Paul Krugman

The Conscience of a Liberal

VTR Date: October 18, 2007

Paul Krugman discusses his book on The New Deal and its aftermath.


GUEST: Paul Krugman
VTR: 10/18/2007

I’m Richard Heffner, your host on The Open Mind.

I’m an erstwhile American historian as well…which may explain why two years ago I was invited to place a wreath on Franklin Delano Roosevelt’s grave at Hyde Park on the 60th anniversary of the President’s death.

Well, my remarks then were respectful, indeed worshipful. But regretful, too…that by the first years of our new century the lie had so clearly been given to the carefully chosen words with which I had concluded my chapter on FDR in a history of the US written fifty years before.

“…for the most part”, I had prophesied, “the ‘Roosevelt Revolution had made its permanent impression upon national life, and it seemed as if Americans would never again enjoy – or regret – an era of laissez-faire”.

Well, I was wrong, of course, egregiously so. There was no “permanent Roosevelt Revolution”. There has been a counter-revolution instead.

But now today’s guest has written an absolutely brilliant new book that not only meticulously details the backwards march dominated by a vast conservative movement determined to undermine FDR’s New Deal achievements…it offers hope for and points the way to a NEW New Deal as well.

Paul Krugman writes an extraordinarily readable, provocative and influential twice-weekly Op-Ed column for the New York Times. A prize-winning economist, he is Professor of Economics and International Affairs at Princeton University as well. The Conscience of a Liberal is his hopeful new W.W. Norton book.

And I would ask my guest to elaborate first on two fascinating passages from this fascinating book:

First “One …” and I am old enough now in the service of the New Deal to have to put on my glasses, “One key message of this book, which many readers may find uncomfortable, is that race is at the heart of what has happened to the country I grew up in.”

And two, simple enough, “Yes, Virginia, there is a vast Right-Wing conspiracy. That is, there is an interlocking set of institutions ultimately answering to a small group of people that collectively reward loyalists and punish dissenters.”

And I want to ask you, Paul Krugman … tell us more about that.

KRUGMAN: Okay. Yes, Virginia there IS a vast Right Wing conspiracy. It’s not very hidden. There are think tanks, media organizations, a whole set of places that supply money, that supply jobs.

Look at 2006, okay … devastating Republican defeat. Two Republican Senators who went down were Lincoln Chafee, who was essentially an Eisenhower Republican somehow adrift in the 21st century. A moderate guy.

And Rick Santorum who was the essence of a modern, actually was running the K Street machine, the control over the lobbyists that the Republican Party tried to establish and did for several years.

Ahmm, what happened to the two of them after the election? Lincoln Chafee got a one year teaching job at Brown. Rick Santorum got a nice, cushy think tank position heading a new program on America’s enemies. So that the vast Right Wing conspiracy takes care of its own.

Very real. It’s a, it’s … huge amount of money, there are places to go. It, it does, in effect … and you look at all of these institutions and you tend to find the same funding sources. There may be dozens, scores of, of these think tanks, of these lobbying organizations … you find the same five families supplying a lot of the money. So it really is a cohesive movement.

HEFFNER: And an effective one, I gather.

KRUGMAN: Has been extraordinarily effective. Took over the Republican Party in the 1970’s, won a lot of elections. Ahhh, ran all three branches of the US government until last November. And that is a large part the story of what happened to America. The story of what happened to the middle class America I grew up in.

HEFFNER: You say, “has been”, do you mean “had been” effective, or …

KRUGMAN: I think it has … I mean there’s still, there’s still a lot of money there, there’s still a lot of organization. But, this is an optimistic book, Conscience of a Liberal is a book that comes to the conclusion at the end that, that the fundamental forces, the, the nature of American society is changing the way … that is undermining this, this movement. That they, they probably have had their day and, and we are, in fact, ready for a new progressive era, a new New Deal.

HEFFNER: Not wishful thinking?

