The Cult of Selfishness Is Killing America

The right has made irresponsible behavior a key principle.

America’s response to the coronavirus has been a lose-lose proposition.

The Trump administration and governors like Florida’s Ron DeSantis insisted that there was no trade-off between economic growth and controlling the disease, and they were right — but not in the way they expected.

Premature reopening led to a surge in infections: Adjusted for population, Americans are currently dying from Covid-19 at around 15 times the rate in the European Union or Canada. Yet the “rocket ship” recovery Donald Trump promised has crashed and burned: Job growth appears to have stalled or reversed, especially in states that were most aggressive about lifting social distancing mandates, and early indications are that the U.S. economy is lagging behind the economies of major European nations.

So we’re failing dismally on both the epidemiological and the economic fronts. But why?

On the face of it, the answer is that Trump and allies were so eager to see big jobs numbers that they ignored both infection risks and the way a resurgent pandemic would undermine the economy. As I and others have said, they failed the marshmallow test, sacrificing the future because they weren’t willing to show a little patience.

And there’s surely a lot to that explanation. But it isn’t the whole story.

For one thing, people truly focused on restarting the economy should have been big supporters of measures to limit infections without hurting business — above all, getting Americans to wear face masks. Instead, Trump ridiculed those in masks as “politically correct,” while Republican governors not only refused to mandate mask-wearing, but they prevented mayors from imposing local mask rules.

Also, politicians eager to see the economy bounce back should have wanted to sustain consumer purchasing power until wages recovered. Instead, Senate Republicans ignored the looming July 31 expiration of special unemployment benefits, which means that tens of millions of workers are about to see a huge hit to their incomes, damaging the economy as a whole.

So what was going on? Were our leaders just stupid? Well, maybe. But there’s a deeper explanation of the profoundly self-destructive behavior of Trump and his allies: They were all members of America’s cult of selfishness.

You see, the modern U.S. right is committed to the proposition that greed is good, that we’re all better off when individuals engage in the untrammeled pursuit of self-interest. In their vision, unrestricted profit maximization by businesses and unregulated consumer choice is the recipe for a good society.

Support for this proposition is, if anything, more emotional than intellectual. I’ve long been struck by the intensity of right-wing anger against relatively trivial regulations, like bans on phosphates in detergent and efficiency standards for light bulbs. It’s the principle of the thing: Many on the right are enraged at any suggestion that their actions should take other people’s welfare into account.

This rage is sometimes portrayed as love of freedom. But people who insist on the right to pollute are notably unbothered by, say, federal agents tear-gassing peaceful protesters. What they call “freedom” is actually absence of responsibility.

Rational policy in a pandemic, however, is all about taking responsibility. The main reason you shouldn’t go to a bar and should wear a mask isn’t self-protection, although that’s part of it; the point is that congregating in noisy, crowded spaces or exhaling droplets into shared air puts others at risk. And that’s the kind of thing America’s right just hates, hates to hear.

Indeed, it sometimes seems as if right-wingers actually make a point of behaving irresponsibly. Remember how Senator Rand Paul, who was worried that he might have Covid-19 (he did), wandered around the Senate and even used the gym while waiting for his test results?

Anger at any suggestion of social responsibility also helps explain the looming fiscal catastrophe. It’s striking how emotional many Republicans get in their opposition to the temporary rise in unemployment benefits; for example, Senator Lindsey Graham declared that these benefits would be extended “over our dead bodies.” Why such hatred?

It’s not because the benefits are making workers unwilling to take jobs. There’s no evidence that this is happening — it’s just something Republicans want to believe. And in any case, economic arguments can’t explain the rage.

Again, it’s the principle. Aiding the unemployed, even if their joblessness isn’t their own fault, is a tacit admission that lucky Americans should help their less-fortunate fellow citizens. And that’s an admission the right doesn’t want to make.

Just to be clear, I’m not saying that Republicans are selfish. We’d be doing much better if that were all there were to it. The point, instead, is that they’ve sacralized selfishness, hurting their own political prospects by insisting on the right to act selfishly even when it hurts others.

What the coronavirus has revealed is the power of America’s cult of selfishness. And this cult is killing us.

America fails the marshmallow test

The marshmallow test is a famous psychological experiment that tests children’s willingness to delay gratification. Children are offered a marshmallow, but told that they can have a second marshmallow if they’re willing to wait 15 minutes before eating the first one. Claims that children with the willpower to hold out do much better in life haven’t held up well, but the experiment is still a useful metaphor for many choices in life, both by individuals and by larger groups.
One way to think about the Covid-19 pandemic is that it poses a kind of marshmallow test for society.
At this point, there have been enough international success stories in dealing with the coronavirus to leave us with a clear sense of what beating the pandemic takes. First, you have to impose strict social distancing long enough to reduce the number of infected people to a small fraction of the population. Then you have to implement a regime of testing, tracing and isolating: quickly identifying any new outbreak, finding everyone exposed, and quarantining them until the danger is past.
This strategy is workable. South Korea has done it. New Zealand has done it.
But you have to be strict and you have to be patient, staying the course until the pandemic is over, not giving in to the temptation to return to normal life while the virus is still widespread. So it is, as I said, a kind of marshmallow test.
And America is failing that test.
New U.S. cases and deaths have declined since early April, but that’s almost entirely because the greater New York area, after a horrific outbreak, has achieved huge progress. In many parts of the country — including our most populous states, California, Texas, and Florida — the disease is still spreading. Overall, new cases are plateauing and may be starting to rise. Yet state governments are moving to reopen anyway.
This is a very different story from what’s happening in other advanced countries, even hard-hit nations like Italy and Spain, where new cases have fallen dramatically. It now looks likely that by late summer we’ll be the only major wealthy nation where large numbers of people are still dying from Covid-19.
Why are we failing the test? It’s easy to blame Donald Trump, a man-child who would surely gobble down that first marshmallow, then try to steal marshmallows from other kids. But America’s impatience, its unwillingness to do what it takes to deal with a threat that can’t be beaten with threats of violence, runs much deeper than one man.
It doesn’t help that Republicans are ideologically opposed to government safety-net programs, which are what make the economic consequences of social distancing tolerable; as I explain in today’s column, they seem determined to let crucial emergency relief expire far too soon. Nor does it help that even low-cost measures to limit the spread of Covid-19, above all wearing face masks (which mainly protect other people), have been caught up in our culture wars.
America in 2020, it seems, is too disunited, with too many people in the grip of ideology and partisanship, to deal effectively with a pandemic. We have the knowledge, we have the resources, but we don’t have the will.

How to Create a Pandemic Depression

Opening the economy too soon can backfire, badly.

Last week the Bureau of Labor Statistics officially validated what we already knew: Just a few months into the Covid-19 crisis, America already has a Great Depression level of unemployment. But that’s not the same thing as saying that we’re in a depression. We won’t know whether that’s true until we see whether extremely high unemployment lasts for a long time, say a year or more.

Unfortunately, the Trump administration and its allies are doing all they can to make a full-scale depression more likely.

Before I get there, a word about that unemployment report. Notice that I didn’t say “the worst unemployment since the Great Depression”; I said “a Great Depression level,” a much stronger statement.

To understand why I said that, you need to read the report, not just look at the headline numbers. An unemployment rate of 14.7 percent is pretty horrific, but the bureau included a note indicating that technical difficulties probably caused this number to understate true unemployment by almost five percentage points.

If this is true, we currently have an unemployment rate around 20 percent, which would be worse than all but the worst two years of the Great Depression. The question now is how quickly we can recover.

If we could get the coronavirus under control, recovery could indeed be very rapid. True, recovery from the 2008 financial crisis took a long time, but this had a lot to do with problems that had accumulated during the housing bubble, notably an unprecedented level of household debt. There don’t seem to be comparable problems now.

But getting the virus under control doesn’t mean “flattening the curve,” which, by the way, we did — we managed to slow the spread of Covid-19 enough that our hospitals weren’t overwhelmed. It means crushing the curve: getting the number of infected Americans way down, then maintaining a high level of testing to quickly spot new cases, combined with contact tracing so that we can quarantine those who may have been exposed.

To get to that point, however, we would need, first, to maintain a rigorous regime of social distancing for however long it takes to reduce new infections to a low level. And then we would have to protect all Americans with the kind of testing and tracing that is already available to people who work directly for Donald Trump, but almost nobody else.

Crushing the curve isn’t easy, but it’s very possible. In fact, many other countries, from South Korea to New Zealand to, believe it or not, Greece have already done it.

Bringing the infection rate way down was a lot easier for countries that acted quickly to contain the coronavirus, while the rate was still low, rather than spending many weeks in denial. But even places with severe outbreaks can bring their numbers down if they stay the course. Consider New York City, the original epicenter of the U.S. pandemic, where the numbers of new daily cases and deaths are only a small fraction of what they were a few weeks ago.

But you do have to stay the course. And that’s what Trump and company don’t want to do.

For a while it seemed as if the Trump administration was, at long last, willing to take Covid-19 seriously. In mid-March the administration introduced social distancing guidelines, although without actually imposing any federal regulations.

But lately all we hear from the White House is that we need to reopen the economy, even though we’re nowhere close to where we’d need to be to do so without risking a second wave of infections.

At the same time, the administration and its allies are apparently dead set against providing the financial aid that would let us sustain social distancing without extreme financial hardship. Extend enhanced unemployment benefits, which will expire July 31? “Over our dead bodies,” says Senator Lindsey Graham. Aid to state and local governments, which have already laid off a million workers? That, says, Mitch McConnell, would be a “blue-state bailout.”

As Andy Slavitt, who ran Medicare and Medicaid under Barack Obama, puts it, Trump is a quitter. Faced with the need to actually do his job and do what it takes to crush the pandemic, he just gave up.

And this retreat from responsibility won’t just kill thousands. It might also turn the Covid slump into a depression.

Here’s how it would work: Over the next few weeks, many red states abandon social-distancing policies, while many individuals, taking their cues from Trump and Fox News, begin behaving irresponsibly. This leads, briefly, to some rise in employment.

But fairly soon it becomes clear that Covid-19 is spiraling out of control. People retreat back into their homes, whatever Trump and Republican governors may say.

So we’re back where we started in economic terms, and in worse shape than ever in epidemiological terms. As a result, the period of double-digit unemployment, which might have lasted only a few months, goes on and on.

In other words, Trump’s search for an easy way out, his lack of patience for the hard work of containing a pandemic, may be precisely what turns a severe but temporary slump into a full-blown depression.

Radical Imagination: Imagining How the World of Finance Really Works

Yves here. Get a cup of coffee. Another meaty chat with Michael Hudson, who focuses here on the role of finance in rent extraction.

An important theme here that Hudson has stressed before is the mistaken perception of home “ownership”.  Only about 1/3 of homes in America are owned free and clear. For the rest, the banks, or mortgage trusts, hold a senior position as mortgage lenders. And over the decades, they have become far less accommodating when homeowners are late even on a single payment. Even worse, insiders have reported that mortgage servicers will even hold payments to assure that they are late, which typically leads to compounding charges that virtually assure a foreclosure. Borrowers also face Kafkaesque obstacles to clearing up errors when they unquestionably paid on time.

To put it another way, as Josh Rosner put it in the early 2000s. “A home with no equity is a rental with debt.” That can be generalized to homes with little equity.

Radical Imagination host Jim Vrettos interviews Professor Michael Hudson, Economist, Wall St. Analyst, Political Consultant, Commentator and Journalist; who offers his views in the way finance works

Welcome, welcome once again to the Radical imagination. I’m your host, Jim Vrettos. I’m a sociologist who’s talked at John Jay College of Criminal justice and Yeshiva University here in New York. Our guest today, on the Radical Imagination, is one of only eight economists named by the Financial Times who foresaw the credit crisis and ensuing great recession erupting in 2008. It was conventional wisdom at the time to say that no one saw the gravity of the crisis coming, including almost every leading economist and financier in the world.

In fact, many had seen it coming. It was seen by everyone except economists from Wall Street; as our guest put it. They were ignored by an establishment according to then, the Federal Reserve chairman Alan Greenspan that watched with innocent quote-unquote shock disbelief as its whole intellectual edifice collapsed in the summer of 2007.

Official models missed the crisis not because the conditions were so shockingly unusual, they missed it by design because the world they lived in was not a world of how finance really works. They missed it because their mathematical models made it impossible to warn against a debt-deflation recession.

Their innocent model worlds were worlds where debt simply did not exist. It’s a world that most of our economic policymakers still live in, and it’s no wonder that everyday people see most economists far removed from their practical economic concerns and interests their everyday concrete reality. Our guest today is an internationally renowned economist who’s followed a much different path of interest and concern.

Michael Hudson is a distinguished research professor of economics at the University of Missouri, Kansas City, a researcher at the Levy Economics Institute at Bard College, a former Wall Street analyst; political consultant to governments on finance and tax policy, a popular commentator sought after speaker and journalist.

He identifies himself as a Marxist economist. But his interpretation of Karl Marx that differs in most other major Marxists. He believes parasitical forms of finance have warped the political economy of modern capitalism. History has regressed back to a neo- feudal system. He’s also a contributor to the Hudson report, a weekly economic and financial news podcast produced by Left Out.

His many books include Killing the HostJ is for Junk Economics,The Bubble and BeyondSuper Imperialism, and “… and Forgive Them Their Debts.” Michael has devoted his entire scientific career to the study of debt —both domestic and foreign, loans and mortgages, and interest payments.

In 2006 he argued that debt deflation would shrink the real economy, drive down real wages and push our debt-ridden economy into a Japan-style stagnation or worse. And just for reference, the typical American household now carries an average debt of over $137,000 up from $50,000 or so in 2000. The average American has about $38,000 in personal debt, excluding home mortgages.

The average credit card debt per U.S. household is $8,500, and outstanding student loans are at an all-time high, in 2019, of $1.41 trillion, a 33 percent spike since 2014, and a 6 percent increase from 2018. Only 23 percent of the population say they carry no debt. As Hudson presciently puts it, debts grow and grow, and the more they grow, the more they shrink the economy.

When you shrink the economy, you shrink the ability to pay the debts. So, it’s an illusion that the system can be saved. The question is, how long are people going to be willing to live in this illusion? Every day people have to face reality. Our economic policymakers urgently need to get it too.

So welcome Michael to The Radical Imagination. Thank you very, very much for coming here and being with us. Your work is so interesting; it’s so new and different. You’re a Marxist economist and yet…

[Michael] I’m a classical economist…

[Jim] You are classical, ok.

[Michael] Marx was the last great classical economist. Classical economics basically runs from the French Physiocrats through Adam Smith via John Stuart Mill to Marx.

[Jim] Along with Ricardo.

