Economist Paul Krugman on the Future of Capitalism and Democracy in America

good evening ladies and gentlemen I'm thrilled to see so many of you here tonight I'm vast Christodoulou the how-to Academy's deputy director and the producer of our weekly podcast series tonight's event is the latest in a series of collaborations between how two Academy and the New York Times entitled how to understand our times its mission is to improve the world by sharing knowledge insight creativity and understanding and our guest speaker tonight has been doing that through his column in The Times for more than 20 years he also writes a free weekly newsletter that I strongly recommend you subscribe to if you aren't subscribed already I mean of course Paul Krugman Paul was the Nobel laureate for economics in 2008 and is a distinguished professor at City University of New York tonight he's in conversation with the tortoise editor Guardian columnist and acclaimed author Matthew d'Ancona please give them both a warm welcome all right well well good evening everyone and welcome to this special occasion that I was just saying to Paul earlier that I think I've actually been reading his column for all of its 20 years and so it's a particular thrill for me and I hope the conversation we're going to have will be stimulating vu2 I think they were very he falls into a unique category which is someone who is both a Nobel laureate and has also had a cameo in a film with Russell Brand and Jonah Hill I don't all Club of global recognition yes so and I'm joking but I'm not which is that he really is one of the the the the handful of public intellectuals who were absolutely essential reading and are recognized around the world now the book that we're going to talk about a bit amongst as many works is is this which urge you to buy afterwards he'll be signing copies so don't miss out it's called arguing with zombies and it's a collection of his writings primarily since 2004 and I suppose Paul what I want to start by asking is you know just to define terms you know what is a zombie idea and how do they manage to keep stalking the world unstopped so a zombie idea actually stole the term from a obscure paper about Canadian health care of all things but anyway the zombie idea is an idea that is should be dead because it's been proved wrong by experience by logic it's we know that it's not true but it refuses to die it just keeps on shambling along eating people's brains and unfortunately a very large part of our political policy debate is really shaped by the attempt to somehow stop these zombie ideas which keep on dominating dominating our politics dominating our policy so that's that's a zombie I mean if we can get later and there there's a small technical distinction between zombie ideas and cockroach ideas which is another thing but we will get to that and very important distinction what what that leads to inevitably is why zombie ideas which as you described in many cases in the book have been you know absolutely undermined by any evidence-based scientific or economic analysis continue to stalk I mean what is propping them up okay usually the answer is money there are some other things evolved as well but so in the US the most persistent pervasive zombie idea is the idea that cutting taxes on rich people pays for itself that yields the magical economic results and and and the revenue comes flooding in has no much you used laughs a curve yeah and we you know we've been through this now there are many many tests of it it's always failed so why does anybody support this idea and the answer is well famous quote from Upton Sinclair it's difficult to get a man to understand something when a salary depends on it's not understanding it and the we have a whole network of think tanks journalistic outlets professional hacks basically who are well you know any anything that that any idea that would lead to billionaires having even more money is going to be lavishly funded it doesn't take a whole lot of support from a handful of wealthy people to keep something like that alive and so that's that's where it is climate change the money if in the magic of tax cuts is is the most important the denial of climate change or the denial that we can do anything about it is the most consequential in fact is the one that may destroy us all and that if you ask me what percentage of the people who are climate change skeptics what percentage of the people who claim to have contrary evidence or claim to produce economic results that that say that it's impossible to stop it what percentage of them are basically working employed by the fossil fuel industry the answer is 100 effort there there there it's an entirely corrupted slam dunk I mean another one of those ideas that that you deal with in the book and has of the obvious relevance here as well as is austerity that's from which it's hard to exaggerate the extent to which it was Orthodox in this country as elsewhere to argue that after the crash deficit reduction was absolutely essential to economic recovery and that without it the British economy for instance would would end up in a disastrous place now why was that wrong and what and how did it come about that that was so pervasive an idea okay the reason it was wrong and we've actually now I mean it was never the case that there was a consensus among economists that that debt was a really severe issue but there were some but what's happened now at this point even the most author of a mainstream economists people like Olivia Amman chard of the formerly of the IMF or Larry Summers are saying the same things I've been saying all along which is that debt does a grossly exaggerated issue the reason it's grossly exaggerated is that advanced countries have the ability to borrow a lot as long as they borrow on their own currency and if you actually ask you know will we have a debt spiral where interest rates mount and that means even more debt the arithmetics has no right now Britain can borrow an interest rate long-term an interest rate of less than 1% the British economy has inflation that's more than that and plus some economic growth so in fact even if the interest payments on the debt are not enough to cause a death spiral if if the British government just keeps the deficit can it can even run a budget deficit and still have the debts steadily melt away as a share of GDP so that the arithmetic just says it's not right it and it never was right it never made any sense the now this is one where it's a little bit it's a little less crude and crass than climate change or tax cuts there are some money issues but I think the biggest problem I have a a whole section on this stuff which is titled very serious people yes which is the term I stole again from someone someone else but the very serious people are people who say things that sound very serious and they sound very serious because that's what lots of other very serious people do and they it sounds like it's important tough thing - yeah of course we must get our fiscal house in order and it's very difficult to get people off that notion because that's kind of a sociology of how how do you prove that you're a responsible tough minded person by taking what sounds like a serious position which austerity sounded like although it was in fact disastrous you note as well in one of the chaps in the book that term one of the columns that the right is quite nimble let's say on Deficit when it suits it to chase that it's quite happy to rack it up oh that's right there the the whole story of the u.s. of political economy in the US has been that as long as there was a Democrat in the White House Republicans said that debt is an existential threat that we must cut spending and they had enough power to force out quite a bit of austerity in the United States which definitely hobbled the economic recovery the moment literally the moment there was a Republican in the White House that nobody cares about debt and so there suddenly we they blow up the deficit to a trillion dollars and so that was very strategically so there was from the point of view of the right yes the debt panic was simply a way to to prevent Democrats from actually doing anything to prevent progressives from pursuing any any goals but then there are a lot of other people who were not especially part of that who just bought into it because it sounded serious and also were amazingly gullible we're willing to believe in the seriousness