WEBVTT - Paul Krugman on His New Book

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Masser and

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<v Speaker 1>Jason Kelly on Bloomberg Radio. So Paul Krogman is with

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<v Speaker 1>us Nobel Laureate economists New York Times columnist n Yu,

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<v Speaker 1>Distinguished Professor of Economics and Professor Emeritus at Princeton University's

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<v Speaker 1>Woodrow Wilson School, Author and editor of nearly thirty books.

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<v Speaker 1>His latest book, Arguing with Zombies, Economics, Politics, and the

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<v Speaker 1>Fight for Better Future. He is in our Bloomberg Interactor

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<v Speaker 1>Broker studio in New York. Paul, So, nice to have

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<v Speaker 1>you here. Welcome back. Hi, good to be back. So

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<v Speaker 1>you know, I want to get into your book. I

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<v Speaker 1>want to first though, ask you in a world, in

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<v Speaker 1>a day where we have headlines on the virus, we're

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<v Speaker 1>talking about politics in the Iowa caucus, We're talking about

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<v Speaker 1>Tesla rallying, we're watching earnings, how do you kind of

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<v Speaker 1>hone in on what's the most important things for investors,

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<v Speaker 1>for kind of the world at large in terms of

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<v Speaker 1>what makes everything tick. Oh, I'm not or I know that.

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<v Speaker 1>The answer to that. I mean, I try to work

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<v Speaker 1>on the things where I have something to contribute. So

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<v Speaker 1>it's a so I'll look at that's so I did

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<v Speaker 1>write about the coronavirus, but from the economics point of view,

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<v Speaker 1>because I think we know a fair bit now about

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<v Speaker 1>how the world has changed and about global supply chain.

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<v Speaker 1>So I'll do that. Uh. And actually it's it's I

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<v Speaker 1>don't know whether to be scared about dying, but I'm

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<v Speaker 1>really very concerned about the disruptive effect on business because

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<v Speaker 1>we have this value chain global economy. Now I'll write

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<v Speaker 1>about you know, political implications of of of economic doctrine,

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<v Speaker 1>fiscal policy, whatever. But it's all kind of to be honest,

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<v Speaker 1>it's a little bit hard to break through. And especially

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<v Speaker 1>I watched the readers. Uh, you know what people want

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<v Speaker 1>to read at the New York Times these days. Um,

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<v Speaker 1>lately it's tend to be sort of impeachment, how to

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<v Speaker 1>boil a perfect egg, impeachment grilling with mayonnaise. So it's

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<v Speaker 1>a mixture of politics and escapism. It's a little bit

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<v Speaker 1>hard to get my stuff that politics and escape absolutely,

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<v Speaker 1>So what in heard this book in particular because you

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<v Speaker 1>do as you tend to have a pretty clear idea

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<v Speaker 1>that that you're putting out there. But to Carroll's point,

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<v Speaker 1>in a very difficult world to break through. Yeah, well

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<v Speaker 1>it is an election year and that was one consideration.

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<v Speaker 1>I have also been writing for The Times for twenty years,

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<v Speaker 1>which made it It's been a while since I reprinted

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<v Speaker 1>so much, though not all of the book has reprinted

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<v Speaker 1>columns over the years, and it just seemed to me

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<v Speaker 1>there was a good time to try and pull this

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<v Speaker 1>together to understand why we're in the in the political

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<v Speaker 1>policy mess we're in, and and also what has worked

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<v Speaker 1>because we have had some success stories over there. So um,

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<v Speaker 1>it just seemed like an opportunity moment. And so when

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<v Speaker 1>you went back and sort of looked at at the collection,

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<v Speaker 1>what were the through lines that immediately jumped out at

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<v Speaker 1>you and which were the ones that were maybe a

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<v Speaker 1>little harder to discern. I actually I've been trying to

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<v Speaker 1>say this without sounding like I've got a swelled head,

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<v Speaker 1>though I probably do, But I mean, I think good.

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<v Speaker 1>I was surprised at how much stuff holds up, how well.

