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BUZZFLASH: Many of our readers don't realize that you are an economics professor at Princeton. How did you come to write a column for The New York Times op-ed page?
KRUGMAN: Well, they just called me out of the blue. Actually it was Tom Friedman who acted as intermediary, because I'd met him. But it was just out of the blue. It was 1999, and at the time, it seemed like our problem was: "How do we deal with prosperity and all the interesting things that were happening in the business world?" They thought that they needed somebody to write about that, and somehow had learned that in addition to regular professor-type stuff, I'd actually been writing journalistic pieces for Fortune and for Slate, and they asked me to come on. It seemed like it might be interesting and fun, and of course we figured that the U.S. policy would be sensible and reasonable, and I'd be writing mostly about disasters elsewhere of the new economy. And what do you know? It turned out to be something quite different from anything we imagined.
BUZZFLASH: Your focus is often on international trade and international monetary systems.
KRUGMAN: Yes, the professional work is basically about that.
BUZZFLASH: You're not a full-time journalist. Do you think that gives you a bit of distance from both the media and from politics when you write your columns?
KRUGMAN: What it means is that I don't have any of the usual journalistic or the journalists' incentives. I'm not part of the club. I'm not socially part of that world. I don't go to Washington cocktail parties, so I don't get sucked into whatever kind of group-think there may be, for better or for worse. I don't necessarily hear all the latest rumors, but I also don't fold in with the latest view on how you're supposed to think about things.
It also means that I'm moonlighting. This is not my career, or I didn't think it is, anyway. And if it means that if I'm frozen out, if the Times finally decides I'm too hot to handle and fires me or whatever, that's no great loss. So I'm a lot more independent than your ordinary average journalist would be.
BUZZFLASH: You make the case that a revolutionary, right wing movement has set out to transform the United States, and they're succeeding. So much of the print media and so many television broadcast journalists have become more like stenographers for the official government spin than probing journalists. What's your take on that?
KRUGMAN: Well, a couple of things. The first is that a good part of the media are essentially part of the machine. If you work for any Murdoch publication or network, or if you work for the Rev. Moon's empire, you're really not a journalist in the way that we used to think. You're basically just part of a propaganda machine. And that's a pretty large segment of the media.
As for the rest, certainly being critical at the level I've been critical -- basically saying that these guys are lying, even if it's staring you in the face -- is a very unpleasant experience. You get a lot of heat from people who should be on your side, because they accuse you of being shrill, which is everybody's favorite word for me. And you become a personal target. It can be quite frightening. I've seen cases where a journalist starts to say something less than reverential about Bush, and then catches himself or herself, and says something like, "Oh, I better not say that, I'll get 'mailed.'" And what they mean by "mail" is hate mail, and it also means that somebody is going to try to see if there's anything in your personal history that can be used to smear you.
It's like shock therapy, aversion therapy. If you touch these things, you yourself are going to get an unpleasant, painful electric shock. And most people in the media just back off as a result.
BUZZFLASH: Bottom line: It's just easier not to be critical.
KRUGMAN: Your personal life, your professional life, is much easier if you oscillate between reverential pieces about the commander in chief and cynical pieces which equate minor foibles on one side with grotesque lies or deceptions on the other.
BUZZFLASH: Economic decisions are certainly politicized, but you do have numbers -- you have the advantage of showing what works, what doesn't, which numbers add up, and which don't. It seems like so much of the criticism you get is sort of dismissive, but no one challenges you on the substance of the arguments you're making.
KRUGMAN: Oh, I get challenged all the time on the substance, but usually by people who have no clue, or who are just looking for anything. So if I say the number is 2.15 and it's actually 2.143, someone will come after me, saying: "Lie, lie - it's inaccurate!" So that's what's going on. But the amazing thing about this is that we're not talking about close calls here. When you talk about [Bush] administration policy, it's not a case of, well, "OK, maybe I disagree with your model, but according to your model, this policy will do what you say it will." These guys are insisting all the time that two minus one equals four. There isn't any reasonable argument in their favor, but there's a lot of power in their favor.