[Michael] Yes, they were all talking about the rentiers. In their time the landed aristocracy were the main rent recipients. But Adam Smith also talked about monopoly rent. And finance was the major monopoly. And today, the role of the landlords played in the 19th century of stifling industrial capitalism is being played by the banks and the rest of the financial sector. Right now the collectors of land rent, which was the main focus of the labor theory of value to isolate what was unnecessary, is being paid to the banks as mortgage interest.

[Jim] Right

[Michael] So, we no longer have a small privileged private landlord class when you have 80 percent of the European population and two thirds of the American population being homeowners. However, they have to pay the equivalent of the rental value of their housing to the bank, in the form of mortgage interest.

[Jim] To the banks, right!

[Michael] My analysis follows from classical economics, as did Marx’s analysis. So Marx is simply the last great classical economist. They were all talking about how industrial capitalism sought to free itself from unnecessary costs of production, and hence how its political fight was against the landlord class and other rent extractors. Where Marx went beyond his predecessors was in looking at the laws of motion of industrial capitalism. He saw these as leading toward socialism. Later, Rosa Luxemburg said that if it’s not towards socialism, it will be toward barbarism.

[Jim] So capitalism would evolve into the possibility of socialism.

[Michael] Yes.

[Jim] Did he foresee the sort of predatory financial system that you worked out?

[Michael] No one described it better in his time than Marx, in Volume III of Capital.

[Jim] Volume III. Ok!

[Michael] Marx analyzed the “real” economy’s circular flow between employers and wage labor buying the products they produced. But then, in Volume III, he said that rentier debt claims by the financial sector was a separate dynamic, independent from the economy of production and consumption. This industrial capitalist economy is wrapped in a financial sector composed of debt and property claims. These are external to the economy. They slow it and ultimately cause a crash. Marx was one of the first to talk about business cycles of about 11 years and the internal contradictions that led to a market collapse. He pointed out that the financial sector had different mathematics of growth – the mathematics of compound interest. These are exponential and inherently unsustainable. In Volume III of Capital and also of his Theories of Surplus Value– which was Marx’s history of economic thought and the theories leading up to him – he collected everything from Martin Luther to other analyses pointing out that debts grew so rapidly at compound interest that it is impossible to pay them.

[Jim] You have a great chart where you talk about compound interest, a penny that was invested at 5% interest from Christ’s time to 1776.

[Michael] Richard Price was an actuarial accountant. He calculated that a penny saved that at the time of Jesus’s birth at 5% interest would become a solid sphere of gold extending from the sun out to the planet of Jupiter.

[Jim] Amazing.

[Michael] Obviously, many people did save pennies at the time of Christ, and the annual interest rate then in Rome was 8 1/3%, one twelfth per year. But of course nobody has a sphere of gold extending out to Jupiter. That’s because debts that can’t be paid, won’t be.

That’s basically my motto: Debts, that can’t be paid, won’t be paid, because there’s no way of paying out of current income that grows much more slowly, tapering off.

[Jim] Right!

[Michael] So debts have to be written down. It usually takes the form of a financial crash. Nobody before Marx explained crashes in terms of the financial claims growing and causing a break in the chain of payments. The actual break could be a result of fraud or embezzlement, or a bad crop, because crashes happened in the autumn when the crops were moved and there was a drain of money from the banks to pay for moving the crop and paying the harvesters. But at least a crash wiped out debts, and then the debt buildup could begin all over again.

[Jim] But in pre-industrial civilizations that didn’t occur did it? We want to play a short little clip from your book, “… and Forgive Them Their Debts,” in which you talk about the debt phenomenon in primitive or pre-industrial civilizations, very different than what we’ve experiencing today, correct?

[Michael] That’s right. You mentioned the Financial Times report of the economists who did see the crash coming. I was the only one who actually made a chart showing why the break had to come. The Financial Time review was by Dirk Bezemer, who showed the chart that I published in a Harper’s magazine, based on an earlier paper I’d given at the University of Missouri at Kansas City for one of our Minsky Conferences.

[Jim] Let’s play this. It’s a two-minute clip on what you talking about, and debt within pre-industrial societies.

[Clip]

[Michael] Economists don’t talk much about religion or society, or how these concerns shape markets. Theologians for their part act as if religion is all about heaven and sex, so debt is left out. Yet it used to be at the core of Judaism, Christianity, and earlier Near Eastern religion.

[Host] Why is that? If religious leaders are interested in social justice, as Jesus was, it you have to talk about economics.

[Michael] I think part of the reason is that when they translated the Bible into English, German and the vernacular, they didn’t know what many of the words originally meant, like deror  (for the Jubilee Year), or how to distinguish between “sin” and “debt” as originally a reparations payment for sin. They didn’t understand that most of the Bible was redacted by the returnees from the Babylonian captivity, who brought back this concept of debt cancellation, “andurarum” – Clean Slate. The Hebrew word was “deror.” In the Bible, you’ll have other words or terms for the Clean Slate, the Jubilee year of Leviticus 25, such as “Year of the Lord” in Jesus’s first sermon.

They didn’t realize that the word “gospel” was the “good news.” That good news was that there was going to be a debt cancellation. They didn’t realize that the Ten Commandments were very largely about debt; that “one shall not covet the neighbor’s wife,” that means you don’t make a loan to the guy so he has to pledge his wife as a debt slave to her so that you can have your way with her.

[Jim] But ordinarily that just gets translated as adultery.

[Michael] Yes, but they didn’t realize that the vehicle for this immorality was largely debt bondage. “Thou shalt not take the Lord’s name in vain” meant that a creditor couldn’t swear that so-and-so owes you money if he didn’t. All of this had to do with fact that the great destabilizing factor in society in the first millennium BC was debt beyond the ability to be paid, leading to bondage of the debtor, and ultimately forfeiture of land to wealthy creditors eager to grab it and do as Isaiah accused, join plot to plot and house to house until there were no more people left in the land.

[Jim] “No more people left in the land.” This is an incredible narrative. Please flesh out the narrative so that we can understand what was going on at that time.

[Michael] In order to explain the dynamics of debt in early times, you have to explain how the overall economic system worked as part of the social system. Most people ran into debt not by borrowing, but simply by not being able to pay the taxes or other payment obligations that accrued. These debts weren’t the result of loans. Most personal debts in Sumer and Babylonia were owed to the palace, so when the crops failed or there was a military fighting they couldn’t pay what they owed to the bureaucracy of tax collectors or for public services.

[Jim] Who were working for the palace.

[Michael] Yes. The rulers had a choice at this point: Either they could let the debtor fall into bondage when he couldn’t pay the tax collectors or the palace. If that happened, he’d owe the crop surplus to the creditor, not the palace.

He owed his payment in labor. That was the scarce resource in antiquity. He’d owe his labor to the creditor, so he couldn’t serve in the army, or do corvee work to build infrastructure or palace walls.

So rulers canceled these personal debts to regain control over agrarian labor and its crop surplus. Every new ruler who took the throne in Sumer and Babylonia started the reign with an amnesty, a Clean Slate to start from a position of balance in Year One. During their subsequent reign, if the crops failed or if there was a military conflict, the ruler would cancel consumer debts (but not commercial debts among businessmen for foreign trade or similar enterprise). That’s in the laws of Hammurabi, cancelled Babylonian debts four times. It’s obvious that if you’re at war or if the crops are hurt, cultivators can’t pay the loans.

What early modern scholars could not believe, until our Harvard group began to compile the economic history of antiquity, that canceling such debts actually was what maintained stability. We began our Harvard group in the 1990’s , and we’ve published five colloquia volumes of the origins of economic enterprise in the ancient Near East, on land tenure, urbanization, debt, and debt cancellation.

Our researches showed that as soon as you had interest-bearing debts (mainly in the commercial sphere), you had debt cancellation for the personal agrarian debts. Business debts were not canceled because the merchants were also citizens, so no matter what, all citizens had their designated self-support land. So only the barley debts were canceled; not the personal debts. We showed that rulers canceled the debts because number one, they were canceling debts owed to themselves. It’s politically easy to forgive a debt if it’s owed to you. But it’s more difficult if there is an oligarchy and debts are owed to private creditors.

Canceling crop debts was what maintained economic stability without mass bankruptcy, which would have meant that a lot of debtors would have ended up as bond servants to their creditors. It also maintained demographic staility, because otherwise, debtors would have run away and joined another community. Many did run away after Babylonia fell in 1600 BC. Four centuries later we find them joining the hapiru, which many people connected to the Hebrews. They were sort of gangs of laborers who also would do a little bit of piracy or serve as mercenaries. Their own groups were very egalitarian, just as pirates were egalitarian in their own ranks in the 18thcentury West.

With the hapiru  you find for the first time an ideology saying that they were not going to let themselves fall into debt to the rich or to landlords. Their ranks were joined by fugitives walking out. Of course, that’s how Rome came to be settled under its “kings,” and what the Roman commoners did 594 BC after the kings were overthrown. The oligarchy took over, and tried to reduce the Roman population to bondage. You had numerous Secessions of the Plebs, for instance, again when the oligarchy broke its word by 449 BC.

[Jim] the aim was to forgive all the debts, just as in the Bible, right?

[Michael] When the Bible really was edited and put together by the Jews who were coming back from Babylonia, they brought back with them many Babylonian practices.

[Jim] So, they had learned from that experience . . .

[Michael] At that time all the Near Eastern kingdoms, even the Neo-Assyrian and Neo-Babylonian empires had rulers who continued to proclaim Clean Slates.

[Jim] The Persians and so on. But that tradition didn’t survive into modern times, although it became a tradition within the old Judaism.

[Michael] And also the original preachings of Jesus. Leviticus 25 projected the practice all the way back to the commandments of Moses. But there’s not very much documentation of Judaism after the compilation of the Jewish Bible, because the Judeans didn’t write on clay tablets, they wrote on perishable materials that haven’t survived. The little that did survive was the sacred library of Jerusalem, which became the Dead Sea Scrolls. When the Romans came, they took the library and they put it in pots. We now have many of these scrolls. One was a midrash, a collection of all of the biblical passages about debt cancellation, including those of the prophets.

[Jim] Interesting!

[Michael] So we know that by the time of Jesus, there was an active popular demand for another Jubilee. But meanwhile, within Judaism itself, the wealthiest families became the rabbinical school. Luke’s description of Jesus in the New Testament said that the Pharisees loved money. They became the rabbinical school of Hillel. Luke said that Jesus went back to the temple in his hometown to give a sermon, and unrolled the scroll of Isaiah to read the passage about the Year of the Lord – meaning the Jubilee Year – and said, that he had come to proclaim this year. That was his destiny.

Early translators of the Bible just read “the Year of the Lord” without realizing that this meant the Jubilee Yearderor, a debt cancellation. Luke immediately says a lot of families got very angry and chased Jesus out of town. They didn’t like his message. The Pharisees in particular got upset, and complained to the Roman that Jesus wanted to be King. Well, the reason they said was that they knew that Rome hated kingship. Roman tradition as written by Livy and by Dionysius and Halicarnassus described Servius as cancelling the debts, and most other kings of trying to keep the oligarchy in its place. Rome grew by making itself a haven for immigrants, whom they attracted precisely by keeping the oligarchy in its place.

[Jim] But they also had an empire. . .

[Michael] We are talking before the eighth to sixth centuries BC. But then the oligarchs took over and throughout the rest of Roman history down to the empire, the great fear was that somebody would do what the kings did: cancel the debts and redistribute the land to the poor. Julius Caesar was killed for “seeking kingship,” meaning that the Senate worried that he was going to cancel the debts after decades of civil warfare over this issue and the assassination of Catiline and other advocates of debt cancellation.

[Jim] And people will be free from their economic bondage

[Michael] Yes. Even many rich people were behind Catiline, who led the revolt a generation before Caesar, who actually seems to have been an early sponsor of Catiline. We’re talking about 62 to 64 BC; Caesar was killed in 44 BC.

So to make a long story short, what made the West “Western” was that it was the first society notto cancel the debts. It was to prevent this that oligarchies opposed a central authority. We don’t find any sign of debt in Greece and Rome until about 750 B.C. It was brought by near Eastern traders, along with standardized calendrically based weights and measures, ritual and religious practices. They set up temples as trading vehicles. For thousands of years, traders had set up local temples to act as a sort of Chamber of Commerce, to negotiate trade. In Greece, and Rome at that time there were chieftainships, which began to adopt the patronage practices of extending loans to the population, and then taking the payment and labor.

These dependency relationships are what made Western civilization different from what went before. There was no palatial economy, no state authority to override the oligarchy, cancel debts, redistribute land or liberate citizens who had been reduced to bondage as a result of their debt.

[Jim] You’re talking about the Middle Ages as well, feudalism?

[Michael] No, I’m talking about Greece and Rome in contrast to the Near Eastern mixed economies that were palatial as well as private. There was much private mercantile enterprise in Sumer. Its foreign trade was largely left to private enterprise (with the palace being a major customer, to be sure), so, these were mixed economies, as the five volumes that our Harvard group published have shown.

[Jim] This is all contained in your book “… and Forgive Their Debts.”

[Michael] Yes.

[Jim] So this is what is crucial to understanding lending, foreclosure and redemption from the Bronze Age finance to the Jubilee.

[Michael] Yes.

[Jim] This is a fascinating history. Can we bring it up to date, including issues of militarization and empire and imperialism in the 20thcentury, World Wars I and II? What are some of the things that occurred, the inception of the World Bank and the IMF? How did America control and attempt to defend its empire by using debt leverage?

[Michael] Already in Greece and Rome there was a linkage between debt and militarization. A Greek general, Tacticus in the third century BC, wrote a book of military tactics. He said that if you want to conquer a town, the way to take it over is to promise to cancel the debts. The population will come over to your side. And conversely, he said, if you’re defending a town, cancel the debts and they’ll support you against the attacker. So that was one of the reasons that debts tended to be canceled by one group or another. It’s what Coriolanus did, and then he went back on his word in Rome. That’s what Zedekiah did in Judea. Well, today it’s different. Here you have the imposition of a military force – really NATO – to enforce debt collection, not only from individuals but on debt entire countries. The job of the World Bank and IMF is to impose such heavy debt service on countries, and indeed to impose it in dollars, that countries have to earn these dollars to pay their debts. They can’t simply print the money to pay these debts like America can do. They have to obtain dollars by steadily lowering the price of their labor. But as yet there is no debt revolt.

[Jim] Because, when we went off the gold standard the American dollar became all powerful.

[Michael]Right.

[Jim] And we control 75% of the gold reserves?

[Michael] By the end of World War II, we controlled 75%, right.

[Jim] These are tremendous transformations in the world economy. The IMF and World Bank have supposedly developed through the UN for development, but as you argue, it’s more to create dependency.

