Kind: captions
Language: en
the following is a conversation with
Paul Krugman Nobel Prize winner in
economics professor CUNY and columnist
at the New York Times his academic work
centers around International Economics
economic geography liquidity traps and
currency crises but he also is an
outspoken writer and commentator on the
intersection of modern-day politics and
economics which places him in the middle
of the tense divisive modern-day
political discourse if you have clicked
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and now here's my conversation with Paul
Krugman what does a perfect world a
utopia from an economics perspective
look like Wow I don't really I don't
believe in perfection I mean somebody
once once said that his ideal was
slightly imaginary Sweden it I mean I
like an economy that has a a really high
safety net for people a good
environmental regulation and you know
not something that's not that's kind of
like some of the better run countries in
the world but with fixing all of the the
smaller things that are wrong with them
what about wealth distribution well
obviously you know total equality is is
neither possible nor I think especially
desirable but I think you want one where
basically one where nobody is nobody's
hurting and where everybody lives in the
same material universe everybody is
basically living in the same society so
no I think it's a bad thing to have
people who are so wealthy that they're
really not in the same world as the rest
of us what about competition you see the
value of competition when what may be
its limits Oh
competition is great when it can work I
mean that there's a UH uh you know I
remember I'm old enough to remember when
there was only one phone company and
there was really limited choice and I
think the arrival of multiple multiple
phone carriers and all that has actually
he has been up been a really good thing
and that's that's true across many areas
but not every industry is not every
activity is suitable for competition so
there are some things like health care
where competition actually doesn't work
and so it's it's it there's it's not one
size fits all it's interesting what is
competition now work in in health care
oh there's a long list I mean there's a
famous paper by Kenneth arrow for 1963
which still holds up very well where he
kind of runs down the list of things you
need for competition to work well
basically
both sides to every transaction being
well-informed having a you know the
ability to make intelligent decisions
understanding what's going on and
healthcare fails on every dimension you
know you did health care so not health
insurance health care well both health
care and health insurance health
insurance being part of it but no health
insurance is is it is really the idea
that there's effective competition
between health insurers is wrong in
health care I mean the idea that you can
comparison shop for for major surgery is
is just you know it it - when people say
things like that
you you wonder are you living in the
same world I'm living in you know that
the piece of well-informed that was
always an interesting piece for me just
observing as an outsider because so much
beautiful such a beautiful world as
possible and everybody's well informed a
question for you is how hard is it to be
well-informed about anything whether
it's health care or any kind of
purchasing decisions or just life in
general in this world oh information you
know in theory is hugely I mean there's
more information at your fingertips than
ever before in history
the trouble is first of all that some of
that information isn't true so it's
really hard and and then some of it's
just too hard to understand so if I'm if
I'm buying a car I can actually probably
do a pretty good job of looking up you
know going to consumer reports reviews
you can get a pretty good idea of what
you're getting when you get a car if I'm
going in for surgery first of all it's
you know you think fairly often that
happens when without your be able being
able to plan it but also there's a reit
you know medical school takes many many
years and going on the internet for some
advice is not usually a very good
substitute so speaking about news and
not being able to trust certain sources
of information
how much disagreement is there about I
mention utopia perfection in the
beginning but how much disagreement is
there about what utopia looks like
or as most of the disagreements simply
about the path to get there oh I think
there's two levels of disagreement one
maybe not utopia but justice you know
what is a just society and that's there
are different views I mean I teach my
students that there are you know too
broadly speaking two views of justice
one focuses on on outcomes you ask your
it's a just society is the one you would
choose if you were trying to what the
one that you would choose to live in if
you didn't know who you were going to be
that's kind of John Rawls and the other
focuses on process that just society is
one in which there is no no coercion
except we're absolutely necessary and
there's no there's no objective way to
choose between those I'm pretty much a
Rawls in and I think many people are
okay with it there's so there's a
legitimate dispute about what what we
mean by a just society anyway but then
there's also a lot of disputes about
what actually works there there's a
range of legitimate dispute I mean any
card-carrying economist will say that
incentives matter but how much do they
matter how much does a higher tax rate
actually deter people from working how
much does a a stronger safety net
actually lead people to to to get lazy I
I have a pretty strong view that the
evidence is points to a conclusions that
are considerably to the left of where
most of our politicians are but but that
there is legitimate room for
disagreement on those things so you've
