Paul Krugman, New York Times Columnist and Author
of "The Great
Unraveling: Losing Our Way in the New Century"
A BUZZFLASH INTERVIEW
BUZZFLASH: Many of our readers don't realize that
you are an economics professor at Princeton. How did you come to
write a column for The New York Times op-ed page?
KRUGMAN: Well, they just called me out of the blue.
Actually it was
Tom Friedman who acted as intermediary, because I'd met him. But
was just out of the blue. It was 1999, and at the time, it seemed
like our problem was: "How do we deal with prosperity and
interesting things that were happening in the business world?" They
thought that they needed somebody to write about that, and somehow
had learned that in addition to regular professor-type stuff, I'd
actually been writing journalistic pieces for Fortune and for Slate,
and they asked me to come on. It seemed like it might be interesting and
fun, and of course we figured that the U.S. policy would be sensible
and reasonable, and I'd be writing mostly about disasters
elsewhere of the new economy. And what do you know? It turned out
be something quite different from anything we imagined.
BUZZFLASH: Your focus is often on international trade
and international monetary systems.
KRUGMAN: Yes, the professional work is basically about that.
BUZZFLASH: You're not a full-time journalist. Do
you think that gives
you a bit of distance from both the media and from politics when
write your columns?
KRUGMAN: What it means is that I don't have any of
the usual journalistic or the journalists' incentives. I'm not
part of the
club. I'm not socially part of that world. I don't go to Washington
cocktail parties, so I don't get sucked into whatever kind of
group-think there may be, for better or for worse. I don't
necessarily hear all the latest rumors, but I also don't fold in
the latest view on how you're supposed to think about things.
It also means that I'm moonlighting. This is not
my career, or I didn't think it is, anyway. And if it means that
if I'm frozen out,
if the Times finally decides I'm too hot to handle and fires me or
whatever, that's no great loss. So I'm a lot more independent than
your ordinary average journalist would be.
BUZZFLASH: You make the case that a revolutionary,
right wing movement has set out to transform the United States,
succeeding. So much of the print media and so many television
broadcast journalists have become more like stenographers for the
official government spin than probing journalists. What's your
KRUGMAN: Well, a couple of things. The first is that
a good part of
the media are essentially part of the machine. If you work for any
Murdoch publication or network, or if you work for the Rev. Moon's
empire, you're really not a journalist in the way that we used
think. You're basically just part of a propaganda machine. And that's
a pretty large segment of the media.
As for the rest, certainly being critical at the
level I've been critical -– basically saying that these guys
are lying, even if it's
staring you in the face –- is a very unpleasant experience.
You get a
lot of heat from people who should be on your side, because they
accuse you of being shrill, which is everybody's favorite word for
me. And you become a personal target. It can be quite frightening.
I've seen cases where a journalist starts to say something less than
reverential about Bush, and then catches himself or herself, and
says something like, "Oh, I better not say that, I'll get 'mailed.'" And
what they mean by "mail" is hate mail, and it also means
somebody is going to try to see if there's anything in your personal
history that can be used to smear you.
It's like shock therapy, aversion therapy. If you
touch these things, you yourself are going to get an unpleasant,
painful electric shock.
And most people in the media just back off as a result.
BUZZFLASH: Bottom line: It's just easier not to be critical.
KRUGMAN: Your personal life, your professional life,
is much easier if you oscillate between reverential pieces about
the commander in
chief and cynical pieces which equate minor foibles on one side with
grotesque lies or deceptions on the other.
BUZZFLASH: Economic decisions are certainly politicized,
but you do
have numbers -– you have the advantage of showing what works,
doesn't, which numbers add up, and which don't. It seems like so
of the criticism you get is sort of dismissive, but no one challenges
you on the substance of the arguments you're making.