KRUGMAN: Oh, I guess we’ll find out in the next few years. Right? But, well look … race, I do … race is central. You ask … what is, what is Movement Conservatism? Which by the way is not my term … it’s what they call it … say themselves. They … they themselves call themselves Movement Conservatives. There is this Movement.

What Movement Conservatism wants to achieve the roll back of the New Deal. The way it winds elections is by exploiting other issues, hot button issues that distract people from the economic agenda. Those can be national security, they can be values issues. As I say, you know, Bush won the 2004 election by promising to defend the country against gay married terrorists. But the, what they do in office then as you know, they then having won the election on that basis, the first thing he wants to do is privatize Social Security.

But the quintessential issue, the issue that has won them more than anything else is race. Ronald Reagan’s career. You know he’s now been sanctified as the ultimate pure Conservative.

But, in fact, his political career was very largely based on tacit race baiting … from the welfare queen driving her Cadillac to starting the 1980 campaign in Philadelphia, Mississippi, where the Civil Rights workers were murdered … with a speech on states rights.

But, it’s not working so well anymore because we are … first of all a more diverse country. Large Latino vote, growing Asian vote and those people are not going to be happy with even coated race appeals. And we are a better country, just much less racist than we used to be, and I think the whole strategy is losing its force.

HEFFNER: You know, as I read the book, and I read it so thoroughly, page by page because it is so damn well written, I kept wondering about whether there isn’t an incredible optimism that you’re demonstrating here, that may lead us all down the garden path.

KRUGMAN: Look, I think …

HEFFNER: And you’re not usually that optimistic.

KRUGMAN: Yeah. Well, it is questioned … am I … I’m not usually big on wishful thinking. I’m usually a bit dour, actually. Okay. Why am I optimistic?

It’s a changed country. Just take a … first, just look at things like attitudes on race. It’s been so central in American politics. But it’s different. Take a look at … I, I think in some ways the racial issues have been more visceral than, than practical policy.

HEFFNER: What do you mean?

KRUGMAN: That, that in fact, we have not for these past 30 years have Republicans running on a promise to restore Jim Crow. What they’re doing, is instead, just appealing to people’s gut sense that they … they’re afraid of racial diversity, that they’re afraid of civil rights. And that’s depends upon people still … the populus still having a strong streak of racism in it. And if you look at then at … my favorite poll … it’s not a political issue at all … but it’s a … I think it has political consequences … what do people think of interracial marriage?

It used to be the great taboo, it was the great … and as recently as the late 1970’s by a large margin, the public disapproved of interracial marriage, did not think it was okay. Only about a third of the public in the late seventies thought it was acceptable to have interracial marriages. That’s gone a way. Now very few people, 77% approved in the last poll I’ve seen. So that’s a change in country.

Now, tell you what my concern is. I think the Right Wing Republican machine is collapsing, is falling apart. It doesn’t have the, the ability to, to do what it did. That doesn’t mean that we actually get a new New Deal.

I mean one of the questions in 2008 … first of all it’s still possible that, that some hard-line Rightist will win the election one way or another. But even if that doesn’t happen the public may think that it’s electing FDR and find out that it’s actually elected Grover Cleveland. There is a real concern about whether the Democrats will actually be the progressives I hope they’ll be.

HEFFNER: Your concern?

KRUGMAN: Yeah, my concern as well. Sure, that’s a very big … the, the possibilities for dramatic change are there. We have huge public support for universal health care. We have a much more … political scientists who try to collate the poll data into various indices … the national mood is more Liberal than it has been since the early 1960’s. But whether that translates into effective political action is another question.

HEFFNER: Now you make a point here that economist or not what you’re claiming here is that it has been the nature of political leadership that has done us in …


HEFFNER: Is that what you’re saying now, that you’re so distrustful of contemporary Liberal political leadership?

KRUGMAN: I’m not sure whether I’m distrustful yet. Let’s put it this way. Hmmm …

HEFFNER: You’re gearing up to be.

