Paul Krugman on Challenging Zombie Ideas

If you are remotely interested in any of the following economics, UH, income inequality, climate change, the history of economic development and thought, how public policy affects the population, UM, healthcare law, climate change, will go down, go down the list. We just walk out on everything and it's just been absolutely fascinating conversation. So, with no further ado, my m IB interview with Paul Krugman. This is Master's in Business with Barry Ridholtz on Boomberg Radio.

My extra special guest today is Paul Krugman. He is the winner of the two thousand and eight Nobel Memorial Prize for his contributions UH to new trade theory and new economic geography. He is a Distinguished Professor at the Quney Graduate Center of the City of New York. He spent much of his career teaching at M I T and Princeton, where he focused on economics. He has either authored or edited twenty seven books, published over two hundred

scholarly articles. Most recently, his book Arguing with Zombies, Economics, Politics, and a Fight for a Better Future just came out. He is the second most cited author on the College syllabi for economics, and is perhaps best known as a columnist for The New York Times. Paul Krugman, Welcome back to Bloomberg. Hi there, it's good to see you again. Let's jump right into this. So I recall you telling a story that you were a science fiction geek as

a kid. How did Isaac Asimov's Foundation trilogy lead you to economics? Isaac Asimov wrote this, you know these books, uh thereabouts, which are you know? It's the Galactic Empire and people use blasters and have spaceships. But actually the science fiction e part is the least of it. It's

social science fiction. The core of the story is there's this group of mathematical social scientists, the Psychohistorians, who have figured out that galactic civilization is falling and have discovered that if they intervene in just the right way, they can limit the period of barbarism. So it's basically social scientists save the universe. I want to be one of those guys. Economics was as close as I could get. That's pretty amusing. People may not know that you are

an economics textbook author. You and your wife wrote what is today the second most popular economics textbook in colleges today. Who who's the lead? Is that? Mank You? Ah? Yeah, I'm afraid it's Greg mank You. So whatever led you to write a textbook that sounds like a lot of work? Actually? Yeah? So the first thing about it is that nobody writes one of the those principles books except out of ignorance

of how much work it's going to involve. The actual the labor that's involved in producing, especially the first edition, but even the revisions is enormous. Partly it's a it's a reasonably honest way to make a living. Since it is my book, teaching is not well, it's supplemental. So since my wife is my co author, our in house name for the book is Economics for one k um. But it was also we thought that we could have

a different kind of textbook that people. Most students come thinking economicis is this totally dry subject, and you know, some of it is, I've got to admit that, but there's stories. So we thought we could try to write a textbook which was as much as possible story driven. It was about real world things, and then we say, here's how economics helps me makes sense of these things. And so we wrote a textbook that was different and

a lot of people like it. And you were you were still doing the revisions on the textbook while you were in Stockholm for the not that that edition, that was second edition, and the financial crisis broke as we were going through pages, so we already were in galleys and suddenly nothing in the money in Banking chapter was true anymore, and so we were frantically working to revise

that that chapter in pages. So every replacement passage had to exactly physically fill the space of the stuff it replaced. So yeah, we uh, I had a lot of stuff I had to do in Stockholm. Robin spent a large part of the time on the floor of our hotel room, crawling from one set of paper as to another doing the revisions that was insane. You had written, or maybe I read it in an interview about a decade ago that at the top of the dot com bubble you said, Gee,

the stock market doesn't make any more sense. I'm going to pull out of equities. It was a was that true? Would be? How did you that was true? Then we have in fact gotten back in some Still, I think probably our portfolio is less equity heavy than than probably the the average. But well, twenty years ago you were what early fifties, lates forties. I was, No, twenty years ago, I was late forties, late forties, So you should have equities then and now less equities. Yeah, yeah, So I

mean I don't claim to be a great investor. In fact, Robbin's got the better head for detail, which is important. So we uh uh, we own a lot of you know, selective real estate, not not things where we think we know something. Okay, Well, real estate goes up over time as well. So eight if when you say you've partially gotten back in, does that mean your some stocks, some bond, some real estate. So you have a diverse portfolio that makes a whole lot of sense. There's another issue I

have to ask you about, which is that of media bias. Um. Lots of people these days have accused the media of being fake news or biased or whatever. You take a decidedly different perspective on bias. Tell us a little bit about that. Yeah, the biggest so by and large, the media get facts right. Uh. They formal me. I mean that's not obviously true of you know, Breitbart or something like that, but they But the New York Times gets

its facts right. The what it doesn't do very well is it it doesn't know how to handle things where there really aren't two sized to a debate when when there's a One of the very first columns I wrote back during the two thousand election said that if if Bush had had said that the Earth was flat, the headline would probably read views differ on shape of the planet. Right.

The media are really terrible. And that's very hard to That's a real problem when you have a not just a highly polarized political environment, but an asymmetrically polarized political environment where one side of the debate is peddling zombie lies uh and the other is is not uh. And it's so it's very there's a real failure I think to inform. There's a unwillingness to I mean, when I started out, I was literally forbidden to use the word

lie in my columns, and that's no longer true. But even so, there's a tremendous bias towards even handedness, even when the hands are not remotely even so you get this false equivalence where both sides are trade equally. The The other thing that you have referenced as a form of bias that i'm a has been amused by is the concept of quote very serious people. That's right, what what are the very serious people? So very serious people?

The phrase actually a lot of it comes from the build up to the Iraq War, when all the serious people thought it made that this was a good idea, which it wasn't obviously, um, but very serious people are people who buy into what is a conventional wisdom of the time, something that important people say and everybody thinks it's serious because all of the other serious people are saying it, and they will nod their head and so like you know, the US debt levels are major threats,

even though it's not really true or the um we have a real problem of a skills gap in the workforce. And so these are things that so I stole it. I think I stole it from the blogger at us. But it really works, these things that And that's, by the way, where the media drops it's even handled this on this So a lot of reporting on debt it was uncritically Bowls and Simpson are great national heroes. Uh so it's yeah, I remember that, but the but the whole.

So it's funny that the one place where the news media really dropped the false equivalence and started saying one side is right is in fact where that side happens to be wrong. But they're very impressed by titles and by positions and by some academic credentials. And if you're the head of a think tank, they think you're actually

thinking when really you're not thinking. Well they yeah, they are impressed by think tanks, which is really a bad idea because uh, there a think tanks, and then there are think tanks, and a lot of the thing tanks don't actually think. Uh they're very impressed by uh, rich people,

powerful people. So if you're you know, if Jamie Diamond says we have a skills gap, that must be serious, whereas Jamie Diamond is no doubt a great business person, but he doesn't know anything about macroeconomics, so it's a really it is a real problem the U on many issues, going to important people is absolutely the worst place to get information because there are people who have a stake in a particular point of view and or or they're too busy to actually think hard. So it is a

you know, that's those are the places. Now it's gotten better, I have to say, the The Times um now has several people writing who actually do understand some economics, don't uncritically accept stuff. We've got a hold section the Upshot, which tends to be analytical pieces from multiple disciplines. So it's better than it was, but still, uh so, those

are the biases. It's not liberal bias, it's not even actually conservative bios So there does very serious people tend to be somewhat right of center, but it's it's mostly it's it's seriousness and even handedness on things which are in fact not serious and in fact where you shouldn't be treating equally both sides equally. Let's talk a little bit about free trade, which is what you won your Nobel for free trade has been the cornerstone of US

economic policy. Why has it gotten such a bad reputation amongst some economists and a lot of people in this administration. Economists love free trade for some good reasons and some not so good reasons. We love free trade because, in fact, there's a lot to be said for it. It's particularly important really for smaller, poorer countries. Try and think about what would happen to Bangladesh without the ability to export

clothing would probably literally be starting to death. So trade open markets doesn't have to be precisely free trade, but open markets are really important for a lot of the world. It's always been the case that if you did it right, you understood that while free trade generally makes all countries richer, uh, it doesn't make everybody within the country's richer. Has effects, possibly strong effects on the distribution of income. Now, we tried to quantify that a little bit, and then no

question that it's it's a growing world. Trade has been some a source nowhere near the dominant source, but a source of rising inequality within the US. Um What we really missed and which has been where a lot of the academic research has gotten We missed how concentrated the negative effects are. Right, So you take a look and you say, look, okay, we're importing a lot of stuff from China we didn't used to import. One of the things is furniture, So we're importing lots of furniture from China.