KRUGMAN: Oh, I get challenged all the time on the
substance, but usually by people who have no clue, or who are just
anything. So if I say the number is 2.15 and it's actually 2.143,
someone will come after me, saying: "Lie, lie – it's inaccurate!" So
that's what's going on. But the amazing thing about this is that
we're not talking about close calls here. When you talk about [Bush]
administration policy, it's not a case of, well, "OK, maybe
disagree with your model, but according to your model, this policy
will do what you say it will." These guys are insisting all
that two minus one equals four. There isn't any reasonable argument
in their favor, but there's a lot of power in their favor.
BUZZFLASH: There's a wonderful chapter in the book
of your collection of columns on that theme. Let's focus on something
specific -– the unprecedented deficit. Last week, I think
it was projected at nearly $500 billion, staggering even beyond
Bush Senior's records in the
early '90s. How is it that this has not become more of an issue,
why don't more Americans see this as gross mismanagement of the
KRUGMAN: Well, for the general public, it's very
abstract. It's very
hard to understand. Understandably, there are a very small number
people who sit down and do the accounting, and say, "Gee, how
going to pay for Social Security in the next decade, given this?" It's
not quantum mechanics; it's not hard stuff, but it does take some
attention. The truth is, when I started doing this column, I
wasn't a U.S. budget expert at all, and I had to put in a lot of
learning how to read those numbers. And you don't expect the guy
the street to understand that.
As for the media, I guess the point is that not very
many people understand this stuff. And those who do –- the idea of saying, "My
god, these guys are looting the country" -– that's uncool.
what you want to do. Right now there's a column in the latest
Newsweek entitled, "The Brainteaser of Deficit Math," which
confirms everything I've been saying all along, that this is wildly
irresponsible and it's actually unsustainable. But the tone is kind
of distant and cool. I don't know whether he actually doesn't feel
any outrage, or just feels he shouldn't do that.
BUZZFLASH: Two points to add to that is during the
last press conference that Bush held before he went off to Crawford,
was asked once or twice about the deficit by a couple of reporters.
And he deflected the questions and kept talking about jobs. You
tell there was a clear strategy to not talk about the deficit.
Instead, Bush talked about something tangible to make it appear to
the American public that Bush was concerned about creating jobs.
Do you think part of the reason that people don't
hold the Bush administration more accountable is that they basically
the benefit of doubt? As if to say, "Surely someone in power
know what they're doing; there has to be logic to the madness and
order in the chaos."
KRUGMAN: I waver on that. Sometimes I think that's
what people think. Certainly, I think that's the case with a lot
of the media. The
concept that the president of the United States is flat-out lying
about the sustainability of his own economic policy -– that's
high a hill for them to climb. And I guess the general public tends
to give him the benefit of the doubt.
But there's a definite tilt in the way these things
are covered and
perceived. I think the average voter in California is feeling
outraged about the state's $38 billion deficit, and then you stop
think for a second. You say, wait a second –- first of all,
$38 billion. It turns out that was a two-year number, and this year
they've closed the books. And it's only $8 billion for next year. And,
anyway, that number should be as abstract and remote from the ordinary
residents of California as the national budget deficit is
from the ordinary American.
But there's a machine that keeps on beating it out, saying Davis
bad; Davis is irresponsible; the deficit –- he lied to us.
press picks it up, and, in turn, it makes its way to the public.
you have a situation in which mainstream publications continue to
report and hammer on Davis' $38 billion deficit, which isn't even
remotely true, while Bush, for the most part, gets a free pass on
$500 billion deficit which is absolutely real.
BUZZFLASH: In your book, you give special attention
to the origins of
the California energy crisis. Who would you say is to blame for that?
KRUGMAN: What actually happened in California was
that the system was
a little short on capacity –- not actually less capacity than
but the usual margin wasn't there because of a drought and a couple
of other things. That created a situation in which energy companies
could game the system by strategically taking a plant offline or
scheduling a power transmission in such a way that it could be
guaranteed to create congestion on the transmission grid, and a whole
bunch of other strategies. Basically by pulling power off the market,
they could drive prices up.
