Paul Kurgman shares his economic insights, observations, and interpretations.
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GUEST: Paul Krugman
I’m Richard Heffner, your host on The Open Mind. And some years ago a very, very rich man told me “for goodness sake to stop saying here at this table that my eyes glaze over whenever I feel constrained to deal with the dismal science … economics … or with those who are its practitioners.” He said it’s just too obvious to bear proclaiming over and over again that I know nothing about the subject and rather wish it would just go away.
Yet ever since he joined The New York Times in 1999 to write is always extraordinarily readable and provocative OpEd page column, I’ve hoped that some day Paul Krugman, who is also Professor of Economics and International Affairs at the Woodrow Wilson School of Princeton University and the author or editor of many books and articles in the field would join me here on The Open Mind.
Of course, it’s difficult to know quite where to begin with my guest. For each week’s events in Washington and elsewhere around the globe provide more grist for his mill, more food for his thoughts, thus more of the trained economist’s shrewd insights and the skill journalist’s enormous ability to interpret and comment on them for his readers.
Indeed, by the time you see this program my guest will have written about many other themes, taken up the cudgels against many other pet peeves. Yet one of Paul Krugman’s columns that has intrigued me the most recently had to do with the media themselves, with media power and bias in the press, print and electronic alike. Of course most of the journalists, certainly The Times people who have joined me here over the years have quite consistently taken a “nobody’s in here but us chickens attitude”, poo-poohing first the notion that the power of the press is just that, real power, and second, the thought that it might be well to do something about it. Like supporting a Fairness Doctrine for the press. Now my guest seemed to me to feel somewhat otherwise, and I trust it is fairness itself to ask him to confirm or deny that observation. What about fairness and a Fairness Doctrine?
Krugman: Well, you know, the Fairness Doctrine which existed for many decades and then went away in the 1980s was there because at the time it was instituted, people thought that mass media, really not print media, which have never been subject to anything like, but that mass media were … look, it wasn’t, it wasn’t a wide open market place. There was only a limited number of outlets, there were a limited number of national networks, and there was some requirement that you take extra steps to make sure that, that at that point the three sources of TV news didn’t abuse their position. Nothing really has changed. We have this notion now … “well, there’s lots of competition.” There are lots of, you know, there’s no need to worry about that. But in fact there are now five sources of TV news instead of three and whereas before there were three networks which were in the network business only, now there are five networks, all of which are parts of large, you now, conglomerates, multiple business interests, clearly the temptations not to have fair coverage are there, and I think we ought to be worrying about it, especially because, you know, everybody now complains that the media is unfair in one direction or another. But I think there’s enough reality to it that we should really be concerned about it.
Heffner: But I never, in reading you, come to the conclusion that you’re just a worrier. I have the feeling that you would say “do this, or do that”. What would you do?
Krugman: Oh, I think. I actually think, although I doubt it’s going to happen, I think we actually should revive the Fairness Doctrine. I think the, the supposed basis on which it was unnecessary was wrong. And that it was a mistake to, to role it back. But actually, mostly, as with most things I do in my column these days, I’m fighting a rear guard action. What we’re talking about now is that the FCC is likely to remove most of the remaining rules. And in particular, the thing that scares me most is they are even willing to contemplate a situation where several national networks could be under common ownership. So if you want your, if you want your nightmare scenario, imagine Rupert Murdoch owning all of the TV networks and, you know, that, that … it’s quite possible would be legal, a year or two from now. We could become like Italy, where Baron essentially owns the media that covers him. Now, well, that’s an extreme position. Actually everything that’s been happening these last few years has surpassed everyone’s worst expectations, at least from my point of view. So, you know, this is serious. We shouldn’t, we shouldn’t dismiss it. And very important decisions that could shape our politics, shape our information flow for decades to come are being made as we sit here.
Heffner: Do you think your fellow journalists would go along with that notion? Owned as they are by these conglomerates?
