An interview with Paul Krugman 

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An interview with Paul Krugman 

Paul Krugman (PA Images)

It’s hard to think of a more influential economic commentator than Paul Krugman. Ever since the 2000s he’s been banging away at the conservative establishment from the comment pages of the New York Times. The thing that makes Krugman stand out is not only that he’s won the Nobel Prize for economics (he refers to it as the “Swedish thingy”), but that he wears his academic learning so lightly. And, unlike so many other academic economists-turned-pundit, Krugman can write with enormous verve, as his new book Arguing with Zombies makes clear. 

It’s a collection of his writing, going back to the 1990s, including not only NYT columns but less familiar work, all inter-spliced with original essays. The whole thing feels suffused with a kind of intellectual pathos. Because Krugman undeniably sets out a brilliant, cogent worldview — but it’s a brilliant, cogent worldview that seems to be losing. Electorates have not opted for the kind of political economy that he urges. Instead, nationalism is coming back. Perhaps that’s why the book strikes such an aggressive tone.

“When you are confronting bad-faith arguments,” he writes in the book’s introduction, “the public should be informed not just that these arguments are wrong, but that they are in fact being made in bad faith.”

“In other words,” he goes on, “we should be honest about the dishonesty that pervades political debate. Often, the mendacity is the message.”

And his enemy? “Movement Conservatism,” which he describes as “the interlocking network of media organisations and think tanks that serves the interests of right-wing billionaires and has effectively taken over the GOP [Republican Party].”

For Krugman, these conservatives are the enemy of all that is good. Social security? The Right-wingers tried to wreck it. Obamacare? They tried to stop it, then attempted to repeal it. The financial bubble? They inflated it. Austerity? A cruel, unnecessary policy imposed by conservative ideologues. Trade? They misunderstand it. Inequality? They don’t care about it. The environment? Whatever. Everywhere he looks, Krugman sees poorly-reasoned arguments being put forward in defence of ideas that are both damaging and wrong — the “Zombies” of the title.

And yet the US electorate opted for Trump, a man who embodies pretty much everything that Krugman detests. Voters don’t appear outraged by the cynicism of the US movement conservatives and are unswayed by arguments that to Krugman seem obvious. When I met him this week in London, I asked him why that should be.

“Writing for a place like the [New York] Times — the dream job, what every journalist wants, there’s no better slot and no further reach — gives you a real sense of your unimportance,” he said. “You have five million readers of the NYT. It is the most influential publication in the world and very rarely do you manage to move the needle on anything real, ever. You just have to accept that and do what you can.”

It’s surprising to hear this, especially coming from someone so pugnacious. Does that mean that arguing with people is pointless?

“We did in fact get pretty significant healthcare reform,” said Krugman. “We did stop social security privatisation, which I had some impact on.” But then he gives an exasperated sigh. “There were disappointments,” he said. “I was disappointed in arguments about austerity and made very little headway despite what I thought was a really compelling case.”

After the 2008 crash, governments cut spending to reduce their deficits, and for a Keynesian like Krugman this was simply the worst possible response. Governments should spend in a recession, not cut.

That was the hard lesson of the Great Depression and it was based on the insight that a person’s income is effectively made up of someone else’s expenditure. It follows that if no one is spending, no one has any income. The only answer is for the government to spend and the return of economic activity puts the economy back on track.

But to Krugman’s horror, governments, including Britain’s, did the opposite. They cut spending and this policy of austerity prolonged the recession. It’s a straightforward, compelling analysis of where conservative economic thinking went wrong. But why haven’t voters rejected the parties associated with these views?

“People have lives, they are busy,” said Krugman. “To the extent that they’re looking beyond their own lives, they’re mostly interested in things that are fun. To my astonishment I have four and a half million Twitter followers, which sounds awesome. But then I think Katy Perry has a hundred million. So you’ve got to have some sense of what reality is like.”

“Like everyone at the NYT, I track our most popular list each day and these days it tends to be: Impeachment; How to boil a perfect egg; Grilling with mayonnaise; Health tips for your sixties.”

Fair enough. But does that undercut the reason for writing the book in the first place — or the reason for writing at all — which is to recruit people to a particular worldview?

“I doubt that the NYT reaches 1 per cent of the US electorate directly, but if you can offer arguments that persuade congressional staff and perhaps other people in the news media, it can make some difference. But only once in my life have I told a policymaker what he should do and actually have him do it. And that was actually the Prime Minister of Japan. It’s never happened in America.”

Krugman is more softly-spoken than might be expected from his writing style, and less strident in his speech. Often there is a distance between the writer’s tone and their personal manner. But the anger in Krugman’s book is inescapable, its pages suffused with contempt for the new style of Trumpian nationalism that has taken hold, not only in the US but also in parts of eastern Europe and — to some extent — Britain. Where has this new, alarming style of politics come from and why is it happening now?