BUZZFLASH: There's a wonderful chapter in the book of your collection of columns on that theme. Let's focus on something specific -- the unprecedented deficit. Last week, I think it was projected at nearly $500 billion, staggering even beyond Bush Senior's records in the early '90s. How is it that this has not become more of an issue, and why don't more Americans see this as gross mismanagement of the economy?
KRUGMAN: Well, for the general public, it's very abstract. It's very hard to understand. Understandably, there are a very small number of people who sit down and do the accounting, and say, "Gee, how are we going to pay for Social Security in the next decade, given this?" It's not quantum mechanics; it's not hard stuff, but it does take some attention. The truth is, when I started doing this column, I wasn't a U.S. budget expert at all, and I had to put in a lot of work learning how to read those numbers. And you don't expect the guy in the street to understand that.
As for the media, I guess the point is that not very many people understand this stuff. And those who do -- the idea of saying, "My god, these guys are looting the country" -- that's uncool. It's not what you want to do. Right now there's a column in the latest Newsweek entitled, "The Brainteaser of Deficit Math," which basically confirms everything I've been saying all along, that this is wildly irresponsible and it's actually unsustainable. But the tone is kind of distant and cool. I don't know whether he actually doesn't feel any outrage, or just feels he shouldn't do that.
BUZZFLASH: Two points to add to that is during the last press conference that Bush held before he went off to Crawford, Texas, he was asked once or twice about the deficit by a couple of reporters. And he deflected the questions and kept talking about jobs. You could tell there was a clear strategy to not talk about the deficit. Instead, Bush talked about something tangible to make it appear to the American public that Bush was concerned about creating jobs.
Do you think part of the reason that people don't hold the Bush administration more accountable is that they basically just give it the benefit of doubt? As if to say, "Surely someone in power has to know what they're doing; there has to be logic to the madness and order in the chaos."
KRUGMAN: I waver on that. Sometimes I think that's what people think. Certainly, I think that's the case with a lot of the media. The concept that the president of the United States is flat-out lying about the sustainability of his own economic policy -- that's too high a hill for them to climb. And I guess the general public tends to give him the benefit of the doubt.
But there's a definite tilt in the way these things are covered and perceived. I think the average voter in California is feeling outraged about the state's $38 billion deficit, and then you stop and think for a second. You say, wait a second -- first of all, it's not $38 billion. It turns out that was a two-year number, and this year they've closed the books. And it's only $8 billion for next year. And, anyway, that number should be as abstract and remote from the ordinary residents of California as the national budget deficit is from the ordinary American.
But there's a machine that keeps on beating it out, saying Davis is bad; Davis is irresponsible; the deficit -- he lied to us. And the press picks it up, and, in turn, it makes its way to the public. So you have a situation in which mainstream publications continue to report and hammer on Davis' $38 billion deficit, which isn't even remotely true, while Bush, for the most part, gets a free pass on the $500 billion deficit which is absolutely real.
BUZZFLASH: In your book, you give special attention to the origins of the California energy crisis. Who would you say is to blame for that?
KRUGMAN: What actually happened in California was that the system was a little short on capacity -- not actually less capacity than demand, but the usual margin wasn't there because of a drought and a couple of other things. That created a situation in which energy companies could game the system by strategically taking a plant offline or scheduling a power transmission in such a way that it could be guaranteed to create congestion on the transmission grid, and a whole bunch of other strategies. Basically by pulling power off the market, they could drive prices up.
