Economist and “New York Times” Op-Ed columnist explains why the middle class in the U.S. is disappearing.
New York Times Paul Krugman
Tavis: Tonight, though, I am honored and pleased to welcome Paul Krugman back to this program. The influential columnist is must-read copy twice a week “The New York Times,” of course. He’s also a professor of economics and international affairs at Princeton. His new book is called “The Conscience of a Liberal.” Paul Krugman, nice to have you back on the program.
Paul Krugman: Good to be on.
Tavis: Two things about this title to start our conversation. One, you’re not supposed to say that L-word, are you?
Krugman: Oh, no.
Tavis: And not boldly, like you have.
Krugman: I know. You ask people who are liberal, they say no. Then you ask them well, do you believe the government should guarantee healthcare to everybody and they say yes. So it’s a funny thing. I think most Americans are liberals, but they don’t know it.
Tavis: How do you read the retreat, as it were, from that word? We live in a society where language – obviously, words have meaning. There has been an all-scale, all-out retreat from that word, to say nothing of the notion of it.
Krugman: Well, I think it’s mostly the word got tied to civil rights, got tied to – and really, when people rail on about limousine liberals and all that stuff, it really has to do with racial politics, which plays a big role in the book.
Tavis: What makes the conscience of a liberal different than the conscience of a conservative? Their politics are different, I get. What makes the conscience different?
Krugman: Well, I think if you’re a liberal, if you believe that we all are, at least to some extent, our brothers’ keepers. If you really believe that we have a sumptuary responsibility to make sure that life is decent for everybody in America, that you believe that society out to be broadly shared, and you believe that you can’t have a real democracy unless you have a little bit, at least, of economic democracy.
Tavis: Your liberal conscience has had its greatest impact on your economic work, your economic philosophy, in what regard, in what ways?
Krugman: Oh, I think basically that what Franklin Roosevelt and Lyndon Johnson did is the best thing in America. That Social Security, Medicare, labor standards – the things that keep us from being the gilded age, from being capitalism, red in tooth and claw, and instead a more balanced system are what we need, and I want more of it.
Tavis: Some would argue, though, the good that those programs have done notwithstanding, one, that those programs are obsolete, that they’ve run their course, and number two, that even then, they’re government programs.
Krugman: Well, why is government a bad word? Government isn’t always good. I don’t know anybody who’s in favorite of government, who’s in the abstract. Although I know there are some people who are against government in the abstract, but I don’t understand why.
But why is Social Security? We’ve got a more turbulent labor market, jobs, corporations rise and fall, jobs are gone, and the one thing we have, the one security that we have, is the government will provide you with a minimum living standard in retirement. Healthcare. You’re not sure; it’s getting harder and harder to get healthcare through your employer.
At least Americans 65 and older have guaranteed health care. In every other rich country, everybody’s got guaranteed healthcare. So should we.
Tavis: I think we all accept the fact, professor, that government can’t do everything, but what ought the proper role of government be, as you see it?
Krugman: Government is there, first of all, to make sure that the free market works. So we don’t want government out there growing our spinach. We do want government in there making sure that the spinach isn’t contaminated. So you’ve got to have this thing to make the stuff work. And that applies to lots of things.
It applies to financial markets. We’ve had this terrible crisis now with the subprime loans that people can’t – that were sold on false pretenses and are causing a financial crisis. That’s because we allowed necessary financial regulation to slide by the boards.
We want government to provide a basic safety net. Ask Americans, do you think that your fellow citizens should go without necessary healthcare because they don’t have cash on hand, or that they should be financially ruined by misfortune, they’ll say no. (Unintelligible) should any child in America lack essential healthcare because his family can’t afford it? People say no, and that’s the appropriate role of government.
Not to mean that success isn’t rewarded and failure isn’t punished, but to put some safety net under our society.
Tavis: I could color this question ad infinitum, ad nauseam – I don’t want to do that, because I want to give you the opportunity to answer it the way you want to answer it, but I do want to ask where you see this conversation about the proper role of government going. There are any number of indicators, again, that I could point to on either side of this question about the fact that we’re going – I could argue that we’re going to be embracing government more and have a more liberal view of government.
I could argue we’re going to take a more conservative view of government, based on any number of factors. But that’s just me. What’s your sense of where this debate on the proper role of government is going in the coming months and years?
Krugman: I think we’re moving in a progressive or a liberal direction, partly because you can just look at the public opinion. Ask people questions. Some questions have been asked over the years and more and more, people are saying, “Well, I think the government ought to provide some security, the government ought to -“ public opinion in favor of a government guarantee of healthcare is stronger than it’s ever been.
And also, the right in this country has never really won elections on economic policy. It’s won them through what I call weapons of mass distraction. So, 2004, Bush ran against gay, married terrorists is the way I’ve been putting it. (Laughter) But the issue that they won on above all is race. Everything from Ronald Reagan starting his campaign in 1980 by going to Philadelphia and Mississippi where the civil rights workers were murdered and giving a speech on states’ rights, to the Willie Horton ads in 1988, and that’s losing its effectiveness because we’re becoming a better country.
Racism is by no means gone, but it’s weaker, and I think we’re a country in which those weapons of mass distraction don’t work so well anymore.