Clothing boys. I like furniture as a particular example, because if you ask, all right, how many jobs were displaced by Chinese imports of Chinese furniture answers, Maybe it might is more, probably more than the duh, maybe even two hundred thousand, But you know, the other jobs were created

lower price to consumers. How big a deal is that? Well, if you happen to be in Hickory, North Carolina, which is a city that is built entirely around the furniture industry, all of a sudden, for that community, it's a devastating impassion. So we missed the extent to which the U. S economy is gigantic, and it's churning all the time. A million and a half people are fired every month. So

you say, how much difference Canada's trade make? Well, the trouble is that the impacts of trade have tended to fall quite heavily on specific communities, and I may Apa, I didn't see that, and it really took a very good paper, you know, published in in in twenty I think, on the China shock um that, among other things, written by one of my students, uh and to to point out how much we were missing that effect. So lots

of um countries have an industrial policy. Shouldn't there be some sort of Hey, if you're in West Virginia coal country, or in North Carolina furniture country, or in the broad loom and fabric areas that are specifics to certain states.

When it's apparent that a region is getting estimated because the global trade advantages where essentially global labor arbitrage and and some of the improved technologies that become specific to elsewhere in the world, why don't we do a retrain, re educate, give people new skills so they can compete even if it's no longer in coal or furniture. Well, we try, and actually we've had trade adjustment assistance at various points in our history. It's never been tremendously successful.

And by the way, trade is not unique. You know, technology does it? Does it? If you actually want to ask what happened to West Virginia. International trade, it turns out, is not an important thing for West Virginia. It's changes in the technology wracking, fracking, and even before fracking, it

was mountain top removal. So all of a sudden, instead of employing thousands of workers to mind coal, you just blow the tops off mountains and use some So um, now you can't have a policy too, or it's it's hard to have a policy to deal with every shock. What you really wanted to straw long safety net so that at least some basics are supplies, so at least people are the resources, among other things, the resources to

move or seek different jobs. Whatever. The little secretive American policy is that we actually have a lot of that. We actually have because the major social programs Social Security, Medicare, Medicaid are paid for at the federal level, mostly because the tax system is uh, at least the federal tax system is fairly progressive, we actually end up providing a lot of de facto aid to distressed regions. And you take Kentucky, it's receiving net aid from the federal government

to the tune of about GDP. So you know, we don't we actually do do a lot. Now that doesn't it's not clear that we have anything that can We can replace a fair bit of the income that's lost. We can't replace the dignity, and but it's not clear that anyone knows how to do that. Another thing that's kind of interesting that you've written, quote international trade and trade policy aren't nearly as important as people think they are.

People love to go on about international trade because a variety of reasons, but among other things, it sounds important. It's international, it's global. Uh. My parents wants gave me a sweatshirt that said global Schmobile on it. I said what and they said, every time you go off to a conference, we ask you what it's about, you say global schmobile. You know, people love to talk global and u which means that we exaggerate, you know, compare we we spent about the same share of our income on

imports and on healthcare as a nation. Uh. Trade, even after even with the Trump tariffs, trade is sort of only it's mostly actually pretty clean. Healthcare is a howling mess. So health care policy is much much more important than trade policy. And but that's not reflected. And the way we talk about the world so so let's talk about changes to some of the trade policy we had. I recall Ross Perow talking about the great sucking sound that NAFTA is going to create, pulling all those jobs south

of the border. Trump effectively ran on that. And now we've tossed the side NAFTA with U s m c A. We're all so much better now, aren't we. Right? So I have people I know have been calling the U s m c A the village people who agree. Uh. Um, And it's a U s m c A is basically NAFTA with Trump's name stuck on it. Um. Is it not all that different than what it's of. It is just the same thing as before, and there's a few

other things. The one place where there's some significant differences it actually gives a little bit more protection clout to labor unions, which is why Democrats voted for it in the US. In the US really uh in Mexico to but it's it was kind of a pro labor union change in policy. Not big deal, but enough so that Richard Trumka of the A F L c I O said, you know, vote for this, and and the Democratic Caucus voted it through um because there was something in it

for organized labor, which I'm sure was not. I'm not sure whether that was, you know, over Trump kicking and screaming, or whether he just didn't even know that he'd done that. But anyway, that's quite the policy wonk, right, so I think that he knows unlike everybody else in Kansas cities in Kansas. But the post super Bowl congratulations that was pretty so A few people pointed out, um that it's actually in Missouri. Yeah, well, kind of people in Missouri

kind of noticed that. Let's talk a little bit about your book, which I found quite intriguing, filled with all sorts of fascinating topics. Let's begin with a great financial crisis. You had some very prescient columns in O. Five and oh seven, running out of bubbles, that hissing sound coming out of real estate and innovating our way to financial crisis, all of these pre date two thousand and eight. What were you looking at that gave you such a clear

view of the financial crisis? That was it was just clear that on the normal metrics, things like the prices to rents, uh, the housing had gone way out of sight. And he just said, is there there are a good reason for this, and then you if you were there were the kind of a tell's tale informal signs, you know, if if um the dot com bubble, I thought I had an inkling that things were gonna be bad when I realized that and when you when when you went into a bar, they tended to have CNBC on in

the bar instead of sports. And then I have a very vivid recollection of that era where where stocks became the national pastime, right and then so if you go back to around two thousand five, it was shows like Flipped This House, so it was the same kind of feel to it. So it just looked way out of whack. And I had an inkling, but only a partial inkling, that the financial sector was out of control, that that we didn't know what we were doing, that things had

gotten complicated. Was only when the crisis was in full swing that it became clear that we were in much worse shape than I'd realized, that that more than half of the banking sector was was things that weren't called banks and therefore weren't regulated like banks. And then so shadow banking was was a huge vulnerability. But that was one of the few times when it's it really seemed obvious that something was majorly out of whack and that something bad was gonna happen. So let's fast forward a

couple of years. During the second Bush term, you had been staunchly opposed to privatizing Social Security, and you wrote, quote, an amazing thing happened for the first time since I became a New York Times columnist in two thousand, my side of a policy debate. Actually one, how is that possible that you know, for ten years you're not winning any debates despite making pretty good arguments. Well if if good arguments one, and the world would be a very

different place from the way it is. And uh, look, I I started writing during the two thousand election, and the Times, yes, because you have been publishing it's slate for a good couple of years. Yeah, unfortunate as well. So but for right for the Times, I've only got really political during the two thousand election because it was obvious to me that then candidate George W. Bush was

lying through his teeth about his policies. Um. But the uh so it was our period of Republican ascendency, and the Republican Party uh already then, although not as much now. Was dominated by zombie ideas, by beliefs and the magical power of tax cuts and so on. So I was on the losing side of most of the political stuff, and it was you tell me, you don't believe the laugh of curve is a real Oh. I believe that there is a laugh of curve, and there is a

some tax rate beyond which you actually lose revenue. But I suspect that that tax rate is on the order of or, and I suspect I actually estimated the laugh of curve is not relevant for the U. S. Economy. And yeah, So between the fact that you have a very powerful right wing which has is committed to things that are not true, and the fact that the very serious people tend to go for things that are serious

but not actually serious. So let's talk about a very serious person that you seem to have a constant um ongoing argument with, Paul Ryan. You you have a section called fiscal phonies. You specifically point out, Paul Ryan, I have a problem with the group I call the UH deficit chicken hawks. They're chicken hawks, They're they're big deficit hawks as long as they're out of power. Once they get into power, suddenly the deficit doesn't matter. What's your

beef with Paul Ryan? Well, I wasn't really with him. I mean fact, I'm not a uh you know me personally, I'm not I'm not a person that's particularly into grudges, personal feuds whatever. I don't uh, But Paul Ryan was as symboled both of where the Republican Party has gone, but also of what's wrong with with me? Your coverage, I mean, the the the media equivalence required that there be serious, honest conservatives, the people who are really earnest

had interesting ideas. So there was a role that someone had to feel except there actually is nobody like that. So they promoted Paul Ryan into that role because he pretended to be that kind of person, not actually very good imitation. It was pretty obvious if you took even a few minutes reading his stuff that he was a phony.

