Dr Paul Krugman | Full Q&A at The Oxford Union

[Music] [Music] thank you so much for joining us here today we're delighted to have you at Oxford I wanted to start by asking about your new book can you just start by telling us a bit about it what your motivation was for writing it and what impact you hope it will have okay so this is the book is mostly a collection of columns so things I've written over the past 15 years a few earlier pieces but assembled to tell a story with with and it was it was a way well partly it was just a way of getting this stuff out also it's an election year in the United States and I thought it was important to get across the extent to which political debate in the u.s. is not actually between ideas that are held in good faith there there are actual you know debates about real issues where reasonable people take reasonable positions but those are almost never the important ones the important ones are almost always ones where where one side is arguing in clear bad faith it's just clearly dishonest and evidence doesn't matter how often evidence refutes what they're claiming they just stay with the same argument for a variety of reasons and I had picked up some many years ago actually from a paper on Canadian health care of all things what the they used very useful term zombi ideas so a zombie idea as an idea that should have been killed by evidence many times but it just keeps on shambling along eating people's brains and so that gave me the inspiration let's let's do a book that that takes columns that I've written over the past 15 years to talk about the the role of zombie ideas and in our political discourse and maybe help people little think a little bit more clearly as we head into this very crucial election in America so two of the main zombie ideas that you outline in the book are climate change denial and cutting taxes for the wealthy yeah how have these ideas translated into policy and effect of the economy for the past four years and if allowed to continue how will they affect the economy of the years to come well okay so just stay with the in u.s. politics the the clearly the dominant zombie idea is the idea that cutting taxes on rich people does Meera's has miraculous economic impacts and pays for itself because the economy grows so much that revenues actually increase and we've tested that over and over again we've tested it with with the Reagan tax cuts the Bush Bush the younger tax cuts the the Trump tax cuts tax cuts in Kansas you know we've done this again and again and again and it's never it has been wrong every time what it does is it is it does lead to budget deficits although I think that those are not nearly as scary as people think but what there's a kind of a two-step that goes on a bait and switch where first the Conservatives in the US rammed through these tax cuts that explode the deficit you're claiming that they'll pay for themselves and then the deficit goes up and they say Oh in that case we must cut we must basically eliminate medical care for the poor right it's a so this it's it's a it's a process by which you you sell tax cuts on false pretenses and then use the deficits as an excuse to basically make the most vulnerable societies of the most vulnerable members of society worse off that's the been the big effect of that zombie the other one is climate change and you know at this point no rational person can deny that we have a really really big problem it's the the evidence has become absolutely overwhelming but sixty percent of Republican members of Congress outright deny the climate change is happening they simply refuse say it's not happening at all and the rest almost without exception oppose any actual significant action to deal with climate change you ask how can they happen that happen well it's a there's a tremendous tree of climate change denial which people buy into the buy into conspiracy theories there's this vast international conspiracy of scientists to perpetuate the hoax that the climate that the planet is getting warmer and you know and then consequences obviously are that that you know without the United States significant climate change action doesn't happen globally and this is existential this could be the end of civilization so this is you know hugely important and it's it's clear at this point that the the debate is not one in which that's susceptible to evidence you're not going to convince people who are essentially in the pay of the fossil fuel interests that that they need to change their position just because Australia is burning so like you said people continue to believe these zombie ideas how can we argue with zombies and have a constructive dialogue with those who refuse to accept believe no in fact no you can't have an R you cannot have a constructive dialogue with the people who are firmly wedded to these ideas that's unfortunately that's one of those same P people tell me why don't you try to reach out to trump supporters and that's that's not sorry that there's if if if we were able to have that kind of discussion we wouldn't be where we are but there's a significant bloc of people who are under the illusion that we were having a rational discussion it's there's even a name now it particularly prevalent in the in the news media both sides ISM so one of it one of the oldest [Music] pieces in arguing with zombies is a an article I wrote during the 2000 election it was already clear that that that you know all previous standards about requiring some degree of honesty and in the campaign had had been eliminated and and I wrote that if a presidential candidate said that the earth was flat the headlines in major newspapers would read views differ on shape of planet and that's something you can argue you can hopefully get newsmedia centrists to understand what they're actually dealing with and that's so that's that's where the margin of of of hope lies I mean it I think I think I have won some of that I mean I when I cash a do people here even know who Paul Ryan was that right and so when I wrote in 2010 that