So what you had was a basically normal, slightly tight power situation that was transformed into a wild chaos of brownouts, blackouts, and prices up to 50 times what's normal due to companies gaming the system. It wasn't some vast conspiracy. It was mostly companies seeing what they could do individually. And it was created by a badly conceived deregulation scheme that set the system up for this to happen. So that's the story, and if you have to say who's to blame, well, companies were out there maximizing profits quite ruthlessly, but that's to be expected. You want to blame Pete Wilson for setting up the system where that could happen, and you want to blame the energy regulators, which basically means the feds, for refusing to do anything about it.
BUZZFLASH: You had a wonderful column on Arnold Schwarzenegger, "Conan the Deceiver," and what little details he's revealed of his economic plan. I think it must be maddening for you to actually understand what the real-life consequences are of the empty rhetoric that politicians make.
KRUGMAN: Well, I've given up a lot to do this column. My habitat before was not just academics, but I was part of the sort of high-level, very genteel policy circuit -- you know, finance ministers, economists and big bankers, sitting around tables with glasses of mineral water, and having high-minded discussions about global policy. I'm very much part of that, or I was very much part of that comfortable world where the working assumptions -- the pretense, if you like -- is that we're all men of good will, and it's all intelligent and that the issues are deep. And if there are divisions, it's because there are really two sides.
And then here I am in the middle of this, trying desperately to get a few more people to notice that we have wildly dishonest, irresponsible people making policy in the world's greatest nation. And currents of abuse are coming in the mail and over the e-mails, as we saw. There are many mornings when I wake up and say, "Why am I doing this? But you got to do it."
BUZZFLASH: Grover Norquist, head of Americans for Tax Reform and a board member of the National Rifle Association and GOP advisor, made a comment that he wants to shrink the size of the federal government so small that he could drown it in a bathtub. When you look at the Bush economic policy, are we dealing with an ideology to destroy social programs and the federal government? Or is it mismanagement? Or both?
KRUGMAN: I think you have to think of this as there's more than one player in this thing. If you ask Norquist or the Heritage Foundation about where the economic and social policy intelligentsia really stands, their aim is to roll us back to Herbert Hoover or before. Norquist actually thinks that we've got to get back to before the progressive movement -- before the McKinley era, which actually is one of Karl Rove's guiding lights as well. So there's definitely an important faction in the Bush administration and in the Republican Party that really wants to unravel all of this stuff and basically wants us to go back to a situation where, if you are unlucky, and you don't have enough to eat, or you can't afford medical care, well, that's just showing that you weren't sufficiently provident. And then, for these people, there would be no social safety net whatsoever.
Other people in the party, and other people in the coalition, have deluded themselves into thinking that somehow this is all going to be painless, and we're going to grow our way out of the deficit. Other people really don't care about any of that and are viewing their alliance with these people as a way to achieve their social goals -- basically roll back the revolution in social mores over the past few decades.
So there is a coalition, but there's no question that if you ask what do the core ideologues want, the answer is they want to roll it all back. If you looked at what the Heritage Foundation says, they use the terms "New Deal" and "Great Society" as essentially curse words. Everything Franklin Roosevelt or Lyndon Johnson did to provide a little bit of a cushion for Americans having bad luck is a bad thing, from their point of view.
BUZZFLASH: As a professor, if you were giving a lecture and you had to define the economic policy of the Bush administration, could you get your arms around it? How would you define it?
KRUGMAN: There is no economic policy. That's really important to say. The general modus operandi of the Bushies is that they don't make policies to deal with problems. They use problems to justify things they wanted to do anyway. So there is no policy to deal with the lack of jobs. There really isn't even a policy to deal with terrorism. It's all about how can we spin what's happening out there to do what we want to do.
Now if you ask what do the people who keep pushing for one tax cut after another want to accomplish, the answer is they are basically aiming to create a fiscal crisis which will provide the environment in which they can basically eliminate the welfare state.
BUZZFLASH: Talking about perception, why is it, even after the staggering deficits, and three million jobs lost, when you look at the polls, ordinary people perceive Republicans as better at managing the economy and the federal budget than Democrats. Even though we're just starting to understand just how good the Clinton-Gore economic policies were, the false perception still exists the Republicans can handle the economy better.