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<v Speaker 1>You know, there have been consistent themes that I've been

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<v Speaker 1>pounding on for for fifteen years now, and that they

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<v Speaker 1>most of them are, are still relevant. Most of the

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<v Speaker 1>work holds up pretty well. Um, it's the I mean,

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<v Speaker 1>the the role of government in in making our economy

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<v Speaker 1>a little bit more humane than it would otherwise be

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<v Speaker 1>the role of government policy, and helping to stabilize the

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<v Speaker 1>economy get us closer to full employment. All of those

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<v Speaker 1>things still hold up that the lots of things have

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<v Speaker 1>not changed that much, except that the quality of our

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<v Speaker 1>discourse keeps going getting worse. Right, Well, let's talk about

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<v Speaker 1>that discourse. I think this is in your book, and

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<v Speaker 1>that we specifically say ideas that should have been killed

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<v Speaker 1>by contrary, contrary evidence, but instead keeps shambling along eating

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<v Speaker 1>people's brains. Yes, that's the that's the zombie ideas. Those

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<v Speaker 1>are the zombies. And I but but speak to this

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<v Speaker 1>because we have these conversations that you know, we grew

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<v Speaker 1>up in a world of analism where fact was fact

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<v Speaker 1>and you understood that, and I feel like we've gotten

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<v Speaker 1>away from that. Yeah, facts as part of the issue,

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<v Speaker 1>although the it's stuff that just doesn't get through. So

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<v Speaker 1>the the most important zombie in American politics is the

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<v Speaker 1>belief that cutting taxes on rich people um is magical

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<v Speaker 1>and actually pays for itself. And the that has never happened,

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<v Speaker 1>has never worked, has failed again and again and yet

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<v Speaker 1>when we had the debate over the tax cut, even

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<v Speaker 1>the alleged moderates they aren't really, but they supposed moderates

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<v Speaker 1>within the Republican Party, people like Susan Collins. We're saying, oh,

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<v Speaker 1>I believe that this tax cut will pay for itself

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<v Speaker 1>and it would reduce the budget deficit. And sure enough,

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<v Speaker 1>of course we've got a trillion dollar deficit. It did

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<v Speaker 1>one of these things always do, which is to blow

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<v Speaker 1>off the deficit. So the UM it is kind of hard.

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<v Speaker 1>How do you have economic discussions when a large part

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<v Speaker 1>of the political spectrum is committed to believing things that

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<v Speaker 1>are manifestly not true. So, speaking of the deficits modern

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<v Speaker 1>monetary theory, you've had some thoughts on that you have

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<v Speaker 1>engaged in some reposts as it were, around that. Why

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<v Speaker 1>do you think it has at least captured the imagination

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<v Speaker 1>at this point? Well partly so. I mean, by the way,

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<v Speaker 1>the look on your face when I said modern monetary theory,

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<v Speaker 1>I wish I could say it. I don't want to

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<v Speaker 1>have because at least for the moment, the M m

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<v Speaker 1>T people and me are on the same side all

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<v Speaker 1>right on on the practical policy issues. UM and In fact,

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<v Speaker 1>it's also what really drives you crazy, drives people like

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<v Speaker 1>me crazy, is we're not actually sure what it is.

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<v Speaker 1>When you try and get what is what are the

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<v Speaker 1>fundamental tenets of monitor monetary theory and how are they

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<v Speaker 1>different from what conventional Keynesians like myself would say, and

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<v Speaker 1>you get very long answers that don't actually seem to

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<v Speaker 1>consist of complete sentences, um and um. A lot of

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<v Speaker 1>it is seems to be just really sort of inventing

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<v Speaker 1>new terms for old concepts, and coupled with a kind

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<v Speaker 1>of attitude that says this is all very radical when

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<v Speaker 1>it actually mostly isn't. So it's it's it's kind of

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<v Speaker 1>crazy making, and it's it's really a distraction from the

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<v Speaker 1>debates we need to be having. Paul Krugman still with us,

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<v Speaker 1>Nobel Laureate, City University of New York Distinguished Professor of Economics,

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<v Speaker 1>his latest book Arguing with Zombies, Economics, Politics, and the

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<v Speaker 1>Fight for a Better Future. You were too kind not

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<v Speaker 1>to correct me, so forgive my mistake. Okay, all right,

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<v Speaker 1>so Paul, great to have you still with us. I

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<v Speaker 1>do want to go back to the coronavirus because from

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<v Speaker 1>an economic perspective. From a market perspective, the market still

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<v Speaker 1>seems to be trying to figure out. But you mentioned

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<v Speaker 1>this new world that we're living in, this value supplied,

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<v Speaker 1>value based supply chain, I think is what is what

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<v Speaker 1>you said, help us understand the economic implications here? Okay,

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<v Speaker 1>so you know I was I wrote a column because

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<v Speaker 1>Wilbert Ross said something truly bone headed, which is not

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<v Speaker 1>that unusual, but it was a good jumping off point

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<v Speaker 1>where he said, this is great for America, help us

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<v Speaker 1>compete with the Chinese. Uh. And that wouldn't have been

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<v Speaker 1>totally bone headed forty years ago, when you actually did

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<v Speaker 1>have a world where kind of national manufacturing bases competed