of Republicans like Paul Ryan and the former Speaker of the House who were obvious phonies and so that's how that that whole thing happened another example is the skills gap now I can't remember an administration on either side of the Atlantic that has not claimed there was a skills cap yeah but you you pretty much sure and but this is not the reason for most the pathologies it's blamed for well in 2014 everybody who mattered was said that the reason that we have high unemployment is that workers don't have the appropriate skills we have a we lack the right mix of workers to deal with the 21st century economy and here we are it's 2020 and the US has three point five percent unemployment and the workers have not gotten more skilled in that time it was all it was never there was never any evidence for this but again it sounds serious and by the way this is this is a recurring thing do you go back to the 1930s you will find a lot of people saying oh you know this modern technological this 20 20th century technological economy requires skills that workers don't have and the idea that that you can restore a full employment with something like this this crazy person john maynard keynes says by having government spending is is is insane obviously it's it's a problem of technology and skills and then along came a very large fiscal stimulus otherwise known as world war ii and and all of a sudden we had full employment all across the western world now are we there for a fair conclusion to draw from what you've just said is the panic around automation which is in every magazine cover to great or just wrongly targeted oh that's oh that's a weird one and that's another one I think we're no I said so the basic idea of Keynesian economics and a sort of cosmic level is that is that often the economy is depressed for reasons that are not deep there just is not enough spending for whatever reason you just don't have enough demand out there and you can restore full employment by just creating more demand Keynes had this great essay in 1930 where about the coming the Great Depression which was unfolding and he said you know we there's nothing wrong with the car there's nothing wrong with the engine we had magneto trouble I would you met this little I get more or less the alternator that it's as tiny though as is it's a small technical problem with the vast consequences people find that really hard to accept the idea that something like mass unemployment something like what the world looked like in 2010-2011 could be something that required just a technical fix just let's go out there and spend some money and get people back to work is I think offends a lot of people's sensibility they think that large problems must have large causes and they can't be such an easy solution and so there's always this tendency to say that's must be something big must be that robots are taking away all the jobs but first of all we've been there before it's been this has been a complaint many many times and if robots were doing all the work so we don't need workers then the workers remaining ought to have had very high productivity well we actually have even in my country and even more here you have a the lowest productivity growth we've seen in generations so the the robot story is just not the technological unemployment stories just completely at odds with with the data if I go on a bit on this I think part of the point is that we've had big things of automation before big cases where particular types of jobs are eliminated by technology but in the past they've tended to be blue-collar jobs and and people like us don't notice that so New York I live in New York New York used to have hundreds of thousands of longshoremen now they're all gone there's a couple of dozen gigantic cranes over in Elizabeth New Jersey that do the work that those 200,000 longshoremen used to do that's a huge technological displacement of course other jobs materialized but it didn't make a big impact but a lot of what we see now is we see computer translation computer so we see AI machine learning we see a high tech stuff which affects high skill people whom we might actually know yeah and so we make a big deal of it but the fact the matter is it's not the actual amount of displacement going on now is actually much less than happened to lots of ordinary workers in the past do you think Automation I mean will it change the nature of worry notwithstanding your point about the totals will it change the nature of work significantly well or is that just something that happens anyway that happens anyway I mean if we look at the the in the u.s. sorry most of my I know my numbers for the us- so if you look at the ten fastest-growing occupations in the US eight of them are basically some kind of nursing right so if we actually look we're where are the jobs a lot of that is health care a lot of is personal care it's and which is fine those are real jobs and in fact they happen to be jobs that at least for now and probably for some time to come we can't actually have done by robots so nothing wrong with that it's it's yes I mean there are a lot fewer people making stuff yeah but that's happened before as well and then we used to have you know most people were farmers and these days the we actually no longer even keep a number on the number of farmers in the US but they're so few but we know that there are fewer people farming than there are people playing World of Warcraft so it's a it so that's just sort of but we found other stuff to do and so manufacturing is now something like 8 percent of the workforce not because mostly because we're so good at it we don't need a lot of people to do it but there are lots of other things to do and we haven't at all run out of things for people to do so and but my point here is I think that blaming automation putting the blame for lagging economic performance lagging wages on automation is not only you know it's wrong but it's also it's a Dodge it's an escape because what's really going on you want to ask you know why our workers done so badly it ultimately comes down mainly to issues of power it has to do with the crushing of the union movement in the United States and wage stagnation because the lack of collective lack of collective bargaining is because minimum wage lagging far far behind productivity so the what we're doing it's an out for a lot of people saying oh it's all these impersonal forces and technology and what can you do is a way to avoid facing up to the the political decisions that have actually caused us to be where we are so inevitably one wants to talk about Trump and what's interesting in the book is your consistent contention that Trump is not a singular phenomenon in the sense that then you say something like Trump was coming which is very very important yeah proposal now can can you elaborate on that well okay so the big news in big story for America right now is we're going to have the latest budget and the budgets in the u.s. given our system are not what actually happens but they are kind of a statement of of intentions and it's it's going to include big tax cuts for the rich and block granting of health care for lots of people that will lead to large cuts relative to current law and cuts in programs and you asked when when did we first start seeing proposals like that the answer is the 1990s the Trump 2020 budget is almost identical in the broad picture to Newt Gingrich's Contract with America from 1995 the Republican Party has moving in this direction that used to be for a long time they were still some holdover long served long serving senators who came from an earlier era when that it wasn't so extreme but we've been heading in this direction for quite some time I think it just may have happened a little bit sooner than we might have thought but but the this was really going to that this movement towards a this kind of alliance between the plutocrats and and the and and the white nationalists has something that that's been building for decades can you explain what you mean by movement conservatism because it's a very important idea in the book yeah so this is it's not there's nothing quite like it in any of the other in any other country it's not UK I don't believe there's anything comparable though you may be heading that way but if in the United States so we have two political parties and they the press likes to treat them as being equivalent and even aside from