Paul Krugman: After 25 Years, My Parting Words to Readers

Summary

Podcast Summary: "Paul Krugman: After 25 Years, My Parting Words to Readers"

Title: The Opinions
Host/Author: The New York Times Opinion
Description: One voice, one opinion, in 10 minutes or less.
Episode: Paul Krugman: After 25 Years, My Parting Words to Readers
Release Date: December 17, 2024

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Introduction

In this poignant episode of The Opinions, renowned economist and New York Times columnist Paul Krugman reflects on his illustrious 25-year career. As he pens his final column, Krugman delves into his journey, the evolving political and economic landscape, and offers insights and final thoughts to his readers.

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Reflections on 25 Years at The New York Times

Krugman opens by expressing a desire to conclude his long tenure with impactful reflections:

"I want to get in the pool. I'm Paul Krugman, just retired as a New York Times columnist, wrote my final column, and these are some reflections on 25 years at the New York Times."
[00:40]

He emphasizes his pride in championing "unpopular and certainly contrarian positions," always grounding his arguments in evidence:

"I've always done it based on evidence that I tried to share with the readers."
[00:55]

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The Era of Optimism (Early 2000s)

Krugman reminisces about the early 2000s, a period marked by widespread optimism in America. He contrasts the prevalent positive outlook with the unforeseen challenges that soon emerged.

"People in America were very optimistic about the future. Clear majority people thought the country was headed in the right direction."
[02:10]

He notes the initial dismissal of the Middle East as a topic of interest, a decision that proved short-sighted as global events unfolded:

"We were literally told we have lots of people writing about the Middle East, but that's not that interesting. And let's have somebody write about the economy because there was all this fun, interesting stuff happening in the economy."
[02:45]

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Navigating the Iraq War Discourse

Unexpectedly transitioning from his primary focus on economics, Krugman tackled the Iraq War, an area outside his main expertise. He critiques the political exploitation post-9/11 and the lack of genuine national unity.

"The attempts to exploit 9/11 for political purposes began literally while the Pentagon was still burning."
[02:55]

Krugman candidly admits that writing on Iraq was not his department but felt compelled due to the prevailing misinformation:

"I found myself feeling that I had to write about Iraq because no one else was. Not in what I thought was a clear-eyed way."
[03:15]

He underscores the dishonesty and misleading nature of the arguments presented in favor of the war:

"The presentation of evidence of the case for war looked exactly like [dishonest economic debates]."
[04:13]

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Predicting the Housing Bubble

Shifting focus to domestic issues, Krugman discusses the burgeoning housing bubble in the United States from 2000 to 2003. He accurately identified the unsustainable growth driven by relaxed lending standards and foresaw the ensuing economic turmoil.

"I have a column about the housing bubble as it was just starting to lose air. I could see right away that housing had become a huge driver of the US economy and it was clearly not sustainable."
[05:11]

Despite anticipating a recession, Krugman reflects on underestimating the magnitude of the banking crisis:

"I thought there was a problem, but it was a much bigger problem than even I had imagined."
[06:49]

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The 2008 Financial Crisis and Obama's Response

Krugman provides a critical analysis of the 2008 financial crisis and the subsequent response under President Obama. He acknowledges the necessity of bailouts to stabilize the banking system but critiques the manner in which they were executed, arguing that they allowed responsible parties to evade repercussions.

"But they were bailed out in ways that arguably let people who were responsible for the crisis get off scot free."
[07:04]

He evaluates Obama's fiscal stimulus plan, deeming it insufficient despite its large nominal size, advocating for a more robust $2 trillion stimulus to ensure a stronger recovery:

"Obama came out with a fiscal stimulus plan which had big numbers in an absolute sense. But if you actually worked through, looked to me like about a third of what was really appropriate."
[07:55]

Krugman warns of the political challenges in augmenting the stimulus and laments the eventual stagnation in fiscal support, contributing to prolonged economic hardship and diminished public trust.