mentioned outcomes what are some metrics
you think about the keep in mind like
the Gini coefficient but really anything
that measures how good we're doing
whatever we're trying to do well what
are the metrics to keep an eye on well
I'm actually I'm not a fan of the Gini
coefficient not because what is the Gini
coefficient okay the Gini coefficient is
a
measure of inequality and it is commonly
used because it's a single number
it usually tracks with other measures
but the trouble is there's no sort of
natural interpretation of it you ask me
what you know what what does a society
with the genie of 0.45 look like as
opposed to society with a genie of 0.25
and well I can kind of tell you you know
when the 0.25 is Denmark and 0.45 is
Brazil but it's that's a really there's
no sort of easy way to do that mapping I
mean I I look at things like what is
first of all things like what is the
income of the the the median family what
is the income of the top 1% how many
people are in poverty by various
measures of poverty and then I think we
want to look at questions like how
healthy are people how how is life
expectancy doing and how satisfied are
people with their lives because there is
it's that they has sounds like a squishy
number not so much happiness it turns
out that life satisfaction is a better
measure than the happiness but life
satisfaction that varies quite a lot and
I think it I think it's meaningful if
not too rigorous to say look according
to that kind of according to polling
people in Denmark are pretty satisfied
with their lives and people in the
United States not so much so and of
course Sweden wins every time
no actually Denmark wins these ends
Denmark and Norway tend to win these
days Sweden doesn't do badly but they're
there they're it's none of these are
perfect but look I think by and large I
there's a bit of a pornography test if
you how do you know a decent Society
well you kind of know it when you see it
right where is America Stan and that we
are have a remark our society I mean
it's there are a lot of virtues to
America but there's a
level of harshness brutality an ability
for somebody who just has bad luck to
fall off the edge that is really
shouldn't be happening in a country as
rich as ours
so we we we have somehow managed to
produce a crueler society than almost
any other wealthy country for no good
reason
what do you think is lacking in the
safety net that the United States
provides you said it's there's a
harshness to it and what what are the
benefits and maybe limits of a safety
net in a country like ours well every
other advanced country has some
universal guarantee of adequate health
care the only in the United States it's
the only place where citizens can
actually fail to get basic health care
because they can't afford it that's
that's that's we it's not hard to do
everybody else does but we don't we've
gotten a little bit better at it than we
were but still that's that's a big deal
we have remarkably weak support for for
children we most countries have
substantial safety you know parents of
young children get much more support
elsewhere they get often nothing in the
US we have limited care for people
long-term care for for the elderly is a
very hiddenness thing but I think that
the really big issues are that we don't
take care of children who make the
mistake of having the wrong parents and
we don't take care of people who make
the mistake of getting sick and those
are those are things that a country a
rich country should be doing sorry for a
sort of a difficult question but what
you just said kind of feels like the
right thing to do in terms of just
society but is it also good for the
economic health of society to take care
of to care the people who would the
unfortunate members of society by and
large it
looks like the doing the right thing in
terms of justice is also the right thing
in terms of economics if we're talking
about a society that has extremely high
tax rates that deter you know remove all
incentives to provide a safety net that
is so generous that why bother working
or striving that could be a problem but
that's that I don't actually know any
society that looks like that even even
in European country with very generous
safety nets people work and and can
innovate and do all of these things and
there's a lot of evidence now that
lacking those basics is actually
destructive that children who grow up
without adequate health care without
adequate nutrition are developmentally
challenged they don't live up to their
potential as adults so that the United
States actually probably pays a price
you know we're we're we're harsh we're
cruel and we actually make ourselves
poor everybody as a society not just the
individuals by being so harsh and cruel
okay so invisible hand Smith where does
that fit in the power of just people
acting selfishly and somehow everything
taking care of itself
to where you know the economy grows
nobody there's no cruelty no injustice
that the markets themselves what is is
their power to that idea where what are
its limits there's a lot of power to
that I mean there there's a reason why I
don't think sensible people want the
government running
steel mills or they want the government
to own the farms right the the markets
are a pretty effective way of getting
incentives aligned of inducing people to
do stuff that works and the invisible
hand is saying that you know people
farmers aren't growing crops because
they want to feed people they're growing
crops because they can make money but it
actually turns out they're a pretty good
way of getting of getting
and agricultural products grown so the
invisible hand is important part but
it's not there's nothing mystical about
it it's a it's a mechanism it's a way to
organize economic activity which works
well given a bunch of preconditions
which means that it actually works well
