The Katie Couric Interview: Paul Krugman, Economist
“There are effectively no socialists in America. Not in the sense we normally mean it.”
The economy is a major issue at the forefront of the 2020 election. President Donald Trump has said it’s “the best it’s ever been,” while Democratic candidates argue that gains are not being shared with enough Americans. In response, we’re seeing Dems propose a number of policies, including some that the right have criticized as “socialist.” So, what’s going on?
To find out, I called Paul Krugman. He’s a Nobel Prize-winning economist, op-ed columnist for the New York Times, and author of the new book, Arguing with Zombies. Paul broke down misconceptions about Obamacare, the president’s tax cuts, and the increasingly common, but mistaken, use of the term “socialist.”
Katie Couric: Your new book is called ‘Arguing With Zombies.’ It’s a collection of your columns and some additional columns as well. But in terms of the title, we’re not talking about ‘The Walking Dead.’ What do you mean by zombies in this case?
Paul Krugman: It’s zombie ideas, not zombie people. I’m not calling any particular individual a zombie. I reserve the right to do that at a future date, but that’s not what I’m doing here. A zombie idea is an idea that has been proved false. It should have died from overwhelming evidence, but just refuses. It keeps on, as I say, shambling along eating people’s brains.
There are a few that you talk about, so I thought we’d go down the list. Another zombie that you’ve written about extensively is Obamacare and all the myths and misconceptions that have been perpetuated by detractors of Obamacare. First of all, what are some of those misperceptions in your view?
The biggest thing was the constant claim that Obamacare wasn’t actually working — that it wasn’t actually getting more people health insurance; that it was leading to skyrocketing premiums and people losing their jobs; and that it wasn’t actually helping people get insurance. People are still saying that, even though we saw a huge reduction in the number of uninsured Americans when Obamacare went into effect. So what you have is a not-complete success story but still, by normal standards, a huge policy success story that people who opposed it from the beginning just continue to portray as a failure.
Why do you think some of these falsehoods are able to persist in such a strong way? And why are people so adamant about the fact that these things are true — when they clearly aren’t?
It’s an old Upton Sinclair quote: “It’s difficult to get a man to understand something when his salary depends upon his not understanding it.” These things are really supported by, to a large extent, the financial interests of people who would like us all to believe things that aren’t true. “Tax cuts pay for themselves”: There are almost no economists (that other economists take seriously, regardless of ideology) who will say that. But there are a bunch of people at right- wing think tanks who continue to say that.
The reason they say that is, well, that’s what they’re paid to say. And then if you ask who supports those right-wing think tanks — that turns out to be a handful of billionaires who have a very strong stake in people believing that cutting their taxes is great for everybody.
Same thing on climate. There’s a 95% agreement among scientists that man-made climate change is real. So, of the people who have questioned that, what percentage have received financial support from fossil fuel interests? The answer is basically 100%. It’s entirely paid advocacy that leads to the persistence of these ideas.
You’re talking about people in the financial sector and scientists, but what about the politicians who have a vested interest in either maintaining the status quo or promoting what are essentially lies? Are they also bought and sold by special interests? And is that the underlying reason they perpetuate these misconceptions?
Yes… It’s not just campaign contributions, although that’s a very large part of it. Politicians depend very heavily on contributions from interest groups that want us to believe things that aren’t true. There’s a lot of dark money that goes behind their campaigns. There’s a revolving door — for a lot of politicians, their next step after leaving office (whether voluntarily or after electoral defeats) is becoming a lobbyist for the same special interest groups. They’re looking for positions at think tanks. They’re looking for slots in the conservative media and all of these things. Ultimately, if you break with the zombies, then all those opportunities get closed off. So there’s a huge individual incentive to go along with stuff, no matter how false it has been proved again and again.
A couple of other zombies you mentioned, Paul. “Socialism” — that seems to be the trendy zombie of the day. “Socialism” is really overused by both sides. Correct?
Well, yes. There are effectively no socialists in America… not in the sense we normally mean it — or that we used to mean it. Socialism means that the government owns the means of production. Now we have a few politicians [who refer to themselves as socialists], and unfortunately, I think it’s bad framing. I actually don’t have that much trouble with Bernie Sanders and his policies. I think his choice to say “I am a socialist,” when actually he isn’t, is probably not good politics.
There are two concepts. One is what we don’t have a very good word in America for, although the Europeans do: Social democracy, which is when have a market economy, you certainly make room for the profit motive, but you have a combination of government regulation, taxes, and a strong social safety net to take some of the rough edges off of capitalism. And then you have actual socialism, where the government takes control of stuff, which currently would be represented by Venezuela.
So there’s a constant rhetorical trick that people use, which is: You propose to make America look a little bit more like Denmark — and they say you’re trying to turn us into Venezuela.
If you look at surveys, over 50% of young people have said they prefer socialism over capitalism. I think perhaps they’re lacking the true understanding of the word. But similarly, conservatives are using it as sort of the Willie Horton of 2020 — the modern day boogeyman.
If you have the people on the right who denounce any attempt to provide a little bit more security and decency in life as “socialism,” then at some point people are going to say, “Well, in that case, I’m a socialist.” You can listen to a recording of Ronald Reagan in 1961 saying that Medicare was socialism and would destroy American freedom. If you’re somebody who thinks that Medicare was a pretty good idea, but you accept his framing of it, then you say, “Well, then, I’m a socialist.” But that’s not at all what socialism really means in practice.