KRUGMAN: It could happen. Look … the history … I, I immersed myself in long American history, Conscience of a Liberal as, as you noticed …I go back a hundred years and beyond in some cases to try and get the shape of what’s happened. And during the, the Gilded Age, which I think … in economic terms the Gilded Age lasted right up until the New Deal. During the Gilded Age there were two parties and there were real differences, but often, even when Democrats did get the White House, even when they were able to achieve some political success, they were what they, at the time, called Bourbon Democrats, Democrats who were basically just like the Republicans, only maybe a little less corrupt. And that’s … there are certain Bourbon Democrats today.

And what we don’t know … we don’t know … so take a, take a fact not in the book, because it’s a new thing. One of the remarkable things, looking right now at the early stages of Election 2008 is that corporate giving to the Republicans has collapsed. All of a sudden basically only the oil and gas industry is still Republican oriented; all the rest are giving more money to the Democrats.

Is that good news or bad news? From a Progressive, Liberal point of view. It does mean that the odds of a Democrat being elected are substantially higher. Of a Democratic Congress are higher, but it also raises the question whether that putative Democratic administrations to come will be beholden to the same interests that benefit from low taxes on the rich and a weak social safety net.

HEFFNER: Let me ask you whether you think that any one of the now leading candidates for the Democratic nomination is likely to be subverted? Whatever word you want to use by these corporate contributions that probably indicate they smell victory and where it’s going to be.

KRUGMAN: Yeah. There’s a bit more to it than that by the way. Let me just back up for a second and talk about what … the corporations … people sometimes talk about the Bush Administration as being the creature of the corporations. I almost say, “Would that it were so.” To some extent, obviously they, they got a lot of money from corporations, or did. They, they looked out for their interests … up to a point … but actually it was almost a kind of extortion racket. And they did not govern in a way that … with the, with the competence, with the kind of long-term planning that, that corporate America expects.

They were, they tended to give big contracts not to establish corporations but to their friends who have no idea what they were doing. You know Blackwater was not a big major corporation until the Bush Administration threw a bunch of contracts its way.

So, in some ways, corporate America is … you know is looking for a little more stability, a little more competence than what they’ve gotten.

Now among the Democrats … Times rules … I can’t do endorsements. Clearly … what’s been happening …

HEFFNER: No, I’m really asking you about dis-endorsements.

KRUGMAN: Yeah. Well, I’m not even sure I can do that. Look, what we have is the … John Edwards of the three leading Democratic candidates … the one who’s furthest back in polls, money and everything else, has struck a clear populist agenda. There’s no question that he’s not going to … he’s not part of this …he’s not a Bourbon Democrat by, by any stroke of the imagination.

HEFFNER: Barefoot lawyer, right?

KRUGMAN: Well … look, he’s personally prosperous. He’s, he’s worked for a hedge fund … all of which I think is perfectly fine. People … we don’t expect … FDR was, was a wealthy individual. That didn’t stop him from being a true servant of the people.

But he’s clearly not in that boat. Now he has, consistently through this campaign been pushing the Democratic Party in a strongly progressive direction and then has been matched. The reason why that hasn’t actually translated into the Progressive Movement, you know, saying, “We’ll only do this if Edwards gets it”, is because he’s been matched. So, in the end John Edwards comes out with a real serious universal health care plan in February and in September Hillary Clinton comes out with a plan, which I have to say is very good, and actually looks a whole lot like the Edwards plan.

Is Hillary Clinton … what would she do in office? Don’t know. I’m, I’m inclined to be optimistic but maybe that’s just, you know, I’ve been feeling pretty chipper about the US political scene these days.

HEFFNER: And our other leading candidate?

KRUGMAN: Barack Obama is a … I mean … come out and say … I’m not really good …

HEFFNER: I’m trying to get you into trouble, obviously.

KRUGMAN: Yeah. No, the … I’ll tell you what, what bothers me about Barack Obama … there are many excellent things. Of course, he was stunningly right on the war. He does have this rhetoric of “Oh, can’t we all work together and end the harsh partisanship.” And of course, I worship FDR …


KRUGMAN: … and FDR didn’t talk that way. FDR talked about the, the evil forces of wealth and the advocates of war and “They hate me as they have never hated anybody else and I welcome their hatred.”