for agriculture it works well for
manufacturing works well for many
services it doesn't work well for
healthcare it doesn't work well for
education so there are yeah we having a
society which is kind of 3/4 invisible
hand and one-quarter visible hand seems
to be something something on that order
seems to be the balance that works best
it's just don't want to you don't want
to romanticize or missed it you know
make it something mystical out of it
it's just this is is one way to organize
stuff that happens to have what broad
but not universal application so then
forgive me for romanticizing it but it
does seem pretty magical that you you
know that I kind of have an intuitive
understanding of what happens when you
have like 5 10 maybe even 100 people
together the dynamics of that but the
fact that these large society of people
for the most part acting in a
self-interested way and maybe electing
representatives for themselves that it
all kind of seems to work he's pretty
magical the fact that there's uh you
know that right now there's a wide
assortment of fresh fruit and vegetables
in the you know in in at the in the
local markets up and down the street you
know who's who's planning that and the
answer is nobody that's the ol that's
the invisible hand at work and that's
great and and that's a lesson that's
that Adam Smith figured out more than
two hundred years ago and it's it
continues to apply and the the but you
know even Adam Smith has a section his
book about why it's important to
regulate banks so the invisible hand has
its limits yeah and that example is
actually a powerful one in terms of the
supermarket and fruit that was my
experience coming from Russia from the
Soviet Union
is when I first entered a supermarket
and just seeing the assortment of fruit
bananas yeah I don't think I've seen
bananas before first of all but just the
selection of fresh fruit was just
mind-blowing and it it beyond words and
the fact that like like you said I don't
know what made that happen well then
there is some magic to the market but
the there's as showing my age but you
know the old movie quote sometimes the
magic works and sometimes it doesn't and
you have to have some idea of when it
doesn't so how do you get regulation
right
how do what can government at its best
to government strangely enough in this
country today seems to get a bad rap
like everyone seems to everybody's
against the government yeah well a lot
of money has been spent on making people
hate the government but the reality is
government does some things pretty well
I mean we government does health
insurance pretty well so much so I mean
given our anti-government bias there it
really is true that there are people out
there saying don't let the government
get its hands on Medicare so the
government that got people actually love
the government health insurance program
far more than they love private health
insurance basic education it turns out
that your local public high school is
the right place to have students trained
and private for certainly for-profit
education is is a by and large a
nightmare of ripoffs and and and grift
and and people not getting what they
they thought they were paying for its
judgment case and it's funny there are
things I mean everybody talks if there's
the talks about the the DMV as being how
do you want the economy and actually my
experience is that the DMV have always
been positive maybe I'm just going to
the right DMVs but in fact a lot of
government works pretty well so it you'd
have to to some extent you can do these
things on a priori grounds you can talk
about the logic of why healthcare is not
gonna be handled well by the market but
partly is just experience we tried where
these some countries have tried
nationalizing their steel industries
that didn't go well but we've tried
privatizing education and that didn't go
well so you'd find out what works what
about this new world of tech how do you
see what do you think works for tech is
a more regulation or less regulation
there are some things that need more
regulation and we're finding out that
you know the world of social media is is
one in which competitive forces aren't
working very well and trusting the
companies to regulate themselves isn't
working very well but I'm on the whole a
tech skeptic not in the sense that I
think the tech doesn't work and it
doesn't do stuff but the idea that we're
living through greater technological
change than ever before is really an
illusion we've ever since the beginning
of the Industrial Revolution we've had a
series of ethical shifts in the nature
of work and in the kinds of jobs that
are available and it's not at all clear
that what we're at what's happening now
is any bigger or faster or harder to
cope with than past shocks it is a
popular notion in today's sort of public
discourse that automation is going to
have a huge impact on job market now
yeah there is something something
transformational happening now he talked
about that maybe elaborate a little bit
more do you not see the software
revolutions happening now with with
machine learning availability of data
that kind of automation being able to
sort of process clean fine patterns and
data and you know you don't see that
disrupting any one sector to a point
where there's a huge loss of jobs there
may be some things I mean actually
translators there's really reduced
demand for translators because we've
translation ain't perfect but it ain't
bad there are some kinds of things that
are changed but it's not overall
productivity growth has actually been
slowed in recent years now it's been
much slower than in some past periods so
the idea that automation is taking away
all the jobs the counterpart would be
that we would be able to you know
produce stuff with many fewer workers
than before and that's not happening
there are a few isolated you know
sectors there are some kinds of jobs