Paul Ryan was a phony the flim-flam man that he that his his pretense to care about deficits was just an excuse to cut social programs I got outrage reaction from a lot of sort of mainstream media type how can you say about this fine clearly sincere guy and I think at this point everyone everyone agrees oh god that man was that was an obvious phony why didn't we see it so I you know I think we win some of those arguments whether it's enough is time will tell and how are those on the ideas or any other conspiracy theories affecting the Democrats if they are at all conspiracy I mean there's a little bit of that stuff within in traumatic party stuff I mean there it is that's pretty there's a fringe mostly Bernie Sanders supporters there were there are a few who see everything as this dark are back in 2016 you so find on Wikipedia that that my son was working for the Hillary Clinton campaign which was interesting because I don't have a son and so there's a little bit of that but it's it's it's very fringe within the party so you compare climate denial is the entire Republican Party is committed to climate denial there are a few people like that and there are not all zombie ideas are conspiracy theories there are other things so all of the important zombies are on the right in in the modern United States because that's where the money is but there are some things I mean I I I think the idea that we cannot solve the climate crisis without a drastic reduction in the Stan of living is something that tends to be a popular both on the right and some people on the Left who want who wants to believe that that we need to you know the consumerism and and an economic growth cannot persist if we want to save the planet and that's actually that's clearly wrong it's it's clearly that the technology the the the the margins of adjustment exist so that that we can maintain pretty much actually that we can actually continue to increase our standard of living while at the same time moving to a zero emissions economy so that this sort of that we must go back to living in villages and weaving baskets or something to to save the planet that's that that is a kind of a left to eat zombie thing but it doesn't have a significant constituency that's not going to move an election where are some of these other things will looking at the evolution of the Republican Party you said that each successive Republican president makes the preceding one look good in comparison yes how specifically has the party developed since your time working in the Reagan administration and have we gotten to the point today that you criticize as the zombification so don't notice I was in the Reagan administration but sub political level I was I suggest to sort of essentially is what he would be a senior civil service post so I was the the chief international economist at the Council of Economic Advisers the chief domestic economist was a guy named summers Larry Summers don't know what happened to him so no Larry our were both registered Democrats were also both 29 years old by the way and and so I I was able to do now people do romanticize each preceding Republican president and so people talk as if the Reagan administration was still full of sensible responsible people and let me tell you I was my position was I was the guy sitting it behind the guy at the table passing up little slips of paper reminding him to say something so and there were a lot of strange people even in the Reagan administration I mean I I dealt on economic issues with the National Security Council and they were they were crazy as loons and I thought well but okay economics isn't their thing I'm sure the actual national security people aren't like this and then came the iran-contra scandal it turns out the whole thing was the hope the whole NSC was crazy as loons so but there were some responsible people still and there were still some responsible there there were Republican senators happens to be something that for complicated reasons I have some personal involvement with when when there was an uprising against Ferdinand Marcos in the philippines reagan's personal instinct was to back the dictator was to be pro authoritarian but the bunch of republican senators said no serve America stands for defending democracy you can't do that there are no people like that left or maybe maybe there's MIT MIT Romney I mean we have one Republican senator left like that but no so it's been a gradual process the you already had a fair number of crazy people purveyors of zombie ideas already I mean the tax codes a'm be goes back to Reagan but you it was a more mixed picture than and then the George W Bush there were it was worse but there were still some people who were somewhat rational but now I mean put that for those of you do monetary policy you know Bush appointed Ben Bernanke to head the Fed and that's and Bernanke is a known forever but is you know clearly a very reasonable person Trump is now trying to put unbelievable hacks on the on the Federal Reserve Board so you can see that there's been a progressive process of degeneration the u.s. is currently close to full employment do you think that trumps spending then amounts to a positive stimulus and where would we be if the Republicans had allowed Obama to engage in the same sort of that's something yeah I mean if we had you can actually put numbers to that I've actually taken we have some as I tried to make a point of using other people's numbers so it so we the Hutchins Center at the Brookings Institution has a measure of fiscal impulse estimate of what austerity or stimulus has done to the economy quarter by quarter going back all the way to to the financial crisis and you can say that if if we had provided fiscal stimulus at the rate that we are now providing under Trump all the way through Obama's term the unemployment rate would have fallen below four percent by 2014 so we could have had this full boom you know six years before we actually got to this point and it's but Republican Congress wouldn't you know claim to care about debt and