So what you had was a basically normal, slightly
tight power situation that was transformed into a wild chaos of
blackouts, and prices up to 50 times what's normal due to companies
gaming the system. It wasn't some vast conspiracy. It was mostly
companies seeing what they could do individually. And it was created
by a badly conceived deregulation scheme that set the system up for
this to happen. So that's the story, and if you have to say who's
blame, well, companies were out there maximizing profits quite
ruthlessly, but that's to be expected. You want to blame Pete Wilson
for setting up the system where that could happen, and you want to
blame the energy regulators, which basically means the feds, for
refusing to do anything about it.
BUZZFLASH: You had a wonderful column on Arnold Schwarzenegger,"
Conan the Deceiver," and what little details he's revealed
economic plan. I think it must be maddening for you to actually
understand what the real-life consequences are of the empty rhetoric
that politicians make.
KRUGMAN: Well, I've given up a lot to do this column.
My habitat before was not just academics, but I was part of the
high-level, very genteel policy circuit -– you know, finance
ministers, economists and big bankers, sitting around tables with
glasses of mineral water, and having high-minded discussions about
global policy. I'm very much part of that, or I was very much part
that comfortable world where the working assumptions –- the
if you like -– is that we're all men of good will, and it's
intelligent and that the issues are deep. And if there are divisions,
it's because there are really two sides.
And then here I am in the middle of this, trying
desperately to get a
few more people to notice that we have wildly dishonest,
irresponsible people making policy in the world's greatest nation.
And currents of abuse are coming in the mail and over the e-mails,
we saw. There are many mornings when I wake up and say, "Why
doing this? But you got to do it."
BUZZFLASH: Grover Norquist, head of Americans for
Tax Reform and a
board member of the National Rifle Association and GOP advisor, made
a comment that he wants to shrink the size of the federal government
so small that he could drown it in a bathtub. When you look at
Bush economic policy, are we dealing with an ideology to destroy
social programs and the federal government? Or is it mismanagement?
KRUGMAN: I think you have to think of this as there's
more than one
player in this thing. If you ask Norquist or the Heritage Foundation
about where the economic and social policy intelligentsia really
stands, their aim is to roll us back to Herbert Hoover or before.
Norquist actually thinks that we've got to get back to before the
progressive movement –- before the McKinley era, which actually
one of Karl Rove's guiding lights as well. So there's definitely
an important faction in the Bush administration and in the Republican
Party that really wants to unravel all of this stuff and basically
wants us to go back to a situation where, if you are unlucky, and
don't have enough to eat, or you can't afford medical care, well,
that's just showing that you weren't sufficiently provident. And
then, for these people, there would be no social safety net
Other people in the party, and other people in the
deluded themselves into thinking that somehow this is all going to
painless, and we're going to grow our way out of the deficit. Other
people really don't care about any of that and are viewing their
alliance with these people as a way to achieve their social goals
-– basically roll back the revolution in social
mores over the past few
So there is a coalition, but there's no question
that if you ask what
do the core ideologues want, the answer is they want to roll it all
back. If you looked at what the Heritage Foundation says, they
the terms "New Deal" and "Great Society" as essentially
Everything Franklin Roosevelt or Lyndon Johnson did to provide a
little bit of a cushion for Americans having bad luck is a bad thing,
from their point of view.
BUZZFLASH: As a professor, if you were giving a lecture
and you had
to define the economic policy of the Bush administration, could you
get your arms around it? How would you define it?
KRUGMAN: There is no economic policy. That's really
important to say.
The general modus operandi of the Bushies is that they don't make
policies to deal with problems. They use problems to justify things
they wanted to do anyway. So there is no policy to deal with the
of jobs. There really isn't even a policy to deal with terrorism.
It's all about how can we spin what's happening out there to do
we want to do.