Krugman: It’s partly a question of what they think and partly the question, what they can say … and of course, people usually end up managing to think things that are convenient. Look, I, I have … when it comes to all of this stuff, I’m in an unfair position, I have an unfair advantage, because I’m moonlighting. Right. I’m a Professor who does a column on the side. So I can probably say things that, that someone whose whole career, whose whole life if wrapped up with continuing to have access, wouldn’t, wouldn’t be able to say. But I think there’s a fair bit of real concern that people just don’t … you know, if you’re a working reporter for a major network, you’re not going to go fulminating about this. That’s … that would be foolish personally. But it … I think people are really concerned. And there have been people, particularly as people retire, they then begin to vent their concerns about what’s happening.
Heffner: What a wonderful thought … that you don’t … during your affective years, say these truths, speak the truth, but when you’re retired, that’s when you begin to lay it all out.
Krugman: But that’s … I mean that’s the way the world works. And the whole point of public policy is to create safeguards so that the natural tendency of power to accumulate is somewhat limited.
Heffner: We’ve gone so far in the other direction. You see to feel though that at some point all of this movement to the Right is going to bring about a newer movement to the Left. That deregulation, deregulation, deregulation … that mantra is going to be met smack in the face with our old American notion that you could regulate.
Krugman: Yeah, let me be clear. There’s good deregulation and bad deregulation. I’m not, I’m not a hard core “the government should control everything” guy. I mean if you ask about trucking deregulation or airline deregulation in the 70’s, I thought those were good things. They … you know, they’re not a 100% good …
Heffner: You still think airline deregulation was good?
Krugman: Yeah. It’s a lot of cheap travel. And although, you know, I think the people who are definitely sure that deregulation is a bad thing are the people whose flights are always paid for by somebody else. So, I, I think on the whole it was a good thing; it really did make it available to large numbers of people. But this hard core, hard core Right wing and it’s not even necessarily free market, but this hard core notion that rich people should be allowed to keep more of their money and we should get nastier and nastier to the poor and increasingly to the middle class, I guess I have to believe that there’s an eventual swing-back on that. Now I don’t have a, I can’t tell you how it will happen. And I’m not … if truth be told, I’m not a 100% sure. For all I know we become an oligarchic society in which people who come from the right families control everything for the next two centuries. But, you know, you can’t, you can run your life on that basis. You have to assume that there is in fact going to be a, a return to what I think of as good sense. Particularly, I guess what I have in mind is that we’ve reached the point where the kinds of pro-wealthy policies that are now being undertaken, are pro-wealthy, not pro-upper middle class. Actually, we’re reaching the point where the, where the Junior Vice President, if only he realized it, is actually on the losing end of this thing. We’re actually seeing policies that, in effect, redistribute from the bottom 97% of the population to the top half of a percent of the population and above. And when people realize that I think we might see a new progressive era. Maybe even a new New Deal.
Heffner: Yes, but Paul Krugman has been ringing that bell for a long, long time now. What happens when you get on your high horse … and you do so frequently … and I don’t mean that in a pejorative sense … when you ring the and you point out the way the tax reforms really work. What’s the response to that?
Krugman: A certain number of people really love that and get motivated.
Heffner: Motivated to do what?
Krugman: Well, I think there’s … certainly to write their Congressman, to, you know, there is something about … look, if … maybe this comes back to media. I have to have a proper sense of my role in the scheme of things. I have the most valuable print real estate in the world …
Krugman: … on loan from The New York Times. That’s a wonderful thing. That means that I land on a million driveways. Maybe, probably, you know, in principal two million people might be reading it, probably less that that. Russ Limbaugh has 18 million listeners. Fox News has, I don’t know how … you know, this is not, this is not a mass … I’m not part of the mass media, I’m part of the, the old print media which is a different and honorable but much more modest, modest thing. Also, let’s be clear that, that these things …one lesson I think you can learn from the Right is “have patience”. You don’t, you know, if, if we think of the modern Right Wing of the United States as having had its first big thrust in … with the nomination of Barry Goldwater. It didn’t really come to fruition until Newt Gingrich won the election in 1994. So in some sense, if, if you’re expecting things to turn around in two years, then you just have too short a time horizon.