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Advocacy for the Affordable Care Act

Highlighting a significant achievement, Krugman discusses the Affordable Care Act (ACA). He lauds its similarity to Massachusetts' successful healthcare reform and credits public intellectuals, including himself, for supporting its passage.

"Obama came out with a fiscal stimulus plan ... [but] Obama's big win was the Affordable Care Act."
[09:20]

He underscores the importance of trusting knowledgeable and honest leadership, which played a pivotal role in the ACA's success against widespread skepticism.

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Critique of Austerity Measures and the European Crisis

Krugman turns his attention to the European debt crisis, particularly Greece's economic meltdown. He criticizes the push for austerity—reducing government spending—inadequate for addressing high unemployment and economic stagnation.

"It turns out that, sure enough, slashing government spending in the face of high unemployment leads to even higher unemployment."
[11:55]

He introduces what he terms the "confidence theory," arguing that austerity does not bolster public confidence but instead exacerbates economic woes. Krugman reflects on the arrogance and disdain of elites, which further eroded public trust.

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Conclusion: Last Words to Readers

In his final remarks, Krugman addresses the pervasive resentment towards elites, urging readers to transcend their frustrations. He advocates for basing political views on rigorous analysis and evidence rather than distrust in authority.

"You should look at what makes sense. Don't trust authority, but doesn't mean that everything that people in authority say is wrong. Trust logic, Trust evidence."
[15:00]

Krugman highlights successes like Obamacare as examples of effective policy driven by expertise and honesty, emphasizing the need to support knowledgeable and sincere leaders to achieve societal progress.

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Closing Remarks

Paul Krugman's retirement marks the end of a significant era for The New York Times and its readership. His final reflections not only encapsulate his contributions but also offer a roadmap for navigating the complexities of political and economic discourse with integrity and informed judgment.

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Notable Quotes with Attribution and Timestamps:

• "I've always done it based on evidence that I tried to share with the readers." — Paul Krugman [00:55]
• "We were literally told we have lots of people writing about the Middle East, but that's not that interesting." — Paul Krugman [02:45]
• "The presentation of evidence of the case for war looked exactly like [dishonest economic debates]." — Paul Krugman [04:13]
• "Obama's big win was the Affordable Care Act." — Paul Krugman [09:20]
• "You should look at what makes sense. Don't trust authority, but doesn't mean that everything that people in authority say is wrong. Trust logic, Trust evidence." — Paul Krugman [15:00]

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This comprehensive summary encapsulates Paul Krugman's retrospective insights, highlighting his analytical prowess and unwavering commitment to evidence-based discourse over a quarter-century at The New York Times.

Transcript

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[Podcast Host]

This is the Opinions, a show that brings you a mix of voices from New York Times opinion. You've heard the news. Here's what to make of it.

[Paul Krugman]

Let's just get this over with. I want to get in the pool. I'm Paul Krugman, just retired as a New York Times columnist, wrote my final column, and these are some reflections on 25 years at the New York Times. There's a lot of things I wrote that I'm proud of, but I think what I'm proud of most is that I took some unpopular and certainly contrarian positions. So I like to think that while I've staked out a lot of positions and sometimes been willing to stick my neck out, that I've always done it based on evidence that I tried to share with the readers. I was brought on at the beginning of 2000, and it's really difficult, I think, for certainly for younger people to capture the state of mind that we had, which was incredibly optimistic. I was literally told we have lots of people writing about the Middle east, but that's not that interesting. And let's have somebody write about the economy because there was all this fun, interesting stuff happening in the economy. Some of it looked silly, but that's okay. And it turned out that the Middle east was a little bit more interesting than anyone kind of imagined at the time. But in general, people in America were very optimistic about the future. Clear majority people thought the country was headed in the right direction. We were seeing lots of successes in economic development. Not everything was wonderful, but the the general sense was very good. These days, basically everybody seems resentful. Workers feel that they've been betrayed by the elites. Billionaires feel betrayed because why don't people love them? So it's how do we make sense of this massive deterioration in the nation's mood? So I picked five columns that capture themes that seemed important to me and now in retrospect, seem important on the past where we are. So one of the columns I think that illustrates a pivot point in changing optimism and faith in our leaders was one I wrote about the Iraq war. I shouldn't have been writing about Iraq. This was sort of not my department. I was hired to write about economics. But I found myself feeling that I had to write about Iraq because no one else was. Not in what I thought was a clear eyed way. There's a lot of mythologizing about the mood of national unity after 9 11. That never happened. I was there, I was paying attention. The attempts to exploit 911 for political purposes began literally while the Pentagon was still burning. And furthermore, I've been paying a lot of attention to what now look like trivial economics debates. But the debates about tax cuts in which I had noticed a pattern of dishonesty, of misleading and selective presentation of evidence on economic issues. And the presentation of evidence of the case for war looked exactly like that.