deficits and so they wouldn't let that happen and of course if Obama had been in a position to do it we would have we wouldn't been running giant deficits to pay for corporate tax cuts which the corporation's it turns out are not using to invest they're just using to buy back their own stock we would have been using it to build infrastructure we would have been using it to improve child nutrition we would have been doing things that actually were building the future and in fact we're doing none of that now actually I was once so I wear a couple of hats and I was in a in one meeting Obama himself had a meeting of sort of progressive economists just a chat and so I was there it's specifically not in my journalist hat and the and he said I want to hear from you about ideas about things I can do and they said but don't tell me I should spend the trillion dollars on the infrastructure I know that you know that I can't do it but of course if the Republican Congress hadn't blocked it he would have and looking at the rest of Crump's economic rhetoric in 2016 how much has he delivered upon or rather how far have his actions fallen from his well it's actually kind of amazing there are two things that are amazing I always worry these that I'm gonna keep on I'll come up with a third thing I turn into nobody expects the Spanish Inquisition but anyway the but one thing is amazing he ran in 2016 as a different kind of Republican he said I'm gonna raise taxes on the rich I'm not going to cut them and I'm going to leave social programs intact I'm not going to cut Social Security or Medicare or Medicaid and I'm going to invest in infrastructure and he did none of those things in fact he cut taxes on the rich a lot in fact there's been a he's been doing everything he tried to to massively cut Medicaid and to massively cut health care for for less fortunate Americans and and this latest budget suggests that he wants to go after Medicare and Social Security as well so all of that was dishonest there has been I mean in in political circles infrastructure week there Trump administration has declared its infrastructure week maybe about eight times and nothing ever comes out so they so he's been none of the things that that he said he would be so that's one side in which he has just you know the the Trump in practice has been absolutely no resemblance to the person he pretended to be in the 2016 campaign the other thing is the economy strong US economy you know with low unemployment do 300 billion dollars of fiscal stimulus that's what tends to happen but it's really striking that the thing specific things he tried to promote try to run a business investment with corporate tax cuts but business investment has fallen and he tried to promote manufacturing with with talath with trade wars and although the economy as a whole is looking strong we're in a manufacturing recession so it's kind of an amazing performance he's he's managed to have an overall picture that is is gratifyingly full-employment but everything that he has specifically targeted has gone down so that's those are those are the things that are impressive about about this it's the the gap between promise and realities is amazing and looking forward to the rest of this year what are the central policies that the Democrats can focus on and develop so that they have the best chances beating drum come November okay so this is we're and you can have a bitter debates among Democrats how how much should they be pushing for dramatic new policies and how much should they be pushing for defending what we have and maybe expanding on it and I like I mean I I would like to see a big movement a progressive direction but I suspect that politically you really want to play on people's justified fear that they're going to lose what they have so you know Democrats won big in the 2018 midterms mostly by running on Trump is trying to take away your health care they should he still is they should be running on that and saying running on oh and by the way we're going to completely upend the health care system and replace it with single-payer even if you think single-payer is a good idea which it probably is is probably not a good way to run the campaign so I know Trump has given lots of ammunition this absolute betrayal of everything he claimed to stand for last time he ran should give Democrats an opening and I worry that if the Democrats instead turn it into a referendum on radical new policies however good those policies may be that's a good way to lose the election looking to hear it to the UK and the trade that the UK will be having post brexit what do you think UK trade deals will look like and how easily will it be able to shift from non - non EU trading partners so let me do the second part first the ability to shift to non EU training partners that's that's a delusion that's just there there are some think there's some empirical relationships and economics that really work and one of them is something called the gravity equation I think we probably have something right the trade trade between countries is basically proportional to the product of their GDP s which is the part of the gravity thing and strongly inversely related to distance it's a very strong thing and basically global economics wants you to be trading with your neighbors a lot and America however much you might like to make deals with America is 3,000 miles away it's just not going to it's just not going to be a substitute for for trade with neighboring countries and also by the way trade between the u.s. and the UK is almost free as is I mean the tariff rates are very low and cutting it you know so cutting at era from 2% to zero is not going to make much difference what does make a difference is eliminating frictions so the point the reason that that brexit is probably going to be costly is not the it's not that whatever tariffs come in it is the the fact that you had frictionless flow of goods and services across the border and now you have to have customs checks and that just that just makes life significantly