Heffner: Yeah, but you seem to be saying in your columns … or as I read them that they knew what they wanted … the Democrats, or the so-called “Liber-als” do not.
Krugman: Well, again, think about; think about the incentives in our society. Think about the incentives for a politician. If you are, however, liberal your convictions as a politician, you do need money for your next campaign. If you are, if you ask the question … let, let me take … not that I particularly want to bash this guy … but you ask the question why is Joe Lieberman … someone who’s always been kind of friendly to the accounting industry … well, what state does he represent? Where is he going to get funds for his next run? You know … so that, the … unless you have a really alerted population, the incentives are always to cut deals with those who have the power, who have the money. Now maybe this is … I guess what in the economics jargon we call an absorbing state. Maybe once we get there, we stay there. If you ask how did we ever get a different society, it had to do with the Depression and World War II. Maybe it takes something like that to turn it around. But, again, you can’t say “Well, let’s give up until … give up on talking about these issues until catastrophe strikes.” I think it, it … for me, at least it’s just a question of being a journeyman worker. And, and saying, you know, chronicling what’s happening.
Heffner: Well, you’re more than a chronicler. Thanks to those people who are reading you every day. You’re more than a chronicler, come on. You’re standing there waving a flag.
Krugman: Well, but I don’t have illusions. Put it this way … I don’t think I’m running the country, I don’t think I’m … I can swing an election. I probably can’t even swing a town council election in, in Princeton Township.
Heffner: Are you going to try?
Krugman: No. I actually wouldn’t. But the point is I, you know, if you’re an academic, you think “Wow, you know, writing for The New York Times, that means really having an impact.” Once you’re there you say, “Well, I’m writing for a semi-national newspaper, the greatest newspaper on the planet, but gee, that’s not really a very important thing.”
Heffner: Oh, come on now.
Krugman: Look, compared to what, again? Compared to, compared to Fox News it’s not much.
Heffner: You really feel that way; you feel that they have done. I mean you wrote a column the other day in which you … the column I referred to in which you make much of that.
Krugman: Oh, look. I mean … yes … and I think there’s a, there’s a particular thing, if I can say this completely taking off both my journalist hat and my professorial hat and just …
Heffner: Leaves you nude.
Krugman: … right … idle speculation … bareheaded to the world. The reason why newspapers like The New York Times used to matter a great deal was that we used to have an establishment with a capital “E”. Which I always envisioned as David Rockefeller. But anyway, we used to have an Establishment of old ties, old money that cared a lot about doing “the right thing”, or at least being seen to do the right thing. And so if The Washington Post and The New York Times weighed in on an issue that swung it. Or maybe even, you know, broadcast journalism would take its cues from what the “papers of record” would say.
We’re not that kind of society anymore. You might say there is no center. There certainly not is … there isn’t an elite center that, that responds to what the conventional wisdom is. We’re a much more polarized society than, than we were. Politics … you can even measure this … I talk to the political scientists all the time … you can just look at political positions and discover that we have pulled apart to a degree we haven’t seen since the early years of the 20th century. And, in that kind of a situation, even writing … whatever I do for a prestigious publication like The Times can, at best, just slightly deflect the course of opinion. And maybe that builds over the course of years, but it’s not something … I don’t have any illusions about what I can do now.
Heffner: What do you think the result will be of that pulling apart, that further and further polarization?
Krugman: I don’t know how to play that out in my mind. I can give you scenarios all the way from, you know, a gentle resolution to apocalyptic conflict. We haven’t seen anything really like it … that we … there was … we were very polarized. The two places in which you can see political polarization in our own history, something like what we have now are … in the 1920’s and sort of, at that point the Great Depression and then the War came as a kind of dais ex machina to change us back into something quite different. Or before the Civil War, and I guess we don’t want to go down that route too far.