[Michael] The World Bank is effectively part of the Defense Department. Their heads are usually former Secretaries of Defense, from John J McCloy, the first president, to McNamara and subsequent heads. What the United States discovered is that you don’t need to go to war to control other countries. If you can have them accept the assumption that all debts should be paid, they will voluntarily submit to austerity, which is class warfare against their own labor force. They will continue to devalue their currency

[Jim] And create puppet governments that will support that as surrogates.

[Michael] Yes. What the free market boys at the University of Chicago discovered is that you can’t have a pro-financial free market – free of government regulation and its own public infrastructure and credit system – unless you’re prepared to assassinate everyone who wants a strong government. When they went to Chile and supported Pinochet, U.S. officials provided a list of who had to be killed

  • land reformers,
  • labor leaders,
  • socialists, and
  • especially economics professors.

They closed down every Economics Department in the country, except for the one at Catholic University, the right wing economics department teaching Chicago School neoliberalism. So, you have to be totalitarian in order to impose a free market pro-financial style – which, under today’s circumstances, means pro-US.

[Jim]  It’s occurring across Latin America, right?

[Michael] Yes. A free market means libertarianism and totalitarian government. What the Chicago boys and the so-called New Institutional Economics school calls the rule of contracts. You have the history of Western civilization now being taught almost everywhere as if what created civilization was the rule of contracts, not canceling the debts. So, you’ve created an inside-out view of history. Its aim is to deny the fact that the only way that you can prevent the kind of economic slowdown that we’re having in America now is to write down the debts. If you don’t write down the debts, you’re internal market will shrink and you’re going to end up looking like Greece, or like France with all the riots that they are having there, or like the other countries that are rioting because they don’t want to be turned into a Neo-feudal society.

[Jim] This seems to be occurring in Puerto Rico as well. So what becomes more profitable for American economy is the military and the armaments that we ship and use in all these adventurers wars that we have in the 800 hundred US military bases around the world.

[Michael] The difference is that in the past when you had militarism, you actually had to fight a war. Soldiers had to go in. You know the old joke about wine that’s being sold in an auction. It’s a hundred-year-old bottle and is very, very expensive. A rich guy buys it and pours it out to impress his friends, but it tastes like vinegar. He complains to the auction house, but is told, “Oh, that’s not wine for drinking! That’s for trading!” That’s what most U.S. arms are for: not really to use. You’re never again going to get Americans to be drafted and go into the army to actually, use them. These arms are not for fighting; they’re for making profits. Seymour Melman explained that in Pentagon Capitalism.

[Jim] The permanent war economy.

[Michael] That’s right. Meaning more profits for the military industrial complex. You don’t actually use the arms. You just pay to produce them and throw them away. It’s like what Keynes talked about, building pyramids in order to create domestic purchasing power.

[Jim] And you can’t, as Melman tried to do, use economic conversion to more civilian uses. That never happened.

[Michael] Seymour Melman explained that the U.S. government decided to make a different kind of a contract with the arms manufacturers. It’s called cost-plus. As he summarized it, the government guarantees them a profit, but to prevent monopoly rents, they determined the prices to be paid at, say, ten percent over the actual cost of production. This led the arms-makers to see that if their profits were going to rise in keeping with the cost of production, they wanted as high of a cost of production as possible.

So, the engineers working on the American military industrial complex aimed at maximizing costs. That’s how we got toilet seats that cost $650.

Countries that don’t have Pentagon capitalism, like Russia or China, are able to produce weaponry that outshines America. Even broke Iran, can make missiles that apparently get right through the U.S. defenses in Syria and Iraq, because they don’t have cost-plus. They’re trying to be efficient, not just to have an excuse for making money via a cost-plus contract.

[Jim] How do we turn this around? You’ve made the connections to show that everyday people and their lives are profoundly impacted by the unreal world that the financial predators are creating.

[Michael] Reality isn’t the aim of their economic models. For instance, just today I saw Paul Krugman on Democracy Now. He said that the reason we’re in a depression is because President Obama did not run a large enough budget deficit! He’s a Keynesian, but goes so far as to insist that debt has no role to play in deflating the economy. That’s largely because Krugman serves in effect as a bank lobbyist – not only here, but in Iceland and other countries. To me, the current economic squeeze is that Obama didn’t let the banks collapse. He kept the bad he debts on the books instead of treating them as bad loans to be absorbed by the banks that wrote the junk mortgages and lost in their speculative gambles.

[Jim] And ate the homeowners!

[Michael] Yes. He kept their bad, outrageously priced loans on the books and evicted 10 million families. He called them “the mob with pitchforks,” and Hillary called them “deplorables.” That shows you where the Democratic Party is at, and why it was so easy for Donald Trump to make a left wing  run around the Democratic Party. That is how right wing Obama was. His legacy was Donald Trump, via Hillary Clinton.

[Jim] Krugman is the most well-known so-called Keynesian economist in the country, right?

[Michael] The reason he’s so well-popularized by the pro-financial class is precisely because he doesn’t understand money. So bank lobbyists love him and he’s popularized by the right-wing New York Times. He had a wonderful debate with Steve Keen that anybody can see on Google, where he says that it’s impossible for banks to create money and credit. He thinks that banks are savings banks, and they’re just relending deposits. Steve Keen explained what endogenous money is. That’s what we talk about in Modern Monetary Theory.

[Jim] And the Wall Street Journal.

[Michael] And the Washington Post. They go together. They don’t want economists to be popular who talk about debt and why the debts can’t be paid or the need for a debt write down. Krugman attacks Bernie Sanders as if he is an unbelievable radical for backing public medical care.

[Jim]  On February 17, Krugman wrote a column “Have Zombies eaten Bloomberg’s and Buttigieg Brains?” He said “My book is arguing with zombies.” And one of the zombies is his obsession with public debt and the belief that we should be terribly scared of government debt, can’t do anything because of deficits. Eeek! And that’s the way Buttigieg talks. The very moment when mainstream economics, if you like centrist economics, has concluded that these debt worries, were way overblown. The president of American Economic Association gave this presidential address saying that debt is not nearly the problem people think it is. It’s not a constraint, and of course, Republicans have pulled off one of the greatest acts of policy hypocrisy in history – you know, the existential deficit threat. I don’t want to see a democratic centrist bring us into this deficit scaremongering. That would be a really bad thing that would block any kind of initiative.

So, what does the everyday person make of this debate? And what’s the attraction of Trump his message to people who feel that their real-world needs are being addressed?

[Michael] I think the reason people voted for Trump’s was mainly Hillary. She said that voters should vote for the lesser evil. There was no question who the “lesser evil” was. It was Donald Trump. Did you want World War III, or Donald Trump? It’s not a very nice choice, but Hillary’s viciously right-wing, especially where Russia is concerned. The Democratic National Committee and deep state are all about Russia, Russia, Russia! And calling Trump Putin’s puppet.

Then finally the Mueller report came out and found nothing there! So you can view the Democratic Party as the political arm of the military industrial complex and the banking complex.

[Jim] And Obama totally propped them up. But now, Bernie! What about him? The Democratic establishment is against him, and so is the Republican establishment.

[Michael] If the enemy of my enemy is my friend, then Bernie’s enemies are the Democratic Party establishment and the Democratic National Committee. So of course a lot of people are going to love him.

[Jim] Yup. He wants to cancel student debt! He is talking your language!

[Michael] If the student debt is not canceled, you’re going to have a generation of graduates unable to get the mortgage loans to buy homes, because they’re already paying their income to the banks.

[Jim] They’re living at home!

[Michael] That means that you’re going to have a shrinking economy. So of course you have to write down student debt, and also other forms of debt – credit card debt and other debt. The economy cannot recover if you don’t write down the debt overhead.

The good thing about writing down the debts is that you wipe out the savings on the other side of the balance sheet. Some 90 percent of the debts in America are owed to the wealthiest 10 Percent. So the problem is not only the debt; it’s all these savings of the One Percent! The world is awash in their wealth. If you don’t wipe out their financial claims – which are the basis of their wealth – they’re going to take you over and become the new financial Lords, just like the feudal landlords. The banks are the equivalent of the Norman invasion. and the conquering landlords that reduce the economy to a peonage!

[Jim] But the moral argument is made that they’re the best. They’ve survived, right? I’m playing devil’s advocate here. So they serve a purpose, don’’ they? Their wealth is a sign that the system is working.

[Michael] That’s not what Adam Smith and John Stuart Mill said, or Ricardo and the entire 19th century classical economic school. They said that economic rent is unearned income. So the aristocracy (“the best”) doesn’t earn it. It is a result of privilege, which almost always is inherited wealth or monopoly privilege, that is, the right to appropriate something that really should be public. Land ownership and mining should be public wealth, as are mineral resources in much of the world. Education should be public. People shouldn’t have to pay for it. The idea initially in the United States was that education should be free as a human right. Medical care is also, as Bernie says, a human right, as it is in a lot of the world. So America, which people used to think was the most progressive capitalist country, suddenly becoming the most neo-feudal economy.

[Jim] How about Max Weber and the Protestant ethic as the spirit of capitalism? The argument is made that those who are productive are rewarded by heaven, while those who are poor deserve it. Wealth was a sign that God had bestowed his grace on its owner.

[Michael] That sort of the patter talk a century ago hasn’t stood up very well. The wealthy claim to be wealthy because God loves them. If they can convince other people that God loves them and hates the rest of the people, they make God into the devil. They make him hate the working class, and make them dependent on this unnecessary class of parasites. That’s crazy! But that’s what happens if you let the wealthy take over religion. Of course, they’re going to say that religion justifies their wealth.

That’s what makes modern religion the opposite of the religion that I described in the Bronze Age. Upon taking the throne, rulers took a pledge to the gods to restore equity and cancel the debts. That included restoring lands that had been forfeited, giving it back to the defaulting debtors to re-establish order. That was the idea of religion back then. But today’s religion has become a handmaiden of wealth and privilege, and of “personal responsibility” to make people pay for education, health care, access to housing and other basic things that should be a public right.

[Jim] Which is what preoccupies the average American, when seventy percent of their earnings are going to these sorts of things, and for taxes and rent. I have a brief quote here from Martin Luther King, who I think represents the sort of religious tradition you’re advocating. He had been deeply influenced by the theologian, Walter Rauschenbusch and his 1907 book, Christianity and the Social Crisis.

[Michael] Read it, so that so they can hear it.

[Jim] Here’s the main quote: “The gospel at its best deals with the whole man; not only his soul, but his body; not only the spiritual well-being, but his material well-being.” King wrote in an inspired passage, “any religion that professes to be concerned about the souls of men and is not concerned about the slums that damned them, the economic conditions that strangled them and the social conditions that crippled them is a spiritually moribund religion awaiting burial.”

[Michael] That’s right. Religion was about the whole economy. Not just a part of the economy. Today they’ve separated religion, as if only spiritual and has nothing to do with the economic organization of society. Religion used to be all about the economic organization of society. So, you’ve had a decontextualization of religion, taking away from analyzing society to justify the status quo by teaching that if things are the way they are, it’s because God wants it this way. That’s saying that God wants the wealthy and privileged to exploit you, especially by getting you into debt. And that’s just crap!

[Jim] And that gets us away from the classical tradition, which does try to see this as social.

[Michael] And that’s why Christian evangelicals hate Jesus so much.

[Jim] There you go! But we love Bernie! Can he win? We’ve only got about a minute to go …

[Michael] Of course he can.

[Jim] You think he will be able to withstand the onslaught that he’s going to get?

[Michael] A year ago I was pretty sure that the Democratic National Committee was going to put the super delegates in to sabotage any attempt that he was going to make to get the nomination. Now it’s clear that the Democratic Party will be torn apart, and this means the end of it if he’s not the nominee.

[Jim] All right! Well, from your mouth to God’s ears! Thank you, Michael. This has been so enlightening.

[Michael] Thank you.

[Jim] I’m so blessed that we are in the audience here too on the Radical Imagination. So happy to have had you here. I hope you’ll come back again. This is your most recent book, “… and Forgive Them Their Debts.” Thank you very much! This is Jim Vrettos for the Radical Imagination. See you next week. Thank you, Michael!

Covid-19 Brings Out All the Usual Zombies

Let me summarize the Trump administration/right-wing media view on the coronavirus:

  • It’s a hoax, or anyway
  • no big deal. Besides,
  • trying to do anything about it would destroy the economy. And
  • it’s China’s fault, which is why we should call it the “Chinese virus.”Oh, and epidemiologists who have been modeling the virus’s future spread have come under sustained attack, accused of
  • being part of a “deep state” plot against Donald Trump,
  • or maybe free markets.

Does all this give you a sense of déjà vu? It should. After all, it’s very similar to the Trump/right-wing line on climate change. Here’s what Trump tweeted back in 2012: “The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing noncompetitive.” It’s all there: it’s a hoax, doing anything about it will destroy the economy, and let’s blame China.

And epidemiologists startled to find their best scientific efforts denounced as politically motivated fraud should have known what was coming. After all, exactly the same thing happened to climate scientists, who have faced constant harassment for decades.

So the right-wing response to Covid-19 has been almost identical to the right-wing response to climate change, albeit on a vastly accelerated time scale. But what lies behind this kind of denialism?

Well, I recently published a book about the prevalence in our politics of “zombie ideas” — ideas that have been proved wrong by overwhelming evidence and should be dead, but somehow keep shambling along, eating people’s brains. The most prevalent zombie in U.S. politics is the insistence that tax cuts for the rich produce economic miracles, indeed pay for themselves, but the most consequential zombie, the one that poses an existential threat, is climate change denial. And Covid-19 has brought out all the usual zombies.

But why, exactly, is the right treating a pandemic the same way it treats tax cuts and climate change?

The force that usually keeps zombie ideas shambling along is naked financial self-interest.

  • Paeans to the virtues of tax cuts are more or less directly paid for by billionaires who benefit from these cuts.
  • Climate denial is an industry supported almost entirely by fossil-fuel interests. As Upton Sinclair put it, “It is difficult to get a man to understand something when his salary depends on his not understanding it.”

However, it’s less obvious who gains from minimizing the dangers of a pandemic. Among other things, the time scale is vastly compressed compared with climate change: the consequences of global warming will take many decades to play out, giving fossil-fuel interests plenty of time to take the money and run, but we’re already seeing catastrophic consequences of virus denial after just a few weeks.

True, there are may be some billionaires who imagine that denying the crisis will work to their financial advantage. Just before Trump made his terrifying call for reopening the nation by Easter, he had a conference call with a group of money managers, who may have told him that ending social distancing would be good for the market. That’s insane, but you should never underestimate the cupidity of these people. Remember, Blackstone’s Steve Schwarzman, one of the men on the call, once compared proposals to close a tax loophole to Hitler’s invasion of Poland.

Also, billionaires have done very well by Trump’s tax cuts, and may fear that the economic damage from the coronavirus will bring about Trump’s defeat, and hence tax increases for people like them.