the question which you think is right in what you think is wrong they're just very different animals the Democratic Party is a it's a loose coalition of interest groups labor unions such as they are civil rights advocates lawyers actually it turns out environmentalists you know a bunch of who who usually manage to act more or less together the Republican Party is a very hierarchical structure it's or it's actually a piece of a very hierarchical structure which includes the Murdoch media empire Fox News is enormously important in the u.s. it includes a whole network of think tanks which are not actually think tanks bar actually propaganda institutions it includes lobbying groups all of which are very tightly controlled and they push a consistent line so you know if your idea is that that there's kind of a daily memo that goes out that tells Fox News anchors what which which smear they should perpetrate and that that memo also goes out to two staffers in Congress on the Republican side yeah that's exactly what happens yeah it really is a coordinated thing and it's it's it's a it's all embracing it it's you built at this point almost everybody left in u.s. politics on the right has grown up within that system this is where they made their career this is the safety net if they should happen to lose a reelection bid there are jobs waiting at lobbying firms and think tanks for them we actually have a term for that we call it we not welfare there's a there and they say if they should happen to to deviate from the party line then you know terrible things will happen watch witness you know we're watching now Mitt Romney being described as a socialist because he was the one the only Republican senator who voted to convict Trump so new including MIT I suspect well yeah and which is kind of a quite amazing actually if you think about about where he came from I mean this is the guy who said corporations are people my friend but because he what he didn't obey the the Trump line he's amount is a Marxist so but that's really important you need to understand that this is not the case it there it doesn't really matter what the personal effect or the language used by a particular Republican senator is it doesn't really matter this is a machine this is a sort of in a way the ultimatum machine politics and it's a very very powerful force if you don't understand that then you completely missed what's actually going on and in the political scene because it's interesting because there's a narrative that somehow Trump has subdued the Republican Party you know they saw him coming down the the famous golden escalator in June 2015 they laughed at him and now he has tamed them but but you get I get the feeling that you think that really it wasn't an act of colonization at all it was it was a perfectly perfectly consensual relationship they thought he was going to lose yeah they thought he would be such a out rate that the scandals and the and they just implausibility of yeah guy as president would so they were they are posted because they thought he was going to lose and maybe I mean he talked a moderate game on policy in 2016 he said I'm going to raise taxes on rich people and I'm going to maintain the the the social safety net programs and they someone that may have worried that he actually meant it but in practice he's been absolutely an orthodox Republican in practice II so it it's actually this column for tomorrow's newspaper play so it's it's you could say that that Trump took over the GOP but you could equally well say that the GOP took over Trump that he has he has become basically it's a deal he will do exactly the same policy agenda that they wanted and in return they will run cover for his corruption and an abuse of power you see you mentioned in couple of places that machismo forms a very important sort of very very debase the kids know that you know this is a guy who wants to build a wall yeah and how much do you think that animated his hatred of Obamacare well okay I think he had hatred of Obama in general I think yeah at some level anything Obama did was bad anything about it was bad so it's and that's partly you can there are many reasons if he's he's he's a good hater but the but no I think I I think actually the the hatred of Obama care is is actually which is you know spread across the Republican Party and that that really comes down to two things one is the way it's paid for so which is the actual revenue stream that backs the subsidies that make Obamacare work it is a tax on high incomes so it the Obama raised taxes on on high Inc on the on the one percent more than than many people realize and a lot of that was because of the financing of Obamacare but the other thing is the great right-wing fear about Obamacare which I think has been somewhat vindicated is that it might work because if you actually demonstrate that the government can do something good for people if they can do something good on one front then maybe we should be doing good things on other fronts and there and so they they don't want they want this to be a test of a dangerous theory yeah I mean this was actually you go back then when the Clinton Bill Clinton health care reform failed their library problems were quite explicit saying we must not allow this to succeed because it will empower advocates of a more expansive role for government and so the same thing and Obamacare in in the end I mean they wasn't that there's no end but the 2018 midterm elections were largely a democratic victory because people were so upset that that Republicans were trying to take away what they had gained under Obamacare there's a full passage I hope you don't mind me quit he's from October 2018 column and you say Trump has an advantage he didn't grow up in the conservative hothouse his very crudité means that he understands that his electoral chances depend not on repeating conservative parties but on maximum ugliness brilliant piece of writing but tell us what you mean by maximum ugliness oh I mean the locker up racist pretty explicitly racist remarks insulting they just one of the things you see in me most Republican members of Congress are apparatchiks they've grown up inside this this hot house and they actually fairly often they they repeat the sacred phrases of their movement under the impression that they mean something to ordinary people and what they don't mean so when when they say oh here's the free-enterprise the public doesn't care about that one way or the other now there was a famous moment the Eric Cantor who was a rising star within the Republican Party was the number two person or number three person in Congress and was defeated in a primary challenge by a somebody who was more Trumpy than he was but he but on Labor Day in the United States you know we uh we don't celebrate May Day we have a different Labor Day but he put out a memo celebrating people who built businesses just that's that's the way Republicans talk they don't value workers actually yeah but he forgot that you know most people are not business owners and and so had lost the ability to talk to ordinary people because he'd been so much a creature of this this inward-looking hermetic world of movement conservatism and Trump is not Trump says the quiet parts out loud is quite explicit in his appeals to to racial fears and mostly racial fears but other things as well and and that's that's an advantage I mean Mitt Romney who surprised us all by showing some principles part of his problem in 2012 was that he was he came across as aloof and and a rich guy who didn't care about ordinary people and which he probably is but Trump is a rich guy not as rich as he says but still who clearly who doesn't care about people in general but he does channel the the anger the heat of a that a lot of the basis feels I mean one of the most interesting things you chase is is this very central role that culture and identity and white nationalism plays in the moment and to the extent that you say you know racial resentment is now more important than economic distress as a as a as a motivator now this is a it's fascinating from a economists but B it's extremely alarming to hear now what is that a change was it was that germinating it's been building it it used to be the case that I mean the the rise of conservatives conservative politics in the United States up until maybe 10 years ago was entirely because southern white voters switched parties all of it it was