Krugman afraid?

What is Paul Krugman afraid of?

by Ezra Klein

Paul Krugman is a lot of things. New York Times op-ed columnist. Nobel prize-winning economist. Arcade Fire fanboy. Obama administration frenemy.

But the side of Krugman I've always found most interesting is the sci-fi obsessive. Krugman has long claimed it was science-fiction author Isaac Asimov's "psychohistorians" who led him to economics. "Someday there will exist a unified social science of the kind that Asimov imagined," he wrote, "but for the time being economics is as close to psychohistory as you can get."

Punditry tends towards the short view. What will happen in the next election? What will happen in Congress next week? What just happened on cable news? And as a pundit, Krugman takes on those topics often. But sci-fi takes the long view. It gravitates towards the threats and hopes humanity will face if it is lucky enough to survive into a world vastly different than our own. And so when I got a chance to sit down with Krugman recently, I asked him to take the long view — the science-fiction view.

Ezra Klein: You’re a big science fiction fan, so I'm curious if you have apocalyptic fears that lurk outside the policy window.

Paul Krugman: If you look at the long sweep of history, global integration has tended to bring mass pandemics in its wake. My understanding is that you basically got waves of major plagues in the ancient world, pretty much whenever somebody controlled the steppes of Central Asia well enough that substantial commerce between China and the West could take place. Pretty soon afterwards, lots of people died. In the opening of the New World, it wasn't the conquistadors, it was the microbes that really did it here.

Now we have this very integrated world with very uneven levels of public health. You have to think that a pandemic is at least a possibility. I think we can be reasonably sure that it won't actually involve zombies, but aside from that, it's a real threat.

Ezra Klein: I worry about that too, but I worry about it because I think it’s still hard for us to grok the level of bacterial integration we really have in the modern world. When I see the efforts to make sure that unauthorized immigrants can't access government healthcare programs, I always wonder what folks think is going to happen if these people get sick? These are the people who are preparing our food and taking care of our children. And it just gets worse when you’re talking about threats outside our borders.

Paul Krugman: Yeah, the way Ebola was covered was about at the same level as media coverage of shark attacks. The public would have learned nothing. Maybe we would have learned we need to close the borders or we need to fear people who don't look like us. I guess Time just named the Ebola responders their person of the year. Good for them, but the public has no idea of how much we depend upon this pretty much invisible line of defense that is looking pretty shabby these days.

Ezra Klein: A fear I hear about a lot lately is the idea that we’ll build a self-improving artificial intelligence that will ultimately destroy us.

Paul Krugman: The history of artificial intelligence is that it's always ten years ahead, and that's been true for about 50 years.

Ezra Klein: But let’s assume it does emerge. A lot of smart people right now seem terrified by it. You've got Elon Musk tweeting, "Hope we're not just the biological boot loader for digital superintelligence. Unfortunately, that is increasingly probable." Google's Larry Page is reading Nick Bostrom’s new book Superintelligence. I wonder, reading this stuff, whether people are overestimating the value of analytical intelligence. It’s just never been my experience that the higher you go up the IQ scale, the better people are at achieving their goals.

Our intelligence is really lashed to a lot of things that aren’t about intelligence, like endless generations of social competition in the evolutionary fight for the best mates. I don’t even know how to think about what a genuinely new, artifical intelligence would believe is important and what it would find interesting. It often seems to me that one of the reasons people get so afraid of AI is you have people who themselves are really bought into intelligence as being the most important of all traits and they underestimate importance of other motivations and aptitudes. But it seems as likely as not that a superintelligence would be completely hopeless at anything beyond the analysis of really abstract intellectual problems.

Paul Krugman: Yeah, or one thing we might find out if we produce something that is vastly analytically superior is it ends up going all solipsistic and spending all its time solving extremely difficult and pointless math problems. We just don't know. I feel like I was suckered again into getting all excited about self-driving cars, and so on, and now I hear it's actually a lot further from really happening that we thought. Producing artificial intelligence that can cope with the real world is still a much harder problem than people realize.

Ezra Klein: What do you think about the argument that’s playing out on the left between the vision of the Democratic Party represented by Hillary Clinton and the vision represented by Elizabeth Warren? Do you think they’re that different?

Paul Krugman: I would say at this point it looks mostly like symbolism. Among liberals in America, there’s actually fairly widespread dismay over actually what I think of as Clinton-Blairism; the kind of ‘90s liberalism that is not really taking on economic inequality, not really taking on Wall Street. And there’s a sense that Hillary Clinton might be a return to that.

But I don’t think Hillary Clinton is going to try and make it 1999 again. I remember in 2008 —as a Times columnist, I can't do endorsements, so you have no idea which party I favor in general elections — but I was skeptical of Obama at a time when a lot of people on the Left were very, very high on him. I heard a number of people saying, oh, god, if Hillary is elected, she's going to bring in the old Rubin crowd, people like Larry Summers, to run the economy. And then Obama got elected and did exactly that. I think, if anything, he was more conventional on economics than she was.

I think at this point, Elizabeth Warren is now the visible embodiment of the wing of the Democratic Party that’s determined not to return to Clinton-Blairism. That makes her useful even if she doesn’t run, as — I don't know — a ghost or something looming over Hillary.

Ezra Klein: Do you think it is possible at this point for a president to be successful amidst divided government in Congress?