But I suspect that the disastrous response to Covid-19 has been shaped less by direct self-interest than by two indirect ways in which pandemic policy gets linked to the general prevalence of zombie ideas in right-wing thought.

First, when you have a political movement almost entirely built around assertions than any expert can tell you are false, you have to cultivate an attitude of disdain toward expertise, one that spills over into everything. Once you dismiss people who look at evidence on the effects of tax cuts and the effects of greenhouse gas emissions, you’re already primed to dismiss people who look at evidence on disease transmission.

This also helps explain the centrality of science-hating religious conservatives to modern conservatism, which has played an important role in Trump’s failure to respond.

Second, conservatives do hold one true belief: namely, that there is a kind of halo effect around successful government policies. If public intervention can be effective in one area, they fear — probably rightly — that voters might look more favorably on government intervention in other areas. In principle, public health measures to limit the spread of coronavirus needn’t have much implication for the future of social programs like Medicaid. In practice, the first tends to increase support for the second.

As a result, the right often opposes government interventions even when they clearly serve the public good and have nothing to do with redistributing income, simply because they don’t want voters to see government doing anything well.

The bottom line is that as with so many things Trump, the awfulness of the man in the White House isn’t the whole story behind terrible policy. Yes, he’s ignorant, incompetent, vindictive and utterly lacking in empathy. But his failures on pandemic policy owe as much to the nature of the movement he serves as they do to his personal inadequacies.

Paul Krugman: Idea that Climate Change Requires Austere Back-to-Nature Lifestyle

60:42
thank you what is the most persistent
60:45
zombie idea on the left and is there one
60:47
is there an idea to what you have
60:50
subscribed in the past which you now
60:51
kind of put into that category oh boy I
60:55
mean the trend the left is not nearly as
60:58
good at maintaining zombie ideas partly
61:03
because there there are in fact not that
61:07
many leftist billionaires and and
61:09
billionaires there are some but not very
61:12
leftist and so I mean well let me put
61:20
this way we were talking about climate
61:22
and environment and and climate change
61:25
and economic growth I’m running to a lot
61:27
of people still who are now this is
61:30
telling you that there I don’t think
61:31
there are a large part of the electorate
61:33
but there are
61:34
but the circles I move in I run into
61:36
people who are sure that to fight
61:39
climate change we have to stop living
61:41
the way we’re living and a much more
61:43
austere back-to-nature lifestyle is the
61:47
only way to deal with climate and that’s
61:49
an idea that it’s just clearly wrong if
61:53
we actually asked by we know enough
61:55
about the technological and economic
61:57
solution to climate change that ASUS a
62:00
green society that does not burden the
62:02
planet would almost certainly be a
62:04
society that looks a whole lot like what
62:06
we have now in people with the driving
62:08
cars they’d be using electricity but the
62:10
cars with the electric and the
62:12
electricity would be generated by solar
62:13
and wind and it but the actual rhythm of
62:16
daily life could look very much like
62:18
what we we have we don’t have to go back
62:20
to to an agrarian pastoral Eden to to to
62:25
deal with the issue but it’s it’s
62:26
something that sounds again it sounds
62:29
serious from a different point of view
62:30
it sounds like if you’re serious about
62:31
climate change you must be serious and
62:34
believing that we have to give up on
62:35
this consumer oriented society and and
62:38
all of these these comforts that we take
62:40
for granted but in fact it’s not true so
62:43
that would here that would be an example
62:44
of a kind of a left-wing zombie in other
62:46
countries in the belief that you can
62:49
just dictate all prices and you know you
62:53
can put price controls on everything and
62:54
not and never face shortages that’s not
62:58
something we see in the US but they
62:59
Venezuela clearly there’s some refusal
63:02
to face reality going on but that would
63:05
be these house but again zombies mostly
63:08
flourished because their big money
63:10
behind them not all of them but mostly
63:12
and and and the no.4 for every George
63:17
Soros there are 50 quiet billionaires
63:21
supporting extremely reactionary causes
63:23
and what about the question the question
63:25
of an idea you’ve changed your mind oh
63:27
so most of my changes have been in the
63:33
in the other direction look at minimum
63:36
wages no no a piece of economic research
63:41
has has shaken my views as much
63:46
actually I’m gonna give you two and and
63:50
me at this this is a great risk of
63:52
turning into a Monty Python routine
63:54
amongst the issues three okay so
64:00
actually so I’ll give you two one
64:01
minimum wages up until sometime in the
64:05
mid 1990s I believe that clearly
64:09
increases in minimum wages would cost
64:11
jobs they might be desirable otherwise
64:13
but econ 101 said that that’s what
64:15
happened and then we got this amazing
64:17
body of empirical research because we
64:19
get in the United States we get a lot of
64:21
natural experiments when one state
64:22
raises its minimum wage and the
64:24
neighboring state does not and the
64:26
overwhelming evidence says that minimum
64:28
wage increases at least within the range
64:30
we see in the US do not cost jobs and
64:33
that changed my view has said labor
64:34
markets are very different from where I
64:35
thought it actually moved me towards
64:38
emphasizing the role of power and in
64:40
labor relations and so on another one I
64:43
used to think that it was always
64:44
possible just by printing money to get
64:47
full employment and and the experience
64:50
of Japan in the late 1990s when despite
64:54
a very easy monetary policy they slid
64:56
into deflation changed my views totally
65:00
I there was a there was a group of us
65:03
actually of when I when I arrived at
65:05
Princeton in 2000 was a bunch of Japan
65:07
warriors who were really very shaken by
65:10
the Japanese experience because we we
65:12
looked at it said you know this could
65:13
happen to us so with me people you
65:16
wouldn’t have heard of but very
65:17
influential in the professional arts
65:18
Vince and Mike Woodford and the fourth
65:21
was Bernanke Ben Bernanke don’t know
65:24
what happened to him he disappeared I
65:26
think yeah so we so that but no the the
65:31
Japanese Japan’s Lost Decade
65:33
changed my view and basically made me
65:36
much more Keynesian much more believer
65:38
that there are times when you really
65:40
need to have the government do the
65:41
spending yes how do you successfully
65:45
regulate the financial markets while not
65:50
scaring the business community in sort
65:53
of trying to
65:55
in the middle of a class that any form
65:58
of common sense reform or tax is not
66:01
Marxist Leninist and it’s not going to
66:03
take away all their assets and money
66:05
okay you know we’ve done this before
66:10
right we imposed extensive bank
66:14
regulation in the 30s which didn’t
66:17
obviously cripple the economy we the
66:19
post-war generation was was the best
66:22
generation in in in certainly in US
66:24
economic history the the the only I
66:29
would say the problem is not scaring
66:31
people not looking Marxist the problem
66:33
with regulating financial markets is
66:35
first of all they’re the financiers have
66:39
a lot of clout but but beyond that it is
66:45
hard to keep up with financial
66:49
innovation which very often is not
66:53
innovating in the sense of you know
66:55
doing things better but as is innovating
66:58
a way of finding ways to set things up
67:01
that evade the regulations so you
67:04
regulate banks and then people create
67:06
something that is functionally a bank
67:07
but doesn’t technically meet the
67:09
definition of a bank and evades the
67:11
regulations it’s hard to keep up with
67:13
that and and if it’s not a well solved
67:16
problem in the we had a significant
67:21
financial reform in the US under Obama
67:24
not everything you I would have wanted
67:26
but it was significant but on many of
67:29
the issues it depends upon this
67:31
Financial Stability Council which has to
67:34
define systemic lis important
67:37
institutions that they’re mean and
67:40
there’s no clear definition it’s kind of
67:43
like pornography you know when you see
67:44
it which is not a stupid way to do it
67:47
but it depends upon having honest people
67:51
of goodwill in charge and now we have
67:55
the Trump administration so so the
67:58
dodd-frank is not a very effective tool
68:00
and it always depended upon upon good
68:04
leadership and
68:06
we have not found I haven’t come up with
68:08
a way to the thing about doing a regular
68:10
old-fashioned commercial banks is that
68:15
that system works the regulations work
68:18
the the guarantees work without
68:21
requiring that there be smart leadership
68:23
or good judgment calls at the top and
68:25
unfortunately everything we try to do to
68:27
deal with more modern financial
68:29
institutions is requires both goodwill
68:34
and sophistication which are both the
68:36
now and very short supply question from
68:39
the balcony please thanks very much so
68:41
we’ve mostly discussed zombi ideas in
68:43
the kind of domestic policy context i
68:45
wanted to ask about zombie ideas in the
68:47
international context in the sense of
68:50
the Washington Consensus and trade
68:51
liberalization and specifically I want
68:54
to ask what your thoughts are on the
68:56
extent to which countries can still
68:58
develop by exporting I has the impact of
69:02
technology and the scale of China made
69:06
it essentially impossible for a trade
69:07
liberalization to facilitate development
69:10
okay that’s a good question
69:13
I think empirically it’s just the
69:16
premise is wrong so we all know about
69:19
China and we know that China occupies
69:21
this huge space and China is a unique
69:25
success story nobody else has matched
69:27
their rates of growth but it’s not the
69:31
only success story so when I took I like
69:34
to talk about the the unfamiliar cases
69:39
Bangladesh Bangladesh is a desperately
69:43
poor country and and compared with
69:46
working conditions and in in the first
69:49
world it’s it’s is horrible and they
69:51
have factories that collapse and kill
69:53
hundreds of workers and all of that but
69:56
Bangladesh is actually they’ve they’ve
69:59
tripled their per capita income and
70:03
there there are very poor country but
70:06
they were a country that was right on
70:07
the edge of Malthusian starvation and
70:11
it’s all because of the ability to
70:13
export if the the ability basically
70:17
clothing labor-intensive
70:19
that they’ve been steadily gaining
70:21
market share at China’s expense because
70:23
China has been moving upscale and that’s
70:26
that’s showing that you can get yeah
70:28
that’s that’s major development that’s a
70:29
major change it’s it’s not it’s a long
70:32
way from from turning into into Western
70:35
Europe but it’s it’s it’s a very big
70:37
deal and it’s showing that the
70:39
globalization can still work for for
70:41
poor countries so I that’s that’s what
70:45
the line Bangladesh is not a it’s not a
70:48
banana republic it’s a pajama republic
70:51
but but that you know they can make fun
70:54
of it but in fact their use that’s a
70:56
very large number of people who are
70:57
lifted at least some ways above
71:00
starvation level by globalization and
71:03
another question from the balcony please
71:06
looking at it as a economist with a
71:08
mathematical mind what impact do you
71:11
think a shift a proportional
71:12
representation would have over time as
71:15
you compared to the electoral colleges
71:18
and first-past-the-post which we have in
71:19
the UK other British Commonwealth
71:22
countries which tend to over time have
71:24
led to two party states so what if we
71:26
shifted the proportional representation
71:28
okay I mean firstly the u.s. the the
71:33
u.s. electoral college system is
71:35
monstrosity that’s a that’s not about
71:38
first-past-the-post it’s about a system
71:40
that at the presidential level gives
71:42
disproportionate representation to to
71:45
some states with small populations and
71:48
at even more important we have the
71:50
Senate which where half the Senators are
71:53
elected by 16 percent of the population
71:55
so this is a that that’s crazy
71:58
that’s a deeply basically we’ve we’ve
72:00
evolved into a rotten borough system for
72:03
half of the US government and that’s
72:05
that’s a clear monstrosity as for the
72:08
rest I mean I don’t know I mean this is
72:13
not I’m not a political scientist I talk
72:16
to political scientists which by the way
72:18
is rare for economists we actually talk
72:20
I actually talk to these goods to other
72:21
social sciences and take them seriously
72:24
and but what I would say is that the the
72:29
there are places with proportional
72:31
representation
72:32
that also managed to be very
72:34
dysfunctional so you know Israel I
72:38
believe has proportional representation
72:39
and I would not say that Israeli
72:44
politics these past 15 years have been a
72:47
model of good ideas and wisdom
72:50
prevailing in fact they I mean every
72:52
system has its problems and one of the
72:54
problems with proportional
72:55
representation is it sometimes causes
72:57
small factional parties with with very
73:01
antisocial goals to to be kingmakers so
73:06
that’s not an easy solution either I
73:08
don’t really know what the answer is
73:10
except to say that that you know people
73:13
people are both generally clever and
73:19
often nasty and they can find a way to
73:21
screw up any system question trip down
73:24
here hi
73:25
you said earlier that the American
73:26
economy is in a pretty strong position
73:28
so I was wondering how much he thought
73:30
Trump could legitimately claim
73:32
responsibility for that and then
73:33
alongside that what are the strong II
73:35
cannot strongest economic arguments to
73:37
voters for voting against him okay the
73:41
reason that we’re in a relatively strong
73:43
economic position is that it’s basically
73:47
deficit spending after years and years
73:49
of saying no debt this is an existential
73:52
threat then we must have austerity which
73:54
really hobbled the US recovery under
73:58
Obama as soon as Trump was in office for
74:00
Republicans said oh we don’t care about
74:02
that I mean the last two State of the
74:04
Union speeches have not so much as
74:06
mentioned the deficit and that even
74:09
though it’s badly done it does give a
74:13
boost to demand so I guess you could say
74:16
the Trump has gets some credit in the
74:19
sense that by getting elected he caused
74:22
congressional Republicans to stop
74:24
sabotaging the economy that’s not a you
74:27
know vote Republican and and and and the
74:29
and the economy won’t be undermined by
74:31
by our sabotage efforts so that’s not a
74:34
great electoral slogan but it might win
74:36
in the election I have to say and I lost
74:40
the room what the rest of that was but
74:42
the
74:44
was one of the strong strongest economic
74:46
arguments to voters to vote against him
74:48
oh the thing about Trump is that he’s
74:50
managed to preside over a economy that
74:55
by sort of aggregate measures
74:58
unemployment rate is low GDP growth has
75:02
been pretty good not spectacular but
75:04
pretty good but which is is showing
75:08
increased hardship for many people
75:11
despite that I mean we were making huge
75:13
progress in reducing the number of
75:15
people without health insurance that has
75:17
now gone into reverse the number of
75:19
people who say that their that they are
75:23
that they are postponing or not
75:27
undertaking necessary medical treatment
75:29
because of expense has skyrocketed
75:32
and the America like the UK there’s
75:38
tremendous regional divergence we have a
75:43
large part of the large parts of the the
75:47
heartland which are in severe economic
75:50
decline as social collapse and that has
75:53
just accelerated you know despite the
75:55
low overall unemployment rate the state
75:58
of affairs in Eastern Kentucky is
76:01
terrible and life expectancy I guess it
76:06
rose slightly this past year but you
76:07
know mortality rates are rising and it’s
76:11
as in case an Angus Deaton say deaths of
76:14
despair people dying from from opioids
76:19
alcohol and suicide have been rising
76:22
despite the strong economy so this is
76:25
actually that earlier question about GDP
76:27
you know the GDP growth not saying that
76:31
the that it’s false but under under the
76:34
surface of that good GDP growth is
76:36
actually a substantial increase in
76:38
misery just a one final question from
76:43
thanks bull great to see you here my
76:48
question is about the u.s. minimum wage
76:50
obviously it’s very very low compared
76:53
it should be you know from visiting the
76:55
US for last 25 years it seems P and
76:57
getting no three jobs to make ends meet
77:00
what do you think the minimum wage
77:02
should be and one of the reasons other
77:05
than you know losing jobs that perhaps
77:07
people have been keeping it down the
77:09
minimum wage suppressed oh so I asked
77:12
that in Reverse I mean the reason the
77:14
minimum wage has been held down is
77:15
because employers want chief labor and
77:20
they have a lot of clout the question of
77:24
how high to go is an interesting one
77:26
and it’s the so even the the big move in
77:34
the u.s. is for $15 and that’s a I’d say
77:39
even $15 an hour even Alan Krueger who
77:43
was one of the key researchers on that
77:45
revelatory work was a little nervous
77:48
about 15 and that the problem is
77:52
regional the the state of New York the
77:55
state of California no problem you have
77:58
a $15 minimum wage and and there’s
78:00
absolutely no reason to think that
78:02
that’s economic difficulty we’re talking
78:05
about Mississippi or Alabama places with
78:08
much lower productivity you might start
78:10
to have some job loss at that level I
78:12
think that the preponderance of the
78:14
evidence says that $15 is okay that
78:18
there might be some minor job loss in
78:21
some of the least productive parts of
78:22
the US but but overall not a big deal I
78:26
think 20 I would start to make me really
78:28
nervous
78:29
that then you start to really be a
78:30
problem in in potentially problematic
78:33
territory but it’s it’s why they see
78:36
actually in this case I think a federal
78:38
minimum wage of 15 and then higher wages
78:40
and in in in appropriate States it makes
78:44
sense this is one of these cases where
78:45
federalism works to our advantage and
78:47
and it’s interesting by the way Alan
78:49
Krueger did do at one point he he went
78:52
to to Puerto Rico which part of the u.s.
78:55
is subject to the u.s. minimum wage and
78:57
much lower productivity and said there
78:59
we should be able to see clear evidence
79:01
that the minimum wage cost jobs and he
79:03
couldn’t find it he said I don’t really
79:05
believe this by
79:06
I can’t find the evidence so so for the
79:09
moment I say let’s let’s go for 15 and
79:11
see what happens and then maybe maybe
79:15
look for the high productivity states to
79:20
to go beyond that great I’m so sorry to
79:24
have to draw it to a conclusion but you
79:27
will have the opportunity to meet ball
79:29
and and get the book signed for now
79:32
please join me in thanking him for
79:34
really fascinating today all right

