1: funeral at a time, does the enlightenment of America advanced
Speaker 1: one generation at a time? Is that what's going on? Well? Some,
Speaker 1: I mean you although there are plenty of you know,
Speaker 1: there are plenty of horrible young people and plenty of
Speaker 1: pretty decent older people, so it's not that straightforward, but
Speaker 1: it's uh. I think it is true that that the younger,
Speaker 1: younger generations are more tolerant than older generations. And um.
Speaker 1: On the other hand, you know, I grew up in
Speaker 1: the sixties and I did watch lots of age of
Speaker 1: aquarious people to and into a Wall Street traders, So uh,
Speaker 1: that's not always the case that people. Right, what's the
Speaker 1: old joke, You're you're heartless if you're not a socialist
Speaker 1: when you're young and a capitalist when you're older. No, anyone,
Speaker 1: anyone who's who is not a socialist under thirty has
Speaker 1: no heart. Anyone who's still a socialist after thirty has
Speaker 1: no head. There was the old line that that's a
Speaker 1: great joke. So we're down to our last two UM questions.
Speaker 1: Speaking of young people, what sort of advice would you
Speaker 1: give a college graduate or millennial who was interested in
Speaker 1: exploring a career in economics? Okay, UM, so you know,
Speaker 1: first of all, do get the education? UM? And does
Speaker 1: that mean doctorate or how far do you go? It
Speaker 1: depends on what you want to do, but you want
Speaker 1: to you're gonna need some kind of graduate degree to
Speaker 1: get on trade into stuff. A master's in some cases
Speaker 1: as good enough, but the UM. But you do need
Speaker 1: some certification. UM. You know. The thing I can say
Speaker 1: is um, yeah it uh, it's you do do figure
Speaker 1: out what you're good at and and something that interests
Speaker 1: you but not necessarily of cosmic importance. Figure out something
Speaker 1: that's really good and that that that you do well,
Speaker 1: and get that as a kind of a baseline. You
Speaker 1: can you can branch out, you can start to do
Speaker 1: stuff like writing newspaper columns or so on later on,
Speaker 1: but you do want to get that baseline. In fact,
Speaker 1: your contribution to society, by and large basically the answer
Speaker 1: don't try to be me uh uh not yet uh
Speaker 1: and uh the U I quote in arguing with zombies.
Speaker 1: I quote there was an essay by Riemon Chandler on
Speaker 1: writing I'm writing books, and he said, you know that
Speaker 1: there have been some very dull books written about God
Speaker 1: and some very fine books written about making a living
Speaker 1: while staying fairly honest. So focus on where you can
Speaker 1: actually add. I like that. And our final question, what
Speaker 1: do you know about the world of economics today that
Speaker 1: you wish you knew thirty or forty years ago when
Speaker 1: you were first ramping up your career. Oh? Actually, see,
Speaker 1: the thing is my career has been uh that the
Speaker 1: the angels were smiling on me. I've had an optimal career.
Speaker 1: There never been anything that everything who broke the right
Speaker 1: way for me in ways that that's just uh, I
Speaker 1: had no right to to to expect. So it's not
Speaker 1: that um what I There is now a major uh
Speaker 1: sort of scandal has pretty much come up in economics
Speaker 1: where we're realizing just how strong the misogyny within the
Speaker 1: profession has been, just how badly um people, how badly
Speaker 1: women have been treated, you know, not Harvey Weinstein level.
Speaker 1: But but lots of of discrimination is just in terms
Speaker 1: of hiring or publishing or everything publishing, the way that
Speaker 1: they're treated and am in ours. And of course then
Speaker 1: the thanks to uh we have you know, anonymous social media.
Speaker 1: We know the way that that some male economists talk
Speaker 1: about their female colleagues. Um. And I was oblivious. I
Speaker 1: you know, maybe had some sense, but I didn't realize.
Speaker 1: I don't think I was ever doing it, but I
Speaker 1: wasn't um campaigning to to say let's stop this. So
Speaker 1: I I really wish that I had been more aware.
Speaker 1: I was sitting there comfortably, you know, and it's super
Speaker 1: comfortable environment. And mean I was I had all the
Speaker 1: qualifications at the right school. I was white, that was male.
Speaker 1: I was Jewish, which actually and economics in my generation
Speaker 1: was sort of normal. Uh and um, And had no
Speaker 1: idea what a lot of people were going through. Um
Speaker 1: And so I regret if I had, if I had
Speaker 1: had a better sense of what was really going on,
Speaker 1: maybe I could have contributed a little bit to making
Speaker 1: it better interesting observation along those lines. Paul, thank you
Speaker 1: so much for being so generous with your time. We
Speaker 1: have been speaking with Paul Krugman professor at Cuney Graduate School,
Speaker 1: as well as the author, most recently of Arguing with Zombies.
Speaker 1: If you enjoy this conversation, well be sure and look
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Speaker 1: Follow me on Twitter at rit Halts. I would be
Speaker 1: remiss if I did not thank the Cracks staff that
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Speaker 1: Barry rit Halts. You've been listen sending some Masters in
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