Skip to main content Skip to navigation

'We may be about to turn this whole thing around'

Paul Krugman talks to Mario Cuomo about his new book (and Aristotle, Keynes, Lincoln, Healthcare and Iraq) and why he is optimistic about 2008

Watch Krugman and Cuomo in conversation

Let me be sure I have right what I think your basic premise was, or one of your basic premises, and that is that the shifting nature of the condition of the American peoples' lives isn't a function of some immutable laws of the market. It's a function more of politics and institutions, etc.

Krugman: Yeah, very much so. I mean, you look at the - you know, you look at the evidence, the history. The middle-class society that I grew up in, being a baby boomer, was created. It didn't evolve through the invisible hand. It was created by FDR and the policies of the New Deal. The second Gilded Age we're living in now was created in large part by the policies of Ronald Reagan and other rightwing politicians.

Cuomo: As far as I noticed in the book, you talk about the middle class, you read Jefferson as the earliest authority of the middle class, and I think that some time ago I discovered it was Aristotle, who over 2000 years ago, had described the middle class almost precisely the way it's described today, but - and he noted that this would require the actions of people to change rules and regulations in order to achieve what he called the vital middle classes. So without it, you can't have a really good society.

Krugman: I'm going to have to look at that. That's amazing. Yeah, I mean, it - you know, Jefferson with the small holder, the small landholder, and it doesn't have to be of the soil. It can be a middle class family, but a society with enormous disparities of income and wealth is not going to be a democracy, even if it is one on paper.

Cuomo: I thought it was really interesting, as a matter of fact at Baruch college we talked about this in a lecture, and the reasons you gave were such common sense reasons. You said we're going to have a lot of rich people who inherited wealth and power because they're the nature of the government. Then you're going to have a lot of miserably poor people who want to kill the rich people because of jealousy and so you need to have that buffer between the two of them that aspires to a better life by figuring out ways to get themselves more property and more wages, and that's going to be the struggle. And then I guess the first real middle class for a democracy was ours, you know, the first real middle class that worked.

Krugman: Yeah, in the 18th century, you could say America was the first truly middle class society and then we sort of lost it for a while there, during industrialisation. Then we got it back because we had the political movement that made getting it back its goal, and now we've lost it largely again because we had a political movement that made getting rid of it its goal.

Cuomo: You talk a lot about - and obviously the title of the book, The Conscience of a Liberal, so you're talking about liberals and you're talking about conservatives and you're talking about progressives and a lot other things.

The founding fathers apparently didn't like parties, and so how about this whole notion that - of ideologies that take the form of particular parties? Is that a good thing for us, do you think?

Krugman: I think it's unavoidable. I mean, I think the - you know, if you're going to have a more or less democratic system, people will have to get together and have to - you know, would you rather that people run for office just saying, trust me, I'm a great guy. We actually sort of did that in 2000, and it didn't work out so well, right? Or would you rather have them spelling out what they believe in, what it is they intend to do, and that means essentially parties and partisanship.

You know, my great hero is Franklin Delano Roosevelt and he was an intense partisan. He said of the people who were opposed to him: I welcome their hatred. And yet he created a more - not just a more equal, but eventually a more harmonious society than we've had before. So, you know, partisanship for its own sake is a bad thing, but partisanship - gee, I'm almost going to sound like Barry Goldwater here - partisanship in the defence of liberty is no vice.

Cuomo: Maybe I'm not going to give the answer to you. My job is the questions, but this question what an alternative might be - maybe an alternative would be a society where you argue only about the issues and what distinguishes you is where you are on Iraq, where you are on middle class, where you are on healthcare - what you said in an important part of your book - as distinguished from what you purport to be for in some broad sense, called an ideology.

Krugman: Well, except those things amount to an ideology. I mean, it's very clear. Right now, we have - you can say it's certainly for better or for worse, but the two parties represent clearly different ideologies. We know no Republicrats in this world right now. We have Democrats at least all to some degree believe in the power of government to do good. They believe in collective action. The Republicans believe that lower taxes and less regulation are the answer to all problems. Those are ideologies. People sort themselves out.

The only thing I have a concern about it whether voters will actually be informed about the differences on issues. The worst thing I can imagine is that we have, as we have had in several recent elections, a blur in which the news media don't really tell people where the candidates stand, and instead make it all into personality traits.

Cuomo: I think - something I learned recently looking up the meaning of ideology. If you look in American encyclopaedias, it says, you know, rules for - basic rules for a system of economics or politics. If you look in the Oxford, it says that and then it says ... despite - and people will hold these propositions despite events. In other words ... (laughs)

Krugman: OK.

Cuomo: It's a rule that never changes on circumstance.

Krugman: Yeah, my other great idol from the 20th century is John Maynard Keynes, who when someone challenged him about his having changed his views, he said, when I receive new evidence, I change my opinion. What do you do, sir?

Cuomo: (Laughs.) Yeah, right. Now, when it came to Bill Clinton -and you certainly you know him well and know his work well. And I think you said in the book at one point that he didn't have any real strong liberal credentials, nor certainly conservative credentials. You couldn't label him as either.