“It’s a question my friends and colleagues debate quite a lot,” said Krugman. “Some of it’s been happening for a long time. The rise of Movement Conservatism in the US is a very big factor in it and that has been a long fuse that was lit with the Civil Rights Act.”

“But I think the financial crisis, in ways that go beyond the usual stuff that people talk about, did a lot to discredit elite opinion and views. If you were a white nationalist in East Europe, you might have been inhibited by the fact it was un-European to express those views and that the ‘Serious People’ in Brussels knew what they were doing and would frown upon you.”

“But by 2015 you understood that the ‘Serious People’ in Brussels had no idea what they were doing. Something like that happened in the US as well.”

In Krugman’s view, the perceived failure of the US “establishment”, which he said “set certain guard-rails on behaviour,” helped to open the door for irrationality. And to Trump.

“Even if Trump is defeated badly, the fact that America could elect someone like Trump is going to hang over America for ever. No one will ever fully trust US promises. No one will ever fully trust the US to follow international law either domestically or internationally. So we have forfeited a lot of soft power.”

“At some level,” he said, “something like Trump was coming. That it would be someone quite that crude was a surprise, but that fact — something like the authoritarian turn in US politics — that’s been baked in for a generation.”

It was the moment in the mid-90s when Newt Gingrich became Speaker of the House of Representatives that the rot set in. “The idea that someone like that could be in that position was as much of a shock in its way as the coming of Donald Trump. We’ve been moving steadily into unthinkable territory over the course of 25 years.”

He’s withering about the US media, especially hard-Right outlets such as Fox News. Its effect has been multiplied by the coming of social media, which makes it easier to spread rumours and conspiracy theories. “That has changed the way American politics works,” he said.

A lot of the anger associated with the US Right has been put down to the decline in traditional industries and the spread of the “Rust Belt”. What is the state of the US economy now?

“We have full employment or close to it,” said Krugman. “But if Republicans had allowed Obama to engage in the kind of deficit spending that Trump is engaging in, you could have had 4 per cent unemployment in 2014.”

Ah — so is Trump a Keynesian? Does his spending amount to a stimulus?

“It is,” says Krugman. “It’s a poorly-designed stimulus. The multiplier is clearly less than one on Trump’s deficits. With a well-designed programme you’d be getting twice as much bang for your buck. But it’s still a hell of a lot of bucks and it’s still giving the economy some boost.”

Krugman adds a note of caution: “It still in many ways doesn’t touch the left-behinders and it doesn’t bring back the jobs. To the extent that people want the manufacturing jobs of yore, they’re not coming back.”

“One of the frustrating things is that the places that are most pro-Trump also happen to be the places most reliant on the social safety net that Trump is planning to destroy.” He has in mind especially food stamps and Medicaid. “And yet people vote for a President whose budget, announced yesterday, would savage both of those programmes.”

There is a parallel with the UK, in that the places that voted Brexit tend to be the places that are most economically exposed to its consequences. “Most people are not economists and feel neglected by elites, though I have to admit it’s a puzzle why working class voters here [in the UK] and in the US don’t understand the obvious contempt that conservative politicians feel for them.”

And what about trade — the subject for which Krugman won his “Swedish thingy”. Does he think it’s possible for Britain to shift the bulk of its exports away from the EU to other trading partners?

“One of the best-attested relationships in economics is that trade between countries is pretty much determined by the size of their economies and how far apart they are. We call it the gravity relation.”

“It’s very hard to fight. Trade agreements can move it a bit, but the fact of the matter is Europe is right here and the US is 3,000 miles away and there’s just no way you can expect the US to really be a substitute for the European market and Europe as a source of supply.”

Krugman pointed out, tariffs between the UK and US are already very low, so having a trade agreement that, say, reduced tariffs from 2 per cent to zero would not make any significant difference. “What the EU does is it goes beyond free trade, and it’s a customs union, so it’s frictionless trade and I don’t think there’s any possibility of a customs union with the US.”

And from Trump’s political point of view, would there be any political capital to be won domestically by forging a trade deal with the UK?

“If you searched very hard for several weeks, you might be able to find one US voter who cared about that. We’re Americans. We barely acknowledge that the rest of the word exists and the idea that a trade deal with the UK would be a big deal for anybody — it’s just not going to happen.”

Is Trump going to win a second term? “Trump is still unpopular,” said Krugman, adding that though the economy is good, it’s not enough to get him back into the White House. “To have 3 per cent unemployment and [only] a 43 per cent approval rating is kinda amazing achievement in a way.”

“Trump just handed the Democrats a huge target with his budget, with huge cuts in healthcare spending. If the Democrats can make it all about how if you re-elect Trump he’ll take away your healthcare then they’ve a pretty good chance.”

“If they make it about capitalism, the system is rotten and we need to tear it all up, then they’ll have a Corbyn-type loss.”

Arguing with Zombies: economics, politics and the fight for a better future by Paul Krugman is published by Norton.

Member ratings
  • Well argued: 77%
  • Interesting points: 91%
  • Agree with arguments: 57%
17 ratings - view all

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