Do you think that people like Bernie, and AOC for that matter, should be more careful with their use of the word, or do you think that it’s being used unfairly against them?
The trouble is that it is being used unfairly against them, but they’re playing into that. I understand in terms of setting themselves off within the Democratic party by saying: “We’re on the progressive side of the Democratic party. In fact, we’re socialists.” That’s kind of what they’re doing. AOC isn’t going to face a competitive election, but Bernie Sanders might. The trouble is that people claim that he wants to turn America into Venezuela — when in fact, he has literally said he wants America to be more like Denmark.
And then, a zombie that’s probably very near and dear to your heart and mind is fake news. I think that the press has been undermined, and I make it a practice never to use the term “fake news” — because I don’t want to buy into it. But what are your feelings on that? I know that you believe that most of the media really does try to be careful with the facts.
Mainstream news organizations… are pretty scrupulous about getting the facts right. They will sometimes make a mistake, but if something’s in the Washington Post or the New York Times, or on CNN or MSNBC, you can be reasonably sure that the facts that they present are, in fact, facts. The news isn’t fake.
But there are multiple sins. One of them is that there’s still way too much horse race politics. Too much about the people, too much about how things are playing, and not enough about what the actual policies are.
I have one piece in Arguing With Zombies where I went through a month of TV coverage of Bush versus Kerry on healthcare back in 2004. The question was: How much would a viewer have learned about what they were proposing on healthcare? And the answer was: Not a thing. There were several reports describing how their healthcare plans were playing politically, but nothing at all about what they actually were. So that’s one bias the media has — but it’s not a factual error. It’s a tendency to focus on the flashy and the trivial.
Moving on to President Trump and the State of the Union. He said, “Our economy is the best it’s ever been.” He also said, “The average unemployment rate under my administration is lower than any administration in the history of our country.” I have two questions, Paul, about that. A, is it true? B, does president Trump deserve any credit for a strong economy?
So it’s not exactly true. We have some very low unemployment rates, but it’s kind of cutting it. We do have employment rates that are comparable to what you had in the late 1990s, and to what you had in the early years after World War II. So we definitely have a very low unemployment rate by historical standards. Whether it’s literally the lowest or not, we’re talking tenths of a percentage rate here.
Now what I would say about the role of Trump in all of this is: First, the unemployment rate was falling steadily and fairly rapidly, from 2010 onwards. Basically, after the financial crisis was over, there was a long trend of steadily falling unemployment under Obama that just continued. So if you just looked at a chart of employment or unemployment, and you didn’t know that there was an election in 2016, you wouldn’t say that something changed. It’s just the continuation of the straight line tracks. Basically in many ways, what Trump is presiding over is the continuation of the Obama economy.
Now, the economy has certainly been goosed to some extent by deficit spending….Trump has presided over what I’ve been calling “a deficit-palooza,” a surge in deficit spending that’s almost as big as the Obama stimulus, which was something that was introduced as an emergency measure in an economy with 9% unemployment. Now we’re doing the same thing with the economy starting at 4% unemployment.
I remember when David Stockman refuted the whole notion of trickle-down economics, and I know you’ve called President Trump’s tax cuts a massive scam. I think the question is, have we seen any of his policies help the middle class voters who make up his base?
No, aside from the fact that just throwing a lot of money at the economy generates more jobs. …We had this huge cut in corporate taxes and the story was supposed to be that the corporations would actually pass that onto their workers in the form of higher wages. But… wage growth remains low. Corporations are not building new factories and buying new equipment. They’re just using it to buy back stock. So none of the things that would lead this to trickle-down to workers are happening. It turns out that if you cut taxes on corporations and rich people, the benefits flow to corporations and rich people.
You of course know the statistic that the richest 1% in the U.S. now own more wealth than the bottom 90%. Income inequality is such an intractable problem, it seems. What do you think is the best way to tackle it?
It’s only intractable because of the political situation. We have a political environment where the solutions that we know would work are not on the table. The last time we had a very unequal society, in the 1930s, we became a middle-class society. We know what we did then: We raised taxes on the rich, we created a much more favorable environment for union organizing, so that workers had much more bargaining power, and we introduced the beginnings of big social programs. We introduced Social Security. That’s what you do.
And before we go, do you think Michael Bloomberg would be called an oligarch? He’s given an estimated $8 billion to charity and has signed the giving pledge. Obviously he’s a very wealthy guy, but I saw a tweet saying that he is an oligarch. What do you think?
I think that’s a little unfair… I’m not a total fan of his in a number of ways, but when we use the term oligarch these days, we mean people who use their wealth to gain political power — and then use their political power to add their wealth. I don’t think you could say that about Bloomberg. I don’t think you could say that he exploited his position as mayor of New York to make himself richer.
I guess you could say he’s spending all this money on ads. So, you know, he is using his wealth.
He’s actually somebody who came up with a business idea that’s been hugely successful, made him extremely wealthy and then got into politics, which he wouldn’t have been able to do without the money. But it’s clear that he has not, at least so far, ever exploited his political position to make himself even wealthier. So he doesn’t fit my definition of an oligarch.
Maybe a bridge too far. Well, Paul, thank you for your time.
This interview has been edited and condensed for length.
This originally appeared in Katie Couric’s Wake-Up Call newsletter. Subscribe here.