Krugman: Well, you know, I was - I mean, clearly his values I would have described as liberal, but he didn't come into the strong view about exactly what the role of government should be. I don't know what you think; I think of it as a liability. I think in the end - not so much him. It's not a critique of him. I think that we did not have a well-defined progressive movement when he came into office, and that that was a great handicap - that the other side knew what they wanted and the people who voted for and supported Bill Clinton were not so clear on what they wanted and he didn't have a clear agenda as a result.

Cuomo: Yeah, and you made that point in the book that he didn't have an agenda and therefore he didn't leave a legacy, really. And I think you're right about that. But most people - I'm not sure you did - but most people, I think, would say he had a good record.

Krugman: Oh, he has a terrific - he did a terrific job of governing, and you know, we forget - we forgot when we - when Bush came to the White House, we forgot how important it is simply to take the business, to take the job of running the US government seriously. So you look at - Fema was a prized, a much-honoured agency under Clinton - fell apart. The veterans administration was a morass when he came to office - became the best healthcare system in America. So it's - no - you know, if we could - I want that competence back, but I think we also need to have a clear direction.

Cuomo: See, that puts us in an interesting position. If we admit that he was competent and had a good record - and he had a very good record, he left us with a $5.4 trillion potential surplus - but that, you know, there was internet and globalisation, a lot of other things came to his aid, so there was coincidence working there. But if you assume, OK, he's not a real liberal. He wasn't markedly liberal or markedly conservative, and he winds up in good record, why don't we look for another such person now in 2008? Why should we look for a liberal?

Krugman: Well, partly because there was undone business. In fact, Clinton did fail to get us a universal healthcare system and that's terribly important and that was a huge missed opportunity. You know, by the time we finally do get it even on optimistic grounds, it will have been 17, 18 years that tens of millions of people who should have had health coverage won't have had it.

And also some of his achievements, it turned out, were squandered. Wouldn't we rather that Bill Clinton had managed to put in place some new institutions that would make America a better place rather than pay off a lot of debt so that George Bush could come in and run it up again?

I mean, in some sense, you want a more enduring legacy because you want something that will persist. The great thing - again, I'm going to go into my FDR worship again - but the great thing about FDR is he created institutions - social security, unemployment insurance, minimum wages - that all survived till this day despite the assaults of people who, you know, wished that it had never happened.

Cuomo: The - maybe this is simplistic, but my favourite historic figure on ideology is Abraham Lincoln, mostly because he was able to reduce everything into little capsules that seemed to make sense, and on the question of ideology, his popular - the most popular quote that I can find is: "Government as the coming together of people to do collectively what they couldn't do as well through the market system privately." And that, it seems to me, is perfect: that if the market works to educate other people or to give them healthcare, then fine. You don't need government, but - [laughs] - it just doesn't work to do those things and so you do need government.

Krugman: Yeah, we don't want government in the business of growing our spinach, because it turns out that's something that farmers, private farmers do a whole lot better. We do kind of want government in the business of making sure that the spinach isn't contaminated with E.coli because that's something that farmers don't do very well.

Cuomo: So let's assume then that we're for a system that produces liberals and conservatives. How would you define "liberals"?

Krugman: I think liberalism is the view - and maybe most broadly - that we are our brother's keepers; that we need to be a society in which we take responsibility. Not that no one should suffer the consequences of their own decisions, but there is a responsibility that our fellow citizens don't suffer extreme deprivation, that things are - that there's a basic equality of, you know, of condition. And also the belief that you need that basic equality of condition to have a functioning democracy. And, you know, the conservatives believe that those things should be not the public responsibility. We are not our brother's keeper; you're on your own.

Cuomo: And libertarians, they're even further to the right than the conservatives?

Krugman: Yeah.

Cuomo: But wouldn't that put us in a position where you have to admit that this country was constructed without the liberal sentiment, because there's nothing in the constitution that says we should be our brother's keeper, and I think really that's why Lincoln preferred the declaration of independence, which introduced the notion of equality in which you could - which fits very nicely where you say in your book that we should have a closer to equal system when it comes to distribution of wealth, et cetera. But the constitution before Roosevelt and before the adoption of all those programmemes had nothing in it that said you should love one another or take care of one another.

Krugman: Well, it was a different time, you know. That's kind of obvious. But the - again, FDR - talking about him too much, but his - if you look at the speech he gave on the signing of the Social Security Act, he talks at some length about how the conditions of a modern industrial nation create new forms of risk, new forms of uncertainty, and it is the necessary role of government to mitigate those risks.

So, true, when Thomas Jefferson was talking about America, it was - leaving aside the slaves, it was a society for the most part of small landowners, and you probably didn't need social security in that society, but now, you know, by the time that the New Deal is created, we were a society of large corporations and unstable labour markets for blue collar workers, and we needed those things, and now we need them more than ever.

Cuomo: Well, but could you also say about that that what we didn't have for 150 or 160 years was healthcare or education, and nothing was more obvious than that you needed both those things desperately to build the country.