that that are going with but that keeps
on happening I mean they New York City
used to have thousands and thousands of
longshoremen taking stuff off off ships
and tow putting them on ships they're
almost all gone now now you have these
the giant cranes taking containers on
and off ships in Elizabeth New Jersey
that's not robots it's doesn't doesn't
sound high-tech but it actually pretty
much destroyed that occupation well you
know that was it wasn't fun for the
longshoremen to say the least and but it
it's not we coped we moved on and that
that sort of thing happens all the time
you mean farmers we we used to be a
nation which was mostly farmers there
are now very few farmers left the end
the reason is not that we've stopped
eating it's that farming has become so
efficient that we don't need a lot of
farmers and cope with that too so the
the idea that there's something
qualitatively different about what's
happening now so far isn't true you see
yeah your intuition is there is going to
be a loss of jobs but it's just the
thing that just continues though you
know there's nothing qualitatively
different about this moment some jobs
will be lost others will be created as
has always been the case so far
maybe there's a singularity maybe
there's a moment when when the machines
get smarter than we are and sky tech
kills us all or something right but the
but that's not visible in anything we're
seeing now
you mentioned the metric of productivity
could you explain that a little bit
because it's a really interesting one
I've heard you mentioned that before
the in connection with with automation
so what what is that metric and if there
is something qualitatively different
what should we see in that metric well
okay productivity first of all
production we do have a measure of the
total the economy's total production
real GDP which is it's not that it's a
little bit of a construct because it's
quite literally it's adding apples and
oranges so we have to add together
various things which we basically do by
using market prices but we try to adjust
for inflation but it's kind of it's a
reasonable measure of how much the
economy is producing and goods in sorry
to interrupt is a goods and services and
services it's everything okay
productivity is you divide that total
output by the number of hours worked
so we're basically asking how much how
much stuff does the average worker
produce an hour of work and if you're
seeing really rapid technological
progress then you would expect to see
productivity rising at a rapid clip
which we did for in the generation after
World War 2 productivity rose a 2% a
year on a sustained basis then it
dropped down for a while then there was
a kind of a decade of fairly rapid
growth from the mid 90s to the mid 2000s
and then it's it dropped off again and
it's not it's not impressive right now
so you're just not seeing an ethical
shift in in in the economy so let me
then ask you about the psychology of
blaming automation a few months ago you
wrote in The New York Times quote the
other day I found myself as I often do
at a conference discussing lagging wages
and soaring inequality there was a lot
of interesting discussion but one thing
that struck me was how many of the
participants just assumed that robots
are a big part of the problem that
machines are taken away the good jobs or
even jobs in general for the most part
this wasn't even a presented as a
hypothesis just as part of what everyone
knows yeah so why is maybe can you
psychoanalyze
is our the puppet the public
intellectuals or economists or us
actually the general public yeah why
this is happening why this assumption is
just infiltrated public discourse
there's a couple of things one is that
the particular technologies that are
advancing now are ones that are a lot
more visible to the chattering class the
you know if when you had a point when
containerization did away with the jobs
of longshoreman well not a whole lot of
college professors are close friends
with longshoremen right and so so we see
this one then there is a second thing
which is you know we just went through
its severe financial crisis and a period
of very high unemployment has finally
come down the there's really no question
that that high unemployment was about
macroeconomics it was about a failure of
demand but macroeconomics is really not
intuitive I mean people just have a hard
time wrapping their minds run it and
among other things people have a hard
time believing that something as trivial
as well people just aren't spending
enough can lead to the kind of mass
misery that we saw in the 1930s or that
not quite so severe but still serious
misery that we saw after 2008 and
there's always a tendency to say it must
be something big it must be
technological change that means we don't
need workers anymore that was a lot of
that in the 30s and that same thing
happened after 2008 the assumption that
it has to be something some deep cause
not something as trivial as a failure of
investor confidence and inadequate
monetary and fiscal response and the
last thing that wages did a lot of
what's happened on wages is at some
level political if the collapse of the
union movement it's the it's policies
that have squeezed workers bargaining
power and for kind of obvious reasons
there are a lot of influential people
who don't want to hear that story they
wanted to be an inevitable force of
nature technology is made it impossible
to have people earn middle-class wage
and they so that they don't they don't
like they they don't like the story that
says actually no it's kind of the
political decisions that we made that
have caused this this income stagnation
and so there are a receptive audience
for technological determinism so what
comes first in your view the economy or
politics in terms of what has impact on
the other
oh they looked at it everything