Paul Krugman, “Arguing With Zombies”

13:57
that like why I mean okay the you you’re
going to be ineffective in these days
maybe you can be an effective regardless
but you’re certainly going to be
ineffective arguing in the public sphere
if you pretend that we’re actually
having a across the board that we’re
actually having honest debate a lot of
it is not a lot of a lot of the
arguments that you hear are in bad faith

so if we talk about the dispute about
the 2017 tax cut there what there was
not this was not a case of well some
serious people think it’s a good idea
and some serious people think it’s a bad
idea that was it was solved with lies
and and then you need
if if you’re going to acknowledge that
and I think it’s being you’re being
unfair to your readers if you don’t say
that then you are also really being
unfair to your readers if you don’t
explain why people are willing
to – to
say these things I mean so so think
about well something I’m mixing subjects
here but think about monetary policy
which actually you probably shouldn’t
but anyways one of the one of those
topic one of those topics that is really
probably often not suitable but it’s
sometimes it is so there there are real
disputes in monetary policy yeah Ben
Bernanke and I are in somewhat in
disagreement about the effectiveness of
quantitative easing
and if you don’t
know what I’m talking about
consider yourself lucky the that’s a
fine that’s a that’s that’s a perfectly
fine debate and I would never question
his motives but if we were having it as
we were having in the early 2010’s a
debate about whether the feds efforts to
rescue the economy we’re gonna lead to
hyperinflation
it was important not just
to say that this is really crazy this is
not that’s not going to happen but to
ask who is it why are people saying this
because there it was really there was
nobody making those claims who wasn’t
effectively a paid political operative