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<v Speaker 1>head to head with each other. But now we're in

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<v Speaker 1>this world of these complicated interlinked value chains where, um,

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<v Speaker 1>you know they I've got an iPhone in my pocket

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<v Speaker 1>here where was that iPhone made? Well? There the last

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<v Speaker 1>step was China. But in fact that that's the last

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<v Speaker 1>step of a very long and winding chain, and there

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<v Speaker 1>are pieces of it that were made in many places,

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<v Speaker 1>and it's been shipped across multiple borders. Um. And in

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<v Speaker 1>that kind of world, anything that disrupts manufacturing anywhere is

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<v Speaker 1>actually going to hurt manufacturing everywhere, and so the coronavirus,

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<v Speaker 1>and that's actually by the rate, most most of the

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<v Speaker 1>evidence says that actually all of the people who have

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<v Speaker 1>actually done evidence says that the Trump trade war has

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<v Speaker 1>actually hurt US manufacturing, not helped it. And the reason

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<v Speaker 1>is because of the value chains. What it did was

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<v Speaker 1>it disrupted that raised the cost of US manufacturers by

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<v Speaker 1>raising the cost of imported inputs. And the coronavirus is

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<v Speaker 1>kind of like the Trump trade war on on steroids.

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<v Speaker 1>If it turns out to be as serious as we

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<v Speaker 1>fear it might be, it's going to be a really

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<v Speaker 1>pretty nasty thing, even for people who are not at

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<v Speaker 1>all at risk of being infected themselves. I feel like,

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<v Speaker 1>going back to your book, that we're at risk two

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<v Speaker 1>of kind of creating a better future if we have

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<v Speaker 1>folks putting out these ideas that have been you know,

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<v Speaker 1>disproven if you will, and that they don't make sense.

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<v Speaker 1>And we certainly see that among politicians. I do wonder

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<v Speaker 1>do you have faith and maybe the private sector to

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<v Speaker 1>kind of move things along. Elon Musk, for instance, like

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<v Speaker 1>him or not, he has certainly pushed forward the idea

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<v Speaker 1>of an e V um, that many traditional auto automakers,

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<v Speaker 1>Paul would have said, it's gonna take much longer to do,

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<v Speaker 1>and I feel like he's moved up that. So do

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<v Speaker 1>you have any faith in kind of the private sector

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<v Speaker 1>moving along some of these ideas well? Sometimes I mean

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<v Speaker 1>the one of the I do say in argument with zombies,

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<v Speaker 1>that that the the overwhelming problem, the one I have.

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<v Speaker 1>Sometimes I asked, why isn't it The only thing I

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<v Speaker 1>write about is climate change? Um, And the private sector

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<v Speaker 1>has actually set us up to solve that problem. We've

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<v Speaker 1>had this incredible technological revolution, and renewable energy and electric

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<v Speaker 1>vehicles is part of that because it means that we

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<v Speaker 1>can electrify a lot of transport as well, and we

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<v Speaker 1>can generate the electricity in ways that don't regenerate greenhouse gases,

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<v Speaker 1>and that that technology is already now. Government policy helped.

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<v Speaker 1>Without some of the investments that took place, particularly under

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<v Speaker 1>the much maliganed Obama stimulus, we green energy wouldn't be

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<v Speaker 1>where it is right now. But the private sector also

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<v Speaker 1>did its part and delivered this great technological stuff. The

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<v Speaker 1>trouble is, first that's sometimes not enough, and sometimes the

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<v Speaker 1>politicians are fighting it. So we have the Trump administration

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<v Speaker 1>trying to force us to burn coal even though the

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<v Speaker 1>private sector really doesn't want the coal anymore. What's the

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<v Speaker 1>best economic lens to look at the Iowa caucus and

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<v Speaker 1>the early Democratic vying for the nomination. Boy, I mean,

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<v Speaker 1>I have by way to zero idea what's going to happen? Uh?

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<v Speaker 1>And the but the caucus is it's a you know,

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<v Speaker 1>it's a deeply unrepresentative state and deeply peculiar. If somebody

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<v Speaker 1>want to said that caucus is an artisanal primary, right,

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<v Speaker 1>it's a it's it's a really bad way to judge

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<v Speaker 1>what voters actually want, and with a highly unrepresentative set

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<v Speaker 1>of voters. So this is a this is really bad,

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<v Speaker 1>God knows. I mean, it's but let me tell you,

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<v Speaker 1>it might be decisive for the nomination, particularly Biden wins

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<v Speaker 1>that he may that may be a kind of it. Uh.