entirely the that after the passage of the Civil Rights Act Republicans the southern whites became Republicans now that extends to some extent to working-class whites in in northern states as well but it's and but if you look at you know I'm I'm a academic who does thinks in terms of graphs and statistics and so on and then tries to imitate an actual human being but the but if you if you graph income versus political alignment which you can do in the United States and it's it's it is true that the richer people are the more Republican they tend to be although the more educated they are the more democratic they tend to but but if you look at that at the groups that are off the line that are either varied that are very different from where you would predict given their income there are a couple of groups that stand out african-americans are even more democratic they're relatively poor but they're even more democratic than you would expect because they understand what's going on southern whites are equally extremely Republican in the opposite direction they're relatively poor but they're very very Republican and then a few other groups turns out that the Jews are far more liberal then then you would expect given their income and which I will say is because now I can speak from you know that that is that is my tribe and because we always know that once prejudice and hate starts spreading we're always next in line and the and what's interesting now is Asian Americans have moved the same way they have figured it out as well that that even if they're affluent in the end they're they're not going to be considered real Americans that if this stuff happens and so you it's just transparently obvious from voting patterns from everything that that that race is essential and look the white nationalism has always been there mmm-hmm but what's happened now is that the all of the restraints all of the a lot of the if you like you know hypocrisy is the tribute vice pays to virtue they're people used to be hypocritical and and and tone down the racism and not anymore so I mean just to be clear you give Trump some agents in this because a moment like Charlottesville where he talks about verifying people both sides that has to play into the permissive environment you're talking about horse yes so yeah it's possible had had things turned out to be a had some more conventional Republican one they might have I think in many ways the same things would have happened then eventually a trump-like character was gone but it might have been delayed a bit I mean you go back you know it's the things I say as each anything I say each successive Republican president has managed to make his predecessor look good and so I was not a fan of george w bush to say that's one thing you will say is that after 9/11 he was pretty he really made an effort to say this does not mean that everybody muslim is bad he does not mean that every arab american now that he he did in fact take a stand against an outbreak of of sheer hatred and trump of course does the opposite Trump they know there's this imaginary crime wave by undocumented immigrants in the United States it's not happening it actually doesn't happen at all but in but Trump insists that is happening even though it isn't well that brings us neatly to the question of the truth and you again I think one of the most interesting themes of the book is this notion of climate change denial as and you call it the crucible of trumpism you know that is it were you say that it's the application of the depravity of climate denial to every aspect of politics and there's a very very interesting way of looking at trumpism yeah I think about I don't know how much people have followed the history here but the you know as the climate change became unambiguous which really is has is now we it really became undeniable 20 years ago that but that didn't stop people from denying and if you look at the various pieces of it it became widespread view on the right that there it was a host concocted by a gigantic international conspiracy of scientists which is you know the Trump conspiracy they're theorizing the the queuing on the some some random pizza shop is is a place where Democrats engage in in child abuse or yeah that's where this this that's the craziness the the wild conspiracy theorizing was already sort of standard practice on climate the abuse of power I mean the the Attorney General of Virginia who is now at Homeland Security I believe going after immigrants but he spent years on a crusade trying to basically criminalize crime at climate science and particularly going after Michael Mann who's the famous hockey stick on global temperatures trying to not just not just you know denounce him but actually try to basically put this guy in jail for doing science so all of the things that we're now seeing on a much broader front were present years ago on the climate issue and of course in climate change the the the public debate was put back a long way by the continued insistence that there was there was doubt right all that you referred at the beginning to you know the the the money that's poured into maintaining doubt in these issues that was surely extremely important in that yeah if you actually so this has been people Naomi Oreskes I think mostly did look at art that handful of I think of articles and professional scientific journals that touch on climate change three percent expressed some doubt about the phenomenon and of those if you then look at the at this sources of financial support for the authors of those skeptical articles how many of them have basically been supported by fossil fuel interests and the answer is all of them yeah it's a the the appearance that there are two sides to this story is entirely manufactured but which is an analog with what happened in the 50s with the tobacco industry we've been through this on tobacco we've been through this on acid rain it's but of course tobacco is bad but and and local air pollution is bad but but climate change is a existential threat to civilization and still this happens you say it's very important when necessary and then anywhere necessary to cool out people of bad faith and bad motive isn't that a sort of implicit critique of the media for what you might call bogus impartiality bogus equivalents I was not actually implicit no I I wrote way back in 2000 during again if we we forget just how much Bush lied about mmm about his policies now it's not quite on a trumpian scale but was still pretty admit not awesome and you could not get journalists to report that and I said at the time that if a candidate said that the that the earth was flat the newspaper headline would would read views differ on shape of planet right and and and that is still it's less true now than it was but it's still a very powerful force and has allowed this stuff to flourish and I can't I I hold zero sway maybe negative sway with with with the news reporting side of the New York Times but I at least I'm not going to make that pretense I'm not going to when when when one side is not only wrong but clearly deliberately lying I'm going to say that it reminds me of my favorite tweet of all time which was the American Flat Earth Society tweeting that Flat Earth beliefs are going global I which I hadn't seen that was only a semi-successful tweet on last question on trumpet it is a very simple one really which is I know that given your position with the New York Times you can't endorse a candidate but you surely have a view on whether the Democrats can win I mean and if so what what strategy do they have to adopt in November okay well I think the Democrats can win they have to run against a fairly strong economy and they also have to run they need to get their act together quite literally they there's a lot of squabbling within the Democratic Party right now some of it you know of course people can have differences of views but I sure as hell hope that they unite behind whoever the candidate is the there and I'm not sure they will there there are some there you know the Bernie bro thing is real there are there a significant number of people who are associated with the Bernie Sanders campaign who refused to back Hillary Clinton after she got the nomination in 2016 saying there was no difference between Clinton and Trump and those people don't seem to be chastened by what has happened since and there are some particularly sort of business oriented Democrats