[George W. Bush]

Facing clear evidence of peril, we cannot wait for the final proof to use biological or chemical or a nuclear weapon, the smoking gun that could come in the form of a mushroom cloud.

[Paul Krugman]

So I got into writing about Iraq and saying much more plainly I think, than anybody else on a major opinion page, this is a bogus case for war. And I was deeply relieved when sort of everybody became cynical about the war and I didn't have to play that role anymore. But something had gone very wrong. You know, politicians have never been, you know, 100% honest, but the level of dishonesty was something new. So during the period from around 2000 to 2003, the housing prices in the United States began just soaring.

[Business Reporter]

On Fridays, the business report focuses on your money. And today we'll continue a look at the money that you may have to spend on a house. Prices have climbed more than 100% in Montclair, New Jersey and climbed 170% in San Diego.

[Paul Krugman]

A lot of the explosion in housing prices reflected new ways of lending subprime. And that's a, you know, it's a long story about what that meant. But basically lending standards to home buyers were greatly relaxed. And when housing prices started to come back down to earth, not only did it mean that a lot of people found that they had mortgages they couldn't afford, but it also meant that there were huge stresses on the banking system. So I have a column about the housing bubble as it was just starting to lose air. I could see right away that housing had become a huge driver of the US economy and it was clearly not sustainable. We were going to be in trouble. I didn't foresee that it would be as bad as it turned out to be, but it was clear and it was an extremely unpopular view. I may have gotten more hate mail over calling the housing bubble than anything else I've written. A lot of people were financially and psychologically invested in the idea that using complicated financial footwork to invest in housing was a great idea. I was reasonably sure that it would lead to a recession. What I did not realize, I fault myself for this, was that I didn't realize how much trouble we'd have in banking. I thought there was a problem, but it was a much bigger problem than even I had imagined.

[Financial News Anchor]

It was a manic Monday in the financial markets. The Dow tumbled more than 500 points after two pillars of the street took tumbled over the weekend.

[Business Reporter]

The news from Wall street has shaken the American people's faith in our economy.

[Paul Krugman]

Which brings us to 2008. Obama was elected. He inherited a massive financial crisis and the banks were bailed out. It was essential that the banks be bailed out because we needed them to keep functioning. But they were bailed out in ways that arguably let people who were responsible for the crisis get off scot free. And people felt that they'd been betrayed by the banks. They felt that some people were being bailed out and others were not. It was an inherently problematic time and deepened the sense of distrust. So the level of political hostility was enormous.

[Business Reporter]

That's why we need an American recovery and reinvestment plan.