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<v Speaker 1>But if he doesn't, then probably slog on for quite

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<v Speaker 1>a while. But my insight is that in terms of

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<v Speaker 1>actual policy, it hardly matters which Democrat wins that it

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<v Speaker 1>as long as a Democrat wins the general election. Um

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<v Speaker 1>that Bernie Sanders has a lot of big plans, but

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<v Speaker 1>in reality he would only be able to do part

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<v Speaker 1>of them, and Biden, you know, maybe kind of old guard,

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<v Speaker 1>but he's actually offering a pretty progressive economic program and

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<v Speaker 1>his party would force him to go through with that.

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<v Speaker 1>So the reality is that that we're going to get

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<v Speaker 1>a Democrat who in practice would be a what Europeans

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<v Speaker 1>would call a social democrat. Would it spanned the safety net,

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<v Speaker 1>raised taxes on the rich. And I'm not going to

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<v Speaker 1>get worked up at all about about who ends up,

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<v Speaker 1>you know, in the lead. Well, and one of the

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<v Speaker 1>zombie ideas that you talk about in your book is

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<v Speaker 1>the myth of the socially liberal fiscally conservative voter. So

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<v Speaker 1>there's a lot of things that are very relevant. Well, yeah,

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<v Speaker 1>there are I know some socially liberal fiscally conservative I

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<v Speaker 1>had to actually tend to encounter. Well, I basically encountered

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<v Speaker 1>them in the breakfast meetings at Bloomberg. Uh. And they

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<v Speaker 1>have an average net worth of maybe a thousand times

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<v Speaker 1>mine at least. Uh. And they all wear gray suits

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<v Speaker 1>and they are absolutely not there. There's nobody out there.

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<v Speaker 1>They are effectively represent maybe three percent of the electorate.

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<v Speaker 1>We just want to spend a couple more minutes with

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<v Speaker 1>Paul Krugman, because we've got him here obviously teaching now

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<v Speaker 1>at the Graduate Center of the City University of New York.

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<v Speaker 1>And when you came in, Paul, you and Carol were

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<v Speaker 1>talking about an interview she did with you down in Princeton.

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<v Speaker 1>You're now a full on resident of Manhattan. What do

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<v Speaker 1>you make of New York City right now? Oh? You know,

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<v Speaker 1>if if you can afford a place to live, which

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<v Speaker 1>is the hard part. Uh, it's a golden age of

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<v Speaker 1>New York City. I mean crime is low, the cultural richness,

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<v Speaker 1>whatever your tastes are, is enormous. The food is better

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<v Speaker 1>by far than it was when I was growing up.

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<v Speaker 1>You know. It's it's a um and and life is

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<v Speaker 1>surprisingly easy. Uh, you know, and anything you want is

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<v Speaker 1>five minutes away. So uh no, it's it's I'm a

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<v Speaker 1>huge fan of New York. I even I'm a fan

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<v Speaker 1>of the subway. For all of its problems, it's a

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<v Speaker 1>it's a very efficient means of transport. So no, I'm

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<v Speaker 1>a Uh you're a bull. I'm a bull. And you

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<v Speaker 1>know I grew up in this on Long Island. I

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<v Speaker 1>always thought that would someday grow up to be in

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<v Speaker 1>a New York intellectual and finally in my sixties, I

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<v Speaker 1>made it. You made it, but you made it, which

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<v Speaker 1>is great. Well, and I do wonder about, um, you know,

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<v Speaker 1>bringing more people and making it more equal within this city.

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<v Speaker 1>Do do you think that's something that we can fix,

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<v Speaker 1>whether it's developers responsibility or whoever. No, we definitely need housing.

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<v Speaker 1>Affordable housing is probably the biggest single thing that you

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<v Speaker 1>can do. I mean, there are other things. Universal pre

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<v Speaker 1>K is great, but we should have even more child

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<v Speaker 1>support and that's something that the city can do. But

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<v Speaker 1>building more housing for regular people, Um, it's you know,

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<v Speaker 1>it's a dense city, but there was there's, in fact

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<v Speaker 1>still plenty of room for that, and that's that's the

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<v Speaker 1>biggest You know, it's always gonna be a highly unequal

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<v Speaker 1>city because it's a place where billionaires want to live, right,

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<v Speaker 1>so there's always gonna be some of those ten seconds.

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<v Speaker 1>Got a favorite part of the neighborhood? Well, I mean

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<v Speaker 1>I because I live on the Upper West Side and

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<v Speaker 1>it's it's you know, it's it's a wonderful place. All right,

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<v Speaker 1>Yeah you do. All right, Paul Krugman, thank you so much.

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<v Speaker 1>We really enjoyed spending some time with you. Today,