and some some of them may have had an
economics PhD or at least call
themselves economics but nonetheless in
fact it was all hired concen and you
need to say that again you’re not being
honest with your readers if you don’t
say that well I’ll get to some things
16:13
that I want to keep coming back to you
16:15
know I want to switch gears a little bit
16:18
I really I mean there were a number of
16:21
greatest hits that I really enjoyed in
16:23
here but one that I had not read before
16:24
that I really enjoyed was the 1993 piece
16:27
that you did called how I work and you
16:31
know one of the things that you known in
16:32
there you trace out the arc of how
16:34
you’ve thought about your work over time
16:36
and and one thing that you noted is that
16:38
you’ve always seen live policy debates
16:40
as fodder for your deeper economic
16:42
thinking so even before you became
16:44
abundant
16:45
and so when to give you an opportunity
16:47
to just tell us you know of the policy
16:50
topics that you’ve worked on over your
16:51
career which have given me of the live
16:54
policy debates which have been the ones
16:56
that have come back into your thinking
16:58
about theory in the in the ways that
17:01
have been most influential in your own
17:03
thinking oh wow
17:06
let me give you two so there were two my
17:13
what I personally consider the the best
17:17
academic paper I ever wrote was actually
17:20
about Japan in was a little over twenty
17:23
years ago
17:24
writing about Japan being stuck in this
17:26
trap being unable to to get out of
17:28
deflation and I was from among the
17:30
people who you know looked at Japan and
well actually so I came into it I
started thinking about I thought the
Japanese were being stupid that there
has to be a really easy answer to this
that they and and in the course of
researching and try and think it through
and looking at there I realize that you
know actually this is really hard it’s
not that the Japanese are not being
stupid and and it could happen to us
which in fact it did ten years later so
it so that’s a case where looking at an
actual policy issue which is the
troubles of Japan let me into relief
rethinking on understanding that they
that we did not have this recession
economic slump thing under control that
it was not a solved problem as many
economists thought at the time the other
area which in this book but you know the
minimum wage the the very few things
that in economic research have shaken me
as much as as the empirical research on
the effects of minimum wage increases
which turns out to be one of the few
places in economics we don’t get to do
very many experiments in economics it’s
a human experimentation is generally
frowned upon and but we get a lot of
natural experiments when when states or
cities raise their minimum wage and you
can compare what happens there with what
happens in neighboring
cities and there’s this classic work
18:56
which has not been replicated and
18:58
extended many times from from 1993 by
19:01
David carte now in Kruger where they
19:03
found out that contrary to what econ 101
19:06
would say you cannot see any any job
19:09
losses from loans or men wage increases
19:10
and that was just shook my my you know
19:13
said okay maybe the economy works a lot
19:16
less like I knew that econ 101 was an
19:19
imperfect incomplete story but maybe
19:21
it’s a lot more imperfect and incomplete
19:22
than I realized it was yeah I mean it’s
19:26
about two comments I mean this I mean
19:28
one that is such a pivotal moment I
19:30
think in economics and so much of the
19:31
work we’re doing at equitable growth is
19:33
building on that the the ideas of how
19:36
all of this new empirical data and
19:38
evidence is changing the way we think
19:40
about theory but I’m also glad I asked
19:43
you this question because now I know why
19:44
you’ve spent so much time in your
19:46
columns focusing on the Japan slump I
19:48
mean it was important but also it’s nice
19:50
to hear you talk about how you thought
19:51
it was important and so this is I’m
19:54
having fun up here is basically what I’m
19:55
saying so okay this is great so um so
19:58
keeping on the same theme here so
20:01
recently when you were talking about
20:02
your book you told the american prospect
20:05
quote i’m considerably less of a
believer in the invisible hand and more
concerned about power than when i was
younger
and that just really struck me and as I
was as we’ve been doing our work at at
global growth and I’ve been thinking
about what the data and the research and
the evidence means and you know thinking
about Adam Smith’s notion of the
invisible hand which you know he calls
the you know it’s like it’s the divine
it’s sort of it’s this it seems it’s
this kindly you know gentle hand that’s
pushing the economy towards optimal
outcomes you know where everyone has
20:39
this mutual beneficial exchange and is
20:43
I’ve been thinking about it the image
20:44
that I now have in my head of the
20:46
invisible hand is actually maybe most of
20:50
you will get this in the 80s there were
20:52
these ads on television for Hamburger
20:54
Helper and there was this
20:56
this hand in this glove that I think is
20:58
little traumatizing for me but you know
21:00
at this smiley face but it looked kind
21:02
of cruel and so in my head I now mention
21:04
the official hand it’s like it’s like
21:05
pushing some people up its shoving other
21:08
people aside and it’s punching down
21:10
right this is it’s it’s not this kindly
21:12
hand this is what I’m thinking about it
21:14
so what am I question for you
21:16
it is does this image resonate with you
21:21
and you know what does it mean to you to
21:26
say you’re you’re less of a believer in
21:29
the invisible hand okay
21:30
so first of all I should say that the
21:32
British magazine prospect would probably
21:34
be a little bit upset at being called
21:36
The American Prospect I associate
21:47
Hamburger Helper with with my
21:49
apprenticeship as an economist because I
21:51
I spent a couple of summers working as a
21:53
research assistant and and in the 70s
21:57
and eating a lot of Hamburger Helper but
21:58
anyway anyway no I mean the the what I
22:05
actually Smith wasn’t that that certain
22:09
that the invisible hand was Benari I
22:11
mean but he was just saying that you
22:12
know things the logic of the system is
22:15
that the but but the belief that markets
22:20
get it right and that markets and the
22:22
markets that there’s kind of a uniquely
22:25
determined thing this is what the market
22:27
wants to happen and defy the market
22:28
etcher at your peril yeah I never fully
22:32
believed in that but it’s become
22:34
increasingly hard to to the weight that
22:41
you want to put on that view and and
22:43
actually the central issue there is
22:45
inequality so and we you know there was
22:49
a an orthodoxy which to some extent I
22:53
shared but have progressively moved away
22:56
from and in a couple of sentences was
23:00
that that rising inequality was because
23:03
of these anonymous
23:05
is that the technological we’ve got
23:07
Larry Michelle if you’re skill-biased
23:09
technological change was pushing us
23:11
towards it greater inequality and that
23:13
has the worse and worse as a story about
23:16
what actually happened and so you
23:17
actually start to ask things like okay
23:20
why are ceos paid so much and the
23:25
proximate answer is well their pay is
23:28
decided by compensation committees that
23:30
they basically a point but that was
23:31
always true so what was it what changed
23:34
between the 60s and and the world we
23:36
live in now that that caused those
23:38
compensation committees to start paying
23:40
them you know three hundred times as
23:43
much as their workers instead of twenty
23:44
times as much as their workers so those
23:46
that’s the sense in which and we see
23:49
that across a lot of fronts now we’re
23:51
having a hard time it’s it’s it’s kind
23:54
of a grab bag of different stories here
23:58
but but somehow clearly it’s not just
24:00
that the market wants something the
24:02
market the there’s clearly a lot of
24:05
wiggle room and outcomes that seems to
24:07
depend on things that at some level are
24:09
our power well and I think it’s this
24:12
grab bag of different stories that’s
24:15
where I see economics right now you’ve
24:17
talked about the card and Krueger work
24:19
we have all of this new empirical
24:20
research a lot of which where we’re
24:23
looking at what inequality means across
24:25
different vectors and then trying to
24:27
understand what that means for economic
24:29
outcomes but it does feel like there is
24:31
still these questions of what it means
24:33
for theory what how do we take all of
24:35
this new research and evidence and you
24:38
know I think this will go into this next
24:40
question here so in one of your pieces
24:41
from August of 2018 so recently called
24:46
capitalism socialism and unfreedom
24:47
you focus on and I wanted to quote this
24:50
because you labeled a quote what’s wrong
24:51
with the neoliberal ideology that is
24:53
dominated so much of the public
24:55
discourse since 1970s and you argue they
24:59
quote the idea that free markets remove
25:01
power relations from the equation is
25:03
just naive and so I wonder if you could
25:06
spend a couple of minutes on you know
25:08
how is it that you think about
25:10
integrating power into economic theory
25:13
I’m sure it’s kind of connected to the
25:14
grab-bag in the invisible hand but if
25:16
you could focus just for a
25:17
and on you know when you say it’s naive
25:21
to not that free markets can remove
25:24
power relations how do you think about
25:27
integrating that into into theory into
25:30
economics okay it’s really hard right
25:32
Mindy
25:33
the thing about economics and for what
25:35
what Heather knows and the economists in
25:38
the room know is that we we have this
25:39
sort of baseline economic theory which
25:42
is the serve supply and demand but but
25:45
in a much extended version which is
25:48
beautiful
25:49
so all the pieces fit together and it’s
25:51
a and it gives you answers to to
25:54
everything and it so it has aesthetics
25:59
going for it it has a kind of
26:01
intellectual satisfaction it’s got
26:04
everything going for it except actually
26:05
that’s not true
26:06
and yeah but it’s but even even people
26:10
like even those of us who know it’s not
26:14
you tend to do stuff where we start with
26:16
that as a baseline and then say okay but
26:19
let’s tweak it a bit so we’ll introduce
26:20
some monopolies into it or let’s tweak
26:23
it a bit and let’s introduce some
26:25
realistic features of labor markets and
26:29
the trouble two problems one is the
26:33
theme which ways that you should tweak
26:35
it is it’s very hard to come up with
26:38
those accept you know kind of
26:41
case-by-case basis so I’m not sure if
26:44
you had asked me where I thought that
26:46
empirical work would say that we econ
26:48
101 got really wrong
26:50
I wouldn’t take minimum wages as the
26:52
place and that but that turns out to be
26:54
where the compelling evidence is so it’s
26:56
it’s very much still here’s something we
26:59
found it’s not necessarily what you
27:00
thought and the MDT it doesn’t we don’t
27:08
have an integrated theory we just have a
27:10
whole lot of mixed we men of course more
27:16
a menagerie of particular cases so it’s
27:21
the the short answer is that I’m just
27:26
much more willing to
27:28
pay attention – to evidence that says
27:31
that we’ve got it wrong but I don’t have
27:33
a general theory of power I mean this is
27:35
a this is a long way off and but but
27:38
listen to listen to what the data says
27:40
and listen actually that that 93 si was
27:43
actually about writing academic
27:44
economics but it was also about being
27:47
willing to listen to people with with
27:49
heterodox views who don’t necessarily
27:51
speak your language and the the way I
27:53
actually put it which seems appropriate
27:54
was listen to the Gentiles I know that’s
28:00
um for tonight um well I mean I think
28:03
that that is it is interesting and you
28:04
know for anybody who might be you know
28:06
here in the audience who wants to think
28:07
about a career in economics I think that
28:09
this is a very exciting question it’s
28:13
something that we’re gonna have to
28:14
continue to grapple with it so that’s
28:17
just my pitch for people to come and
28:19
help the the profession I will also note
28:22
that you know my favorite piece that
28:24
you’ve ever written was the one called
28:25
mistaking beauty for truth so so I
28:29
recommend that that’s in here and that
28:32
it kind of gets at some of these themes
28:33
so um I wanted um actually I’m going to
28:37
go to this next so I wanted to go back
28:39
to this 93 essay for just a moment and
28:43
quote something that you said let me
28:45
just find it um I have way more
28:48
questions that I could possibly ask in
28:50
an hour so I just I just skimmed wine
28:52
we’ll have to get back to it later so
28:54
you um
28:57
so in this 93 essay and when you trace
28:59
your intellectual history you talk about
29:01
how you learned that your talent was to
29:05
make complex ideas into simple models by
29:07
reframing the question among other
29:09
things and I thought that was a really
29:11
interesting self-awareness and I want to
29:15
quote from the book where you’re telling
29:17
the reader how you develop trait models
29:19
where economies of scale could be an
29:20
independent cause of international trade
29:22
even the absence of comparative
29:23
advantage and you say if this paragraph
29:25
where you say I was of course quote I
29:28
was of course only saying something that
29:30
critics of conventional theory had been
29:32
saying for decades yet my point was not
29:34
part of mainstream international
29:35
economics why because it had never been
29:38
expressed in nice
29:39
models and Lil ellipse here quote I
29:43
suddenly realized the remarkable extent
29:46
to which the methodology of economics
29:48
creates blind spots we don’t we just
29:50
don’t see what we can’t formalize and
29:54
and then you go on to explain how that
29:56
was important in this but I you know I
29:59
as I’m as I was reading this in thinking
30:02
about both your statements about the
30:03
invisible hand our thinking about that
30:05
these questions about power I wondered
30:08
if you could I mean do you think that
30:10
power is a big blind spot for economics
30:13
oh sure I mean a little bit less blind
30:16
than it was but it was if I think about
30:20
the way that people like me you know
30:24
vaguely center-left but but but
30:26
economics trained people thought about
30:28
the world 2025 years ago it really
30:33
didn’t beat much room for power it was
30:36
really that that if this was basically a
30:38
you know a functioning market supply and
30:41
demand and then yes you wanted to have
30:44
some government policies to mitigate
30:45
some of the injustice as a harshness of
30:47
it but but didn’t think very much at all
30:50
about the role of monopolies didn’t
30:52
think very much about as we might I
30:57
think I was probably always for higher
30:59
minimum wages but assume that there be a
31:01
cost in terms of jobs always has some
31:04
sympathy for unions but didn’t thought
31:07
up them as as as having a lot of
31:10
downsides much more than I do now and
31:13
just generally the we we’ve really got
31:16
we bought into the the idea that that
31:20
the the invisible hand that the the
31:21
logic of the marketplace severely
31:24
constrains what happens and that looks a
31:26
lot less persuasive now so one more
31:29
theory question and then I want to talk
31:30
about what all this means for how we
31:32
kill the zombies they one word that just
31:35
I have to one run through a question
31:36
about macro so you’ve talked about and
31:40
you have this nice piece in here from
31:42
2010 at where you called the instability
31:44
of moderation where you point out that a
31:46
key problem for macro economics has been
31:48
this search for micro foundations and
31:51
that we weren’t able to find those in a
31:53
way they did worked
31:55
you know microphone served
31:57
microeconomics being about rational
31:58
economic outdoors and rapidly clearing
32:00
markets I’m relative to macro where
32:02
there’s frictions and ad-hoc behavior
32:04
and I wondered if you could comment on
32:08
something else that I’m seeing happening
32:10
now which is the reverse in that we’re
32:14
seeing a lot of young scholars new
32:17
generation of scholars who are using
32:19
micro economic data to build up to do
32:21
macroeconomic theory and I wonder if you
32:24
see any hope for the forum developing a
32:27
more cohesion between micro and macro
32:29
from them from the micro to the macro
32:31
rather than from the trying to find the
32:34
micro foundation okay so if I the micro
32:36
foundation I think maybe I should do a
32:38
micro foundations was the idea we have
32:40
this idealized Homo economicus the
32:43
economic man who’s perfectly rational
32:45
and is and and operates in perfect
32:49
markets and it’s a it’s a metaphor that
32:51
has proved useful but then ends up
32:54
trouble with it is that people are
32:56
always tempted to go too far with it and
32:58
and there was a for most of my
33:00
professional life we we were in
33:03
situation where people basically the
33:06
things that happen in recessions
33:07
couldn’t happen if people were as
33:10
rational when markets where as efficient
33:12
as as this theory says and so you would
33:15
say so that means you’re going to change
33:16
the theory right but what actually
33:18
happened was that not half the
33:19
profession said that means that the
33:21
things that actually happened don’t
33:22
actually happen so we can create this
33:25
idealized world where you know if they
33:26
what are you gonna believe the theory or
33:28
your lying eyes and and and I hope that
33:34
we moved back from that more although
33:36
there’s still quite a lot of that I was
33:37
actually one of the shocking things to
33:39
me has been how little adjustment in
33:42
doctrine took place after the financial
33:44
crisis it’s amazing to me how how how
33:48
many people I maybe should know that
33:50
right there’s old line about science
33:53
that science progresses funeral by
33:54
funeral basically nobody ever admits
33:57
that they were wrong about anything but
33:58
the but I think I think what you’re
34:01
getting is we’re now tending to do a
34:03
in academic economics it became lots and
34:06
lots of of work with data work with real
34:09
cases and the problem always with that
34:12
actually there two problems with it
34:13
one is that knowing how an individual
34:16
market works doesn’t necessarily tell
34:18
you how the whole ensemble works either
34:20
their work can be real fallacies of
34:23
composition so looking at what goes on
34:26
it you can can be very very wrong I mean
34:29
actually that’s in some ways that’s what
34:30
macro is all about because if you say is
34:32
it good for an individual to save and be
34:35
thrifty and the answer is well yes is
34:37
good if everybody tries to spend less
34:39
than their income at the same time the
34:42
answer is that’s a depression so but the
34:46
other problem is that that you get this
34:48
accumulation of cases and it’s always
34:52
tricky to know whether your general
34:55
whether whether they generalize you you
34:57
end up knowing you learn a lot about
35:00
some some so that there’s a there’s a
35:03
prize that’s actually harder to get the
35:05
novella called Clark medal it’s given to
35:07
an economist under 40 and so we’ve had
35:10
stuff a there’s some wonderful work on
35:12
the impact of of increased access to
35:18
global markets driven by the expansion
35:21
of the the railway network in India in
35:23
in the nineteenth century that’s great
35:27
but how sure are we that what we learn
35:30
from indian railway networks is actually
35:32
applicable to to to the coronavirus
35:35
let’s say and you know when I was a
35:39
under granit took a course in computer
35:42
science that it’s a very primitive
35:45
artificial intelligence efforts then and
35:48
and people I remember very much the line
35:51
that we thought we could learn to
35:53
understand intelligence by by teaching
35:55
computers to play chess and what we
35:56
ended up was learning a lot about chess