interacts she has some one of the rules
of that I was taught in economics
everything everything affects everything
else in at least two ways but the the I
mean clearly the economy drives a lot of
political stuff but also clearly
politics has a huge impact on on on the
economy there we we look at the decline
of unions in America and said well you
know it's the world has changed and
unions don't have a role but you know
two-thirds of workers in Denmark are
unionized and Denmark face has the same
technology and faces the same global
economy that we do is just a difference
in political choices that leads to that
difference so I actually teach a course
here at CUNY on called economics of the
welfare state which is about things like
health care and retirement and to some
extent wage policy and so on and the
message I keep on trying to drive home
is that look in all advanced countries
they've got roughly equal competence we
all have the same technology but we make
very different choices not that America
always makes the wrong choices we do
some things pretty well our retirement
system is is one of the better ones but
but the point is that the there's a huge
amount of political choice involved in
the in the shape of the economy what is
what is a welfare state well in welfare
state is the old term that but it
basically first all the programs that
are there to mitigate if you like the
the risks and in justices of the market
economies so in the US welfare state is
Social Security Medicare Medicaid
minimum wages food stamps when you say
welfare state my
first sir feeling is a negative one well
I know I like all I probably generally
at least theoretically like all the
welfare programs
well that's it's been demonized and to
some extent I'm being a little doing a
little bit of thumbing my nose at all of
that by just using the term welfare
state although it's not I see ya there I
got you but everybody every advanced
country actually has a lot of of a
welfare state than the US I mean we
that's fundamental part of the fabric of
our society the Social Security Medicare
Medicaid are just things we take for
granted as part of the scene and so if
you you know that there there's a lot of
there's people on the right wing who are
say oh it's it's it's all socialism and
well I guess mean what you want them to
mean and we just just today I I told my
class about the the record that Ronald
Reagan made in 1961 warning that
Medicare would destroy American freedom
and but sort of didn't happen on the
topic of welfare state what are your
thoughts on universal basic income and a
sort of a a gin not a generic but a
universal safety net of this kind
there's always a trade-off when we talk
about social safety net programs there's
always a trade-off between universality
which is clean but means that you're
giving a lot of money to people who
don't necessarily need it and some kind
of targeting which makes it easier to
get to deal with the crucial problems
with limited resources but but both has
incentive problems and kind of political
and I would say even psychological
issues so the great thing about Social
Security and Medicare is no questions
asked you know no you don't have to
prove that you need them i it's
comes you know I didn't I'm on medic
here I allegedly I mean it's it's run
through my my my New York Times health
insurance but you know I didn't have to
file an application with the Medicare
office to prove that I needed it just
happened when I turned 65 there's that's
good for dignity and it's also good for
the political support because everybody
gets Medicare on the other hand if you
and and we can do that with health care
to give everybody a guarantee of an
income that's enough to live on
comfortably but that's a lot of money
what about enough income to carry you
over to difficult periods like if you
lose a job that kind of well we have
unemployment insurance and I think our
unemployment insurance is too short
lived and too stingy it would be better
to have a more comprehensive
unemployment insurance benefit but the
trouble with with something like
universal basic income is that either
the bar is set too low so it's really
not something you can live on or it's an
enormous ly expensive program and so at
this point I think that we can do far
better by building on the kinds of
safety net programs we have I mean food
stamps Earned Income Tax Credit we
should have a lot more family support
policies those things can deal with can
do a lot more to really diminish the
amount of misery in this country ubi is
something that is being I mean it it
goes kind of hand-in-hand with with this
belief that the robots are going to take
all of our jobs and if that was really
happening then I might reconsider my
views on UPI but I don't see that
happening
so are you happy with this course as
going on now in terms of politics so you
mentioned a few political candidates is
is the kind of thing going on and on
both on Twitter and debates in the media
through the written words is a spoken
word how do you assess the public
discourse now in terms of politics we're
in a fragmented world so more so more so
than ever before so at this point the
public discourse that you see if if
you're if Fox News is your principal
news source is is very different from
the one you get if you read the New York
Times on the whole my sense is that
mainstream political reporting policy
reporting is a not too great but be
better than it's ever been because of
what when I first got into the you know
the pundit business it was just awful
lots of things just never got covered
and if things did get covered it was
always both sides I mean it's the line
that comes back from me writing during
the 2000 campaign was that it if one of
the candidates said that the earth was
flat the the headline would de use
differ on shape of planet I mean it's a
and and it's that's less true there's
