Paul Krugman on Financial Reform

Paul Solman: At January’s annual economics meeting in Atlanta, we sat down one-on-one with a variety of intriguing economists, none of whom I’ve known longer than Paul Krugman.

I first interviewed him in the early 1980s, back when the NewsHour was 30 minutes long and I was working locally at WGBH, Boston; Krugman, at MIT. He surprised me from the get-go, expressing great skepticism at the accepted wisdom of the era: that Japan’s so-called “industrial policy” of managing its economy would prove beneficent.

“Why should we assume a bunch of bureaucrats have special insight into economic policy?” he asked on camera (wording approximate). “I don’t.”

Here, he weighs in on an especially timely topic, given the Financial Crisis Inquiry Commission grilling the heads of the nation’s biggest banks yesterday and the heads of the FDIC and SEC today: What should we do about our financial institutions? How should we approach reform?

Also, you can watch the Shultz piece I mention in the interview here.