who say well they will both the party if Sanders is the nominee which is equally unforgivable the stakes are just too high and so but the Democrats should run I mean I understand that people have very ambitious things would like to make really major progressive changes in policy but that's not going to win the election the election is going to be won by convincing people of the truth which is that if Trump is reelected there will be huge cuts in in government programs that people depend on so you know if you want to say I would like to have Medicare type system for everybody okay but in fact the much more important as an electoral thing is to say Trump will actually destroy Medicaid and severely cut Medicare if he is real like don't let it be any of the good yeah you need to emphasize that the extent to which actually the Republicans are the radicals here and how much the programs you depend on are at risk if Trump wins turning to this country and its problems you come here only a few days after breaks it yeah what's your feeling on the the prospects for the UK after brexit do you have a sense yeah so I've been I'm certainly thinking that brexit was a bad idea and it will make Britain poorer and if you haven't actually done they there there's a possibility that the that there'll be a significant disruption in the short run in the long run it will make Britain a little bit poorer 2 or 3 percent of GDP which is well yeah this two or three percent with the error range being that why it's a it's a very difficult thing to ask me but it imposes a lot of frictions you know what the the great thing that the European Union managed to do was to create a truly frictionless flow of goods and services and people comparable to what we have within the United States and brexit does away with that and and that creates a lot of additional costs but not catastrophe I mean suppose for example that Britain negotiates a free trade agreement but not but not part of the EU which means it's free trade but not a customs union which in turn means that you actually have to have border checks yeah I post and so on so that introduces some frictions well Canada has a free trade agreement of the United States but not a customs union so you do have to stop at the border and then there and it's a nuisance and it does impose some costs and Canada is no doubt a little bit poorer than it would be if it were simply a part of a customs union but on the other hand it's not a Canada is not is not a hellhole of economic depression it's it manages so I think that's the the brexit is a bad idea I don't like the political process that got you there and that's what I was going to say it does it have unpleasant echoes to you as a symptom of something yeah a lot of they're clearly echoes now I think it's not nearly as bad here as it is in the States although I might be proved wrong about that but but it clearly has some of the echoes there are a lot of commonalities I mean and I will so I'm much more disturb maybe about the what brexit may say about the future politics of the UK than about the economics the economics in the end you know money is just money and it's a and making the country a couple of percent poor is that's that's a pretty big thing in terms of what policy could achieve that's a that's a pretty impressive level of economic destruction but it's it's actually not going to be the fundamental thing I mean one of one of the prospective symmetries you till you talk often in the book about how Trump made big promises to the left behind and in fact delivered a pre-standard Republican ya package Boris Johnson is promising huge infrastructure and regeneration packages one wonders where that will go see I mean her but he's also asking for big cuts yeah so I don't know I I have no insight I mean the the thing about Trump is you might have thought that he would try to deliver at least a little bit of what he promised and and his absolute complete abandonment of all of that is is impressive and not very smart and I I suspect well does it terrify you in the sense that that hasn't been is there a risk of complete detachment in the political process between evidence and America well that's what's happening anyway yeah but no but I actually do think that look the the comparisons I think about it's not with the UK because I don't know what's going to happen here but I was paying for complicated reasons I was paying surprisingly close to developments in Eastern Europe I was a good friend who was constitutional law person was tracking the collapse of democracy in Hungary and the thing about Hungary the Fidesz preserving the outward forms of democracy but in fact creating a one-party autocracy was that Viktor Orban is smart and he actually delivered a little bit there was some genuine populism mixed in with the authoritarianism and if Trump had were as smart and and self-disciplined as our bond we'd be lost in America already it's a in some ways we were given a gift by the fact that we had such a a sloppy undisciplined authoritarian I mean you say well you know small mercies yeah you sort of identify a quadrant that's under occupied at the moment but could be which is the economically interventionist and socially conservative that's right the sort of George Wallace type of guy and which is by the way where to some extent or a bond is in a little bit in in Hungary it's a little bit what law and justice is doing in Poland they they're it's a actually that the phrase that political scientists I know use sometimes they they call the Heron folk welfare state yeah a welfare state but only for the master race and there's the FN and in France is a little bit like that as well and that that's a very what it's actually interesting that America that the hold of the plutocrats over the over the Republican Party is so strong that we have nobody moving into that space and but yeah they're they're clearly you would think there would be a political opportunity for somebody to be actually branded thought the very very early that there was the at the very beginning in in the history of South Africa the the briefly the slogan of the South African Communist Party was workers of the world unite for a white South Africa right there is a there there's there is a there is a an opportunity like that and I guess I guess we can consider ourselves fortunate that that no us politician has moved into that space yeah yet um my final question for me before we turn to the audience is you survey all of this and you say in the book a whole issue range of issues over 15 years here we are in 2020 are you would you consider yourself broadly an optimist or broadly a pessimist yes I mean I'm I'm terrified about the political near term yeah now if I step back if we get the two things in terms of social attitudes despite all of these things we're talking about despite the empowerment of white nationalism and intolerance and all of that the underlying social attitudes have gotten much more progressive I mean when I when Ronald Reagan was elected only one in three white Americans thought that interracial marriage was okay yeah see you watch issues like gay marriage went from a you know a deadly political issue in 2004 to widespread approval now a so you see these changes so the we're still there's still lots of racism there's still lots of intolerance and it's enough to unfortunately sometimes be decisive politically but we're actually much less racist and much more tolerant than we were which is a hopeful sign if we can get through this moment without seeing democracy collapse and then on the most important issue which is climate change their technology is our friend when we've actually had a I say you know the claims of robots and all of that and our incredible technological change are all wrong but one area where there has been revolutionary technological change is energy the idea of a society that lives basically on renewable energy and it has virtually no greenhouse gases that looked like a very steep hill to climb ten years ago now looked relatively easy we've we've had miraculous progress there so the saving the planet is technologically easy saving society underlying attitudes have been moving in a direction of greater tolerance but we are at a moment of crisis where we can lose it all and we could lose it all very soon okay good moment to hand over to the audience now we have microphone queuing system here where are they they are one there and