CalPundit Interviews Paul Krugman

Daniel Drezner reacts:

"I was entranced by the interview's mix of defensible economic critiques and wild-eyed political paranoia."

As were we. We are marveling at the scope of the Evil Conservative Conspiracy Special Agent Krugman has unearthed, although we cannot give him huge props for discovering it, since, as he says, it is "one whose organization and goals are pretty much out in the open....".

We will stab somewhat randomly at a couple of his points, then muster a big finish.

Paul Krugman, political scientist:

The strength of the hard religious right — even though the numbers are probably smaller than they were in the 80s — is higher because the fanaticism of those who remain is much greater.

Whatever you say.

Paul Krugman, psychologist:

It's odd that the better things get if you are rich or a fundamentalist Christian, the more angry they get.

For expressions of anger from what I presume are at least some non-rich, non-fundamentalist Christians, try Kevin's comments.

Paul Krugman, social historian:

"Is this the same country that we had in 1970? I think we have a much more polarized political system, a much more polarized social climate. We certainly aren't the country of Franklin Roosevelt, and we're probably not the country of Richard Nixon either, so I think we have to take seriously the possibility that things won't work out this time."

We're not the country of Richard Nixon, and that is a bad thing.

Is he kidding? I am sure Prof. Krugman hums along when he hears "Ohio" on the radio. When CSN&Y get to the bit about "Four dead in Ohio", what does he imagine they died of, food poisoning? In 1970 we were two years past two assasinations, and four years from Watergate. When people in the late '60's worried about a "long, hot summer", does he suppose they were fretting about global warming? Now, I will grant that the Clinton impeachment and the Florida recount were dramatic, but let's have a bit of perspective. [Hey, what about 9/11? Well, did that polarize, or unite us? Time will tell!]

Paul Krugman, entrepeneur:

"...when I wrote the intro to the book the guys at Norton were worried, they were saying, that's pretty tough stuff. But at this point it doesn't seem that far out anymore, there are a fair number of people saying the same thing. In fact, I almost felt as if we missed the window when this stuff would still be shocking, because a lot of people are starting to see it. The scales are falling from people's eyes."

"Good news, Paul! The public is waking up to the Sinister Bush Conspiracy!"

"Ahhhh! What about my book sales? Darn that Al Franken!"

Paul Krugman, international finance expert (wait, isn't he?)

...you might also get in a situation where the interest rates the [United States] government has to pay to roll over its debt become so high that you get an accelerating problem, which is what happened in Argentina. What happened was that suddenly no one would buy Argentine debt unless they paid a twenty something percent interest rate, and everybody says, but if they have to roll over their debt at a twenty percent interest rate, there's no way they can pay that back. So the whole thing grinds to a halt and the cash flow just dries up.

We will give the microphone over to Brad DeLong for this one. Suffice it to say, comparisons with Argentina are a bit over-heated.

Paul Krugman, international finance authority (wait, he is one!):

[China is] financing both the current account deficit, and, as it turns out, directly financing the government deficit.

From the NY Times:

Figures released this week showed that private foreign citizens bought an unprecedented $129 billion in United States government and agency securities. Official accounts, mostly central banks, added $43 billion more.

The fog thickens - that's a lot of private citizens, and not many central banks. However, there are many "theys" to keep track of in Special Agent Krugman's world. Does he mean the Chinese government, or private citizens? His next answer offers a clue:

I don't think China is going to [stop buying US bonds] to pressure us. You can just barely conceive of a situation where they're mad at us because we're keeping them from invading Taiwan or something, but more likely they just start to wonder if this is really a good place to be putting their money.

Hmm, I suppose the both the Chinese government and Chinese people individually might get mad about Taiwan. But I'm troubled - I am just not sure that wealthy Chinese with offshore dollar assets are fully at the beck and call of the government. Sounds like flight capital, if in fact the individual purchasers are Chinese (I doubt it, BTW). [Info on reserves held by East Asian countries here; full paper here]

As of May 2002, the authors report reserve holdings as follows:

Japan holds more reserves than any other nation, US$411.6 billion at the end of May, 2002. China is
second, with US$241.9 billion in reserve holdings. Next in order come Taiwan (US$139.8 billion), Hong Kong (US$111.2 billion), South Korea (US$109.6 billion) and Singapore (US$78 billion).

So, China plus Hong Kong sum to roughly $353 Billion; Taiwan, SK, and Singapore sum to $328; Japan stands tall at $411. Who are we worried about?

OK, big finish, and a very good question from Kevin:

Kevin: What are the three biggest problems the United States faces right now?

Let's pause for a moment, and think of your answer. Mine are the economy, the war on terror, and a word you may not have heard - racerelationsschoolreform. Back to the Prof:

PK: The budget deficit, joblessness, and, ultimately, what really, really scares me, even though I can't write about it all the time, is the environment. That's more important than anything.

Can't fault his lack of consistency, since he once warned us that Mr. Cheney... remains in charge of energy policy. And that scares me more than terrorism.

Anyway, let's ask the audience:

2004 Vote Issues — Single Most Important or Very Important

The economy...................85%
Creating jobs....................85
Education..........................78
Federal budget...................77
War on Terrorism...............75
Homeland security..............74
Health insurance................74
Situation in Iraq.................71
Taxes...............................67
Social Security..................67
Prescription drug benefits 63
International affairs..........60
Military spending..............59
Environment....................49
Abortion..........................42
Gun control......................41
Israel/Palestine................40
Campaign finance reform 25

Well, race relations doesn't appear at all, but education does, so I am claiming credit for that.

As to the Prof, I am reminded of a quip I read recently:

"I read a newspaper story about how scary the statistics were about soil erosion, but when I told people about them around the campfire, no one was scared."

MORE: Filed under "Fearless Predictions":

...unless we slide into Japanese-style deflation, there are much higher interest rates in our future.

Well, that boldly rules out stability, I suppose.

Comments

[Jim Glass]

"It's odd that the better things get if you are rich or a fundamentalist Christian, the more angry they get. "

Sort of like the better things get for you as a tenured academic, $50,000 per day corporate consultant and nationally-known pundit, the angrier you get, eh?

Gee, you'd think he'd have a little sympathy for the angry types. ;-)

[TM]

Well, he did say this:

There's a funny thing that happened when I had that piece on inequality from the Times magazine a year ago. I had no control over the artwork and didn't see it until everyone else saw it, and they had this big picture of what they thought was a mansion. But it wasn't a mansion, it wasn't what the really rich are building now, it was a roughly $3 million house of about 7,000 square feet, and there are a few of those in Princeton just down the road from me. The people doing the Times magazine artwork just don't realize how rich the rich are these days...

Class envy everywhere.

[Jon Henke]

Yeah, it's gotta be inconvenient that people aren't really that concerned with his "inequality".

Maybe they need him to rub their faces in it with appropriate pictures.....
After all, how can we know how envious we *should* be unless we see the right picture?

Or, alternately, maybe Mr Krugman should stop trying to manufacture class envy.
Just a suggestion, of course.