I want to hear a little bit more Rooseveltian rhetoric. I worry a little bit that, that, that Obama wants to be too nice. And that’s not, that’s not going to work.

You …we still have … I mean I’m, I’m feeling very optimistic. Now we’ve had this really … from my point of view out of control, Right Wing movement that came very close to establishing a long term lock on power in this country and if you want to, you want to take these people on, you better be prepared to, to be harsh and partisan. Not in the interests of partisanship for its own sake, but because there are real issues at stake.

HEFFNER: It’s interesting to me that and, and certainly it comes out in the book, that you …you do feel that there has been a sea change in attitudes among Americans. We’re not now talking about the shift form the New Deal to what we’ve experienced in the past 20, 30 years. But you do feel there is … that the better angels of our nature have surfaced.

KRUGMAN: Yes. I’m a big Lincoln fan, too. No, the … I think it has. Look, the … we went through a very bad period these, these past six years. We went through a period when it was easy to believe that we were going to go into a New McCarthy era; that we were going to be in a situation where fear would be … would allow the bad people to dominate our political scene.

And for a while it seemed that that was were we were going. But we didn’t. In, in the end it turned out that the, the American people are better than that. And then you look at attitudes … polling, but also voting on issues of domestic policies. Social … look at the fight now over S-chip, the children’s health insurance program. There …I think there would have been a time … in the early Reagan years when a lot of people would have … a lot of Americans would have disapproved of something that might help people poorer than, than themselves.

There was a period when there was a lot of hostility … any, any government aid was “well, it’s going to give money to the, to the … to welfare cheats.” And that’s not the public attitude now. I mean there’s some of it … obviously … there are some people.

But, but we have overwhelming public support for the idea that children should be entitled to health care.

HEFFNER: By the time this program is on the air we may have found that the President’s veto was sustained.

KRUGMAN: Yeah. Because the House of Representatives … although it has a substantial Democratic majority, still has enough, you know, more than a third Republican and there’s still a lot of party discipline. There …

HEFFNER: Republican Party discipline.

KRUGMAN: Republican Party discipline, although actually Democratic Party discipline is getting better. As of, as of we’re taping … there were, I think, eight Democrats who did not vote in favor of the, of the S-Chip Bill. And five of them have been persuaded to vote to override the veto.


KRUGMAN: … so it’s actually the … we’re, we’re … but … sure … but you know give this as … there’s a shock factor. I don’t think Republicans have quite absorbed what’s happened to them. I mean just two years ago … everybody … I have a whole shelf of books about the permanent Republican majority. You know, Red America … we’re going to … they’re, they’re going to … and I don’t think that they’ve quite absorbed the fact that actually that’s not the way it’s going and, and some of them are still being good Movement men, and I don’t think … that’s going to be hard to, to deal with.

HEFFNER: It’s interesting to me that at no point do you talk about national security and its impact.

KRUGMAN: I did a lot of work for this book, trying to figure out … because there’s a legend … right … the story is that ever since Vietnam the Democrats have been perceived as weak on national security and that’s been a big political liability. In, in effect … the argument … it’s almost as blatant that, that the Democrats have never recovered from having, in the end, been right about Vietnam. That you get punished forever for having been right about Vietnam and, and there’s almost an attitude among some people … still … in Democrats in Washington that, “Well, we better not make that mistake again. We better make sure that we … we’re wrong about Iraq, to, to stay credible on national security.”

Ahmm, the reality is that if you look at the years immediately following Vietnam, the public did not perceive the Democrats as weak on national security. That they were not punished, that even the 1972 election in which George McGovern was shattered, it was McGovern who was shattered, not the Democrats in general. They did okay in the general election.