more difficult not you know it's not doesn't mean grass growing in the streets of London but it means it means that the economy gets a little bit poorer and you're not gonna get of a customs union with the United States among other things they're actually a siphon the fact that it's just too too far and too big with there's a it's a peculiar we don't have a we have a North American Free Trade Agreement or you know now renamed but basically Trump just stuck his name on it but was it's basically the same agreement it's a free trade agreement but not a customs union and the reason it's not a customs union is that a customs union has to have a unified trade policy has to have the the same tariffs you need that you have to pay the same tariffs whether you unload Goods in Hamburg or Rotterdam who makes that decision well the EU has several big countries so you you can sort of have no one dominant player it makes all the decisions the trouble with NAFTA has been US Canada and Mexico either you give Canada and Mexico substantial power over the United States we cain't gonna happen or you have what is basically just us the u.s. making the policy which is unacceptable to the Canadians the Mexicans and we do the same thing the UK tried to have a customs union or a there's only so far the UK can can go with having a special relationship with the United States without effectively becoming a US Protectorate and so which which I don't advise okay so so it's not going to happen and sort of tying together everything that we've talked about so far why have both the policies of the Trump administration and Brax it not yet proven to be the economic catastrophes that they were predicted to be oh you know all right so I made famously a bad call an emotional call on election night 2016 said there's gonna be a disaster which I retracted three days later I said you know I let I did what what you shouldn't let yourself do which is I let my you know political dismay color my analysis and I said well actually you know if anything Trump's gonna run but but bigger budget deficits and that'll give the economy a bit of a boost so that was what the model always said and I was actually one of the people who who warned that the brexit opponents were scare mongering that you don't get instant gratification what brexit does it doesn't cause a recession things like that trait it's what brexit does is it puts some sand in the gears it it creates frictions it makes the British economy less efficient and therefore a little bit poorer but not an instant economic catastrophe it it's I think Adam Smith's that there's a great deal of ruin in a nation it takes a particular advanced country with all of the capabilities of flexibility of yours or mine you it takes years of really bad governance to to do a lot of harm to the economy either that or a completely complete failure to respond actively when a crisis hits for other reasons so I if if things go badly wrong if you know who knows maybe coronavirus will be the the the testing moment for probably not but who knows then you worry a little bit that the that the Trump has surrounded himself with the team of idiots but it's a the the but it takes a lot to really screw things up and it never made sense to say the bricks it was going to cause a recession it was always what if you took your models serious then if you're gonna comes you really should I mean models are not are not always right but the one thing you should never do which I failed my own injunction for three days in 2016 is to let your your emotions cause you if if you have a really strong reason to think that the model is wrong fine but but and so the fact that people were for a lot of reasons horrified at that brexit was not a good reason to invent new reasons for a recession and that's what I'm afraid some people did you mentioned their current of our stress then we've already seen the fact that's been having on the Chinese economy but as it spreads what impact what have on the global economy well that's what we want to know I mean it's it's it depends on how how big and how pervasive I mean the so we had SARS which was something similar in 2002-2003 which did there was a measurable impact not just on the Chinese economy but on the world economy it clearly did shave maybe one or two tenth of a percentage point off of global growth but in 2002 China was seven percent of world manufacturing now it's more than a quarter of world manufacturing a China is integral part of supply chains all across the world so if this is really disruptive then it is it it's going to be a much bigger deal than past ones I mean I'm hearing you know anecdotal reports from businesses saying that there's some crucial raw material some crucial inputs that that they normally get from their Chinese suppliers and and they've they're about to run out and they can't get any more so this could be a pretty big deal but it all depends on the epidemiology of which I know nothing and actually I'm afraid the epidemiologists are are kind of feeling but they know nothing because they can't trust the Chinese government so they can't trust the reports just a final few questions for me before we move to the audience in your view what has been the biggest disappointment and economic policy over the past decade oh no it's actually it's pretty simple I mean that there are lots of things but they but the most important thing was that the crazy turned to fiscal austerity in 2010-2011 I mean you know there we were with mass unemployment record low borrowing costs for all major governments and suddenly the conventional wisdom the I use a phrase and the in arguing with zombies very serious people they stole that from someone but it's a you know capital D capital S capital P all the very serious people suddenly decided that debt was the greatest threat and that we should ignore 30 million unemployed people across the Western world and and instead worry about debt even though people with money on the line people buying bonds were clearly not worried about debt and and that didn't Ormus