KRUGMAN: Again, I think it comes back to press coverage. Just this weekend, I was looking at something: There's an enormous scandal right now involving Boeing and a federal contract, which appears to have been overpaid by $4 billion. The Pentagon official who was responsible for the contract has now left and has become a top executive at Boeing. And it's been barely covered in the press -- a couple of stories on inside pages. You compare that with the White House travel office in 1993. There were accusations, later found to be false, that the Clintons had intervened improperly to dismiss a couple of employees in the White House travel office.
That was the subject, in the course of one month, of three front-page stories in the Washington Post. So if people don't understand how badly things are being managed now, and have an unduly negative sense of how things were managed in the Clinton years, well, there in a nutshell is your explanation.
BUZZFLASH: If you had to make a projection, do you think Clinton's presidency -- specifically his economic policy and what he did in terms of generating jobs and creating surpluses -- will survive as his legacy, versus what happened afterwards with the Bush administration?
KRUGMAN: Well, I think Clinton's successes will be overshadowed by the scale of the disaster that followed. Not that Clinton will be blamed. I think historians will say, "Gee, there was a sensible, basically well-intentioned government that dealt successfully with a bunch of crazies."
A lot of good things happened in the 1920s, although there were a couple of really bad presidents. But all of that now, in historical memory, is colored by the realization of what followed afterwards.
I think that with the looming disasters of the budget on foreign policy -- and the things that really scare me, which I know we're not going to get into but let's just mention the erosion of civil liberties at home -- I think that, in retrospect, this will be seen in terms of how did the country head over this cliff. I hope I'm wrong. If there's regime change in 2004, and the new man actually manages to steer us away from the disasters I see in front of us, then we'll probably be talking a lot about the long boom that was begun during the Clinton years, and how it was resilient, even to an episode of incredibly bad management.
But I don't think that's the way it's going to play out, to be honest. Whatever happens in the election, I think that we've done an extraordinary amount of damage in the last three years.
BUZZFLASH: Looking just at the economic impact of Iraq, how much of a strain will that continue to be?
KRUGMAN: Well, there are levels and levels. I think Iraq is going to cost us $100 billion a year for the indefinite future. Now at one level, you can say, well, that's only about 20 percent of our budget deficit, and it's only about 5 percent of the federal budget. But on the other hand, it's being added onto a very nasty situation. It's a little unpredictable. I don't know how much collateral damage Iraq is going to inflict. At the rate we're going, it's clear that unless something happens soon, we're going to have a much bigger Army. It may seem like we have enough troops, but I've been talking to people, including officers, who are just crying about what they see as the degradation of the Army's quality because of all of this.
Right now, I'm trying to understand what a petroleum industry expert is telling me, when he says that some of the market futures suggest that the market is pricing in about a one-in-three chance that unrest in Iraq spreads to Saudi Arabia. And if that happens, of course, then we're talking about a mammoth disaster.
BUZZFLASH: I've got to say I don't know how you sleep at night.
KRUGMAN: I have a little trouble, to be honest. It's this funny thing: I lived this very comfortable life in a very placid college town, with nice people all around. And life is good. But some of us -- not just me, but a fair number of people, including my friends -- we've looked at the news, and we sort of extrapolate the lines forward. And there's this feeling of creeping dread.
BUZZFLASH: James Carville, I think, called you courageous. Do you just call it like you see it? Do you just look at the numbers and tell people what the numbers tell you?
KRUGMAN: I could have made the decision to either not do this column or to do it and to say, OK, my expertise is economics, and I'm going to write this in a very cool fashion. And I'm going to write columns praising something, anything about the Bushies, and make snide attacks on the Democrats, just to keep an even-handed feel to it, so that people won't get mad at me. And I decided not to do that. For whatever the reason was -- pig-headedness or whatever -- I certainly stuck my neck out quite a lot.