still a fair bit of that out there but
it's less true than there used to be and
there are more people reporting writing
on on policy issues who actually
understand them than ever before so
though that's good but I still I have
how much the typical voter is actually
informed unclear I mean they the the
Democratic debates I think we I'm hoping
that we finally get down to having a not
having 27 people on the stage or
whatever it is they have but but yeah
they're reasonably substantive certainly
better than before and while there's a
lot of still you know theater criticism
instead of actual analysis and the
reporting it's it's not as totally
dominant as in the past it can ask maybe
a dumb question but from an open-minded
perspective when
you know people on the left and people
on the right
I think view the other the others as
sometimes Complete Idiot's yeah it what
do we do with that you know is it
possible that the people on the right
are correct about their what they
currently believe is that kind of
open-mindedness helpful or is this
division long term productive for us to
sort of have this food fight well the
trouble you have to confront is that
there's a lot of stuff that just is
false out there and but commands
extensive political allegiance so the
idea well both sides need to listen to
each other respectfully I'm happy to do
that when there's a view that is worthy
of respect but a lot of stuff is not and
so take economics is something where I
think I know something and I'm not sure
that I'm always right in fact I know
I've been wrong plenty of times but I
think there is a difference between
economic views that are within the realm
of we can we can actually have an
interesting discussion and those that
are just crank doctrines or things that
that are purely being disseminated
because people are being paid to
disseminate them so there are there are
plenty of good serious center-right
economists that are happy to to talk to
none of those center-right economists
has any role in the Trump administration
the Trump administration and by a large
Republicans in Congress only want to
listen to people who are cranks and so I
think it's being dishonest with my
readers too to pretend otherwise there's
no way I can reach out to people who
think that that reading ain't ran novels
is is is how you learned about monetary
economics let me linger on that point so
if you look at Iran okay
so you said center-right what about
extreme people who have like radical
views you think they're not grounded in
any kind of data in the kind of reality
I'm just sort of curious about how open
we should be to ideas that seem radical
Oh radical ideas is fine but then you
have to asked I have to ask is there
some basis for the radicalism and if
it's if it's a if it's something that is
not grounded in anything then and
particularly by the way if it's
something that's been refuted by
evidence again and again and people just
keep saying if it's a zombie idea and
there's a lot of those out there then
there comes a point when it's not worth
trying to fake respect for it
I see so there's a through the
scientific process you've shown that
this idea does not hold water but I like
the idea zombie ideas but they live on
through it's like the idea that the
earth is flat for example has been for
the most part that's proven yeah but it
lives on actually is growing in
popularity currently yeah and there's a
lot of that out there and there you
can't you can't wish it away and it's
you're not being fair to either yourself
or if you're somebody who writes for the
public you're not being fair to your
readers to pretend otherwise so quantum
mechanics is a strange theory but it's
testable and so while being strangest
widely accepted among physicists how
robust and testable our economics
theories if we compare them to quantum
mechanics and physics and so on okay
economics look it's a complex system and
it's also one in which by and large you
don't get to do experiments and so
economics is never going to be like
quantum mechanics that said you get
natural experiments you get tests of
rival doctrines you know in the
immediate aftermath of the financial
crisis there was one style one one
basic theory of macroeconomics which
ultimately goes back to John Maynard
Keynes that made a few predictions it
said under these circumstances printing
money will not be inflationary running
big budget deficits will not react cause
a rise in interest rates slashing
government spending austerity policies
will lead to two depressions if tried
other people who had you know exactly
the opposite predictions and we got a
fairly robust test and you know one one
theory one interest rates stayed low
inflation stayed low austerity countries
that implanted harsh austerity policies
suffered severe economic downturns you
don't get much you know that's that's
pretty clear and that's not going to be
true on everything but there's a lot of
empirical I mean the younger economists
these days are very heavy heavily data
base syndrome and it's and that's great
and I'm I think that's that's the way to
go
what theories of economics there is
there currently a lot of disagreement
about would you say Oh first of all
there's just a lot less disagreement
really among serious researchers in
economics than people imagine when we
actually we contract that the Chicago
Booth School has a panel an
ideologically diverse panel and they
oppose the regularly posed
questions and on most thing there
there's a huge that there's remarkable
consensus there's a lot of of things
where there you people imagine that
there's dispute but that the the
illusion of dispute is something that's
basically being fed by political forces
and and there isn't really I mean there
are I think we questions about what are
effective ways to regulate technology
industries we really don't know the
answer is there there's a or what