harm like I said in the u.s. we could have had full employment by - by 2014 the UK suffered it was a much more gradual process but the UK suffered years of lost growth because of premature austerity in in in in Europe people look and they say well because Spain is recovering so it's all okay in the long run it turned out alright and this is where that's that's actually the meaning of the Keynes quote about in the long run we are all dead I mean the Spain went through ten years of hell and finally is emerging from it but my god the human cost is enormous in some places Greece may never recover so that the the shift to austerity and the the way in which elites decided in the teeth of air we knew about macroeconomics that debt was the most pressing problem that was the most disappointing thing I've ever seen and leading on from that what are the biggest challenges you think we'll face over the next decade in deciding economic policy okay so I'm a I'm a secular stagnation guy which is one of those economic jargon things that that and nobody has any idea what it means but but secular stagnation says that you have it's when you have persistent weakness of demand when the private sector just doesn't want to invest as much as it wants to save it which means that the economy it doesn't mean that you're always in a depression but it means that you're kind of always close to one and that that if anything goes wrong you don't have a very good way to respond and that's where we are all across the the advanced world we I'm not sure what the next big shock is going to be maybe it's coronavirus maybe not maybe it's something else but sooner or later there's always a shock and we don't have any shock absorbers anymore interest rates are so low that central banks really can't do significant cutting the u.s. is in the best position but even so we don't we don't have nearly enough room to to to respond to a recession you have even less and the an interest rates are negative and in both the euro area and in Japan fiscal policy we've already seen that that governments are very bad at using fiscal policy of the and so there's no it's not at all clear something let me win I shouldn't say if sooner or later something will go wrong and when it does go wrong it's not a little clear how it will respond so if you ask me when do I predict that the next great recession is coming the answer is I have no idea but what I do know is that we're much worse placed to deal with a shock than we were in 2007 and final question for me before we move to the audience globalization to a certain extent drove a lot of the growth in the past decade in the world economy but with the US we're drawing into more into policies what will be the main factor that drives global growth in the next decade okay it's a real quick I mean globalization was really is really important for for countries the u.s. if the u.s. turned protectionist in earnest which it has not it's just you know Trump is waging a limited trade war then US would be a bit poorer but access to global markets is really critical for a lot of the world's poor countries I I always use as the motivating example of Bangladesh just happens because it's because it's not a well-known story people don't follow a very man Bangladesh is still desperately poor and you know if you if you judge it by Western standards it looks terrible but it's also has three times the per capita income it used to have it used to be literally on the edge of starvation and now it's it's got some some room and it's all based upon being able to export labor intensive products mostly clothing somebody said it's not a it's not a banana republic it's a pajama Republic and and that all those open global markets are absolutely critical for developing countries so far we haven't done too much damage I mean Trump has imposed a bunch of kind of scattershot tariffs on Chinese goods but China actually is if you were going to pick an emerging market that's able to handle that relatively well it would be China and a lot of the stuff that that we've blocked by terrorists from China we're sourcing from Vietnam or Bangladesh instead so it's not actually such a terrible thing for the world and if if that's how it stays then then we're ok then a Dennett on worry i mean a full-on outbreak of 1930 style protectionism would be disastrous for me would hurt global GDP but much more important it would hurt a lot of poor countries that desperately need those access to global markets but I'm not sure that's gonna happen it looks to me as if me a the one of the funny things about Trump's protectionism is that is not there's not a strong political movement demanding it there's actually not a whole lot of constituency for it it's this is really one of the few things that is just his personal obsession and and it's not clear that that's a trend that's going to go on very very much further than it has thank you we'll move to questions from the audience now so if you have a question please raise your hand wait for the microphone to come to you and stand up while asking your question and could we start with the member in the second room in the white sweater thank you I'm just wondering if there are any economic policies that do not hurt the climate and and also appeal to them sorry to the Republican base sorry that would would are there any economic policies that are good for climate and appeal to the Republican base okay you've got make a distinction between the Republican base being like ordinary voters and Republican politicians and and the quick answer for the politicians is no there there are people that we've had there was an op-ed by George Shultz and Ted Holstead saying let's do let let's have a carbon tax and rebate the proceeds to the general public and this will appeal to conservatives as well as liberals and everyone will be for it and there's an economist letter that's signed by several former Republican chairs of the Council of Economic Advisers and every living form of the Federal Reserve Chairman calling for the same thing and they're all