is there another one on the balcony yeah yes so please come up one at a time I mean - you can cue obviously and please be as short and brief in your question as possible and don't make speeches otherwise I shall cut you off ruthlessly right far away thank you for joining us this evening I was interested in your thoughts about the concept that Malcolm Gladwell talks about in his podcast revisionist history he introduced the notion of moral licensing and looks at how after for example Australia had elected their first prime minister who was a woman there was rampant sexism how after the election of Barack Obama there was merripit racism and describes a sociological phenomenon whereby people feel licensed to express this really extreme views of intolerance after having come through a period of relative progressive development I'd like to get your thoughts on that whether yeah that has currency and if you could speak to how our own media are becoming so tailored to our specific propensity is whether they be tolerant or intolerant how it's very possible to have that be routinized in the way we think about the world we live in thank you yeah okay so I haven't listened to mark actually I should say this is where we're peddling some podcasts of me this week but we'll gain but the I mean there's certainly something in that it was clear that that perversely you know a lot of people thought that the election of Barack Obama went meant that we really had transcended racism and in fact it seems to have been like a significant number of people having voted for one black person now felt free to be to be much more racist thereafter well though that is not what I actually think is more important in terms of this outburst of the the crudest emotions is that the we used to be held together they they're really raw racism raw white nationalism a lot of other things were held back by the fact that that there was a an elite that that considered such things unacceptable and and people listened to the elite and I believe that the financial crisis the euro crisis the demonstration that the the elite in many cases had no idea what it was doing undermined its authority and in in that way opened the door for a lot of stuff I don't I don't Poland sorry weird good job Poland actually escaped largely unscathed through the euro crisis didn't wasn't badly hit by the financial crisis why have white nationalists taken over in Poland and I think a lot of it is that the European elite that used to have the moral authority to say you can't do that no longer commands credibility anywhere in Europe yes go right ahead I love your column I have an American medical student I'm here doing an elective in the UK and you were talking about how the US economy so many of the jobs are healthcare related and if by any miracle we get any sort of substantive health care reform passed in the US I'm wondering what would happen to our economy and also if you can talk about some of the challenges facing the NHS okay that's a question actually that I've been asked a couple times on tour it's a good question we spent 18 percentage beyond health care and you might say oh my god if you know that's clearly excessive and but if we cut it back what happens to all the jobs the answer I would give is that I won't say there's be nothing no negative impact but if you actually look at it turns out that America spends far more on health care than anybody else does but we don't actually get more health care than other countries do it's all about high prices and those high prices are reflecting to some extent high physicians salaries but not high nurses salaries and a lot of it is exorbitant prices we pay for for drugs and for medical equipment and the so if we ask what would be squeezed if we get effective health care reform that brings costs down I don't think it would mean a large reduction in the number of nurses because in fact the United States is not hugely over supplied with nurses compared with other advanced countries we we pay more for health care but the extra payments are largely going to to Big Pharma and the medical equipment manufacturers and to some extent two-star doctors who are being paid very high salaries and the ordinary this that the working stiffs of the medical industrial complex are not the ones who would be hurt by a more rational healthcare system so can I take the next question from the balcony hello I'm keen to get your thoughts on GDP as a measurement and whether it needs updating whether it's still the best ways to take the pulse of a nation okay I can't actually see where the person is but so let me respond it with a Jim in a general way too though that the city but the all right look nobody no serious economists has ever said that GDP is the measure of an economy's success every principles of economics textbook has a has a a box in it that says what GDP does not do I know that for sure because mine does right and and so now is to some extent maybe we still fall into the trap of thinking that the GDP you know GDP is is the market value of goods and services produced and that doesn't count both doesn't account the negatives doesn't it you know if you produce a if you operate a dirty power plant and in the middle of an urban area that kills a lot of people you've added to GDP and and it doesn't count some of the good things that happen so if we look I tend to use these days Denmark as an example of how different an advanced country can be from the United States and in Denmark turns out Denmark has exactly the same productivity that's the United States does it has just just as well at employment or a little bit better actually in in terms of worker employment but its GDP per capita is something like 10 percent less and the reason is because the Danes actually take vacations and that's clearly that's that's not a negative right so so GDP is a flawed measure but it of welfare or it's not a measure of human welfare but on the other hand it's it is what it is we know what it means and if you want it's perfectly fine to produce other measures but I don't think just say that we can the trouble is once you try to go beyond GDP you're getting into a lot of value judgments and of course we must make value judgments this is what we do but it's not going to have the same status as this is the number that that is measuring the market value of stuff so and some people say that people I respect say that the trouble is governments focus on GDP to which my answer is actually no they don't the government's have all kinds of stuff they're going on but the idea that that my government or your government or anybody else's is actually maximizing gtp that's not that's not what's going on so I don't think that it that the measure that we use is the problem I think the underlying values of our society are the problem I could take another question from the balcony yes thank you very much for coming and speaking here you mentioned something about having to get through the current crisis of democracy and it seems in many ways that the world has become increasingly complex despite only having sort of traditional liberal democracy as a potential solution so you look for example brexit boils down all sorts of problems into a single yes/no referendum you mentioned climate change of course question of short-term versus long-term my question to you is do you think that democracy can survive in this increasingly complex world and what do you think democracy should do in order to do so so first well I'm not sure that the world is more complex than it used to be I mean it's been the world has been complex for a long long time and now the question of whether democracy can survive the answer is I don't know I mean I'm scared to death but but not I'm not I'm not despairing but I'm terrified and and you know what has to just keep on plugging the despair is not a helpful emotion Aaron and I don't think it's warranted yet but in any case it's not helpful and the mean I I don't know I I don't think we've found something that's better than liberal democracy the that doesn't mean it will necessarily survive but but the the alternatives are all worse and I guess we just well we will see but we will also I hope try to make the right thing happen and look there are all kinds of there are always stresses there there is there's a note I know US history better than than then in UK history and certainly better than a lot of other countries there has