Nobel Prize-Winning Economist Paul Krugman on Retiring from NYT

CHRISTIANE AMANPOUR, CHIEF INTERNATIONAL ANCHOR: And now, a conversation with the Nobel prize winning economist, Paul Krugman, who’s written his last column for The New York Times, after 25 years of sharp and often indispensable takes on major issues that shape America and the world. He says he sees an erosion of optimism. The cause, collapsing, trust in elites and institutions. And he joins Michel Martin with a fascinating look back and also to discuss what lies ahead.

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MICHEL MARTIN, CONTRIBUTOR: Thanks, Christiane. Paul Krugman, thank you so much for joining us.

PAUL KRUGMAN, FORMER OPINION COLUMNIST, THE NEW YORK TIMES AND NOBEL LAUREATE, ECONOMIC SCIENCES: Great to be on.

MARTIN: Well, congratulations on this chapter of your very distinguished career. Congratulations on that.

KRUGMAN: Well, you know, I’m not retiring from the world, but I have retired from The Times, and I’m now free to — I actually do have a newsletter up and running. And I think there’ll be plenty to write about in the next few years.

MARTIN: You’ve written about everything from, you know, globalization to financial crises, to politics, to public trust. How did you decide what you wanted to write about?

KRUGMAN: It’s kind of a what is looking important in people’s minds where I think I can add some value. So, that’s — and that can be — and occasionally, you know, there was a period, I weighed in on the Iraq war, which was definitely not anything I had expected to be doing, but nobody else was kind of saying the obvious, which was that this was a very, very dubious cause for war. And so, I felt I needed to say that. But for the most part, it’s whatever comes up. And, you know, when the financial crisis came along, I have to say, horrible as it is, that I was actually having — that was a great time in my life because it was a perfect convergence of my academic work and my popular writing. This was something, in a way, that people like me had been warning could happen, had been ready to talk about, and there it was. And then, it became the question of, OK, how do you explain that without any technical jargon in 800-word chunks?

MARTIN: I was thinking about a recent column you wrote about tariffs. You wrote how Trump’s radical tariff plan could wreck our economy, and you go through all the cons. And then, the last line, for people who haven’t read it, is — and this is not a spoiler alert, you said, pros — your last line is pros, I can’t think of any. And I just wondered if there was ever a kind of a feeling of, you know, if I could only have been more persuasive.

KRUGMAN: I think I’m realistic about that. You — you know, Times has an immense readership, which means that it probably reaches less than 1 percent of the U.S. population.

MARTIN: True.

KRUGMAN: People’s beliefs on many subjects are just not very moveable, no matter how good your argument is. I mean, that’s — and I learned that a long time ago, long before I even wrote for The Times. So, I — you know, it can be frustrating. You can see something, but no, when we had the debate over social security privatization in 2005, I don’t know if people even remembered that, but that was, you know, George W. Bush having won re-election claim that he had a mandate to privatize Social Security. And I was part of the group of people saying, this is a really, really bad idea. And I was absolutely shocked when the push failed, because that was the first policy debate where my side had actually won.

MARTIN: You have been critical equally of initiatives on the Democratic side — Democratic/progressive side, when you thought they were ill considered and didn’t go far enough. And I wondered is that harder in a way?

KRUGMAN: That hurts much more. I mean, I was practically tearing my hair out. You can go back and look at what I was writing just before and just after President Obama took office, and I was tearing my hair out over the obviously, seemed to me, inadequate size of his economic stimulus plans and even participated in meetings with government officials, and they didn’t do it. And so, no, it hurts much more when you are — I mean, you know, I have no illusion that anything I write is that are going to persuade Donald Trump of something, but when you fail to persuade Barack Obama, it’s — it hurts more.

MARTIN: So, let me go back to when you wrote your final column for The Times. You look back at your first column.

KRUGMAN: Yes.

MARTIN: And you talked about the optimism of the early 2000s and you contrasted it with today’s resentment and anger. And, just if you could, for people who haven’t read it, why do you think that is? What do you think happened?