Heffner: You know when I began teaching in the late ‘40’s … teaching American history, and when I wrote … first did my Documentary History of the United States … 50 years ago … my description of the New Deal was that it had changed things and where there had been polarization before, there had been a reversal. Now my understanding is, thanks to you economists, that has not been true at all.
Krugman: Oh, no, it did. It changed things for fifty years. Which is …
Heffner: You think only now that the rich are getting richer and the poor …
Krugman: No. It, it began unraveling … what I think of as the, the country that Franklin Roosevelt made … he really did. I mean there’s no … if you actually look … you can look at the, you can look at the numbers which is … one of, one of my identities … I’m a numbers guy. You can look at it qualitatively, however you like. The country that we emerged as in 1946 was a very different country from the country we were in 1929.
Krugman: It was a much more equal country. It was a country with new bases of power; it was polycentric, it wasn’t … it wasn’t at all the really quite oligarchic society we’d been in the 20’s. That new America, if you like, which we still imagine ourselves to be, but we aren’t any more, lasted something like 30 years and then began unraveling, during the 1970’s. And it was still only part way there during the Reagan years. But at this point we really have … sometime … you know there’s no hard date. Just like there wasn’t a date when everybody said, “okay, now it’s the Renaissance.” There wasn’t a date when you suddenly said, “Oh, we are back to more or less a plutocratic society.” But, but in fact we’ve gone a long way there over the past 30 years.
Krugman: That is … I can be professorial again and say “good question”. Right? I actually think at some level there maybe a natural tendency to go that way in a market economy. And we … it’s possible that we sort of … that because of the catastrophes of the Depression and World War II and, and the things that were done in response, we defied the current of history for thirty years. I’m not sure if that’s true because if you look at other industrial countries, they’re not going the same way we are … at least not to the same extent. Might be … I don’t know, I’ve heard all kinds of … I’m working on it … I think is the answer.
Heffner: What’s your bet?
Krugman: I don’t know. The best suggestion I’ve had from one correspondent is it was all when, when the TV networks started showing football games on the weekends. And the corporate executives started looking at how much the players were being paid, and said, “I want some of that.” And that’s when it all began to fall apart. [Laughter] I, I’m not … I think you can probably point to a lot of things. I think it will turn out to be … when we finally understand … if we ever understand it … to have been a complex of things involving probably inflation, which undermined some of the old institutions. Probably the oil crisis, maybe … you know … why, why did the social revolutions of the sixties happen? We still don’t know the answer to that. I think, I think what we’re seeing is a kind of social revolution. And it’s, it’s something that’s …you know … collapse of “norms.”
Heffner: Revolution or counter-revolution? You seemed to be saying before that what we were doing was reverting …
Heffner: … and that you couldn’t have a marketplace society without ultimately coming back … you could have a New Deal, it could stem the tide for a bit, but then you were going to revert to type.
Krugman: That’s possible. I mean it’s just not … you know … I think, am I allowed to say I don’t really know?
Krugman: That …
Heffner: No, you’re Paul Krugman, you can’t say that.
Krugman: All right. No, I mean … what I think right now is that we had … we had what looked like a self-sustaining set of institutions that preserved a strong middle class. Those institutions turn out to be more fragile than we thought. Whether they might, given different history, different policy have endured … is a very hard question to answer. And that’s really the question, “Was this something that was inevitable, or is it something where somebody screwed up somewhere along the way?” And I haven’t made up my own mind about that. But I think the, from my point of view anyway, the important thing that I as a … trying to explain to people what’s happening and what they might try to do … I think what’s important is to first of all get people to acknowledge it, to realize that, that this is happening.
Heffner: You know, as I read Krugman a couple times a week, I get the feeling that you see a sea change in terms of persuasion, in terms of the ability now … I mean you, you said something … wrote something the other day … talked about the lies ….