Now if you ask what do the people who keep pushing
for one tax cut
after another want to accomplish, the answer is they are basically
aiming to create a fiscal crisis which will provide the environment
in which they can basically eliminate the welfare state.
BUZZFLASH: Talking about perception, why is it, even
after the staggering deficits, and three million jobs lost, when
you look at
the polls, ordinary people perceive Republicans as better at managing
the economy and the federal budget than Democrats. Even though we're
just starting to understand just how good the Clinton-Gore economic
policies were, the false perception still exists the Republicans
handle the economy better.
KRUGMAN: Again, I think it comes back to press coverage.
Just this weekend, I was looking at something: There's an enormous
right now involving Boeing and a federal contract, which appears
have been overpaid by $4 billion. The Pentagon official who was
responsible for the contract has now left and has become a top
executive at Boeing. And it's been barely covered in the press –-
couple of stories on inside pages. You compare that with the White
House travel office in 1993. There were accusations, later found
be false, that the Clintons had intervened improperly to dismiss
a couple of employees in the White House travel office.
That was the subject, in the course of one month,
of three front-page
stories in the Washington Post. So if people don't understand how
badly things are being managed now, and have an unduly negative
of how things were managed in the Clinton years, well, there in a
nutshell is your explanation.
BUZZFLASH: If you had to make a projection, do you
think Clinton's presidency –- specifically his economic policy
and what he did in
terms of generating jobs and creating surpluses –- will survive
his legacy, versus what happened afterwards with the Bush
KRUGMAN: Well, I think Clinton's successes will be
the scale of the disaster that followed. Not that Clinton will be
blamed. I think historians will say, "Gee, there was a sensible,
basically well-intentioned government that dealt successfully with
bunch of crazies."
A lot of good things happened in the 1920s, although
there were a
couple of really bad presidents. But all of that now, in historical
memory, is colored by the realization of what followed afterwards.
I think that with the looming disasters of the budget
on foreign policy –- and the things that really scare me,
which I know we're not
going to get into but let's just mention the erosion of civil
liberties at home -– I think that, in retrospect, this will
in terms of how did the country head over this cliff. I hope I'm
wrong. If there's regime change in 2004, and the new man actually
manages to steer us away from the disasters I see in front of us,
then we'll probably be talking a lot about the long boom that was
begun during the Clinton years, and how it was resilient, even to
episode of incredibly bad management.
But I don't think that's the way it's going to play
out, to be
honest. Whatever happens in the election, I think that we've done
extraordinary amount of damage in the last three years.
BUZZFLASH: Looking just at the economic impact of
Iraq, how much of a strain will that continue to be?
KRUGMAN: Well, there are levels and levels. I think
Iraq is going to
cost us $100 billion a year for the indefinite future. Now at one
level, you can say, well, that's only about 20 percent of our budget
deficit, and it's only about 5 percent of the federal budget. But
the other hand, it's being added onto a very nasty situation. It's
little unpredictable. I don't know how much collateral damage Iraq
going to inflict. At the rate we're going, it's clear that unless
something happens soon, we're going to have a much bigger Army.
may seem like we have enough troops, but I've been talking to people,
including officers, who are just crying about what they see as the
degradation of the Army's quality because of all of this.
Right now, I'm trying to understand what a petroleum
is telling me, when he says that some of the market futures suggest
that the market is pricing in about a one- in-three chance that
unrest in Iraq spreads to Saudi Arabia. And if that happens, of
course, then we're talking about a mammoth disaster.
BUZZFLASH: I've got to say I don't know how you sleep at night.
KRUGMAN: I have a little trouble, to be honest. It's
this funny thing: I lived this very comfortable life in a very
town, with nice people all around. And life is good. But some of
-– not just me, but a fair number of people, including my friends
we've looked at the news, and we sort of extrapolate the lines
forward. And there's this feeling of creeping dread.
BUZZFLASH: James Carville, I think, called you courageous.
just call it like you see it? Do you just look at the numbers and
tell people what the numbers tell you?