Tavis: And yet, your point notwithstanding, and I get it, but that said, when you think of Republicans and Democrats, I think the average American would put economic policy in their category, even though your point is that they have not won on economics, when you think of the race for the White House you tend to think that economic policy is a wholly owned subsidiary, the purview of, the bailiwick of the GOP, not the Democrats.
Krugman: Oh, that’s not the way – no polls that I’ve seen lately. Right now, if you look at the polls, the Democrats have got a decisive advantage on everything except national security, where it’s roughly equal. So no, the public likes – if you look at public opinion on the issues, it’s sort of to the left of the middle of the Democratic Party, and if you look at how the public rates it, economics really is a Democratic issue.
The public wants a direction. The public would like us to have more policies, more government support, a stronger safety net, and they’re even willing to pay more taxes to do it.
Tavis: So what, if anything, is encouraging to you about what you see now vis-à-vis the Democratic field raising this issue, getting traction on this issue, economics?
Krugman: Oh, it’s been – look, healthcare, which is an economic issue as well as a medical issue, the positions they’ve taken are more progressive than anything I thought was possible two years ago. Remember, two and a half years ago, we thought we were going to lose Social Security. Now we’ve got all three leading Democratic candidates proposing pretty good plans for universal health coverage. That’s a big step in the right direction, and I think it’s a winning issue for them.
Tavis: What is the primary factor or the primary factors driving this gap that continues to expand between the have-gots and the have-nots that you write so much about?
Krugman: I think it’s institutions and ultimately, politics. So the example I like to use is unions. Unions are a powerful equalizing force wherever they’re strong. The U.S. used to have a strong union movement. People say, “Oh, well, but the world has changed. There’s not a place for unions anymore.” But then you look at other countries – Canada. Canada in the sixties had the same unionization as the U.S., about 30 percent of workers were in unions. Canada still has a strong union movement.
The U.S., it’s been shrunk to a fraction of its former size and that’s because employers were basically given an open hunting license to bust union organizers, starting with Ronald Reagan. So it’s a political thing. It’s not everything. There may be other stuff going on. But if you really look at it, a lot of it is that look, the middle class society – I grew up in a middle class society. We don’t have one anymore.
That middle class society was created by Franklin Roosevelt. The economic historians call it the great compression. It was really only about 10 years, and the income differential has gotten a lot narrower. And I believe and I argue in the book that the great divergence that has taken place since the 1970s has a lot to do with politics, too.
Tavis: I take your point, but I want to dig a little deeper. I take your point about the fact that there is no longer a middle class, as there once was. What do you mean by that, though?
Krugman: What I mean is that it used to be there were very few people who were so rich that they were sort of out of the sphere of – not living in the same world as most people. It used to be that blue-collar workers with good jobs had houses that weren’t that much smaller, lived lives that weren’t that dissimilar to managers, and they weren’t in a completely different material universe.
That’s no longer true. Now you look and over the past 35 years, sort of the end of the great post-war boom, we’re not sure whether the typical family is any better off than it was, right? With all this stuff, computers, fax machines, Internet – all these things that have made us more productive have come along, and yet the gains have gone, the lion’s share has gone to the top couple of percent of the population so that middle class is not really sharing in the economy. That’s not a middle class economy.
Tavis: Why should I believe – never mind what you’ve said so far in this conversation – that in the most multicultural, multiracial, multiethnic America ever, where economic policy is concerned, that we won’t witness a country that turns more and more nativist every day as opposed to expressing the better angels of ourselves?
Krugman: Well, this is always the question, and the answer, I would say, is that if you look, there is a nativist element in the population, in the electorate. It’s the same element that was anti-African American. It’s the same people. The thing is, they’re a dwindling minority in this country. People are really much more open. You can just look at public opinion, not just on political issues but on social issues, and you find that it’s not paradise. There’s always going to be racism, there’s always going to be nativism. But it’s just less influential.
Look at California. We’re seeing in California – the attempt to have a sort of nativist backlash, Pete Wilson and all that. Got him one election, and then it turned out that actually, California has taken a definite progressive turn in its politics.
Tavis: This is an oversimplified question, but it really is at the heart of so much of what’s talked about in this book, if I can paraphrase it this way, and that is that whole notion of whether it’s race or if it’s class. We’ve talked about both in this conversation, so let me ask a brilliant professor an oversimplified question. At the end of the day, what is it about, going forward? Is it about race, or is it about class?
Krugman: Oh, see, what I think happened to this country is we have a political movement that is about class but that uses race to win elections. So I don’t think Ronald Reagan was a racist, I don’t think George W. Bush is a racist, but they’ve used race as a wedge issue, so the leadership – again, the 2004 election was about things – people voted on the basis of sort of emotional issues. Gay marriage, terrorism, and the exaggerated fear of terrorism. It’s a real problem, but the exaggeration I think has a racial element. Dark-skinned people.
That’s how they win elections, but what does Bush do as soon as he’s won? He says, “And now we’re going to privatize social security,” and that’s a class issue. So no, the management cares about class, but they get the base to vote for them by talking about race.
Tavis: He’s brilliant and again, must-read copy at least twice a week in “The New York Times.” I like him for a lot of reasons; tonight, I really like him because he’s just so unafraid to even say the word liberal, boldly using it on the cover of his new book. By Paul Krugman, the new one, “The Conscience of a Liberal.” Mr. Krugman, as always, good to see you, man.
Krugman: Good to see you.
Tavis: Glad to have you on.