I don't follow every part minimum wages
I think there's there's
pretty overwhelming evidence that that a
modest increase in the minimum wage from
current levels would be would not have
any noticeable adverse effect on jobs
but if you asked how high could it go
$12 seems pretty safe given what we know
15 is 15 okay there's some legitimate
disagreement there I think probably but
but I can people have a point 20 where
where is the line at which it starts to
become a problem and the answer is truly
we don't know it's fascinating to try to
such a cool economics is cool in that
sense a you because you're trying to
predict something that hasn't been done
before the impact the effects of
something that hasn't been done before
yeah you're trying you're going
out-of-sample and and we have good
reason to believe that that there are no
that it's nonlinear that there comes a
point at which it doesn't work the way
it has in the past so as an economist
how do you see science and technological
innovation when I took various economics
courses in college technological
innovations seem like a no-brainer way
of growing an economy and we should
invest in it aggressively yeah I may be
biased but it seemed like the various
ways to grow an economy it seems like
the easiest way especially long term is
that correct and if so why aren't we
doing it more well that's okay
the first question is yeah I mean all
it's pretty much overwhelming we think
we can more or less measure this
although there are some assumptions
involved but it's something like 70 to
80 percent of the growth in per capita
income is is basically the advance of
knowledge it's not just it's not just a
crude accumulation of capital it is it
is the fact that we can get smarter a
lot of that by the way is more prosaic
kinds of technology so you know we I
like to talk about things like
containerization or you know an earlier
period the you know the invention of the
flat
a cardboard box I have to be invented
and and now all of your deliveries from
Amazon are made possible by the
existence of that technology that the
web stuff is important to but but what
would we do without cardboard boxes so
but all of that stuff is really
important in driving economic progress
why don't we invest more
why don't we invest more in you again
more prosaic stuff why aren't why
haven't we built another goddamn real
tunnel under the Hudson River which is
for which the need is is so totally
overwhelmingly obvious how do you think
about first of all I don't even know
what the word prosaic means but I
inferred it but how do you think about
prosaic is it the really most basic dumb
technology innovation or is it just like
the lowest hanging fruit of war
benefiting me gained when I say prosaic
I mean stuff that is not sexy and and
fancy and high-tech it's building
bridges and tunnels having inventing the
cardboard box were the I don't know
where do we put EZ Pass in there that's
a it is it is actually using some the
modern technology and all that but it
it's you're not gonna have I don't think
you're gonna make a movie about about
the fact that the guy who ever wasn't
that easy pass but but it's actually a
pretty significant productivity booster
to me it always seem like it's something
that everybody should be able to agree
on and just invest so like in the same
way there's the investment in the
military and the DoD is huge so everyone
kind of not everyone but there's a
there's a there's an agreement amongst
people that somehow that a large defense
is important it always seemed to me like
that should be shifted towards if you
want to grow prosperity of the nation
you should be investing in knowledge
yes prosaic stuff infrastructure
investing infrastructure and so on
I mean sorry to linger on it but do you
have any intuition do you have a hope
that that changes the idea of intuition
why it's not changing it's uncommon in
tradition I have a theory I'm reasonably
certain that I understand why why we
don't do it and it's it's because
because we have a real values dispute
about the welfare state about how much
the government should do to help the
unfortunate and politicians believe
probably rightly that there's a kind of
halo effect that surrounds any kind of
government intervention that even though
providing people with enhanced Social
Security benefits is really very
different from building a tunnel under
the Hudson River politicians of both
parties seem to believe that it's the
government is seen to be successful at
doing one kind of thing it will make
people think more favorably on doing
other kinds of things and so we have
conservatives tend to be opposed to any
kind of increase in government spending
except military no matter how obviously
a good idea it is because they fear that
it's the thin end of the wedge for
bigger government in general and to some
extent liberals tend to favor spending
on these things partly because they see
it as a way of proving that government
can do things well and therefore it can
turn to broader social goals it's
clearly can there's a if you like the
what you might have thought would be a
technocratic discussion about government
investment both in research and in
infrastructure is contaminated by the
fact that government is government and
people link it to other government
actions
perhaps silly question but as a species
we're currently working on venturing out
into space
one day colonizing Mars so when we start
a society on Mars from scratch what
political and economic system should
operate under oh I'm a big believer in
first of all I don't think we're
actually gonna do that but does let's uh
let's imagine hypothesize that we
colonize Mars or something look
representative democracy is vs. pure
democracy well yeah but pure democracy
where people vote directly on everything
his is really problematic because people
don't have time to to to try and master
