E-mail a friendPaul Krugman
airdate October 21, 2008
Called "the Mick Jagger of political/economic punditry," Paul Krugman is an economist, professor and New York Times op-ed columnist. Now at Princeton, he's taught at Yale, MIT and Stanford. He's also been a consultant to the World Bank, International Monetary Fund and the U.N. and, during the Reagan administration, served on the Council of Economic Advisers. Krugman has won numerous awards, including the '08 Nobel Prize for economics, and is the author/editor of 20 books and more than 200 professional journal articles.
Nobel Prize-winning economist describes the current financial crisis and explains how it will impact the presidential election. (2:12)
Full interview. (9:56)
Paul Krugman
Tavis: Paul Krugman is a widely read columnist for "The New York Times" and a professor of economics at Princeton. Last week he was named winner of this year's Nobel Prize in economics for his work on world trade patterns. He's also a bestselling author whose latest book, "The Conscience of a Liberal," will be out in paperback come January. He joins us tonight from New York. Professor Krugman, welcome back, and first of all, congratulations, sir.
Paul Krugman: Well, thank you. (Laughter) Yeah, it's quite unreal, still.
Tavis: Yeah, I was about to ask - is it starting to settle in yet?
Krugman: No, I think probably one of these days it'll be old hat. I'll go straight from it not being real to being old hat - no transition.
Tavis: Just so I can get my mind right before they call me to tell me that I've won the Nobel Prize in something, tell me how this goes down. Do you get forewarning? How does one get notified that one has won the Nobel Prize?
Krugman: Your cell phone goes off just before you're about to step into the shower, 20 minutes before it goes worldwide. So no, no forewarning, no hint; I had no notion that it was on.
Tavis: For those who don't understand exactly what your work is in economics, for those lay persons watching the program, tell me what it is that the prize was given to you for this year, specifically?
Krugman: It was for my work on international trade and economic geography. International trade obviously being about why the countries ship so much stuff back and forth, and what I and a few other people did, but I got the prize for whatever reason, was to say look, a lot of world trade is not you've got a tropical climate and you grow bananas and we've got a temperate climate, we grow wheat, but a lot of it is the sort of historical accidents that build on themselves.
Somebody gets a head start in an industry, that ends up being an advantage that persists, and you get all this trade between even similar countries. Economic geography - why are there 60 million of us crowded into a narrow stretch of the East Coast? Trying to figure out what it is, and really, each of us is there because the other 60 million people are there.
And so it was all these things about basically where is stuff done, who ships what to whom, and a really different take on that from what people have been saying for the previous hundred years.
Tavis: You are, obviously, an economist and now a Nobel-winning economist, and yet most of us know you for your writing, certainly in "The New York Times." I don't know that you had ever given thought to whether or not you might be considered one day for the Nobel Prize, but certainly given that some find your work controversial, did that ever make you think that that was never in the offing for you because of the controversy surrounding your writing sometimes?
Krugman: It occurred to me that I might be making myself a little too hot to handle. That strong views, no matter how much I think they were right, were not probably the best way to curry favor, to make it easy to get a prize for previous work. But I said to myself, "Then this is no way to live." You've got to do what you think is right, regardless.
Tavis: You've been so courageous down through the years in writing about, speaking on behalf of, and defending every chance you get, the poor - the working poor, the very poor, and raising those issues wherever possible. Where does that come from, is that part of your conscience, to borrow from your book title, or is that just where your work has taken you?
Krugman: No, there's nothing that says that you have to - the work takes me in a certain position. The work - as an economist, I could see that a lot of the people on the right, the people who didn't want to do this stuff, were being deceptive, dishonest about some of the arguments they made for low taxes on rich people or privatizing Social Security and that sort of thing.
But a lot of it is just - it's values. I think I - I have an image of the kind of society I want to be part of, and that kind of society doesn't include a lot of people who are in real desperation unnecessarily.
Tavis: What kind of society ought we be - since you went there, let me follow you down this path. What society ought we be trying to create?
Krugman: Well, I like to believe I want to be part of a society where I don't feel that any of my fellow citizens, and ultimately any of my fellow human beings, are lacking in the essentials. I don't want to, when I'm having my nice glass of wine with dinner, think to myself, well, there's somebody five miles, 10 miles from me who doesn't have enough to eat or can't afford basic medical care.