But that wasn't what people wanted to hear. So I was out there, you know, years ahead of of almost anybody else, saying, Hey, this guy that you're claiming it to be the you know, the the intellectual leader of the Republican Party is a flat out phony and an obvious one, and actually a pretty clumsy one. So uh, I returned to him as as an example both of where the GOP has gone and how the media can go wrong. So you said, uh, I know you personally, and I want to put a little color on that.

I probably know you pretty well for is it a decade? Probably it was before of the financial crisis that more than a decade, So it's more than a decade. But the thing that I find fascinating about you, and full disclosure, we have these monthly salons, we go to dinner. I see you pretty regularly. I think that something I wrote was the subject of your very first blog post and

conscious of a liberal you'd since backfield. So it's hard to judge, but I recall seeing that in posting and saying, oh, look, Paul Krugman is a blogging Um. I'm fascinated by your public persona and how what people think of you because of your columns is nothing like what you're like in the real world. You're a very different person in the real world in reality. Then I think what people see

in terms of your columns. Yeah, I'm a pussycat. I mean, I'm I'm quiet, shy, uh, not at all, you know, I'm not a very angry person or any of those, not at all. You're You're optimistic, your upbeat, you're funny. People don't realize you have a sense of humor. Um sometimes a sharp sense of humor. But still, I don't know if I would use the phrase happy, go lucky, but you're pretty easy going, happy person. Yeah. It's not your image. Yeah, because people look and say, well, those

are tough columns. Yeah, but I'm not angry. I'm just realistic. I mean sometimes I'm angry. But that's a but it's it's it's a it's a policy anger, it's a it's about uh, about about how we how we handle the world person to person, I'm you know, mild mannered to Clark Kent or something. Okay, that's that's that's pretty fair collect Kent. And And one of the things that I find fascinating is that you're much more right than wrong.

I don't mean right versus left, but on a lot of things you've discussed broad policy issues, the result of certain things, You've been pretty dead on on everything. On the rare occasions where you get something wrong, people like jump on it and beat on it. But I always want to say, hey, that's the exception that proves the rule if you have to. My favorite example is, you know, if Trump gets elected, we're gonna have a recession or

the market's gonna crash or something like that. People pound that beat that drum constantly, and I always say, what else has he gotten wrong? It's hard to find broad pronouncements that are widely apptable that you weren't. And I retracted that called three days later, they don't. No one wants to talk about that. Yeah. I protracted that call and said that that Trump was going to run bigger death, that that was probably going to provide some some stimulus, and he has and it has so well. But that

but that's you know, that's part of um. Why do zombie ideas persist? Well, because there's a network, there's a there's money behind it. I mean it used to be a guy at National Review whose full time job was basically the stalk me. You know too. He wrote more blog posts attacking my columns than I wrote columns. And so there's a whole industry. They go after lots of people, but it's a but I seem to be a particular favorite. And so yeah, there there's that means. That means because

you're effective. Well it's yeah, it's a bit of a compliment. And you know, in terms of getting now, if you never make a mistake, if you never get something wrong, then you're not taking enough risks. So but but of course, if you're in a position like mine, where there are people you know, I'm probably I'm I am paranoid, but there are in fact also people out to get me. Just that's the old old line. Just because your paranoid doesn't mean they're not some there are, there are well

financed people out to get me. And by the way, that might be Philip K. Dick, although I could be wrong, since I know you're a sci fi buff. I don't know. I don't remember whether he used that. But anyway, um and sure, uh so, uh yeah, I think if you take it as a whole. In fact, look the the five years or so after the financial crisis, we're in a peculiar way. They were glory days because the models worked.

You know, people like me who had an update and modernized but still fundamentally Kenzie and approach to things made predictions about what would happen to interest rates, to inflation, what the effects of austerity policies would be that all came out right and all the very serious people who said something different turned out to be wrong. So hyper inflation didn't happen, Austerity would bring us out of the Our economic doll drums, especially in the UK didn't work. Um, basically,

keenes knew what he was talking about. I mean, you Kansians came in thinking that the multiplier the the impact on GDP about one dollar cutting government spending would be around one point five. And after we had five years or so of hard evidence, it turns out that the multiplayer is one point five. I mean, it wasn't just the quality, even even the quantitative stuff was dead on. Quite fascinating. I want to talk about politics because some of the reviews of this book and other books that

you've written have described you as a political animal. But really, if you go back to the early history of Paul Krugman, Newsweek did a profile of you and called you ideologically color blind. I think a lot of people don't know you worked in the Reagan White House. Yeah, that was interest, that was a sub political level. I was the senior international economic staffer at the Council of Economic Advisors. So no Senate approval. No. Yeah, the senior domestic staff Stafford

was a guy what was his name, Larry Summers. Don't know what happened to him. Uh So, yeah, that was I mean, it was high level but technical position. And uh um, I mean I was already I was a registered Democrat, as was Larry Um, but willing to work, and my job did not require that I'd be in public defending positions. And of course being at the Reagan administration.

Although Marty Feldstein, who was the Chair of the Council and who brought Larry and me down, although he was a Princeton Marty Felds Harvard, although he was a you know, a conservative, Um, he was reasonable and on any internal debate within the Reagan administration, I always was happy to back Marty's side of that debate. So, but it was interesting, I mean it was it was. It was partially I hope I did some good, but it was also a little bit of tourism, got to see government from the inside.

So that was a different era in conservatism. They seemed to be a little more um, rational, fact based. Yeah. No, there were a fair number of strange people even in the Reagan administration. I mean some of the people I dealt with me and are dealt with people that economics people at the National Security Council who I who were crazy And I thought, wow, but this is not their real thing. I'm sure the actual security people are better. Then along came Iran Contra, and it turned out, no,

they're all crazy. One of the things about where we are now is that each successive Republican president is managing to make his predecessor look good by comparison. So it would certainly looked better. So but it was it was still It was true that that there was a lot more room for rationality then than there is now. So most of your career not a partisan, more of a technocrat. Your role is to provide policymakers with information about what

did and didn't work. What changed? How did you flick a switch from being an ideological, color blind technocrat to someone who has been described as a hardcore partisan. Well, two things happened. One is that change jobs. So what you want to write if you're writing working papers and publishing an academic journalism very different from what you want to write if you're writing columns in the New York Times. But also the world changed and a particularly the Republican

Party changed. So the Republican Party of the nineteen eighties was still a fairly diverse group. And while there were some voodoo economics types, and we were still in some to some degree in a space where we were having real arguments about real issues. Uh. Today it's a monolithic Uh it's been completely taken over by zombies that have

eaten the party's brains. Uh. So, actually, just saying things that are true, it's just saying, you know, I'm not gonna I'm not going to give credence to stuff that's obviously false is a part as an act. And since you're gonna be doing that, you might as well try and make that case in a strong way and not

not pretend that you're having a serious argument when you aren't. So, once facts are no longer um indisputable ones, once people can say what they want to believe, how can you have an intelligent debate about economic policy, well across party lines. You can't. Mean, it's just now they're not everything is

party politics. You know. If we want to talk about military policy, the federal reserve is still a zone of actual discussion and relatively non politicized, although Trump is trying to put some very uh, strange people on the Federal Reserve Board, right, goldbugs and and all sorts of whack. So that may change, but for now it's it's a place where you're gonna have honest arguments, and of course

within the Democratic Party their serious discussion. There's no no question that there were real debates about the shape of stimulus or the TPP or whatever where you were having. But it's true that half the political spectrum is just a complete dead zone for actual debate. So let me switch gears with you and talk about something related to this that you wrote a New York Times Sunday magazine article about, which is how did economists get it so wrong?

