In the summer that New York and London swapped climates, PW dodged raindrops and caught up with Paul Krugman, economist and New York Times columnist, at the offices of his publisher, W.W. Norton, on 42nd Street and Fifth Avenue, just opposite the main branch of the New York Public Library.
Krugman—conservatively dressed in blue suit and tie, frazzled from an intense media training workout in anticipation of his publicity tour—commandeers the office of the vacationing W. Drake McFeeley, president and chairman of Norton, for a one hour talk about The Great Unraveling, his collection of columns from the Times (out this month).
Since the war in Iraq began 18 months ago, Krugman has become the darling of the liberal set. "I'm not all that much of a liberal," says Krugman, trying not to be pigeonholed. "I seem to surprise now because I've been so hard on the Bushies, but back in '95 or '96 American Prospect ran a cover story accusing me of being a dangerous free-market conservative. I don't think I've changed my positions. I think free markets are a good thing, but I also think that government has certain responsibilities in this environment. Because I'm willing to say it and point out what's going on, I've become this voice."
As the "jobless recovery" slouches forward, the stock market numbers have begun to perk up, showing the dichotomy between Wall Street and the average working American. "The stock market reflects the beliefs of people who own stock," says Krugman. "It reflects their beliefs about what profits are going to be. Profits are not the same thing as the health of the economy. And a lot of it reflects their belief about what stock prices are going to be a few months from now. One of the things we should have learned from the '90s is that the stock market can get way out of touch with reality, even about profits. Put it this way: what's good for the stock market is not necessarily good for America."
Krugman grew up in Merrick, N.Y., on Long Island, and he holds all the emblems that you would expect from a world-class economist. He is a graduate of Yale and the MIT grad school and has taught economics at Yale, MIT and Stanford. Since 2000, he has been professor of economics and international affairs at Princeton University. As an academic, he has written such tomes as Exchange-Rate Instability and Has the Adjustment Process Worked? Asked just how an economist gets out of the classroom and becomes a lightning rod for the right wing, Krugman laughs. "The LA Times contacted me way back," he says, "must be '87, to write once every eight weeks. And from that, I'm not sure anyone remembers this, but I actually had a biweekly column in U.S. News and World Report in the late '80s. There was somewhat an aborted venture by the Washington Post to produce a series of trade books, and they contacted me to write a trade book, which has turned out to be kind of a cult classic, The Age of Diminishing Expectations [MIT Press, 1997], which is a survey of the U.S. economy. It was kind of a stealth textbook. And after that, one thing after another came along." Krugman's other trade books, all published by Norton, include Peddling Prosperity: Economic Sense and Nonsense in the Age of Diminished Expectations (1994), The Accidental Theorist: And Other Dispatches from the Dismal Science (1998), The Return of Depression Economics (1999) and Fuzzy Math: The Essential Guide to the Bush Tax Plan (2001).
Krugman has been writing for the Times since January 2000. "A call from [fellow Times columnist] Tom Friedman," Krugman remembers, recounting his hiring. "Howell Raines had decided they really needed someone who could write with some authority about economics and business. Here it was, '99—it was funny at the time—Raines's line was, 'We have five guys writing about the Middle East and nobody writing about the economy, and the Middle East doesn't seem so central to our concerns anymore.' "
Krugman contributes two columns a week. "At any given time, I have stuff in progress for three possible columns," he says. "And usually what I do for those is, I think of something that is probably an interesting issue depending on whether I've written on it before or not. I'll start finding out who knows about it, where I can get the data, where I can get the stuff. I'm Internet age. I use the phone but rarely, mostly I rely on e-mail, so I have various things in various states of play. The day before the column appears, I usually know what I plan to write about, but often I'll decide which of the various things are ready to go, depending on what the morning's news is."
Krugman has become an outspoken iconoclast. He shies away from no one in Washington, including the venerable Alan Greenspan, chairman of the Federal Reserve. "The reason he gets a respectful press," says Krugman, "is that he was there through this period of enormous prosperity. To some extent he did the right things. He fought off the '87 stock market crash. He helped fight off the international financial crisis in '98, and he was there while the economy had this great boom in the second half of the '90s. But he's abused that position. The chairman of the Fed is an enormously powerful official who isn't elected, is not terribly accountable. He's got to stand above politics."
As an example, Krugman cites Bush's tax cut. "Ever since Bush came into office, Greenspan has actively abetted a tax cut. He's continued to give these guys an easy ride in violation of his own stated principles. If he had stayed out of it completely—if he'd simply said, 'my role is monetary policy'—that would be okay. Or if he'd held Bush to the same standards that he held Clinton, that would be okay. But he hasn't. He feels a sympathy for the political goals of this administration, but he's not supposed to play that role."