never been a time in America when everything was okay right there there we if I think it's this like there's no Billy Joel song revealing my my age here but you know they if you think about all the things over the course of my adult lifetime that have all of the crises all of that there's never been a time when there weren't a lot of terrifying things I think the democracy is in more danger now you're thinking if we didn't start the fire but you know the idea that that America I mean I'm exactly the age where I thought I might be called up to serve in Vietnam after I graduated from college they there I got yeah there was a day when I got my lottery number and it was to 95 and I just said oh okay I'm gonna have a life now turned out they didn't call up anybody for my class but it but you know there have been a lot of really bad times in America before so the idea that the things have gotten more complex and more difficult it's just that this time the chance that the really really bad guys might win in an irreversible way it just looks higher than it ever has before thank you what is the most persistent zombie idea on the left and is there one is there an idea to what you have subscribed in the past which you now kind of put into that category oh boy I mean the trend the left is not nearly as good at maintaining zombie ideas partly because there there are in fact not that many leftist billionaires and and billionaires there are some but not very leftist and so I mean well let me put this way we were talking about climate and environment and and climate change and economic growth I'm running to a lot of people still who are now this is telling you that there I don't think there are a large part of the electorate but there are but the circles I move in I run into people who are sure that to fight climate change we have to stop living the way we're living and a much more austere back-to-nature lifestyle is the only way to deal with climate and that's an idea that it's just clearly wrong if we actually asked by we know enough about the technological and economic solution to climate change that ASUS a green society that does not burden the planet would almost certainly be a society that looks a whole lot like what we have now in people with the driving cars they'd be using electricity but the cars with the electric and the electricity would be generated by solar and wind and it but the actual rhythm of daily life could look very much like what we we have we don't have to go back to to an agrarian pastoral Eden to to to deal with the issue but it's it's something that sounds again it sounds serious from a different point of view it sounds like if you're serious about climate change you must be serious and believing that we have to give up on this consumer oriented society and and all of these these comforts that we take for granted but in fact it's not true so that would here that would be an example of a kind of a left-wing zombie in other countries in the belief that you can just dictate all prices and you know you can put price controls on everything and not and never face shortages that's not something we see in the US but they Venezuela clearly there's some refusal to face reality going on but that would be these house but again zombies mostly flourished because their big money behind them not all of them but mostly and and and the no.4 for every George Soros there are 50 quiet billionaires supporting extremely reactionary causes and what about the question the question of an idea you've changed your mind oh so most of my changes have been in the in the other direction look at minimum wages no no a piece of economic research has has shaken my views as much actually I'm gonna give you two and and me at this this is a great risk of turning into a Monty Python routine amongst the issues three okay so actually so I'll give you two one minimum wages up until sometime in the mid 1990s I believe that clearly increases in minimum wages would cost jobs they might be desirable otherwise but econ 101 said that that's what happened and then we got this amazing body of empirical research because we get in the United States we get a lot of natural experiments when one state raises its minimum wage and the neighboring state does not and the overwhelming evidence says that minimum wage increases at least within the range we see in the US do not cost jobs and that changed my view has said labor markets are very different from where I thought it actually moved me towards emphasizing the role of power and in labor relations and so on another one I used to think that it was always possible just by printing money to get full employment and and the experience of Japan in the late 1990s when despite a very easy monetary policy they slid into deflation changed my views totally I there was a there was a group of us actually of when I when I arrived at Princeton in 2000 was a bunch of Japan warriors who were really very shaken by the Japanese experience because we we looked at it said you know this could happen to us so with me people you wouldn't have heard of but very influential in the professional arts Vince and Mike Woodford and the fourth was Bernanke Ben Bernanke don't know what happened to him he disappeared I think yeah so we so that but no the the Japanese Japan's Lost Decade changed my view and basically made me much more Keynesian much more believer that there are times when you really need to have the government do the spending yes how do you successfully regulate the financial markets while not scaring the business community in sort of trying to in the middle of a class that any form of common sense reform or tax is not Marxist Leninist and it's not going to take away all their assets and money okay you know we've done this before right we imposed extensive bank regulation in the 30s which didn't obviously the economy we the post-war generation was was the best generation in in in certainly in US economic history the the the only I would say the problem is not scaring people not looking Marxist the problem with regulating financial markets is first of all they're the financiers have a lot of clout but but beyond that it is hard to keep up with financial innovation which very often is not innovating in the sense of you know doing things better but as is innovating a way of finding ways to set things up that evade the regulations so you regulate banks and then people create something that is functionally a bank but doesn't technically meet the definition of a bank and evades the regulations it's hard to keep up with that and and if it's not a well solved problem in the we had a significant financial reform in the US under Obama not everything you I would have wanted but it was significant but on many of the issues it depends upon this Financial Stability Council which has to define systemic lis important institutions that they're mean and there's no clear definition it's kind of like pornography you know when you see it which is not a stupid way to do it but it depends upon having honest people of goodwill in charge and now we have the Trump administration so so the dodd-frank is not a very effective tool and it always depended upon upon good leadership and we have not found I haven't come up with a way to the thing about doing a regular old-fashioned commercial banks is that that system works the regulations work the the guarantees work without requiring that there be smart leadership or good judgment calls at the top and unfortunately everything we try to do to deal with more modern financial institutions is requires both goodwill and sophistication which are both the now and very short supply question from the balcony please thanks very much so we've mostly discussed zombi ideas in the kind of domestic policy context i wanted to ask about zombie ideas in the international context in the sense of the Washington Consensus and trade liberalization and specifically I want to ask what your thoughts are on the extent to which countries can still develop by exporting I has the impact of technology and the scale of China made it essentially impossible for a trade liberalization to facilitate development okay that's a good question I think empirically it's just the premise is wrong so we all know about China and we know that China occupies this huge space and China is a unique success story nobody else has matched their rates of growth but it's not the only success story so when I took