So let me throw the question back to you. Why did the profession fail to anticipate the Great Financial Crisis? Okay, so that actually at some level we have prediction. Predictions are hard, especially about the future, uh, and failing to see the financial crisis. I think that people should have seen the housing bubble, because that seemed pretty obvious. But

that's not the major sin. The major sin was that a substantial number of economists um enthusiastically embraced financial deregulation before the crisis, UM, and at least for the decades before the crisis, going back to UM, the repeal of Glass Stiegel, and much more than that. Wait, wait, even before that, yeah, and and and then post crisis, many of them were extremely critical of fiscal stimulus, even though they should have known better. Um. And what happened there.

So this is academic economics, And to a large extent, what happened there was that look there, partly its ideology, it was a kind of conservatism that the economics profession is kind of center right on on average. Um. So there was something political about it, but it was also we have these beautiful models in the bottle of an efficient market. Efficient financial market where asset prices are always right. Is gorgeous. It's esthetically pleasing, it's it's it feels great

to to play with it. Um. Happens not to be true, but it's it's a huge lure for the profession. And then uh, after the crisis, it turned out also that the years and years of railing against Kenzie and economics as being too ad Hawkins on that had led to a lot of people just not actually understanding. You know,

if we had this. If we had the financial crisis instead of in two thousand eight, we would have had a much better policy response because it was Unfortunately, the evolution of the economics profession UH in the seventies and the eighties and the nineties took us away from understanding what we needed to understand UH in in the aftermath

of two thou eight. So, so let's talk about how where you physically were at different schools around the country impact your understanding of that You you describe this in that same column as the difference between salt water and freshwater economists. Yeah, that's love. I love that that. Yeah, it's actually Hole came up with that one. But it's

a um. It turns out that the places that kept the memory of Knes alive tended to be places like m I. T And Yale and Princeton, and the places that forgot all about it tended to be places like Chicago and UH Minnesota and Carnegie UH. And so the it just so turns it just so happens the places that that I would say, maintain a fairly realistic view of how macroeconomics works, that we're willing to actually look at the facts and not insist on the perfection of

their models. Um tended to be places that were on the coasts of the US as opposed to in the middle. So I'm gonna throw a curve ball at you. Berkeley clearly is a salt water economics thesis. Where do you put Stanford and the Hoover Institute? Oh, the Hoover Institute is a is a peculiar thing within Stanford. It's it's it's an odd thing. It's not actually the uh and and the Stanford is a mix ideologically and Hoover is this independent entity really within it? So uh yeah, so

what what can you say? But but no, definitely, I mean the uh you know, Bernankee hired me at Princeton and then actually promptly left for the FED. But still um. But Princeton was a hotbed of people who worried about Japan because we thought that Japan's problems were a possible omen for the rest of us, and that turned out to be exactly right. Can you stick around a bit? I have a ton of questions we can do that.

We have been speaking with Paul Krugman, professor at Keuni Graduate Center and author of the book arguing with zombies. If you enjoy this conversation, be sure and come back for the podcast extras, where we keep the tape rolling and continue discussing all things economics. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. Be sure and check out my weekly column on Bloomberg dot com slash Opinion. Follow me

on Twitter at Ridholts. I'm Barry Riholts. You're listening to Masters in Business on Bloomberg Radio. Welcome to the podcast, Paul. Thank you so much for doing this. I've been looking forward to discussing your new book, which I have right here, and just talking about um so many other things. How goes the book slog? I know, and I know it's a slog. Yeah, I'm just in the early stages, as we said here. I've just on two events so far. Actually, Samantha b in New York. She's so funny, isn't yeah?

And then Marks Andy in Philadelphia who was not quite as funny, but it was also really good. So right, so so sad, Samdy, It's hard not When I did the Daily Show, she was the one who ran that segment, and you just so many takes ruin because she just makes you laugh. You can't not laugh. No, we did. That was fine. Yeah, but you know, I'm I'm not Spring Chicken anymore, so I'm not doing the crazy change cities every coast to coast. So you should do Bill Maher. He would have you on in a hard too far

to fly. Yeah, although I'm actually I'm doing London and Madrid because I'm big in Spain. For some very peculiar reason, I'm big in Spain. Aren't you affiliated with London School of Economics? All? Yeah, but it's a it's a very loose thing. But yeah. But but they advertised my books on the side of buses in Spain for some reason. Really yeah, And Spanish language edition came out the same day as the English edition. So so where are you going in Spain? It's all going to be in Madrid.

But even so, so we were about two maybe three timers ago. We were in um San Sebastian and it's in deep in the Hinchel lands of Spain and it's just spectacular. I I've spent a fair bit of time in Santiago to Compostela, which is really great. Uh. The climate, it's really weird. The climate feels like whales and it's uh uh and they still take siesta's but it's uh but it's it's really there's a lot of great stuff. But I've been I've been around with a fair bit

of Spain. They know how to live there, they know how to kick relax enjoy food and wine there. Really it's a whole different head space. Yeah, Paul, What do you think are the two most important zombies that you discuss in the book? Oh, clearly it's the belief that tax cuts pay for themselves. I thought they do. You're telling me they don't. Didn't the laugh for curve on that Napkins say that you could cut taxes and they pay for themselves. Yeah, it turns out we've had an

erroneous napkin and it is has never once happened. So that's the one that in terms of our political life matter, I had no idea. Um. And the other one is climate change denial. It's a hoax. It's a Chinese un that's right. The belief that it's a hoax, or at least that it's not really serious or anyway there's nothing we can do about it. Um. That's you know, as the evidence keeps on piling in and as the consequences start to show the fact that that is still I

mean sixty of Republicans and congress our climate deniers. They deny the climate change is happening at all. The only major political party in the world with the majority that believes climate change isn't real. Yeah, although I'm not entirely sure about the current governing party in Australia. But yes, um, but yes, this is and this is really that. Those are those are enough to go on. There are there are other zombies out there, but those are the two

really big ones. Those are the big ones. Fascinating, all right. So so let me jump through a couple of questions we missed during the broadcast portion. Um. The two things I didn't get to, um that I felt were important were, Well, let's start with climate change, a well known Chinese hoax, right, climate change created by the Chinese so they could continue to dominate us on the industrial side. You call it quote an existential threat and a priority above health for reform, income, inequality,

and financial crisis. That's a big statement, yeah, because if you make the plan an unlivable or large portion of the planet on livable, that I was about to say Trump's everything else, and now that's uh, and it's and that is you know, we're on track to really catastrophic outcomes. It's the climate models have been surprisingly accurate so far, and they there was just a big piece, Um, I don't remember was Bloomberg at the Times about I think

it was Bloomberg? Was the nineteen eight forecast turned out to be dead accurate? Yeah? Yeah, So that it's that. This is you know, it's good science, it's real science, and it's scary as hell. And the thing about it also has an issue is it happens to be something we know how to deal with. We a little a mixture of public investment in new technologies plus putting a price on carbon. Uh, it would make an enormous difference. And technology is is our friend here. Renewable technology has

made enormous advances. So all the ingredients are in place for solving this existential threat, except that we have the leadership. Well, we we have leadership which is trying to make sure that the catastrophe happens. So what about a technological solution? So if we don't get a change in leadership, and ten years from now we find ourselves with a rising global temperature and rising sea levels. What about seating the clouds or some magic bullet that will make all this

go away? Well, you know that's the last resort. I'm not going to rule it out. Uh, but there's enormous problems if you start to think about that, because anything you do that is actually geoengineering is it's going to have very uneven impacts. It's gonna it may stop the planet from cooking, but it will um cause worsening of the climate in some places. It will be very uneven.