KRUGMAN: I think a large part of it is that the people and institutions that we looked up to just kept failing us. In 2000, if top people in the national security sphere told us that another country had weapons of mass destruction, the idea that they might not be leveling with us, that they might be taking us to war on false pretenses was inconceivable. I mean, I did conceive of it, but I got an amazing amount of pushback from people saying no. Are you really saying that a president of the United States would take us to war for bad reasons? And of course, so it turned out. People thought that people running the financial, running the financial regulators, economic policymakers, and the bankers themselves knew what they were doing and could be trusted. And then, came this, you know, horrific financial crisis, and it turned out that nobody knew what they were doing, and a fair number of people were basically, running scams, you know, and down the line. I talk a lot — I talked in the column. It’s one of those — you know, I am to have an international focus and I spend a lot of time in Europe, know a lot of Europeans and the creation of the Europe was supposed to be a wonderful event, it supposed to bring Europe together. And in the end, you know, there was a euro crisis, which the currency itself survived, barely, but the optimism, the faith in Europe’s future did not. And again, this was all of the great and the good. We’re telling Europeans we have a — this is a fantastic idea. Trust us. And so, you know, there’s accumulation. And I think it’s also — it’s something I probably should have said in that column is the fact that nobody seemed ever to have paid a price. You know, that in the ’30s, you know, bankers got hauled off to jail. In the aftermath of Iraq, there were plenty of arguments that said that people should at the very least be paying some kind of personal price for having misled us into war. And nobody ever did. And I think that does contribute also to the feeling that the system is rigged that you can’t trust the elites.

MARTIN: It’s interesting because people used to look back at the Vietnam era and, you know, the ’60s, which a very fractious time, you know, in American life. The violence in the streets, right? You know, targeted assassinations, millions of dollars in property damage from people just, you know, furiously lashing out, and the Vietnam War and it became very clear very soon, that there were — you know, that false statements were made in connection with that conflict, sort of, too. But I’m just curious of why you think it is that, in your sense of it, that we kind of — as a country, kind of clawed our way out, but then after the 2000s, have not been able to, and I’m just curious why you think that is.

KRUGMAN: Well, first of all, it did take a while. I mean, if we’re thinking of, you know, when did America get over Vietnam syndrome? They probably wouldn’t be until the 1980s. But the mystery I find looking back is why — in some ways, why elites were as willing to — if not exactly be held accountable, at least to allow the democratic process to work? I mean, there were — you know, there were a lot — why during the Gilded Age did plutocrats, despite all of their wealth, they didn’t actually try to subvert elections? And I don’t — I’m not sure why there was more restraint on the part of the powerful in the past. But, you know, if, Watergate would barely register as a scandal these days, and I don’t know why.

MARTIN: You also wrote in your first column that imperialism and saber- rattling nationalism were out of style in 2000. But today, nationalism is surging globally. Do you think it’s part of the same phenomenon, people think, well, you know, elites can’t be trusted, globalism can’t be trusted, so stick to our knitting here? What’s your thinking about it?

KRUGMAN: Well, yes. I mean, part of it was that we did have what these elites that we used to trust did, and especially the U.S. political elite did was we kind of were a benevolent hegemon. I mean — and everybody can tell you about all the outrageous things that were done when the United States was the dominant power of the world. We can talk about 1973 in Chile. We can talk about a lot of horrible things that the U.S. tolerated or even encouraged. And yet, overall, for countries that effectively were imperial powers, the United States behaved incredibly well for many decades. And now, we have both somewhat lost relative power and also just basically lost our own sense of benevolence. And so, stuff breaks out. And so, we have — I mean, the war in Ukraine a massive conventional war that actually, in many ways, despite all of the high technology, resembles World War I more than anything else, who thought that was possible in the 21st century? And yet, there it is.

MARTIN: So, I want to go back to your core discipline, the economy. In 1998, you wrote a groundbreaking paper about how central banks struggle to manage the economy when interest rates hit zero. I want to go back to the fact that you — as you pointed out, really, at the beginning of our conversation, that this country has substantially avoided recession. And I just think — why do you think that is?

KRUGMAN: Here’s the, you know, deeply unpopular opinion that will, I think, become orthodoxy a few decades from now, which is that Biden and his team actually managed the economy extremely well. It’s going to be like Harry Truman’s. There’ll be a resurrection of his reputation. Because they learned from the mistakes. Obama went too soft, too weak on the economy in 2009. And as a result, it took years to recover. And Biden said they understood, which Obama didn’t, that they really had one shot at taking strong measures. And so, they did, they spent a lot of money, which temporarily boosted inflation, although in the end, cumulative inflation in the U.S. is similar to that — of the whole rest of the world. But they really did put money behind, you know, Building Back Better was the slogan, but building back on spending. And I think that is the secret, that there were other things that went right, but the fact of the matter is that the United States — the administration and the razor thin Democratic majority in Congress said, OK, we have a crisis. We are going to throw a lot of money at it because this is our one chance. And in retrospect, it worked. It worked in every respect except politics.