living in a fantasy world there is nobody in the Republican political establishment who has any interest in these things they they do not want it's not it's not about conservative principles or anything like that it's they they just do not want to acknowledge this phenomenon for couple you know they don't want to acknowledge first of all that government can ever do anything good because if people think that if you see a successful climate change policy then people might say well maybe we should also have a universal health care and then that and then the the grip of the fossil fuel interests the there's no way to deal with climate change that doesn't financially hurt people whose money is locked up in coal so no it's a unfortunately there the idea that you that that's some clever twit tweak to the policy is going to get you Republican support it's just yeah I am you might believe that if you've been in a cave for the last twenty years if you go to the member in the back room and thank you very much for your speech I was wondering do you think that there is a way back from the zombification of discourse both in the US and the UK or do you think that there are now two strong political economic incentives for politicians to spread disinformation and continue to prop up a lot of these ideas which theoretically are according to technocrats completely dead but still very much alive in the minds of the public through this kind of fake news in post truth world okay well part of the answer is you cannot giving in to the spirit it's just it's just the wrong thing to do so you always have to hope and there are you there are opportunities sometimes a window opens up so for for many many years a significant expansion of health coverage in the United States was just impossible we knew it couldn't be done and then a window of opportunity opened up in large part thanks to the financial crisis and we got it done and it's it's a it's a Tafel of but it's still 20 million people now have helped to have health care who didn't have it before so so you can get some things done and then this it's possible that the things yeah I'm trying to figure out what what is going on on your political scene a little bit and it seems to me that that Boris Johnson is little bit like like Trump pretended he was I mean he is actually calling for investment in infrastructure it's not clear that it's their smart investments in infrastructure but but he does want to actually build some stuff so that's it that's a difference so so there is some room I mean the things where there's really big money involved it's very hard but there are some things like the debt obsession I think that had that was much more just a kind of self reinforcing prejudice among among elites and and those things can can shift they can they can change but I mean who knows the we we have had we have had political reforms in the past there have been times when when policies got much better and you just have to hope that we'll find windows of opportunity to make that happen again can we go to the member at the end of the first room sorry here in the first room hi I'm curious to hear more about your writing process you have a knack for writing pieces op eds that are very succinct very relevant and really speak to direct kind of feelings or issues that many people have and more broadly I'm curious what motivated you to branch out from academia into writing more publicly relevant politically related pieces okay yeah you know I I had a sideline an occasional public writing from way back I mean I was a I was a columnist for US News and World Report in the 1980s I never met anybody who read it but the but so I and by the way is terrible I mean I practice is really important here and so I I've always been less techie less jargony than most people even my academic writings always striving for maximum simplicity and then the actual somehow that gravitated and I got this offer out of the blue to write for the New York Times which was nothing I was anticipating but just seemed like a chance to do something different and but the actual process of writing that there a couple of things one is to I'm always working I'm always accumulating material every time I'm on the you know on the web on Twitter selectively the picking and anything that I think that might be useful I you know I archive so I there's there's always a backlog of stuff that's ready and then I pay attention to events and when it seems like that there's a moment when when it might actually be useful to to write about something and I'll do that and then there none of the press there are rules for writing the you always have to I talked about the little book bit in arguing with zombies that that stay with the easy stuff you know I have I don't believe I've written any columns about quantitative easing because that's not a topic that that will that will make any sense at all to to to the readership right in English and then the I there are certain basic communication rules I'm told that the military system is tell them tell them what you're going to tell them then tell them then tell them what you told them or as I sometimes say you should write in Sonata form you introduce a theme you do some stuff with the theme and then you return to it at the end and got and always remember that nobody has to read you that's a very important thing that academics have trouble with if you're writing for a newspaper nobody needs to read you so you have to have something to grab them at the begin you have to have a stinker at the end so that they remember it and even with all that by the way at the moment that's actually a little bit hard for somebody like me to break through if you look at the most popular stuff in the New York Times on a given day it tends to be impeachment how to boil a perfect egg grilling with mayonnaise 32 places to visit in Italy so you know people are okay could we go to the member in the second row over there hi thank you for talking to us we've been speaking a bit about your expertise in international trade I was