every issue I mean we could see what
government by referendum looks like
there's a lot of that in in California
and it's uh it doesn't work so good
because it's hard to explain to people
that the various things they vote for
may conflict so representative democracy
is it's got lots of problems and I kind
of Winston Churchill thing right it's
the worst system well you know except
for all the others but so yes thinking
with a representative and basically the
American system of regulation and
markets and the economy we have going on
is a pretty pretty good one for Mars if
you start from scratch if you didn't
start from scratch you wouldn't you
wouldn't want to send it where sixteen
percent of the population has half the
seats you probably would want one which
is more actually more representative
than what we have and the details it's
unclear I mean the we when times are
good all of the various representative
democracy systems whether it's
parliamentary democracies or a us-style
system whether you have a prime minister
or the head of state as an elected
president they all kind of work well
then they all when times are good and
they all have different modes of
breakdowns
I'm not sure I know what the answer is
but but something like that is given
what we've seen through history it's the
least bad system out there I mean I
don't know I'm a big fan of the TV
series the expanse and it's kind of
gratifying that out there they the it's
the Martian congressional republic okay
in a brief sense so amongst many things
you're also an expert in international
trade what do you make of the the
complexity so I can understand trade
between two people say to neighboring
farmers it seems pretty straightforward
to me but international we need to start
talking about nations and nations
trading seems to be very complicated so
from a high level why is it so
complicated what are all the different
factors that weigh the objectives need
to be considered an international trade
and maybe feeding that into a question
of you have concerns about the two
giants right now of the u.s. in China
and an intention that's going on with
the international trade there with the
trade war well first of all
international trade is not really that
different from trade among individuals
when it's it it's vastly more complex
and there are there are many more
players but in the end the reasons why
countries trade are pretty much the same
as the reasons why individuals trade you
countries trade because they're
different and they can derive mutual
advantage from concentrating the things
they do relatively well and also there
are the economies of scale you know you
don't not individuals have to decide
whether to be a surgeon or a or an
accountant it's probably not a good idea
to try and be both in countries benefit
from specializing just because of the
inherent advantages of specialization
and that's so the now the the fact it's
a big world and
they were talking about millions of
products being traded and in today's
world often trade involves many stages
so that made in China iPhone is actually
assembled from components that are made
all over the world and but it doesn't
really change the the fundamentals all
that much there's a recurrence I mean
that the baked the big the dirty little
secret of international trade conflict
is that actually it's not conflicts
among countries are really not that
important most trade is beneficial to
both sides and to both countries but it
has big impacts on the distribution of
income within countries so the growth of
US trade with China has made both US and
China richer but it's been pretty bad
for people who were employed in the
North Carolina furniture industry who
did find that their jobs were displaced
by a wave of imports from China and so
that's where the complexity comes in not
at all clear to me I mean they we have
some real problems with China though
they really involve trade so much as as
things like respect for intellectual
property not clear that those real
problems that we do have with China have
anything to do with the current trade
war trade war seems to be driven instead
by a fundamentally wrong notion that
when we sell goods to China that's good
and when we buy goods from China that's
bad and that's that's misunderstanding
the whole point he's a is trade which
I'm in both directions a good thing yeah
we would be poorer if it wasn't for it
but it but there are there are downsides
as there are for any economic change
it's like any new technology makes us
richer but often hurts some place some
people trade with China
makes us richer but hurt some people and
I I wouldn't undo what has happened but
I wish we had had a better policy for
supporting incumbents
the losers from that growth so we live
in a time of rec reticle ization of
political ideas Twitter mobs and so on
and yet here you are in the midst of it
both tweeting and writing in New York
Times articles strong opinions riding
this chaotic wave of public discourse
do you ever hesitate or feel a tinge of
fear for exploring your ideas publicly
and unapologetically oh I feel fear all
the time
it's not too hard to imagine scenarios
in which this is I might personally find
myself kind of in there in the
crosshairs and I mean I'm the I am the
king of hate mail I get them amazing
correspondents uh does it affect you it
did that it did when I started these
days I've developed a very thick skin so
I know I don't usually get in fact if I
if I don't get a wave of hate mail after
a column then then I've probably wasted
the that that day so what do you make of
that as a as a person who's putting
ideas out there if you look at the
history of ideas the way it works is you
write about ideas you put them out there
but now when there is so much hate mail
so much division what advice do you have
for yourself and for others trying to
have a discussion about