MARTIN: And why do you think that is?

KRUGMAN: I mean, there is some — if you look at, you know, who voted which way in the election, basically people who pay attention to the news supported Harris by a strong margin, and people who don’t supported Trump by a strong margin. So, a lot of it is just plain. It didn’t filter through. And look, but a little bit more to less contemptuous, so — if you like, you know, that can come across as a really talking down to people, which I try to avoid doing, but the — we know, this is one of those things that’s been documented again and again, if prices go up and wages also go up, people think that they earned the wage increase and that the price increase was done to them. And the — you know, which is not the economist model. We think about wage price spirals and think of them as being kind of related. And — but we did have a shocking, fairly brief, roughly two-year period of elevated inflation, which was probably not even U.S. policies because it happened everywhere. It was as the snarls and supply chains as the — we emerged from COVID. But people felt angry. If people — you know, if we judge by consumer spending, people were doing OK, they actually — incomes adjusted, inflation were up. People had — you know, the — just now traveling seems like everybody in America has bought an airplane ticket lately. And the — so, the objective measures of consumer health are fine, but people feel that they may be personally doing OK, but that’s thanks to their efforts and the government, whoever’s in power, is responsible for the fact that things cost so much more than they did a few years ago. I mean, try and find yourself a first world government that is not deeply unpopular right now.

MARTIN: That’s true.

KRUGMAN: Right? If we’re watching the implosion of Justin Trudeau in Canada. We’re watching — we just saw the conservatives in Britain suffer a humiliating defeat. Olaf Scholz has just lost all control of Germany. You go down the list and every government — and what’s really funny is since it’s all the same thing, since everybody faced this burst of inflation, you would think that people would look around and say, well, it can’t really be this government’s fault if the same thing is happening in every country around the world? But that’s not — you know, most people don’t look at that.

MARTIN: They don’t look at it that way. So, before we let you go, is there one piece or two at The Times that you’re particularly proud of?

KRUGMAN: Oh, gosh. I mean, I have a bunch of them proud of. I’m really proud of the stuff I wrote, you know, during Iraq, which was not my department, but needed to do it. I wrote a 2005 piece saying, this sure as heck looks like a hell of a housing bubble and it’s going to be ugly. And that was right. I wrote at — in early 2009 that, you know, Obama was going to come to grief because his stimulus was too small and he wasn’t going to get a second chance. Maybe — actually, there was one — mostly just for the turn of phrase, but I was mostly writing about Europe, but I talked about people who believe that you should slash spending in the face of mass unemployment, and many of them arguing that was — that would work because it would increase confidence. And I call that believing in the confidence theory. And you know, you know that you succeeded when a turn of phrase that you invented is widely used without citation. And so, now these days, everybody talks about the confidence theory. So, you know, those are some of the highlights.

MARTIN: You wrote that while resentment can put bad people in power, it can’t keep them there indefinitely. Is there something that gives you hope that the public will eventually hold leaders accountable for poor governance and move them toward better governance?

KRUGMAN: I mean, I’m a little selective here because, obviously, some bad people have held on to power for a very, very long time. But you look at — I mean, I do look at other countries. So, we had a highly populous right- wing vaguely Trump government in Poland, and they lost power. The Polish public finally said, we’ve had it with these people. Now, it’s still tenuous, but it does show it can happen. If you believe the opinion polling, I mean, a lot of the — the role model for a lot of our fears is Hungary, which is a democracy on paper, but where things are so heavily rigged, that’s really, really hard to see the ruling power party lose power. But if current polling holds, which, you know, God knows, but even with all of the rigging, Orban might be about to be on the way out. So, you know, people do. People are — it takes a while, and there’s always excuses. But I — as long as there is — there’s always hope. I mean, since — I’ve been in this business for a long time. I mean, I’ve seen various kinds of, you know, freedom revolutions happen in many countries, and sometimes they come to grief. Sometimes you have a great uprising of popular outrage, and then it turns out that meet the new boss, same as the old boss, and it’s — it all goes bad again. But sometimes it really does transform. So, sometimes things do go right.

MARTIN: Paul Krugman, thank you so much for talking with us.

KRUGMAN: Thank you.