Krugman: Well, it's actually interesting. America pioneered mass education not so much from the federal level, but the idea that every child should receive education; that everyone in the country should be literate is something that started here long before it reached Britain.

Cuomo: You know, it started late in this country, didn't it? It wasn't in the constitution. President Lincoln talked about it a little bit in 1865 and did something - Adam Smith mentioned it as one of the things you'd have to do through a government, I think, and even before that in The Theory of Moral Sentiments for his second book, he said it more clearly, but that didn't happen for a long, long time.

Krugman: Right. But we were the first to - really the first nation to make a point of - I mean, it wasn't done mostly from Washington, but then we weren't a very centralised nation for most of our early history. And at the local level, at the state level and universal education - I mean, I'd like to say if universal education didn't exist in this country, people on the right would denounce it as un-American, and it's only because it's already in place that they can't quite do that, but, you know, the - it's the same thing. The case for every child having access to healthcare is absolutely the same as the case for every child having access to elementary school. Cuomo: You say that economic discontent, public disgust with the Iraq war, cronyism, and general incompetence - I'm quoting you - and the increasing [tolerance] on race and social issues will combine to make Democrats winners in 2008.

Krugman: Right. Now, you know, anything can happen. Well, you know... laughs]

Cuomo: I know that even better ...

Krugman: You know that better than anyone. Right. You know, when I - hey, I worry that there are certainly people who'll try to make this election about candidates' haircuts or the way they laugh or, you know, something like that instead of about the issues. But to the extent that it's on the issues, you know, Democrats have an overwhelming advantage. There is - you can't at this point find a single issue in which the Republican brand is stronger than the Democrats', not even national security and much less so anything else.

Cuomo: Clearly, we won in 2006 - the Democrats. We won in 2006 on the implied - with the implied promise that we get people home - the military people home from Iraq. We didn't win really on the issues; we won on the seesaw test. Bush was down, that lifts you up. You're on the other end of the seesaw. And so we won because he lost basically, and we had this implicit promise.

Don't we have to do more to win the presidency when we're not running against Bush? Don't we have to come with a strong, specific agenda on all the big issues, including Iraq and Iran and winning back world respect, and healthcare, healthcare, healthcare, etc?

Krugman: Yeah.

Cuomo: Are we doing that now, do you think?

Krugman: On healthcare, yes. On domestic issues, I'm actually - the Democrat - the plausible Democratic nominees are not perfect, but they are actually more progressive than I would have imagined possible two years [ago]. On healthcare, all three leading candidates have excellent plans. Not ideal, but really very good, and this - you know, this is an issue I spent a lot of time on. And on other domestic issues, on poverty, on education, the plans are pretty good. And anyway, healthcare is going to be the prime domestic issue and I think the Democrats have a very clear - clearly staked out position that resonates with the American public.

Iraq is a problem. They are still very timid. They're - in spite of everything, Democrats are afraid of being labelled weak on national security.

Cuomo: What I want to ask you next is to get to equality. I'm going to hold on Iraq until a little bit later. I'm trying to follow your book actually - the order in the book, and so the big question on the economic side was inequality and how do you deal with it and how we - and so I want to ask you about that.

Warren Buffet says there's a class warfare and the rich are winning. I think that's a pretty good description, don't you?

Krugman: We call it - people like me call it a second Gilded Age. That's not a bad of exaggeration of that. It's really true by the numbers. You go to Greenwich, Connecticut, and where all the great gilded mansions are and these days, hedge fund managers are buying up those mansions and tearing them down to build stuff that's bigger. So we really are in the second Gilded Age.

Cuomo: I'm going to ask you the practical question now that the voters really should be asking: How do we deal with it? What do we have to do to get more equality here without being considered communists or rabid socialists? What are we doing about - talk about trade policies and education and the question of the Chinese currency, what specific thing do we have to do?

Krugman: OK. Let me say I don't think that the - I don't think the charge of being socialist or communist works as well as it used to.

Cuomo: I said rabid.

Krugman: Rabid, yeah, yeah. There is a problem. Americans think they don't like government programmemes, but they actually like the ones they have. The famous - the constituent who chased down Senator John Breaux and said, "senator, don't let the government get its hands on medicare." [Laughter] But the - yeah - but the real problem - look, healthcare, obviously - that's - that in itself is a huge step.

The other things - the policies that led to the explosion of inequality were not any one thing. It was just a systematic bias in policies across the board, and resolving it is - tilt the balance back the other way: everything from expanding the Earned Income Tax Credit; more financial support for lower-income students in college. We're becoming the shame of the western world on that in that respect. Higher minimum wages; labour laws that make it easier for unions to organise and much harder for employers to get engaged in union-busting.

You can think of a number of other policies, none of which is actually qualitatively different from things that we already have on the books, but larger quantitatively and I think the combined effect is in fact qualitative - that really do get a significant movement towards greater equality, just as the cumulative effect of the nickel and dime-ing those policies down, under conservatives, led to a great increase in inequality.

Read part two