just wondering if you might say something on the other big area which is new economic geography we've got a lot of inequality within countries and in the distribution of economic activity within countries in the US and the UK and in Europe particularly here the policy responses to these problems particularly the strength of London in the southeast compared to the rest of the country and the policy response seems to be as you put it build something um what do you think new economic geography should tell us about how we can have a more nuanced and positive policy response to these issues okay so I yeah this this is one of my you know original this is my old hunting ground that I basically helped create the new economic geography 30 years ago and and something happened turns out you didn't realize it right away but it's now clear that there was a breakpoint somewhere in the 1980s up until that point regionally regional differences had been steadily narrowing so backward parts of advanced countries were catching up with the more with the richer parts and that all went into reverse sometime in the 80s and now you have the highly educated workers are migrating to places which already have highly educated workforces the the yeah that just been a shift toward towards there's a lot of left behind regions in all of our in all of our countries and as best we can we don't fully understand it but it looks like it has something to do with for once it this this is mostly not political it's a it's being driven by technology knowledge-based industries want to be where lots of people with with high technical skills reside and that offer the amenities that those people want suppler things too one of the funny things that you see is that corporate headquarters in the US a lot of them had moved out of the bigger centers and the now art they're moving back in and the reason they can do that is because they can actually physically separate the low-level jobs from the high-level jobs it used to be that to have your corporate headquarters in Manhattan you have to have you have to pay five thousand people enough to to to live given the cost of Manhattan real estate now you can have only a thousand people that the top jobs and the four thousand other people can be somewhere out in in a much cheaper location so all of these things have now it's and it's it's it has definitely caused a lot of stress I mean the the the deaths of despair in the United States is of opioids suicide and alcohol is a huge thing and it's very much a something that's taking place in the left-behind regions of America the lots of men without work and by I'm not being sexist there but it's been you know particularly it's the it's the men without work that is is that is is is showing that something has fundamentally changed and the and politically those left behind regions are the ones that tend to be radicalized radicalized on the right as it turns out so that yeah I mean the the popular vote was almost evenly split in the United States in 2016 slightly you know the people made their choice and they chose Hillary Clinton but then we have this Electoral College thing but the but two-thirds of the GDP voted for it for Clinton it was the it was the prospering regions that voted Democratic and the the Left Behind regions that voted Republican sothank and out and you know I can go on yeah so if you look at you know where is where is the AFD in Germany I justice I'd never imagined that that that you know neo-nazis would become a force and in Europe again but there they are and the and they're their core strength is in the former East Germany which is very much a left behind region now the question is what do you do about it and that is really really hard I haven't gotten any good answers you can give aid to lagging regions but you know we do that it actually turns out the US the US we don't have regional policy except that we do because in practice given the that we have a federal government that is largely paid for by progressive income taxes and that we have social programs that that are strongly redistributed poorer lagging States de facto receive huge aid the state of Kentucky effectively receives aid from the rest of the United States that's about 20% of GDP and yet that's votes it votes for politicians who want to slash the government so that's all I've but anyway and but the point is that with all of that the process of growing regional and equality is still proceeding you can try to give people point to examples seeing a successful there are occasional success stories that where a particular City small city in the heartland makes a comeback but they tend to be isolated success stories and I suspect that there's kind of a limited number of such success stories that if if if if South Bend Indiana to take a random example does well it's probably because it it grabbed the slot that might have gone to some other town instead a few turns I grew up my early years in in Utica New York you've never heard of but it's in the middle literally it's it's pretty much the middle of nowhere and was an industrial center and suffered terribly but has had to come back because it's the headquarters of Chobani yogurt and if you ask why did that happen it's because in the mid 90s they accepted a bunch of Bosnian Muslim refugees so it's just one of those stories where random events lead to but but those are isolated stories and and the fundamental fact is that the draw of those big highly educated metros is very very strong you know when Amazon solicited bids for second headquarters they actually said if you if you're Metropolitan Area doesn't have at least a million people and a highly educated workforce don't even bother calling us can we go to the number over here in the first row hi so you mentioned globalization and talked a bit about it and its importance in alleviating poverty but surely that alleviation is offset by the increased distance that Goods need to travel and the carbon that they the carbon emissions that are emitted by such travel and so I was wondering which