36:00
and that’s kind of the problem with all
36:04
this proliferation of which we need but
36:07
and but it’s a judgment call
36:09
so so some of this stuff I think is
36:11
tremendously relevant and but but you
36:14
know I’m never sure
36:16
okay again so now um I want to move on
36:20
to the zombies to keep us up at night
36:22
and core to this book into your columns
36:27
is and you already talked about it the
36:29
one-sided nature of the current debate
36:31
in the sense that there’s polarization
36:33
but it’s asymmetric and we need to
36:35
understand the motives on on both sides
36:37
and in your in a piece from October of
36:42
2018 you wrote quote I submit that the
36:46
GOP is an authoritarian regime in
36:49
waiting and I wrote in my notes here
36:52
yikes
36:53
so I tell us a little bit more about you
36:57
know you know as I read through the book
36:59
it does seem that the and I and part of
37:01
what I was trying to do in time of the
37:03
theory is that there seemed to be some
37:05
parallels between what’s happening
37:07
economics and what’s happening in our in
37:10
the way that we talk about economics out
37:12
in the political sphere but focusing in
37:15
on the political sphere how you know
37:19
what do you see as the biggest zombies
37:21
and do you think that the GOP is the
37:26
most important one which is it one of
37:28
the one of the things that I feel like I
37:30
took from your book what the zombies are
37:32
ideas so a zombie idea is something like
37:35
new tax cuts pay for themselves which
37:37
which should be dead but is instead out
37:40
there eating people’s brains but the and
37:43
the in principle those zombie ideas
37:47
could come from either left or right but
37:49
in in America in 2020 that all of the
37:53
important zombies are coming from the
37:54
right they were all reflecting the
37:56
nature of and the section of the book
37:59
about movement conservatism is this this
38:03
interlocking set of institutions
38:05
included the Republican Party being
38:07
actually just sitting in in the midst of
38:09
the set of interlocking institutions
38:11
held together largely by by money from
38:15
from relative handful of billionaires
38:16
but doesn’t take a lot of billionaires
38:18
to finance a movement and and willing to
38:23
make deals with
38:28
racists with-with-with intolerance in
38:32
order to advance the interests of these
38:34
people and it is extremely scary look
38:37
we’ve seen it happened that when I was
38:42
at Princeton my next-door office
38:44
neighbor was a constitutional law
38:46
scholar and who was who also happened to
38:51
be a specialist on Central Europe and so
38:53
I was busy sort of tracking the collapse
38:56
of democracy and hungry and you can just
38:59
see how that you know Kim chef Lee was
39:02
doing this she actually spoke magyar
39:03
which nobody does but the and and so she
39:07
was able to – and I should lend her
39:10
space on my blog because no one was
39:12
reporting it but I got up a really
39:15
pretty first hand you know much I was
39:18
much more aware than the vast majority
39:20
of people in this country of how it’s
39:24
possible to dismantle a democracy you
39:28
can maintain the institution’s on paper
39:30
it bus completely subvert them in
39:32
reality which happened essentially
39:34
hungry is now one-party authoritarian
39:35
state it’s it’s a little bit subtle have
39:39
but it’s it’s it’s very real and and
39:41
frankly if Trump was a smart Viktor
39:43
Orban we’d probably be lost already so
39:45
the so I scared the hell out of me it’s
39:49
a it’s extremely frightening it’s a
39:52
we’re we’re we’re not very far from that
39:54
point this is the dark part of the
39:57
conversation sorry
39:59
and so the next thing in terms of
40:02
zombies is they you’ve said quote to be
40:05
honest sometimes I wonder whether I’m
40:06
wasting my time talking about any issue
40:08
other than climate change in quote and
40:12
you know I often think that the climate
40:15
change issue visa the economics is very
40:17
interesting because economics is about
40:19
optimizing given resource constraints
40:22
and climate change is so fundamental to
40:24
that that that basic idea but tell us
40:27
about what you think economists should
40:29
be focusing on and where you would like
40:33
to see the economic profession focus its
40:35
energy on this question okay so
40:41
first of all I think we do need to
40:42
convey that there’s still this notion
40:44
that somehow environmental costs are not
40:48
really part of the economy and I’m not
40:51
sure that it’s it’s all that important
40:52
weather or change the measure of GDP to
40:55
include those or not but it is important
40:57
to to highlight the the cost I mean if
41:00
you look at the fossil fuel industry as
41:02
a wholly the kind of measurable costs
41:05
climate change is only just one of them
41:07
but including the the government direct
41:09
Arman subsidies but also that the health
41:11
costs of air pollution the fossil fuel
41:14
industry in the u.s. actually destroys
41:16
about twice as much value as as the
41:19
total value of wages profits and
41:21
everything else in the industry so it
41:22
that we should we should be making a
41:25
point of that that should be out there
41:27
but also this is a case where I think
41:29
the invisible hand stuff comes back the
41:34
there’s now econ 101 is every principles
41:39
of economics textbook has a chapter on
41:40
externalities cost that you impose on
41:43
people and and how the appropriate
41:45
solution is to put a price on them so
41:47
basically economics 101 says we should
41:49
have carbon taxes that that’s actually
41:52
absolutely standard stuff so but there
41:57
is a still some tendency for our
42:00
colleagues in the profession to say and
42:02
that is the solution and is the only
42:05
right solution it has to be the core of
42:07
the solution and that’s not actually
42:09
right I mean it’s it certainly should be
42:12
a important part of it but there’s a lot
42:14
of reason to believe that that there are
42:16
other things that matter a lot that
42:18
investments in infrastructure
42:20
investments in technology and just in
42:22
general this issue is so important that
42:24
we can’t afford to be purists I think
42:27
the purists the purity test on on policy
42:29
here is wrong anyway but even if it were
42:32
right the important thing is to do
42:35
something do something big and and if
42:38
you have to sell it by packaging it with
42:40
a lot of other stuff sure so I basically
42:43
I’m a green new deal enthusiast for both
42:46
on the economics and the political
42:48
economy it’s just this is no time to say
42:51
well the textbook says we should do it
42:53
this way
42:53
and that’s the only way yeah so um I
43:04
want to ask you a few questions about
43:06
what should be in our handbook you know
43:09
how is it that you know you’re out there
43:12
every day not every day but twice a week
43:15
I’m one of the nation’s most important
43:17
economics educators giving people tools
43:20
to help both understand the economy and
43:22
to push back in their own communities on
43:24
zombie economic ideas and you know you
43:28
have a long list of things that you
43:30
think are zombies and and ways to fight
43:33
back but one one thing they fit in and
43:36
you’ve written a lot about this the one
43:38
thing that’s important is the language
43:40
that we use and so you’ve noted a number
43:42
of your columns about how people you
43:47
know might be using the words capitalism
43:49
or socialism differently and I’d like to
43:53
ask you whether or not you think it you
43:55
know how you think that matters in
43:57
communicating to the public when you
43:58
know that different people are gonna
43:59
have a different sense of you know if
44:01
you say socialism and you look at a poll
44:02
whether or not people are for it part of
44:04
that is different people have different
44:05
conceptions of what that is and so what
44:08
do you think what are you finding the
44:09
most fruitful ways to deal with these
44:11
multiple understandings oh boy
44:14
I mean I’m not sure that I even know the
44:16
answer because I’m not sure if I found
44:19
anything that works I mean we have there
44:29
is a I mean unfortunately I mean we
44:32
don’t really use the term very much in
44:36
this country that’s social democracy
44:38
which is a sort of standard European
44:40
parlance for what it’s actually what the
44:44
Democratic Party stands for these days
44:46
it is a mostly market system but with
44:49
the government regulation
44:52
government moves to empower workers
44:55
it’s basically Denmark you know it’s a
44:57
and if you and it would be really
45:01
helpful if we could use that now we have
45:04
a long history in this country of
45:07
anybody proposing anything that sort of
45:10
mitigates the harshness of the market is
45:12
accused of being a socialist and that’s
45:16
one of the I think that it is in the
45:18
book of it was a Operation coffee cup in
45:23
1961 which was the American Medical
45:25
Association
45:26
it wanted doctors wives it was 1961
45:29
doctors wives were supposed to invite
45:31
their friends over for coffee to listen
45:33
to a recording of Ronald Reagan
45:35
explaining how Medicare would destroy
45:37
American freedom and you can listen to
45:41
it it’s on YouTube the so it’s so if you
45:47
keep on calling any attempt to mitigate
45:49
unit to make lives may be basically any
45:51
attempt to have nice things as socialism
45:52
then of course at some point pieces some
45:54
people start to say well in that case
45:56
I’m a socialist it does worry me a lot
45:58
that one of the seriously possible
46:02
Democratic nominees for president
46:04
actually plays into that and I says I am
46:07
a socialist which he actually is you
46:09
know Bernie Sanders is actually a Social
46:11
Democrat who was kind of shocking the
46:14
bridge was seat by saying I am a
46:16
socialist and that I’m not sure I kind
46:19
of understand the appeal of doing that
46:21
but I I’m not sure that I really want to
46:24
go into a general election that way so
46:27
so but but yeah there’s this tremendous
46:30
okay no I mean yet you know I I am x
46:34
doesn’t allow me to endorse candidates
46:36
by the way not explicitly anyway and and
46:39
and one thing I’ve been saying is I
46:41
think that in terms of actual policy any
46:44
of the Democrats will be much the same
46:45
yeah that we’re not gonna get Medicare
46:47
for all no matter who is elected but
46:50
we’re not going to be getting Republican
46:53
policies we’re gonna get beginning
46:54
significant progressive policies even if
46:56
it is a centrist guess the the
47:01
but but there is this constant I mean
47:05
the White House this White House put out
47:07
a actually hilarious report on you know
47:10
attacking socialism hilarious because if
47:13
they were screening so hard and one of
47:17
the things they did was they kept on
47:18
switching back and forth some of the
47:20
time they were saying that basically
47:22
it’s it’s all Venezuela and sometimes
47:24
and they were having a really hard time
47:26
with the Nordic countries they are
47:28
really hard time with Denmark and some
47:30
of the time it says Denmark well that’s
47:32
not socialism so it’s okay
47:33
and some of the times well it is
47:34
socialism medicine and and they’ve been
47:36
trying to show that socialism is bad
47:38
they they finally found their decisive
47:40
chart which says it’s a lot more
47:42
expensive to own a pickup truck in
47:44
Sweden it is an America it’s a good it’s
47:47
an important stat yeah you use the term
47:49
neoliberalism in one of your columns and
47:52
you note when you said it you have a
47:54
parenthesis says oh this is what it is
47:56
and it was notable cuz I think it was
47:58
the only time I’d appeared in the book
47:59
and it’s not clear to me that it’s a
48:01
useful term I’ve questions about whether
48:04
or not it’s a useful term for a column
48:06
tell me why you think it or do you think
48:08
it is I suspect that that’s was one that
48:11
was actually a blog post and actually
48:13
The Times has done something to me I
48:15
used to have a blog that was clearly
48:17
distinguished it was right I was under
48:18
times umbrella but it was clearly
48:20
distinct from the column and they
48:21
changed the format so that digitally
48:23
they look the same and so I and and it’s
48:28
actually kind of inhibiting it’s kind of
48:30
because people may not know that this is
48:32
it and so they might I feel a little bit
48:35
less free to use terms of art in in blog
48:39
posts because a lot of we’re going to
48:41
not know that that’s not my regular
48:42
column and so neoliberalism I mean I
48:45
think it’s my feet is a meaningful term
48:47
I think there is a there was a real and
48:49
but it’s not it’s it’s a kind of not a
48:52
term we use in this country yeah it’s a
48:54
term that a lot of people outside the US
48:55
used to refer to this faith in markets
48:58
to this belief that privatizing leads to
49:01
more efficiency and a lot of people who
49:04
are at least moderately progressive at
49:07
least used to be all Sony liberals there
49:09
used to be a lot of people who were
49:11
or market liberalisation and free trade
49:17
which is somewhat different subject but
49:19
also uh even for some privatization but
49:23
also for strong social safety net and so
49:27
I think it’s a it’s a meaningful term
49:29
and probably I think if you ask where
49:32
was I in 1995 I would have been would
49:35
have been a neoliberal I’m a much less
49:38
of one if I probably not one at all now
49:40
because uh because I learned something I
49:43
mean I think though it’s turned out that
49:45
the world is is is less that’s contacted
49:47
the invisible and a lot less facing the
49:50
invisible hand that I used to well so um
49:52
I have one more question so for those of
49:54
you who have questions from the audience
49:56
there’s two mics here so please feel
49:58
free to come up so when Paul when when
50:03
you reached out to me to do this
50:04
interview this evening and I was told I
50:07
could ask any questions I wanted I got
50:08
really excited and I was gonna spend the
50:10
entire hour talking about how awesome
50:15
the New Pornographers are and we could
50:17
talk about all the bands that you like
50:19
and and one things that I love about
50:21
Paul’s column is that when he elevates
50:23
these young indie bands and introduces
50:26
me to new music that I didn’t already
50:28
know about and so I’m just to end a bit
50:31
on a high note
50:32
I wanted to know if you could just share
50:34
with us this evening like what is the
50:36
the new band that you’re most excited
50:37
about so that justjust tell us okay so
50:40
by the way this is one of those things I
50:41
used to do a blog post every Friday with
50:43
a with a band performance by a band so
50:46
I’m a 66 year old wannabe hipster I
50:48
discovered indie music and and now I’m
50:52
inhibited about that because because
50:54
people will think it’s a regular Times
50:55
article and saying they’re using it
50:57
throughout some band you like and but
50:59
but we’re now appears so advertisement
51:01
on my newsletter which you can subscribe
51:04
to if you’re a time subscriber you
51:06
subscribe and get an email newsletter so
51:08
I now have an indie band performance
51:09
every every week in the newsletter and
51:13
the so yeah there’s a couple but I think
51:17
probably the ones that I’ve been
51:20
really really liking and I like the way
51:23
I got I found them to that I was
51:25
actually so is it this band called
51:27
Larkin Pope it’s two sisters from
51:29
Atlanta who do blues basically and and I
51:34
found them by I just hadn’t I hadn’t
51:38
been to a concert for a while none of my
51:40
usual bands were performing it there are
51:42
a few venues in New York so I just
51:43
looked at the you know Rockwood Music
51:45
Hall well the list of future
51:48
performances none of which I recognized
51:50
so I listened to bits of each of the
51:52
bands and said oh I like those people
51:54
and so those are and they got they got a
51:57
Grammy nomination several years later so
51:59
I actually I wasn’t wrong to think there
52:01
was something there so I encourage all
52:05
of you to sign up for his newsletter and
52:07
I think you were first sold disc out did
52:09
it so I think what I’m going to do
52:10
because there’s a long line here is I’m
52:14
going to take a handful of questions and
52:16
then after you ask your question feel
52:18
free to sit back down he will still
52:20
speak to you but or if you want to keep
52:22
standing up here you can’t I always
52:23
think it’s all awkward when you keep
52:24
standing so but I’ll take a few so go
52:27
ahead my understanding is that you were
52:30
hired for The Times principally to deal
52:33
with economic issues and as time went on
52:37
that stretched into a somewhat broader
52:39
set of policy questions and then a kind
52:43
of uber pundit covering quite a bit of
52:48
territory beyond economics and I’m
52:50
curious about foundations and how you
52:53
think about them you’ve talked about
52:58
becoming less wedded to the earlier
53:03
orthodoxy of economic theory by the time
53:06
you’re talking about power and politics
53:09
more broadly it’s not clear what the
53:12
anchor is other than you and I and a lot
53:15
of people in this room share a lot of
53:17
the same values for the kind of society
53:20
that we’d like to see but I’m curious if
53:23
it feels different for you when you’re
53:26
talking against a theoretical basis
53:29
and when you’re expanding more broadly
53:32
into eval use this course okay thank you
53:36
cumulatively I’ll try to remember I’ll
53:39
write them down too
53:42
thanks Paul so much for coming down this
53:44
has been great looking forward to
53:46
reading your book just quick background
53:48
I’m 35 years old over the Obama years I
53:51
struggled mightily to establish myself
53:53
in the last three years I’ve paid off
53:56
over six figures and student loans and
53:58
bought a half million dollar condo in DC
54:00
which is 50% black in this room of
54:03
liberal elite there is about less than
54:05
2% black people my main question is what
54:08
is a 2 or 3 eken I’m open-minded not a
54:10
zombie but I voted for Trump and I’m
54:12
wondering what are 2 or 3 economic
54:14
policies that could increase the black
54:17
attendance in this room or make the
54:20
black people in my neighborhood able to
54:22
have a six-figure salary such as myself
54:25
that’s the question thank you great
54:28
question um go ahead over here ok so I
54:32
call my country yes among the victims of
54:35
the Regan doctrine of the Washington
54:36
Consensus especially in free trade so my
54:39
question was can we count as part of
54:41
strands legacy the fall of the
54:44
intellectual framework that calls
54:45
feel free free trade what if I’m one
54:49
more and then all why was the drop of
54:51
the unemployment rate from 10 percent to
54:53
5 percent under President Obama
54:55
essentially ignored all fall from 5% to
54:58
3.5% under President Trump his glorified
55:06
address that first one obviously I’m
55:10
ready I hope I’m doing more than just
55:12
values there’s most my columns are
55:16
actually pretty analytic if you actually
55:17
read them they they’re I’m using pretty
55:20
you know vigorous language but if you
55:23
actually look there’s always an
55:24
analytical core it’s not always
55:26
economics because I actually talk to
55:28
people in other fields I sit in this
55:31
invested in it as does in the the stone
55:35
Center for the study of socio-economic
55:36
inequality which is
55:39
is a genuine interdisciplinary group so
55:42
I actually Janet Varney who runs the
55:46
center is a sociologist at least in part
55:48
as the McCall’s political science so I
55:51
act but in general I talked so I I’ve
55:53
leaned quite heavily on other social
55:55
sciences and try to make sure that I’m
55:58
not just making stuff up that I’m that
56:00
I’m actually restaurant so so that’s
56:02
it’s still always driven by by some
56:05
aspect of of analytics I and I drink
56:10
relatively few you know sort of Trump is
56:12
bad Trump was a bad person I don’t think
56:16
I’ve written any that are just there
56:18
because that not because you know I
56:20
obviously have views but because lots of
56:23
people are doing that and I’m trying
56:24