So if you're upper lower Slabstan and turns out that the United States and the European Union are planning a project of geo engineering that just has as a small side effect is going to turn your country into a desert. Uh, how are we gonna deal with the political fallout of that? That's a it's a I mean, it's better than than than than total doom, but it's really not the route we want to go down. Have you been following the debate about climate change in Australia. It's quite fascinating some

of it. And they you know that they're they're deep in denial, at least the elected officials, elected officials are So it's it's a lot like our situation, like Florida. Yeah, it's a it's it's a place which is is really on the as it happens. They have to be right at sort of the leading edge of disaster then that the continent is burning. Um. But they have like us, they have people who have an ideological opposition to any

form of government action. They have powerful fossil fuel interests, huge mineral and timber interests that don't want to change. So um. Yeah, to Australia. If you really want to feel depressed, look at Australia, where on the one hand, you can see what the shape of things to come in terms of disaster, and you can also see politically

how hard it is to do the right thing. There's a wonderful book called Windfall came out about four years ago that traces the history of investment in climate change and new technology and all these things. And the conclusion of the book is essentially, Areas that are hot are going to get hotter, Areas that are dryer are gonna get drier, Areas that are cold are gonna get colder.

Areas that a wet are going to get wetter. And it's not so much that the climate is going to change, as it's just going to be so much more intense everywhere. Desertification is going to continue expanding. Places that suffer coastal flooding are going to be overwrought. It's whatever you have just multiple times. That's simple. But it's but yeah, there's a lot of things. It's not it's not linear. It's

not just that every place gets two degrees warmer. It is that a lot of stuff happens in addition to that, and um, yeah, it's it's and it really really uh it's it's quite terrifying and um, um really we fossil I talked in the book about zombie ideas. Fossil fuels is basically a zombie sector. We shouldn't be uh, we should be phasing out fossil fuels entirely, quite quickly, and

in fact, we have the technology to do that. So they Uh, if we had any kind of realistic pricing, we wouldn't be we wouldn't be digging coal, we wouldn't be Uh, we might be doing every bit of subsidized this solar is more so at this point and PCT me at the moment, Cole is losing the battle against

solar and wind um just on pure cost grounds. And and you have the Trump administration trying desperately to force people to burn coal, and and the electrical electric production facilities, all of all of the big plants that are making electricity, they're all moving to natural gas. It's so much cheaper and cleaner. Well, they're moving to natural gas and to uh and a lot of wind and solar and natural gas.

Fracking is one of those things which it uh there, there's a lot of It turns out we're releasing a lot of greenhouse gases because of lacks regulation. But if we did it right, fracking is a good transition technology because hydrocarbons methane has a lot less carbon per btu than coal does, so and it's good for sarge capacity. So you know, we we could in a rational world, we'd be we'd be using a natural gas to provide searge capacity, were using renewables to provide based capacity. Uh

some nuclear I'm I'm okay with that. Um, we would be getting it completely out of the coal business. We'd be shifting to electric vehicles, all of it. Fraction of a percent of g d P in terms of what it would actually do to growth, um, but of course not under current management. Interesting. And then the other thing we didn't get to during the broadcast portion that I have to talk about because you've written about it so much and it's such a giant issue, is the income

and wealth inequality that's in our our society. And I have to point out that back in you were first writing about this. Yeah, I wasn't the first person to notice it, but it was already obvious. So yeah, piece called the Rich, the Right and the Facts, um, which goes through you know, a lot of the bad arguments that people were making against worrying about rising in comm inequality, all of which all of those arguments, by the way,

still being live because there's zombie ideas that won't go away. Um. So yeah, this was now it's gotten substantially worse since then, you know, by by modern standards. Gordon Getko was a piker. Uh. But theh this is definitely um uh and it it

colors everything. I mean, the fact that we have a society where a few people have so much money, so much influence, and also where people aren't living in the same universe, so we're socially divided part because we don't live in the at all in the same material universe, which is not the kind of the America I grew up in. Right, So so let's put some some numbers, some flesh on the bone. You wrote quote, CEO is now get paid more than three hundred times as much

as the average worker. So how did that come about? How was it formally x or thirty X to now three? Now that's a that's actually quite an interesting story, right, it's um, it's now. CEOs have always pretty much appointed the people who decide how much that they'll be they'll be paid. So in some sense it was always a game where CEO appoints some people who have every incentive to say this guy is great, he needs to be paid ins. But they didn't used to exercise that power

to anything like the extent that they do now. Um. What changed? Um, there was big shift in power. Relations used to be that if you have paid an extravagance some uh, your union would kick up, and of course we think the death of private sector unions has meant that that's gone away. Um. It used to be that if you got yourself paid an enormous salary, Uh, the Farawore government would take a lot of it away in

higher taxes. So at some level, if there was a question of shall I piss off my entire workforce in order to be able to take home an extra in order to get paid an extra million dollars? Uh, Well, if I'm only gonna be able to take home and fifty thousand of that, I might not want to do it. If I can get take home a much larger share of it than then maybe I will. So that changed. And then just a general set of norms expectations. One

thing is clear. It's not because we're that we have better c e O s, right that what's the same pool they're coming from? This? And then and look at how much money disastrous CEOs end up getting in their severance packages. Right, So yeah, that's kind of surprising. It's really that sort of thing used to be if you're really screwed up, they would hit hand you your hat and send you on your way, not with the million

dollar exit pack. Yeah anyway, but yeah, so so so this is a real This is one of the key pieces of evidence that says that if you think that technology and globalization explains why we've gotten so unequal. You know, explained to me how that has means that incompeten CEOs get paid as much money as they get paid doesn't.

So there's a couple of bullet points that come from that. Um. First, there's a fascinating Planet Money episode on the unintended consequences of some of the employment compensation changes under Clinton Bill Clinton. That was part of a big set of tax changes where they try to cap the dollar payment and allowed payment in stock. How much of that is the source of this giant because when you look at stock composite compensation, it's the lion's share of these giant yeah, um ceo comps. Yeah.

And it's a whether that's the result of the of the policies enacted during the Clinton years, I don't know. It's uh, it's certainly as part of the part of the issue. And it um. I mean there was a period when economists, some of them said, you know, good, we should pay people in stock because that gives them an incentive to perform well. But it turns out it doesn't actually work that way, partly because you get the stock options, but they reset the price that the company

does badly. Um, but aren't CEO is incentive to do a good job. Because they're the CEOs, you have to incentivize them more. That's that's the point it turns out. You know, back in back in the America, I grew up in again, I'm an all the cards were here. Uh we had think about photos of I always think of photos of of NASA and the all of these guys and uh in short sleeve white shirts, the pocket with the pocket protectors, all of whom are being paid not all that well, none of whom have incentive pay

doing incredible things. You know, it wasn't we think of NASA, But the same thing was going on at the great technology companies at the time. So it's not it. It's amazing actually to think that that. I mean, money matters, monetary incentence matter. But people do good work for lots of reasons. And we've we've lost the notion that people might do good work because they take some pride in their work right. Also it's their job not to not

to go too far on a limb. So you've described we we're talking about climate change and denial there before you've described um quote, the inequality denial industry that either inequality wasn't rising, or that it didn't matter. Who can legitimately, with the straight face say there hasn't been a giant increase in economic getting. Well, you know, there's a there's a good salary to be made from the ability to say that with a straight face, and that's really what

drives it. But yeah, it's it's quite amazing. I mean, the numbers, the official numbers show it. Although we actually have a problem with many of the standard measures because they don't actually keep track of gigantic incomes because that's uh, we didn't think we needed to, but because but now

we do. Um but uh yeah, when when there are people out there still trying to claim, uh that inequality hasn't gone up much, and then just say, among other things, just you walk around, look look look, you know, look at look at New York City, look at the um at the way we live now. It's just is not the same middle class country it used to be. And then we do have, uh, you know, we have pretty sophisticated ways of h between tax data surveys and so on,