issue do you think is more pressing the need to alleviate poverty or climate change or is there a way to address both thank you okay um that's actually a very good question because if if we do move to a we if we have aggressive climate policies which we we damn well better have pretty soon the I've actually sat through some presentations about the technologies here so the biggest source of disastrous emissions is burning coal to generate electricity and we should stop that immediately and it's easy with the technology renewable technology has had a revolution so that's easy local ground transportation electric cars you know as we we know how to do that we'll get better at it and if if the electricity is generated by renewables that's fine the hardest parts the hardest things to replace our air and and marine transportation those are the ones where we still there aren't yet good technological alternatives to hydrocarbons maybe hydrogen something but we don't it's so it's likely that a world in which we had we put an appropriate price on emissions which is only part of I'm not I'm not I'm not one of those people who thinks that the carbon tax is the be-all and end-all of policy but it's certainly part of it would be one in which international shipping would be substantially more expensive and it would cut into globalization now it's in a given past experience people may find innovations so they it's not necessarily the case that we have to do lot a lot less global trade in order to control emissions but it's definitely true marine transportation is is a really hard thing it is one of the areas that we're we don't have a we don't have a good zero emissions technology on on tap and it would be it it it would certainly be at least initially a casualty of effective climate policy that's saving the planet takes priority we go to the member at the very end of the chamber you spoke earlier about these divisions within the Democratic Party and how refusal to compromise on progressive ideology will be a losing strategy so I'm curious in your opinion what is the best message or strategy to unify Democrats right now we're extremely divided okay I don't know I mean it's not my expertise right and it's not clear that's anybody's expertise but you know I actually sit at the center the stone Center for the study of socio-economic inequality which is genuinely interdisciplinary we actually have sociologists political scientists as well as economists and we actually talk to each other so I actually take seriously I'm not one of those economist who thinks that we know everything and and don't need actually I sorry Jagdish Bhagwati a great trade economist was my teacher and he once explained he said he was allowed to to do this his personal theory of reincarnation which was that if you were a good economist a virtuous economist you were reborn as a physicist and if you were an evil wicked economist you were reborn as a sociologist that's that's the typical economists attitude but I don't share it and the so I talk to the political scientists but they're not at all clear on how how this works I suspect it's going to be I mean I'm going to be you know Democrats to unify behind whoever it is that the stakes are too high and and it doesn't and and and the outcome is probably pretty much the same regard lain with the stakes are too high we may have some problems if those look like Bernie Sanders has kind of a hard floor of 24% support and a hard ceiling of 26% support and that maybe I'll make it a little bit difficult to to unify the party behind him and then if if if we end up which we might with somebody like Michael Bloomberg some of the Sanders people will scream bloody murder you know of the here's a plutocrat and but III think all we can do is try to argue to people look the these things these things are in the scale of what's at stake unimportant I'm not a yeah III would and maybe maybe still we we can come up with somebody who is kind of acceptable to all camps but God knows we have time for one final question could we go to the number what do you believe will be the largest long-term challenge to the American economy oh wow it depends on how long-term we're talking about mean for for the next decade or so the it's it's this lack of shock absorbers I mean it inequality is a inequality is a really bad thing and the rise in any calls you're really bad thing but it doesn't it's not exactly you can have an extremely unjust economy that that doesn't have a recession so so the the biggest I think thing right now is that you know in on average when recessions hit the Federal Reserve cuts interest rates by five hundred basis points the current federal funds rate is only a 150 hundred seventy five basis plane anyway it's someone they we have only about a third as much room to cut as we have cut rates in a standard recession so we don't have a good response when when something goes wrong that's the that's the kind of next decade but beyond that it's all climate change I mean climate change is the absolutely overwhelming issue of our time and the US economy will will suffer once Florida is all underwater you know it's I which is which is not that remote a prospect and and of course not many more things lots of stuff before that once the entire Southwest becomes a desert so climate but that's that's everybody is in the eye I do say in arguing with zombies that that sometimes I wonder how I can justify writing about anything other than climate change could it is the existential issue out there the trouble is given political realities you have to you you have to talk about other stuff because that's marching around with a sign saying the end is nigh doesn't work even if it's true on that note that's unfortunately all we have time for but please join us in heading over to the Goodman library for a book sale and signing of arguing with zombies and please join me in thanking dr. King for coming you

Channel: OxfordUnion

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Length: 57min 50sec (3470 seconds)

Published: Sat Mar 21 2020