I like to talk about the the unfamiliar cases Bangladesh Bangladesh is a desperately poor country and and compared with working conditions and in in the first world it's it's is horrible and they have factories that collapse and kill hundreds of workers and all of that but Bangladesh is actually they've they've tripled their per capita income and there there are very poor country but they were a country that was right on the edge of Malthusian starvation and it's all because of the ability to export if the the ability basically clothing labor-intensive that they've been steadily gaining market share at China's expense because China has been moving upscale and that's that's showing that you can get yeah that's that's major development that's a major change it's it's not it's a long way from from turning into into Western Europe but it's it's it's a very big deal and it's showing that the globalization can still work for for poor countries so I that's that's what the line Bangladesh is not a it's not a banana republic it's a pajama republic but but that you know they can make fun of it but in fact their use that's a very large number of people who are lifted at least some ways above starvation level by globalization and another question from the balcony please looking at it as a economist with a mathematical mind what impact do you think a shift a proportional representation would have over time as you compared to the electoral colleges and first-past-the-post which we have in the UK other British Commonwealth countries which tend to over time have led to two party states so what if we shifted the proportional representation okay I mean firstly the u.s. the the u.s. electoral college system is monstrosity that's a that's not about first-past-the-post it's about a system that at the presidential level gives disproportionate representation to to some states with small populations and at even more important we have the Senate which where half the Senators are elected by 16 percent of the population so this is a that that's crazy that's a deeply basically we've we've evolved into a rotten borough system for half of the US government and that's that's a clear monstrosity as for the rest I mean I don't know I mean this is not I'm not a political scientist I talk to political scientists which by the way is rare for economists we actually talk I actually talk to these goods to other social sciences and take them seriously and but what I would say is that the the there are places with proportional representation that also managed to be very dysfunctional so you know Israel I believe has proportional representation and I would not say that Israeli politics these past 15 years have been a model of good ideas and wisdom prevailing in fact they I mean every system has its problems and one of the problems with proportional representation is it sometimes causes small factional parties with with very antisocial goals to to be kingmakers so that's not an easy solution either I don't really know what the answer is except to say that that you know people people are both generally clever and often nasty and they can find a way to screw up any system question trip down here hi you said earlier that the American economy is in a pretty strong position so I was wondering how much he thought Trump could legitimately claim responsibility for that and then alongside that what are the strong II cannot strongest economic arguments to voters for voting against him okay the reason that we're in a relatively strong economic position is that it's basically deficit spending after years and years of saying no debt this is an existential threat then we must have austerity which really hobbled the US recovery under Obama as soon as Trump was in office for Republicans said oh we don't care about that I mean the last two State of the Union speeches have not so much as mentioned the deficit and that even though it's badly done it does give a boost to demand so I guess you could say the Trump has gets some credit in the sense that by getting elected he caused congressional Republicans to stop sabotaging the economy that's not a you know vote Republican and and and and the and the economy won't be undermined by by our sabotage efforts so that's not a great electoral slogan but it might win in the election I have to say and I lost the room what the rest of that was but the was one of the strong strongest economic arguments to voters to vote against him oh the thing about Trump is that he's managed to preside over a economy that by sort of aggregate measures unemployment rate is low GDP growth has been pretty good not spectacular but pretty good but which is is showing increased hardship for many people despite that I mean we were making huge progress in reducing the number of people without health insurance that has now gone into reverse the number of people who say that their that they are that they are postponing or not undertaking necessary medical treatment because of expense has skyrocketed and the America like the UK there's tremendous regional divergence we have a large part of the large parts of the the heartland which are in severe economic decline as social collapse and that has just accelerated you know despite the low overall unemployment rate the state of affairs in Eastern Kentucky is terrible and life expectancy I guess it rose slightly this past year but you know mortality rates are rising and it's as in case an Angus Deaton say deaths of despair people dying from from opioids alcohol and suicide have been rising despite the strong economy so this is actually that earlier question about GDP you know the GDP growth not saying that the that it's false but under under the surface of that good GDP growth is actually a substantial increase in misery just a one final question from thanks bull great to see you here my question is about the u.s. minimum wage obviously it's very very low compared it should be you know from visiting the US for last 25 years it seems P and getting no three jobs to make ends meet what do you think the minimum wage should be and one of the reasons other than you know losing jobs that perhaps people have been keeping it down the minimum wage suppressed oh so I asked that in Reverse I mean the reason the minimum wage has been held down is because employers want chief labor and they have a lot of clout the question of how high to go is an interesting one and it's the so even the the big move in the u.s. is for $15 and that's a I'd say even $15 an hour even Alan Krueger who was one of the key researchers on that revelatory work was a little nervous about 15 and that the problem is regional the the state of New York the state of California no problem you have a $15 minimum wage and and there's absolutely no reason to think that that's economic difficulty we're talking about Mississippi or Alabama places with much lower productivity you might start to have some job loss at that level I think that the preponderance of the evidence says that $15 is okay that there might be some minor job loss in some of the least productive parts of the US but but overall not a big deal I think 20 I would start to make me really nervous that then you start to really be a problem in in potentially problematic territory but it's it's why they see actually in this case I think a federal minimum wage of 15 and then higher wages and in in in appropriate States it makes sense this is one of these cases where federalism works to our advantage and and it's interesting by the way Alan Krueger did do at one point he he went to to Puerto Rico which part of the u.s. is subject to the u.s. minimum wage and much lower productivity and said there we should be able to see clear evidence that the minimum wage cost jobs and he couldn't find it he said I don't really believe this by I can't find the evidence so so for the moment I say let's let's go for 15 and see what happens and then maybe maybe look for the high productivity states to to go beyond that great I'm so sorry to have to draw it to a conclusion but you will have the opportunity to meet ball and and get the book signed for now please join me in thanking him for really fascinating today all right

Channel: How To Academy Mindset

Views: 129,595

Keywords: Paul Krugman, Nobel Prize, Economics, Matthew d'Ancona, Capitalism, Trump, America, Democratic Primaries, Kleptocracy

Id: 5ruUc8yJSJA

Length: 79min 41sec (4781 seconds)

Published: Tue Feb 25 2020