The, the picture of Democrats as weak on national security, the idea that we were stabbed in the back in Vietnam is something that was created retroactively in the 1980s. I call it the “Rambofication” of history. And beyond that there have actually been relatively few elections in which national security was a big factor.

And I would say really only two: 2002 and 2004. Those two post-9/11 elections are aberrations and now that the Bushies have proved themselves so unable to wage war, now that they’ve made such a mess of things I think that issue is off the table, at least for a while.

HEFFNER: And you think that it’s gone now.

KRUGMAN: Not entirely.

HEFFNER: Well, you don’t factor it in to the new New Deal.

KRUGMAN: Not for a while at least. I think, I think that we have at least, at least five years and maybe more before the “Rambofication” of Iraq. Eventually … I’m sure eventually there will be movies about how some heroic guy with bulging muscles could have won the war if only those politicians hadn’t stopped him. But I think right now the American public is sick of this war. And the American public has caught on to the fact that, that these guys on the Right are not … for all the flag waving … are not actually very good at securing the nation.

HEFFNER: Given your assumptions about … your optimism … let me call it that …


HEFFNER: … never mind assumptions about this or that. What is it you think that the good new world, the brave new world before us is going to mean in terms of our economic situation.

KRUGMAN: Well first of all I do … I believe … better than fifty percent odds that we will have universal health care by the end of, the next administration. That in itself … just right by itself means a huge improvement in the quality of life for … not just for those who are currently uninsured, but for anybody who is worried about losing health insurance. This is a huge source of anxiety that Americans face that citizens of no other advanced country face. And we can solve that. And we can solve it actually … we can actually save money in the process of eliminating that anxiety. So I think we’re going to have a huge improvement on that dimension.

Will we do a lot to reduce inequality to share the fruits of economic progress more broadly. I think we can. It’s a, it’s a harder hill to climb than universal health insurance, which we know how to do it, and we know it can be, it can be done right away. But I do think that we’ll get a lot of progress. It’s not … the, the … the great leveling of incomes, the creation of a middle class society that FDR accomplished, was made possible by exceptional and extreme circumstances. The Great Depression which totally discredited laissez-faire. The … World War II which established a period of government controls that were used in effect to create a more equitable wage structure that persisted, I’m not expecting or hoping for anything like that this time around, so it’s not so easy to make big changes. But I think we could emerge five years from now as a more equal, less stressed society than we are at present.

HEFFNER: Will our continuing involvement in globalization push us closer to that? Or further away?

KRUGMAN: Well globalization is … let’s be frank, globalization is an unequalizing force. When you import lots of labor intensive products from China you are reducing the demand for less skilled labor in the United States. That’s economics 101. It’s in the text book. I wrote the text book, so I know that.

The …but it’s not as big a force as some people would, would have you believe. And the way you can tell that is those same forces of globalization are acting on all advanced countries. And yet, the spectacular growth in inequality as we turn to a, a second Gilded Age, that’s a uniquely American phenomenon. I mean it’s not even that France is different, or Sweden is different. Canada is different. We say as … we talk as if globalization dooms the union movement. But Canada still has as many workers unionized as it did in the 1960s.

HEFFNER: So am I fair in saying in the 30 seconds we have left that when you say, “it’s politics, it’s political leadership, you incorporate this area, too?”

KRUGMAN: Oh, very much so. But I’m not, not … I’m not a protectionist. That’s not … I don’t think it’s necessary, you could still have a decent society with relatively open markets to world trade, as every other advanced country is proving.

HEFFNER: And you think we’ll prove that, too?

KRUGMAN: I think it’s more likely than not. I think, I think we will get there.

HEFFNER: You’re hedging.

KRUGMAN: I … no, I’m not wildly optimistic, I realize that there are ways this can go wrong. But I think we will.

HEFFNER: I hope you’re right and thank you very much for joining me today on The Open Mind. And, I hope that everybody reads, The Conscience of a Liberal.

KRUGMAN: Well thank you, I … thank you very much.

HEFFNER: And thanks, too, to you in the audience. I hope you join us again next time. 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.