trying to actually put do a little bit
56:26
more analytics okay I already lost what
56:29
the rest of the ship and one question
56:31
was how do we increase black attendance
56:33
and audiences like this one about free
56:38
trade and then one about why the drop in
56:43
the unemployment rate wasn’t is
56:44
celebrated under Obama as it is being
56:46
horrified under trauma yeah so I mean
56:50
it’s an interesting I mean I am it’s a
56:54
shame that’s it this audience isn’t more
56:55
diverse I try to reach out and I think
57:02
there is some I mean it’s also i’m sure
57:05
that the the average education level in
57:08
this audience is way above public you
57:11
just do what you can but I’ve got knows
57:13
I I have what I’m not quite even sure
57:20
what’s probably to say here it’s not as
57:22
if I I’m disconnected from the non my
57:24
community I married into it
57:26
I mean it’s so it’s it’s not I I hope
57:32
that there’s some connection there and I
57:34
do do event so I actually I’m fairly
57:37
heavily involved with with Goddard
57:39
Riverside which which does all it is
57:41
sort of a traditional settlement house
57:43
that does a lot of outreach so I hope
57:46
that that’s part of it and in terms of
57:48
look
57:50
the a strong social safety net
57:55
educational opportunity health care all
57:58
of these things are important for
58:01
everybody but they given that America is
58:03
what it is and in our history they’re
58:05
especially important for for for
58:09
non-whites so I think that this is all
58:12
may I’m for a lot of things that for
58:16
racial justice that go beyond just
58:17
economic policies but even your basic
58:20
progressive agenda is very it’s good for
58:23
for a lot of people but it is
58:24
disproportionately good for for for
58:27
minority groups okay so we have free
58:31
trade I think I mean the thing about
58:35
free trade you know there are some I
58:42
think we see more about the downsides of
58:45
globalization than then some of us
58:47
acknowledged but on the other hand there
58:49
are some important upsides especially by
58:51
the way for poor countries which
58:53
desperately need access to global
58:54
markets and one of the things I think
58:56
worth saying is that the global trading
58:59
system uses the set of rules the ones
59:01
that that Trump is making a mockery of
59:04
the roots of that system are actually
59:07
they go back to FDR this is this was
59:09
originally a progressive project it was
59:11
actually part of trying to make a world
59:13
that was more integrated also more
59:16
peaceful and and and rule of law on an
59:19
international level so they so I don’t
59:22
think that you can say that just because
59:23
Trump is throwing carrots around that
59:25
that somehow means that he’s serving a
59:27
progressive agenda it’s actually it’s in
59:30
some ways to return to the old-fashioned
59:33
Caronia stopped protectionism that of
59:36
the old adage still have my short-term
59:42
memories my buffer is not big enough the
59:45
last one was about the unemployment rate
59:48
why do you yeah why why didn’t got more
59:50
attention it’s a tough one to answer
59:51
yeah man it’s our third what do we
59:55
really need to to ask I mean it’s a they
59:59
think about
60:02
to state television otherwise known as
60:04
Fox News what what they emphasized and
60:08
so no it’s clearly it’s a it’s a
60:11
question of what it’s it is quite
60:13
remarkable actually that you had under
60:18
under Obama you had starting in 2010 you
60:22
had an enormous sustained recovery and
60:24
it was it it didn’t get they’ve got
60:28
unemployment down to levels even by the
60:30
end of Obama’s term unemployment was in
60:32
fact below what the Fed had thought was
60:34
was sustainable so we were already in
60:36
this territory but there wasn’t a paid
60:40
cheerleading squad and the way there is
60:41
now and and and a lot of you know retro
60:45
the retroactive rewriting of history so
60:48
and of course the same people who
60:51
declared that all the numbers were fake
60:52
when they were good numbers for Obama
60:54
are now all you know don’t say that
60:58
don’t say that anymore so that it’s not
61:01
really that hard to understand I mean if
61:04
I’m gonna extend this a bit there is
61:06
even aside from this specifically us you
61:10
know that’s specifically us dynamics
61:12
there is this amazing a lot of the
61:16
business and economic reporting still
61:19
does have a a conservative slant and it
61:23
I see if one of my minor little cause
61:28
celeb here is the is the way that some
61:33
European countries quickly France France
61:36
gets extraordinary bad press and and you
61:42
keep on reading that it’s actually one
61:45
of my colleagues Roger Cohen to his
61:46
credit he he quoted he said I brought
61:49
something about France of ugly here or
61:51
so ago and he quoted himself saying
61:54
about how France is collapsing and it’s
61:56
an impossible economy it can’t sustain
61:58
so and then he said something like I
62:00
actually I wrote that in 1986 if you
62:04
actually look at the reality France it’s
62:06
not so bad I mean
62:08
in fact prime age adults are more likely
62:11
to be employed there than they are here
62:13
and the and if you look at the quality
62:16
of life standard of living but France
62:19
because France has really big government
62:21
and high taxes and generous social
62:23
programs it’s supposed to be a disaster
62:25
area and so a lot of the news media
62:27
write about it as if it were even though
62:29
in fact it’s not okay so we’re running
62:34
out of time ran try to get to these
62:36
questions I’m not totally guaranteeing
62:38
we’re gonna get to all of them but this
62:39
is a plea to be pithy and I’ll take four
62:43
again and see where we are you sir yeah
62:45
thank you
62:47
Paul this is a question about fiscal
62:49
deficits so this is a big argument
62:52
that’s going on between well you on one
62:56
side saying they really don’t matter
62:58
you know our deficit topped the trillion
63:00
last year total debt is over 20 trillion
63:03
dollars and it’s projected to keep going
63:06
up at an astronomical rate and
63:08
throughout our lives where we thought to
63:10
balance our budget that you don’t want
63:12
to pay down so can you tell me why
63:24
arguing that they don’t matter if you
63:27
could share also the counter-argument
63:29
for that that Larry Summers is providing
63:31
so note to myself just so as I remember
63:39
that so I’m gonna take it back to
63:41
monetary policy here so apologies for
63:43
that but the current bull market began
63:46
after the financial crisis and despite
63:50
some you know recent you’re fairly
63:52
recent Corrections or quote-unquote
63:54
recession indicators it’s continued and
63:58
really shows no sign of stopping
64:01
you have asset prices or valuations at
64:04
historic highs so my question is do you
64:06
believe Fed policy has played a role in
64:09
sustaining the market and if so how big
64:12
is that role and if so do you see it as
64:14
a problem thank you great over here
64:18
hi with the increase of the kick economy
64:20
and
64:21
with automation what’s your thoughts on
64:23
Andrew Yang’s universal basic income
64:26
especially when it was said or
64:28
demonstrated to have failed in the
64:30
Nordic countries wonderful and over here
64:33
I just have a quick simple question in
64:36
your opinion on a scale of zero to ten
64:39
how much is the United States of
64:40
plutocracy okay so why you start with
64:44
that one I’ve written them all down so
64:46
I’ll repeat them for you okay I respect
64:48
myself okay um maybe a maybe a seven
64:56
Venis it’s not totaled we’re not we’re
64:59
not full feeling gone full oligarch here
65:02
and look under Obama it’s funny that
65:08
people don’t seem to realize but tax
65:11
rates on the top one percent went up
65:14
quite a lot under Obama in fact if you
65:16
believe the CBO that by the end of
65:18
Obama’s term they were federal tax rate
65:22
on top one percent was about what it was
65:24
in 1979 so then effectively although
65:27
it’s their complicated details but but
65:31
by some measures at least he had unwound
65:33
all of the Reagan tax cuts for the rich
65:36
so you know we’re not it clearly we have
65:39
a hugely disproportionate influence of
65:42
of the wealthy but but where it’s not
65:44
not totally and it’s not it’s not
65:46
impossible we aren’t we haven’t gone all
65:49
that way it’s so it don’t you don’t you
65:55
could very such a thing sometimes hard
65:57
to believe given given the kinds of
65:59
things we have to write about but there
66:00
is such a thing as being too cynical
66:04
okay okay which so there’s a ubi there
66:08
is an Swedes in reverse order yeah yeah
66:10
what um first of all gig economy that’s
66:16
one of those weird things where it turns
66:18
out that it’s it hasn’t grown nearly as
66:20
much as people think so people talk
66:22
about the gig economy things like uber
66:24
and the list of things that are like
66:27
uber is uber that’s basically yeah and
66:34
and I think one thing that does happen
66:36
when you have a sort of high
66:38
socioeconomic status cratis we don’t
66:41
realize how many people always worked in
66:42
something like a key economy that they
66:45
that when I was in Princeton you know
66:47
there were all these Central American
66:50
men mowing lawns and early in the
66:51
morning and how how were they hired the
66:54
answer is men would stand on street
66:56
corners in Trenton and get picked up by
66:58
then you you a new hotel take so and
67:01
some of the people have done did
67:03
research Larry Katz and I’m forgotten
67:07
the co-authors who had said there was a
67:09
big increase in the indicate economy
67:11
redid the numbers and said you know we
67:13
it’s not actually that big an increase
67:14
so that’s an exaggerated and Andrew yang
67:16
the two things one is his vision is that
67:21
technological changes rapid productivity
67:23
growth is eliminating work except
67:25
actually productivity growth is the
67:27
slowest it’s been in decades it’s just
67:30
not it’s just not there and the trouble
67:32
with ubi I like the idea of as as little
67:39
as clean and few questions asked us
67:42
support policy as possible the trouble
67:45
with UPI is that either you make it a
67:50
woefully inadequate sum of money some of
67:53
these people can’t really live on or
67:55
it’s an enormous too expensive program
67:57
so I don’t think that and I don’t think
68:00
we’re in a position to do that
68:01
so the so we need much more targeted
68:05
means-tested programs at least for now
68:07
now if we really were having the robots
68:10
taking all of our jobs then we might
68:11
have to rethink about this issue but
68:14
there’s no sign that that’s happening so
68:15
it’s funny yang is if
68:17
as I’m the numbers driven candidate
68:20
telling you the truth except none of the
68:23
numbers actually support what he says so
68:27
then there’s monetary policy order
68:29
economies in household okay yeah so on
68:34
so actually so clearly asset prices all
68:37
kinds of asset prices are high because
68:39
interest rates are low yield on bonds is
68:42
low so people buying other stuff the
68:44
question is is that because the Fed is
68:46
doing something artificial and I don’t
68:48
think it is I think the point is that
68:49
that we seem to be in a world that which
68:51
is a wash and savings with no place to
68:53
go and the Fed has to keep interest
68:55
rates low to not have us in a in a
68:57
persistent depression
68:59
now there’s in some ways a better answer
69:03
would need to get those savings
69:04
something to go by having a massive
69:06
infrastructure program and and having
69:09
the federal government you know right
69:10
now the real as of yesterday anyway that
69:14
a 10-year bond rate was one point five
69:15
two percent was less than the inflation
69:17
rate so basically people are paid
69:19
willing to pay the federal government to
69:21
take their money and we should be doing
69:23
a lot more spending with that but that’s
69:25
a I don’t think that the Fed has done
69:27
something especially evil or distorting
69:29
here which actually ties in I was really
69:33
I thought was really strange to have the
69:34
it’s trying to make an opposition
69:37
between me and Larry Summers because
69:39
Larry Summers is actually saying exactly
69:41
the same thing I am on debt bail he’s
69:43
actually calling for deficit spending
69:44
and lots of infrastructure spending and
69:46
that’s not his hat by the way I mean if
69:48
it was I don’t think it was ever the
69:49
case that that serious economists were
69:54
as remotely as freaked out about debt as
69:57
Delta a consensus was I don’t think
69:59
there was ever there the the whole
70:02
notion that debt was the greatest threat
70:04
facing America was something that none
70:06
of the people I take seriously ever ever
70:08
bought into but there’s been a movement
70:10
now in the last couple of years with the
70:13
most mainstream of mainstream economists
70:15
coming around to the view that debt
70:18
concerns have been greatly overrated so
70:20
we have Olivia blanch are the former
70:22
chief economist of the IMF who is the
70:24
the most probably the most mainstream
70:27
person and in in the economics
70:29
profession
70:30
then the most the most control the
70:32
careful presidential address the
70:35
American Economic Association last year
70:37
was saying we worry too much about debt
70:39
and you have Larry Summers and Jason
70:41
Furman he was effectively topic on
70:44
succeeded Larry as top economist for
70:46
Obama saying we actually shouldn’t be
70:48
worrying about death and we need to be
70:49
doing it we need to be borrowing to
70:50
build infrastructure so no I’m actually
70:52
on this stuff I’m squarely in the
70:54
mainstream and the people who think that
70:56
debt is some existential threat are well
71:00
they’re inventing economics that doesn’t
71:01
actually come from economists okay so we
71:04
are we are out of time but here’s what
71:06
I’m going to do I’m gonna let you ask
71:08
your questions quickly and then you can
71:10
pick which one to answer okay
71:11
so it’s a bit of a it’s I know I know
71:13
it’s a yeah we’ll see so start over here
71:15
there are two trends taking place across
71:18
almost the entire Western world right
71:20
now so one economic basically slower
71:22
growth and widening inequality and one
71:24
political the rise of the far right do
71:27
you think there’s a connection between
71:28
those two trends and if so what is it
71:30
and what can be done about it
71:31
yeah that’s a good go ahead speaking
71:35
about zombie ideas you kind of mentioned
71:38
power motives what about education or
71:43
lack thereof about economics because you
71:47
know I just had two children go through
71:49
a very good public school system in this
71:51
area and it’s really not integrated and
71:54
then in college there’s just you know so
71:57
many other things going on and other
71:59
requirements and so I just I was just
72:02
wondering what your thoughts are on
72:05
teaching economics whether it should be
72:07
taught more or differently or is it you
72:11
know really this kind of side thing that
72:14
only people interested should be taught
72:16
hi I just applied to PhD programs this
72:20
year I think generally because of
72:22
initially reading your columns and I was
72:25
wondering given that the rewards to
72:27
begin economically seem to me pretty I
72:29
mean if you care about policy very
72:31
skewed to people who have New York Times
72:34
columns and books should I should I do
72:36
it or what what is the other thing I
72:37
should do if I should I said you might
72:40
be is that
72:41
should he become an economist the answer
72:43
says well yeah yes yeah okay hi I was
72:57
wondering what your thoughts are on the
72:59
current state of the eurozone and we go
73:02
and also what’s going on at the BC
73:04
that’s it that’s the question all right
73:07
and last one here so I was really struck
73:10
by your comments about kind of moving
73:12
away
73:12
I guess you said from your liberalism
73:14
and as you’ve learned over the years and
73:15
kind of being able to evolve your
73:17
thinking in a way that you know may be
73:19
admitting you were wrong in the past
73:20
something that I’ve been thinking a lot
73:22
about and the upcoming election my views
73:25
having shifted a lot in the past four
73:26
years and I think something that has
73:28
been difficult for me and probably
73:31
people in this room to reconcile is that
73:33
knowing that we may be in an era that
73:35
really calls for these bigger ideas like
73:37
the green new deal like you mentioned
73:38
while recognizing that you know myself
73:40
included kind of has both of financial
73:42
and I guess kind of political stake in
73:44
the status quo and so I think my
73:46
question is really about kind of how you
73:48
are able to let yourself change your
73:51
mind I think it’s kind of a difficult
73:52
like ego thing even for me and how to
73:54
address people you know your friends and
73:58
family kind of who may not quite be on
74:00
board without kind of reinforcing the
74:02
self-fulfilling prophecy of saying an
74:04
issue like the green new deal may not be
74:06
realistic where as kind of seems to end
74:09
up being the conclusion if that’s the
74:11
attitude you who’s going to it well too
74:14
much then I’m going to skip the Europe
74:16
even though I can go on at length I’m
74:18
not don’t want to do that and I just
74:21
want to say that yeah we should have
74:22
more economics education but you can
74:25
discount what I’d say about that because
74:27
our the Krugman Welles economics
74:30
textbook AP a dish ap edition we
74:33
actually have about 70% of that market
74:35
so I have a conflict of interest I mean
74:42
I don’t think we fully understand the
74:45
rise to the far right
74:47
I mean it’s rising inequality probably
74:52
is part of it but it’s it’s not such an
74:56
easy thing it’s not it’s not the case
74:58
that the this is where I do talk to
75:02
political scientists the people who have
75:04
gone far right in the US which where I
75:07
know the research can not in fact to be
75:10
people who want have lost it’s a there
75:13
there are some and this certainly
75:14
geographically it’s regions that have
75:16
lost that then have gone hard right but
75:19
that’s not actually often people who are
75:21
suffering who are who are the ones
75:23
who’ve gone that way and there there’s
75:25
something going on I I suspect that I I
75:29
don’t have a complete theory but one of
75:31
the things that’s happened I do believe
75:32
that the that the financial crisis and
75:37
all of that had the effect of
75:40
discrediting elites and that that people
75:45
used to be that people believe maybe
75:48
this is a kind of euro thing as well
75:49
because people believe that the the
75:52
European Commission and the the the
75:55
great the Great and the good actually
75:57
knew what what was up and that that if
76:00
they said you know don’t listen to
76:01
neo-fascists that that people listen to
76:04
them and there’s been a la huge
76:05
reputational lost which is removed one
76:08
of the great you know stabilizers in our
76:11
system now it’s harder to do for the US
76:14
I mean it’s not made maybe that’s part
76:18
of it as here as well but what I would
76:25
say here is is that the the the hatred
76:29
was always there the question is what
76:32
freed people to express it what freed
76:34
people to do it and then I’m not sure I
76:36
know the answer to that it’s there there
76:39
was always if you imagined that that
76:42
everyone had had really become tolerant
76:45
that it didn’t happen and but the but
76:50
somehow or other all across the Western
76:52
world even in the place I mean that
76:55
there’s a strong white nationalist
76:58
movement in a lot of Scandinavia too so
77:00
it’s it’s not clear that even the
77:02
inequality and having a really strong
77:05
social safety net is enough to prevent
77:07
that I don’t know what I don’t know what
77:09
the answer to that question except to
77:12
say that that it’s a big deal and it’s
77:14
one of those things we really well we
77:17
need to understand but we also need to
77:18
if possible you’re headed off because
77:20
the the future looks pretty scary on
77:22
that front I on a positive note
77:25
we’re ending here thank you all so much
77:46
you