Krugman has accused the Bush administration of blatant lies. ("It's not just that the policies are bad and irresponsible," he wrote in one of his Times columns, "our leaders lie about what they are up to.") Asked if the media have a double standard about lying, vis-à-vis Clinton versus Bush, Krugman is blunt. "To a certain extent, Bush benefits from the fatigue of the Clinton years and in particular so many of the Clinton scandals—that would be 'scandals' with quote marks—turned out to be nothing, like Travelgate and Whitewater. The natural tendency is 'all right already.' So when some real potential scandals and lies come along, it's like the boy who cried wolf." Krugman notes that Bush's lies are harder to report about. "People relate to lies on a human scale. If someone lies about sex, hell, we can all understand that. If someone makes a trillion-dollar lie about the budget, that's kind of hard to wrap your arms about, and of course it's much more important."
Krugman has become a target for the right wing. "There are whole Web sites devoted to attacking me," he says with good humor. But turning serious, he says, "It's really unpleasant taking these guys on. It's unpleasant for you personally as a journalist. The whole machinery that conjured up scandals out of thin air during the Clinton years is now turned against anyone who criticizes Bush.
"I'm willing to say a lot of things, most people in journalism are not," he avows, "partly because I don't think that this is my real job. I can always walk away from it and go back to being just an academic or a consultant advising investors about future currency crises. I don't hang out with journalists a lot. Some very prominent [media person] said, 'Well, the way the Bushies talk about tax cuts, it's like the weapons of mass destruction.' In other words, he was implying that he understands—they are lying about all of that. But you would never gather that from what he says on air. I'm not part of that. The good side is that I don't care about that particular mob opinion."
"Well," he says when challenged, "that's a little stronger maybe than I should have said. I love this term I got from the military types, 'incestuous amplification' where people only talk to each other, they start to believe something much more strongly than anyone of them would come to believe on his own. That's what happens, I think, a lot with the press. You get this 'Bush is a straight shooter'—which is absolutely not true—but it's what everybody says. Or Gore is a liar, which was really not true. I'm not a part of that because I'm in some other social universe."
Krugman has written that "old rules about politics and policy no longer apply." Pressed about what he meant, he says, "They [the Republicans] don't basically believe that this is an ongoing system where power will shift back and forth. They regard themselves as the legitimate rulers—and the only legitimate rulers. When they're considering a change in rules or legislation, they don't say, 'Well, gee, how would we like to live under this rule if the Democrats were in control?' They don't ever intend to allow the Democrats back into control.
"This is a movement that's now in control," Krugman stresses. "It's not just a political party. There's enormous amounts of money. There are parts of the media that are simply part of the movement—Fox News, several newspapers, talk radio. They don't operate under the normal constraints that we are accustomed to. The limitations that you'd expect to see, both in terms of what they can do and in terms what they would consider appropriate to do, just don't apply."
Krugman has gone so far as to accuse the Bush Republicans of being revolutionaries and "leaders [who] do not accept the legitimacy of our current political system." Asked if people might be alarmed by such allegations, Krugman says, "I expect that many people will be shocked, although I wrote that in April and it seemed much more shocking in April than it does now." Krugman elaborates: "Look, we have a whole series of telltale events: the California recall. We're supposed to have elections when we have elections. It's within the letter of the law, but it very much against the spirit of the way things are done. The Texas redistricting. Not just the attempt to redistrict between censuses just because you think you can gain an advantage. Just think about the fact that the governor of Texas has said that he might employ bounty hunters to chase down those Democrats. There's a level of partisanship, a raw 'we're going to win by any means necessary' that I think we haven't seen in this country."
Krugman says that this administration ("uniquely fierce and vindictive") reflects "Bush Family Values." "They are basically feudal," he says . "This is a family thing. They believe in family loyalty."
Didn't the Kennedys believe in family loyalty? Krugman replies, "Not in the same way. Maria Shriver and Arnold Schwarzenegger. Can you imagine the Bush family allowing some member to marry a liberal Democrat?"
Krugman has been highly critical of Bush's tax cuts. Just when will the bill come due? "We can run this way for a while," he says, "until the bond market says, 'Wait, where are we going?' My guess is late in the decade. It could be sooner than that. The fiscal situation is really dire if you look ahead. Some people say, 'I'm worried about the effect on interest rates or investments.' I think that's minor—I'm worried about solvency, worried that the promises people think the government has made to them on Social Security, Medicare are now so underfunded because the revenue is just not coming in, that at a certain point we're going to have a train wreck. Either we have to have large, full-reversal of the Bush tax cuts and maybe something beyond that because we've run up a lot of debt in the interim, or we have to have severe cuts in the middle-class entitlement programs and in the midst of all that it's going to be political civil war."
Krugman's time is up and he's in a rush to catch a train back to Princeton. PW last sees him darting down Sixth Avenue, dodging raindrops, running away from the Deficit Clock at 43rd and Sixth, now active again and heading into the billions.