[Paul Krugman]

And Obama came out with a fiscal stimulus plan which had big numbers in an absolute sense. But if you actually worked through, looked to me like about a third of what was really appropriate. So on the one hand you had people screaming, oh my God, $700 billion. How can we afford that? The answer is actually quite easily. But the column I wrote was saying, hey, this should really be $2 trillion. Why aren't we doing this? And this is setting the stage for a weak recovery and years of high unemployment, which is going to make people even further disillusioned. And one of the funny things was politically, the Obama people were aware that they might be undershooting, but they believed, I think extremely naively, that they'd be able to go back to Congress for more if the initial stimulus turned out to be inadequate. And I warned from the beginning that when you come back for more, they'll say no. The lesson of what's happened so far is that fiscal support for the economy doesn't work. So no more of that. And that's kind of what happened. We ended up in this kind of political economic trap that also meant that we really messed up as a country. And again, the public had even less faith in our leadership. So as bad as the financial crisis was, and as inadequate, at least initially the recovery was, one of Obama's big wins was the Affordable Care act. And in 2009, I wrote a column explaining that this plan was very similar to a plan that had already been introduced in Massachusetts. And you know what? It works in Massachusetts and it's going to work nationally. Basically, in this case, trust your leaders. They actually do know what they're doing. And this is a well designed plan. And this was at a time when there were widespread predictions of disaster, that the whole thing would fall apart. And I said it wouldn't, and thank heavens it didn't. And look, there were a lot of people who played some role in getting it across the finish line. I like to think that I played some small part in that. They needed public voices, public intellectuals saying, this plan makes sense, this is a good plan. I actually talked to people in the administration at the time and some of them were really worried that I would be a purist, that I would say, no, we really should have single payer, that we should have Medicare for all, which I actually believe would actually be of superior system, but I knew wasn't going to happen. And that having me come out in the Times and say, this is a good plan, this is as good as we're likely to get and it is well worth doing, helped. I mean, obviously President Obama got it through, Nancy Pelosi wrangled the votes to get it through, so they have a vastly greater credit. But I think that I was at least helping a little bit in pushing it along. So the last column in this set of five was written in 2010, just as I was realizing that there was starting to be an elite consensus about the need to slash spending, which I believed was all wrong, that it was a terrible idea, that it would deepen the economic slump and delay recovery. And it did. So we had the financial crisis in 2008 and Lehman Brothers failed, and all of which was terrifying. But then we had a second wave of crises in Europe when Greece suddenly hit the wall.

[Financial News Anchor]

The euro reached a fresh one year low against the dollar. Along with the stench of Greek economic decay, now comes the fear of contagion.

[Paul Krugman]

And Europe, like the United States, was suffering from high unemployment, but we just had a crisis with governments having trouble paying their debt. And so there were a lot of voices saying, no, never mind the unemployment thing, what we need to do is worry about balancing the budget. And I argued first of all that there really was no urgency about debt, but also that this belief that slashing government spending, the demands for austerity, would somehow work out because people will feel more confident and will increase their spending, it was exactly the wrong thing to do. And I think my lasting contribution to the language of economics was that I called this believing in the confidence theory. I think 50 years from now, people try to remember a phrase that goes with me, it'll be the confidence theory. And I was right. It actually turns out that, sure enough, slashing government spending in the face of high unemployment leads to even higher unemployment. And the confidence thing didn't work out at all. And it turned out that all of this austerity was unnecessary and extremely harmful. The elites really let down the people, the public, and there was a level of arrogance and disdain that has really served them badly. So my overview of what went wrong is that a lot of it has to do with the the fact that we stopped trusting our leaders again and again. We were one way or another, sort of betrayed by both political leaders and to some extent, business leaders that we thought they knew what they were doing. We thought they had our best interests at heart, or many people did, and it turned out that they didn't. Last word to readers People feel very resentful and let down by elites, and with a lot of good reason. But that doesn't mean that you should let resentment drive your views of politics. What it means is that you should let hard thinking drive your views. You should look at what makes sense. Don't trust authority, but doesn't mean that everything that people in authority say is wrong. Trust logic, Trust evidence. Go for what actually seems to make sense and we can do much better. In some cases, we really have done much better. Obamacare worked. So try to listen to people who sound like they're knowledgeable and sound like they're being honest with you and and not not just being arrogant and trying to tell you what to do. And that's a much better chance of getting to the right.

[Podcast Host]

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