which the that's new. They never used the slice of this fun as they do top one percent, ten percent, half and that's a big change the top point of one percent. Nobody ever thought that was important. How much money could there be up there? But the answer is now a lot? And so yeah, so this is not there shouldn't be any real question about that. But again, it's difficult to get a man to understand something when

the salary depends on it's not understanding it. So let's talk about a headline um from a different writer that I had to ask you about because it's so fascinating. Derrick Thompson in the Atlantic the weekend before we tape this had a column quote, this is the headline boomers

have socialism? Why not millennials. It's kind of a fascinating take. Well, there is a yeah, I mean, it is a peculiar thing that when people say, oh, America will never stand for government health insurance, every American sixty five and old there has government health insurance. When they say Americans won't stand for wide, large government guarantees of income so security. Uh so we actually do have, in fact, the US

welfare state. Uh. It's not that it's smaller than that of other advanced countries, but not that much smaller, because in fact, we do provide healthcare and retirement income to people people vote. It's probably people who vote. But I think the other thing that happened was that, um, you know, I thought, when when Medicare came in, uh uh, why was it possible to go and provide government health insurance to everybody over sixty five? Why didn't people complain that

this was taking away private insurance? The answer was that private insurers weren't interested in covering people over sixty five. There was never an expensive Yeah, they're expensive and unpredictably expensive. So the so that you were basically moving into a

blank space. Um. And the trouble, the reason that it's not so easy to just have Medicare for all is that people under sixty five, many of them do have private health insurance, which both means that you have a lobby uh interest group, but I think even more important means that you're telling people, you know, we're going to take away the insurance you now have, and we're going

to replace it with something different. Trust us, it will be better, probably plus death panels on top of it, plus death panels, and it probably will be better in fact, but that's a that's a really heavy political lift, and it's I mean, if you can start with the Tabla raza Um. I dedicate this book to the Arguing Zombies, to the to the memory of Uva Reinhardt, healthcare economist

of Princeton, who helped me a lot. And Uva and and his wife May Chung, they actually put together Taiwan's healthcare system, which is single payer's basically Medicare for all. And how's it working. It's working fine, but the but Uva himself said, look, we're not gonna be able to do that in the United States. We're if you want, if you want to get there, I wouldn't start from here. So we're recording this the day of the Iowa Calucus is of all the Democrats who were running for office,

who has the most compelling, workable healthcare proposal of everybody? Oh, that's an interesting question because the I mean, they're all workable proposals. On the technicalities, Medicare for all would work. Uh, Elizabeth Warren has laid out a lot more detail about how it would be paid for than Bernie Sanders has, But something like that would work. UM enhanced massively enhanced Obamacare, which is basically what Joe Biden means, just extended to

cover everybody and well extend cover. Yeah, so the subsidies don't cut off, so that we have much reduced code pays and it's just uh that also works. There are countries that have universal health coverage that do it through private insurance companies, like the Netherlands, so that's also workable. So I'm not sure that anyone in terms of of

who plan is actually the truth is. I believe that if any Democrat is elected, what we will in fact get is Obamacare two point Oh that Medicare for all ain't gonna happen, uh not not for a few years anyway. And so what we're actually going to get to something that is just a greatly enhanced version of what we we we managed to achieve in which is fine with me, right, and people have come to like Obamacare. In fact, the current administration but for John McCain, would have gotten rid

of it. I think that is certainly a factor in the outcome of the midtime was probably the single biggest factor. Um, yeah, that's what most of it's that was largely a healthcare election. One thing that worries me about Medicare for all and all that is it that instead of people talking about the fact that Trump wants to take away what we have achieved, that they're gonna be talking about some you know,

radical new proposal. Um. And we need to keep focused because the in fact, if Trump is reelected, there's a very good chance that he will find way to kill Obamacare in his second term. Um. So what do you think the outcome of November is going to be? I personally have no idea, although I will t this up by saying, it feels it seems like he had a thread and needle quite precisely. And it was a hundred and fifty thousand votes across five states that put him

over the team. Yeah, and as he gained votes or lost votes since I don't know that, we really don't know. I mean, it was also a media obsession with Hillary's emails and all of that. And Trump won in large part because nobody thought he could possibly win. He benefited enormous things drama from you know, coverage that ignored the possibility of his winning. And so it was okay to beat up on Hillary because obviously Trump can't win. Uh, and that won't happen, I hope this time. But God knows.

I mean, the economy is unemployment is low, although what all of the political scientists say is that what matters is how fast is the economy growing, not the level but the rate of change in the year before the election. And two it's kind of a borderline that's that's more or less neutral. So but who knows. I mean, Trump has certainly not managed to build mass support his core his core group. He's still at whatever that is. And it's uh, and but electoral college probably still gives him

an advantage. Um, well, it looks like he's lost Pennsylvania already, we hope. And it looks like he's lost Michigan already and possibly Wisconsin. Well, it is interesting that to the extent that Trump was making the Trump economy overall, I have to admit, it's a low unemployment. It's the Obama economy extended out for years. But if it feels pretty,

you know, it feels good. It feels good. But the peculiar thing, the amazing thing, actually is that where Trump's economy is bad is precisely where he promised to help. So manufacturing bankratsy is a way up manufacturing. We're in a manufacturing recession, even as even as we had so it's possible that that that that tips the bottle Ohio, Michigan, Wisconsin. That so maybe, but then on you know, the third hand, Uh, there may be other factors coming in and it's hard.

I really have no ability to prognosticate on this. Two years ago, I would have bet you a million dollars that the Senate would not change hands. And following and following the arc of all the news that's come out this year, I think it's a better than even chance that, um, the Democrats take the Senate or at the very least it's yeah, I think that. And that wasn't true to you. So that's clear, and it's and in some way map but challenging. You know, it's only a third of the

of the seats ruppied. Everybody said, oh two maybe chance, it's a real chance. Now that's one of those things that we're there's enough, there are enough really weak uh Comlican senators and it uh yeah, Arizona, you know there's places she was in point she never won anything, that's right, and and and his lacking pretty bad. But I try, actually, I try not to running against an by the way in Arizona, Yeah, I try not to od on this stuff too much. It's it's the fact of the matter

is is that we don't know. But it's the realm of possibilities I think do range from Trump victory and Republican Senate probably it's still Democratic House, but to uh, democratic victory, democratic sweep, and that would be really interesting. I mean, it would be give us a chance to do you know about only had two years when he was actually able to do anything, so did Trump. Yeah, and uh so I think if we actually look at it, the the possibility of another you know, we're not we're

not going to get Medicare for all. We're not going to get uh the free college, free college. We're not. We're uh, we might get a Green New deal, maybe not as big as the one that that advocates want, but I would definitely be for that. And um but on the other hand, we might, uh we may be on a slide into becoming in a authoritarian, one party state. That's that has happened, and I'm I'm really quite concerned that it could happen to us. That that would be

bad if it happened. So on that cheerful note, because I know you are heading out to seth myers. From here, let's jump to our favorite question that we ask all of our guests. We call this the speed round, um. And I'll just plough through these as quickly as I can, and we'll we'll send you on your way, starting with what are you watching these days? What are you streaming? What's your favorite podcast? What are you what are you paying attention to? Okay, I actually shouldn't say that. I

don't really do podcasts okay, very little. I am listening when I can to, uh to the uh Prince Peterson Institute Trade talks, which is that's professional listening. Um, the uh how about watching? What are you watching? Oh crime? I have both Amazon Prime in Netflix, and I watch all kinds of of stuff, but mostly not uh not you know, nerdy stuff. So I'm a huge fan of

the Expanse. Oh god, I love that, right, so, I think, and it makes me almost forgive Jeffs for all the other things he's done that he rescued the Expanse and his continued this last season has been spectacular fabulous. So actually that's something that's social science nerds like as well, which is a whole story. And there's another season now coming in the future. There's another season coming. There's also

gonna be uh. I don't know how many people saw this, but Altered Carbon, which was Netflix and that was that was a great science fiction novel and they turned into a great series and they'll be I think we're having a second season coming up the next month. So if you like Altered Carbon, you should check out Electra Dreams, which is loosely based on Philip K. Dick. Haven't watched really, it's the first one is spectacular, and they're all separate.