And of course I do live in that kind of society right now where that happens. I can go not very far, even though I live in a neighborhood, always not very far away there are a lot of Americans, people with the same rights, citizenship, that I've got who are living lives of desperation, and it shouldn't be that way.
Tavis: There are some, though, as you know, economists and others, even politicians, for that matter, who think that's the way of the world - that some have, some don't; some have more, some have less, and the market works all this out one way or the other.
Krugman: Well, we don't have to be Cuba, right? Some people are going to have more; some people are going to have less. Some people are going to - I don't begrudge people who invent something and get a lot of money for it and then live in a big house, that's okay. But I don't think it's right when you could - I don't think it's right that any infant should grow up without adequate medical care, and yet that happens all the time.
I don't think it's right that somebody who has the misfortune of losing his job should have that misfortune compounded by losing his health insurance. And these are things - we already know that it doesn't have to be this way. We already know - universal healthcare, one of the things I've been pushing for - every other wealthy country has it. It's just an American choice, and a bad choice, I think, that we don't have it, and that's a choice we have to change.
Tavis: Beyond the issue of health insurance, we live in a country where this gap - you're the economist, not me, but as I see it, at least between the have-gots and the have-nots continues to widen. In essence or in short, why is that the case in our country?
Krugman: Well, I argue - this is one of the arguments in "Conscience of a Liberal," the book, that a lot of it is ultimately political. That American income and equality started growing just about the same time that American politics shifted to the right, and some of it is easy to understand. Our taxes, even as people - the number of really, really rich people in America grew, the tax rates on the really, really rich dropped dramatically.
Other things are more subtle. Corporate CEOs - used to be when a corporate CEO was being paid 60 times what his average worker was paid, there'd be a fuss about it. The union would complain, there might be congressional hearings. Nowadays, if a corporate executive is paid 1,000 times what his typical worker is paid, well, the union doesn't object because the unions were largely broken in the 1980s with the help of the Reagan administration, there are no congressional hearings, or there weren't at least until recently, because hey, the Republicans controlled Congress.
So I think we created a political climate that was favorable to a highly unequal society, and that is probably the biggest explanation of why we became such an unequal society.
Tavis: Were you a member of the House or the Senate when this bailout plan or rescue plan, depending on one's politics and one's penchant for wording - bailout, rescue - were you a member of the House or the Senate, that issue notwithstanding, would you have voted for that bailout plan?
Krugman: That was an agonizing question, because I wasn't actually a member of a House or the Senate, but I was talking to them and writing about it. And there are two opposing things. On the one hand, this is a real financial crisis. This is more like the 1930s than I ever expected to see in my lifetime, so this is the real thing, and it's scary.
On the other hand, the original bailout plan was terrible. It was unacceptable. So in the course of a lot of negotiations, the Democrats in the House and Senate managed to extract out of Henry Paulson, the Treasury secretary, managed to extract a bill that was better, but still not good. And so there was this question of what do you do?
And I came down finally, saying better to pass it, even though it's a bad bill, than not to, because the crisis is so bad. That has turned out to be an okay move, because under further pressure the actual implementation is becoming closer to what I wanted. Instead of buying the toxic waste off the financial companies no questions asked, now what we have is the U.S. government buying an ownership stake in these companies, which is what they should have been doing all along.
And they've been using this bill to do it, so it turns out that it's not so bad. But that was a really agonizing thing - people were saying to me on both sides, "If you think this is so important, why are you being critical, and if you think this is such a bad bill, why are you saying vote for it?" It was a tough one that was forced on us by lousy leadership.
Tavis: I've got about 45 seconds here to go. Tell me how much worse you think it's going to get before it gets better, and whether or not in the next couple of weeks this campaign for the White House is, in fact, going to turn on this issue?
Krugman: I think it's going to turn on this issue. I think the economy has focused people's minds. No more nonsense - let's talk about what - who do you really think is - do you want the guy who's going to be more Bush policies, or do you want the guy who isn't? But it's going to get worse for quite a while. This economy is going to deteriorate well into next year, and it's probably not going to make a big turn for the better for a long time.
Tavis: He is the winner of this year's Nobel Prize in economics, Princeton professor Paul Krugman, of course, columnist for "The New York Times." His book, out in paperback in just a couple of months, is "The Conscience of a Liberal." Professor, always glad to have you on. Again, our deepest and sincerest congratulations on your prize this year, sir.
Krugman: Thank you so much.
Tavis: Glad to have you on.
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