Heffner: … that come from the center in Washington. And the, and “the Bush Administration lies a lot.” Now that’s quite a statement. Question is how do they get away with it and aren’t we in a position now, I mean hasn’t that possibly been the major change in American life … that the engines of persuasion work so well.
Krugman: Well, there’s something … I think this actually gets back to your media question, at least in part.
Krugman: When you look at … certainly politicians have always lied about this and that and the other thing. Or, misled the public. It was never … well, in my imagination, at least, you couldn’t do things quite as blatantly as what happens now. If you look at … now I thought, during the Reagan years that this was … we were … had vastly irresponsible tax cuts. And those tax cuts were justified by what I thought of as a silly economic theory. But having a silly economic theory is not the same thing as just, you know, misrepresenting the content of your own policy. This time around you can come along with a … will, Social Security, privatization plan … which quickly counts the same pot of money twice, it’s really a declaration that two minus one equals four. And really nobody except … except me … was pointing that out in anything resembling a mass, mass media outlet. You know you could look at … why I remember just one point … and I don’t mean to single them out, but I just happened to be watching CNN Moneyline, you know, which I’m on occasionally … so that’s … these are friends of mine … but there was a description of the Bush proposal and it just, just stated the, the favorable claims for the proposal without any critical assessment. Without any saying “Hey, wait a second, that’s not a … you can just say … talk about the return you can get on your money without explaining who’s going to pay for the future benefits.” It was … I’m not … I mean, depending on what I’ve had for breakfast I think that we’ve had a degeneration of the quality of public discourse, or it’s just that world has gotten too complicated and people have given up even trying to understand. Or maybe that this possibility was always there and until Carl Roe came along nobody understood that you could do this. That you could just plain blatantly misrepresent your own numbers and the press, out of the sense that it would be too shrill to, to say it, will never point it out.
Heffner: How do you explain the Times’ willingness to be as, as careful as they have been to make … to point this out … and I don’t mean just your column.
Krugman: Ahmmm, no, I need to … that’s a … to be honest, I need to be a little careful because I can’t go out there and … my job is not to run The Times. If I were a … not a OpEd columnist, but a regular working reporter, you know, it’s … reporters are very concerned about the charge of being biased. They, they have …I’m supposed to be biased …though some of my correspondents don’t understand that. But, but a working reporter, doing a news story is very exposed and by the way, there’s a ferocious attack machine. If you, if you can do anything that can be construed as showing a Liberal bias … wow … you better not have any problems in your private life … let’s put it that way. In that situation the safest thing is whatever the discretion is to say, “each side has a point.” Much the safest thing. I think … if, if you say … if a Presidential candidate said “the world is flat” you would have a news story in, in The Times or any other mainstream paper, saying “Shape of the Earth … two different views.” You know that’s a … and I understand that. What’s interesting is that there are two kinds of media out there. There are the media who would do that and the media who will say, if the candidate happens to be a Republican, “he’s right.” You now. And so, the net effect is a very strange pattern of coverage.
Heffner: You know we’re coming to the end of this program, and you’ve promised to sit there so we can do a second program. I have to tell you …in the 20 seconds that are left now … I’ve had the feeling that The Times has been on the side of saying , “that’s a lie” much more often than I’ve seen or remember seeing it in the past. I’m a hell of a lot older than you are so I remember The Times when it was the “good gray Times” and would never do the challenging that it seems to me that it does now. But I made that point because I want to thank you for joining me today and make sure you sit there and come back here next time. Thanks, Paul Krugman
Heffner: And thanks, too, to you in the audience. I hope you join us again next time, and if you would like a transcript of today’s program, please send $4.00 in check or money order to The Open Mind, P. O. Box 7977, FDR Station, New York, New York 10150.
Meanwhile, as an old friend used to say, “Good night and good luck.”
N.B. Every effort has been made to ensure the accuracy of this transcript. It may not, however, be a verbatim copy of the program.