There's not a contiguous series. They're all standalone, so really really interesting. Um, and I watched lots of concerts. That's right, you're a music geek. I'm well, it's kind of weird. I'm a I'm a sixty six year old want to be hipster. Right, I'll watch a lot of indie music performances. Right. Have you seen David Burns on Broadway American Utel? No? I have, not so amazing. I've seen it twice already.

It's done in February sixteen, So you better go hurry up and see if you're win because you're leaving the out of the country. If you're a Talking Heads fan, it's amazing. It's really just amazing. Um and did you see it's been you mentioned Amazon Prime. The boys haven't

watched that yet. So it's like the anti Marvel universe, like the opposite where where when you when you look at the model, they're super Euros are part of a corrupt corporation that abuse their power to obtaining government contracts. It's just fascinating. I probably should be in because I'm the whole superhero thing, by and large leaves me cold.

So you would, you would totally. So I only recommended this series to two people who could not be more different, you and Cliff Fastness, and I'm betting both of you are gonna love it. Okay, so put that down. Second, what's the most important thing we don't know about Paul Krugman? Okay, so we have touched on this before. I think the most important thing that people don't know is that I

is that I'm a pussycat and person. That's right, your whole public persona, the public persona somehow even though I don't think you know, you don't encourage it. I don't encourage it. I don't insult, I don't talk about people's personal appearance. Uh. I don't. But your writing is barbed and effective, and people interpret that as mean and angry. Yeah, but I'm not angry and I'm not a I don't

hold registered. Yeah, you're a mench um. Let's talk about your early mentors who influenced the way you look at the world of economics. Okay, So I had two great economics mentors. First, Bill Nordhouse uh Yale Yale Nobel or right although after me, which is kind of weird, but Buddy got it. Um And I was his research assistant when I was still an undergraduate, and that was tremendous apprenticeship. And then a Rudy dorn Bush and M I T was a huge influence on me and on the many students,

So huge influence. Um So those are the two people you know whose personal advice mentorship mattered a huge amount. What about economists? What economists have influenced how you think of the field? Yeah? So the um So, although I wasn't an advisor, but Bob solo of M I T just I a whole lot of the way I do economics, the whole writing style which fills over to my public

writing as well. It comes a lot from Robert solo, who was this great m I t a commist who had this tremendous gift for taking complicated issues and turning them into simple models that illuminated the world. And I've always been in that. And then um not a simple modeler, but John Maynard Keynes. I was waiting for you to

go there it. Maybe you have to actually do economics as a as an advocation to appreciate the greatness Kaynes's ability to think his way out of the box in which economists were trapped at the time and see things differently. There's never been anything like it, I would say, not even Adam Smith did as much to really just say this is the world is not the way you think it is, and it's amazing performance, quite fascinating. Let's talk about books. What do you like to read for fun?

What do you read? What do you recommend to people? Tell us some of your favorite books. Okay, so I'm a geek. Uh so I read a lot of science fiction. Um, I anything by Charlie Strauss, who I consider the greatest living uh science fictional author. Um and uh the yeah s t R O s s um the but but lots of there we are actually if you search, you can find uh I have met him. The Frocity Archives, Yeah, the laundry, the laundry files. Novels are amazing, they are

they are, the Annihilation Score, yeah. The But he's he's incredibly prolific. And I had a memorable evening with him and several other science fiction authors who all live in Edinburgh, where we talked science fiction and tasted single malt scotches. And I describe it as a half memorable evening because I only remember the first half. So give us some other books that he's interesting, So, I mean and in science fiction. Actually, I just recently, for the first time

in decades reread Done. You know, it's going to be a new version coming out, and you know the previous ones they've all screwed it up somehow. But let's see,

because that is actually an incredible book. The other thing I do is I read a lot of history, so all kinds of stuff, and I just read a a long detailed book on the Peninsular War, which is part of the Napoleonic Wars, but it's the piece that where the the Spaniards and the Portuguese, with help from the Duke of Wellington, were fighting the French in Spain, and it's uh. And what was great about that was that most of the stuff that you read about that in

English is very Wellington's centered. It's very much about the British army. But this one gives you the whole panorama which is much vaster and uh, much more brutal. The Peninsula War, Peninsular War. So it's it's really from eighteen o eight up until eight thirteen there was this uh, extraordinary, very grim but but it's fascinating struggle for for control of Spain. Give us one more and then I'm gonna

ask you about one. Okay, so favorite books, UM, got so many things, I mean, uh, I'm I mean actually it was very much influenced by I haven't not but the philosophy of of David Hume inquiry concerning human understanding, How skepticism and demanding evidence made a big difference. That was actually only the years later that I realized that actually he probably was the first modern economist, even before

Adam Smith. That's really quite fascinating. So back to science fiction. Um, two different people who are sci fi geek friends who I I have a giant overlap with their taste. There was aspect what they like and don't like. When two people recommend the book, I go out and get it, but I haven't read it yet. Both recommended The Three Body Problem. Yeah, have you have you seen? I have read it. You read it? What are your thoughts on? I mean, I liked it. It's a full trilogy, and

it's feel full trilogy, and it's kind of weird. I mean, it's it's but it's it's Chinese resiction. It's very different in field, and it's it's strange. But it's full of interesting ideas and even even some character development. You know a lot of science fiction, and I have to admit that the characters are kind of too dimensional because it's a little bit better than that with with this, and it's not it's not the best, uh that I with stuff I've read. I mean, I think maybe it may

lose something in translation. I don't know. But you didn't read it any original man, not my man. Darine skills are a little so that's probably where where it fell a little A little short. Speaking of fail um, tell us about it time you failed and what you learned from the experience. Oh gosh, I mean, there there have been multiples but um, I mean, obviously I made a bad call about the economy on election en, didn't you roll that back pretty quick? Days? But no one wants

to hear about that. They just want to beat you with the original call. But it is a reminder not to let not to let you know. And I've done some things before. I mean, I was warning about a debt crisis during the Bush years and I never happened. And I and usually when I make these things, I go back and ask myself, was that actually grounded in hard thinking? Or was I letting my my desire to see bad things happen to bad people influence my judgment?

That's usually what what do you think Bush was a bad person or was he just an amiable dufast in over his head. I think he was not a great person, and I think that was he a bad person. So if you had to pick Cheney, your Bush, Oh, Cheney was a bad Okay. So when I look at Bush, I look at like, all right, I don't agree with most of his decisions, but he seems kind of like a goofy well, utterly lacking an empathy for the people

who are less fortunate than himself. So that's a that's fair, you know, so, but not not actively evil in the same way that Cheney was, and certainly not in the way that the Trump is. All right, so let's um. So the value is there? What do you do for fun? What do you do when you're not panning New York Times columns? Well? Uh, go to as many indie concerts as I can manage. Tell us the last couple you saw? Okay,

last two I saw We're uh. Most recently Raina del Sid which is actually it's the it's an indie band. It's also a person, but she's the core of it from Minneapolis. Sort of folky stuff but really great fun. And I saw that at Rockwood Musical, which is a standing only venue. Stand there with a beer in your hand and your your five feet from the band. So that was great. You stood for two hours in front of the band. I imagine, you know, as long as I can keep on doing it. Uh And then uh um.

And then one before that was another Larkin Poe, which is blues. There are two sisters from Atlanta and they have a band for for touring. They have a band and their their records are just them plus various pieces like a drummer and a guitarist or a a drummer, and they add that, but the two of them are are both the one one is slide guitar and one is is is regular guitar, and and they do h amazing harmony vocals and um and that was just they got hot.

Recently they got nominated for didn't win one, but they got nominated for Grammy and they um no. And I saw them at Bowery Ballroom, which is uh five fifty instead of one hundred fifty standing room. So so so these are standing with a beer in your hand concerts. That's a tough kid. The last thing I did that for was you two with the Garden, and that has to be twelve years ago. And I'm younger than you. I can't stand for two hours. Well so far, so far,

so good. I mean, you know, well time with time when I can't. And the other thing I do is I I do. I do bike trips. Now I have actually done by trips, like the full trip with the Chase fin and there there's more for you and saying go two hours this direction, and there's a pace vehicle in your following, well not pace vehicle, there's a van that pops up with with bottles of cold water every once in a while and and takes your bags to the next hotel. And so I've been doing lately. I've

been doing two of those years. So so you're biking for seven days effectively. Yeah, we're Actually it's the next one, which is in Portugal, is gonna be ten days. And your wife does this happily with um. She actually has the last couple. She's gone and done other things and met me at the end. But I have some buddies, all of them, you know, sort of my age, who are all of us, you know, still saying hey, we can still do this, let's do it, and you can

do that pretty easily in Europe. They're they're built for that more than we are. Yeah, you want to go village to village, although I've done I've done them in Vermont and Donmond, Quebec done you know. So, But it's a it's a it's a great way to get out of your head right, instead of instead of worrying about the fate of the economy or the faith of the thing that it's it's just can I actually get up that hill? Right? Changes your focus. So so speaking about

worrying and being pessimistic or not. What are you most optimistic about these days? And what are you most pessimistic? Well, I'll start with the pessimism. I think. I think there's basically an even chance that we're going we're going to lose our democracy. You know, that's even if we get past Trump. The forces of have been unleashed and that yeah, I mean I I for complicated reasons. I tracked the collapse of democracy in Hungary pretty closely, and and you

can easily see. I mean, I if Trump was as smart as Victor Orbon, we'd have lost it already. And so this is this is what really scares me most. Uh, there's my pessimism, my optimism. Um, you know, the Americans are just incredibly more open minded than they were as partly young people. It's not just young people. I mean when I think back to what the country was like in in the early nineteen eighties, I mean, and you can you can see it both. You can see it

in in polling, but other things too. I mean we I um, as an adult working economist, I lived in a country where only a third of white people thought interracial marriages were okay, a country where. I mean, as recently as two thousand four, gay marriage was a major election losing issue. We're just we had a close mindedness and prejudice level, and we've gotten vastly more tolerant, and

that's that's gotta be a good thing. So the pushback to that is hasn't the current administration revealed I'm not saying they are this. I'm saying Trump has revealed there's still big streaks of anti semitism, racism, misogyny, much more in the United States than a naive, upper middle class white guy like myself would have guessed. No one is anti Semitic. To me, how could it exist in the country. You don't get my mail, Oh I I get I

used to get the blog comments. You and I have had conversations about how horrific some of the comments used to be, and I just, you know, I just chucked it up to hey, people are getting killed in the financial crisis. No one wants to read me yammering about it, but they do, And then they would make a really obnoxious comment that said I didn't think that that was I didn't never repulated that to the rest of American society.

I think that but that stuff is always there, and that's what you think of it as a streak is like you know, a couple of outsider cranks. No, it's it's it kind of feels like it's a little more

expansive than it was. I actually wrote something it's not it's not in arguing with zombies, but I wrote something, uh early two thousand's about about actually about France, where at the National Front had gotten a lot of votes in an election and saying that there that there are angry people, that there's something like a quarter of the population, and every advanced country who are who are all of

these things? And that doesn't go away the idea that we're every disenfranchise frustrated and will express it in kicking the cat in any way they can. Yeah, and does anybody uh? And as it's always the usual things, it's

always about brown people, it's always um. I don't know if anybody listens to Tom Lear or anymore, but he had a great satirical song from nineteen one about uh that that choruses the Protestants hate the Catholics, and the Catholics hate the Protestants, and they hate the Muslims and everybody hates the Jews, and uh, and that's uh, so

that's always there. But the point is that there was a sort of assumption that that majority, the majority of the population was like that, which was probably true in the in the fifties, and it's not. Uh, it's a lot better now. So just just as economics advances one funeral at a time, does the enlightenment of America advanced

one generation at a time? Is that what's going on? Well? Some, I mean you although there are plenty of you know, there are plenty of horrible young people and plenty of pretty decent older people, so it's not that straightforward, but it's uh. I think it is true that that the younger, younger generations are more tolerant than older generations. And um. On the other hand, you know, I grew up in the sixties and I did watch lots of age of aquarious people to and into a Wall Street traders, So uh,

that's not always the case that people. Right, what's the old joke, You're you're heartless if you're not a socialist when you're young and a capitalist when you're older. No, anyone, anyone who's who is not a socialist under thirty has no heart. Anyone who's still a socialist after thirty has no head. There was the old line that that's a great joke. So we're down to our last two UM questions.

Speaking of young people, what sort of advice would you give a college graduate or millennial who was interested in exploring a career in economics? Okay, UM, so you know, first of all, do get the education? UM? And does that mean doctorate or how far do you go? It depends on what you want to do, but you want to you're gonna need some kind of graduate degree to get on trade into stuff. A master's in some cases as good enough, but the UM. But you do need

some certification. UM. You know. The thing I can say is um, yeah it uh, it's you do do figure out what you're good at and and something that interests you but not necessarily of cosmic importance. Figure out something that's really good and that that that you do well, and get that as a kind of a baseline. You can you can branch out, you can start to do stuff like writing newspaper columns or so on later on,

but you do want to get that baseline. In fact, your contribution to society, by and large basically the answer don't try to be me uh uh not yet uh and uh the U I quote in arguing with zombies. I quote there was an essay by Riemon Chandler on writing I'm writing books, and he said, you know that there have been some very dull books written about God and some very fine books written about making a living while staying fairly honest. So focus on where you can

actually add. I like that. And our final question, what do you know about the world of economics today that you wish you knew thirty or forty years ago when you were first ramping up your career. Oh? Actually, see, the thing is my career has been uh that the the angels were smiling on me. I've had an optimal career. There never been anything that everything who broke the right way for me in ways that that's just uh, I

had no right to to to expect. So it's not that um what I There is now a major uh sort of scandal has pretty much come up in economics where we're realizing just how strong the misogyny within the profession has been, just how badly um people, how badly women have been treated, you know, not Harvey Weinstein level. But but lots of of discrimination is just in terms of hiring or publishing or everything publishing, the way that

they're treated and am in ours. And of course then the thanks to uh we have you know, anonymous social media. We know the way that that some male economists talk about their female colleagues. Um. And I was oblivious. I you know, maybe had some sense, but I didn't realize. I don't think I was ever doing it, but I wasn't um campaigning to to say let's stop this. So I I really wish that I had been more aware. I was sitting there comfortably, you know, and it's super

comfortable environment. And mean I was I had all the qualifications at the right school. I was white, that was male. I was Jewish, which actually and economics in my generation was sort of normal. Uh and um, And had no idea what a lot of people were going through. Um And so I regret if I had, if I had had a better sense of what was really going on, maybe I could have contributed a little bit to making it better interesting observation along those lines. Paul, thank you

so much for being so generous with your time. We have been speaking with Paul Krugman professor at Cuney Graduate School, as well as the author, most recently of Arguing with Zombies. If you enjoy this conversation, well be sure and look Up an Inch or Down an Inch on Apple iTunes and you can see any of the three hundred plus conversations we've had over the past five plus years. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. Give us a

review on Apple iTunes. Check out my daily reads on rid Halts dot com, my weekly column on Bloomberg dot com. Follow me on Twitter at rit Halts. I would be remiss if I did not thank the Cracks staff that helps put together these conversations each week. Sam Chivraj is my producer. Michael Batnick is my head of research. I'm Barry rit Halts. You've been listen sending some Masters in Business on Bloomberg Radio.