Paul Krugman: I’d say basically no, but it depends on your definition of success. You can have the economy expanding, no foreign crises, and you can preside over a time of prosperity, which is kind of what happened with Bill Clinton. But if anything actually has to be done, no. Everybody in Washington has learned this very damaging lesson, which is that if somebody else holds the White House, but you have blocking power, sabotage works.

I think we are in for a very ugly time until one party or the other establishes a strong enough hold that the other party finally has an Eisenhower moment of essentially accepting the changes and going back to some kind of politics around a relatively narrow range of issues.

Ezra Klein: When you say it that way, it sounds like we're in a dangerous period in American politics. You have an electoral system that is biased a bit towards Democrats at the presidential level and heavily biased towards Republicans at the House level. So you're likely in for a really long period of divided government. And I agree with you, I think you have a level of political polarization that makes successful legislating very, very difficult amidst divided government. It seems possible that we’re looking at a decade or more in which we have a political system that is essentially unable to make any forward motion on major problems. It might be able to respond to a crisis, but it cannot affirmatively legislate.

Paul Krugman: Well, I'm not even sure about responding to a crisis. I find myself in meetings with international financial types. It's all the usual discussions, and they don't like to talk domestic U.S. politics, but then at some point, somebody says, what if we had another major financial crisis? What if we really needed something like TARP again? What are the chances that something like TARP could actually happen in this political environment? And everybody goes quiet, and looks down at their blotter.

Ezra Klein: I'd push on that a little bit. I think back to TARP, and it failing the first time, but then the crushing market reaction moving Congress. I still think market reactions can move Congress. What scares me is that you can really screw up a country by not doing things you should have done. But then the crisis doesn't come in a sharp moment where you can identify the cause. It’s just in lost percentage points of economic growth over a long period of time where nobody can be clearly blamed, and there’s not an easy, obvious fix.

Paul Krugman: One of my pet peeves actually is that people talk about policy as if, as long as you've avoided a hot crisis, things are okay even when they’re obviously not. The pet peeve that affects me personally is the cancellation of the Hudson Rail Tunnel in New York City, and it’s kind of perfect. Essentially, because of political partisanship, we still have the world's greatest city totally dependent on a tunnel completed in 1910 for all public transit linkage to the west. That doesn't show up in an abrupt collapse, but those sorts of things show up in a steady degradation of our prospects.

Ezra Klein: What do you think are the big stories for the next five years in American politics? What do you think it is that people should be paying attention to but they’re ignoring?

Paul Krugman: We have the continuing toll of a weak labor market. Yes, the unemployment rate is down, but we still have a lot of long-term unemployment. We still have a really lousy environment for new college graduates. This doesn't show up in any dramatic event, but it means that we're seeing a lot of dreams getting killed in ways that are going to take a toll on national morale, with hardly any focused political pressure to do anything about it.

Then there are the environmental issues. I think crashing oil prices are going to put the brakes on fracking, but as best as I can make out, done right, shale can in fact be an important, very positive force. But that requires that there be adequate regulation to make sure that it is done right. Given the current environment, it's very unlikely that that'll happen. So we're going to be seeing a lot more stories of poisoned wells, of earthquakes. These ongoing environmental issues that will probably produce a lot of local rage. You drive into certain parts of Pennsylvania and there's obviously huge local anger, but it's not likely to move things on a wider front.

Then there’s the trend towards inequality, which has not reversed, let’s put it that way. You might wonder at what point at which there's enough revulsion to be politically effective. I remember when we were writing stories about 30,000 square-foot mansions, and we're talking about those being torn down for 80,000 square-foot mansions. So it goes on.

Ezra Klein: Do you worry more about wealth inequality or income inequality?

Paul Krugman: Income inequality, but I don't think they're separable issues. We need to worry a lot more about lagging incomes in the bottom half or bottom two-thirds of the income distribution than we worry about soaring incomes at the top. And the people in the bottom two-thirds of the income distribution have hardly any wealth. For them, wealth has gone from essentially zero 30 years ago to essentially zero now. So for them, it's income that is crucial.

The wealth inequality measures are useful because they are, in some ways, a more reliable gauge of what's happening at the top. If incomes fluctuate a lot at the top, you can argue, though it's overstated, that it's a changing cast of people. But the top 0.1 percent in wealth is not an ever-shifting cast of characters.

Ezra Klein: Do you think the story of median and lower-than-median wage stagnation and the story of income inequality are the same story, or different? It seems to me that you can see different patterns. The story of the huge changes in income inequality seems to really be focused in the top three or four percent, and it seems to start about 10 years after media wage stagnation. Or, I guess, to put it another way, do you think we could solve wage stagnation without solving income inequality?

Paul Krugman: Probably not. I think if you really did something about wage stagnation you would find that it would have a pretty strong effect in curbing incomes at the top as well. I think if you try to understand the factors behind soaring incomes at the top, they are many of the same forces that are leading to stagnating incomes for workers. The idea that we can totally separate these things is wrong. It almost harkens back to the Clinton-Blairism. You did have, in the UK at least, a fairly serious attempt in Blair/Brown to tackle poverty and to reduce income inequality, combined with a sympathetic, laissez faire attitude towards the top one percent. It produced results for a while, but in the end, it seems to be economically and politically unsustainable. It gave rise, eventually, to a regime that's doing its best to increase inequality on all fronts.

Ezra Klein: Have you seen plans from any politicians, or even any think tanks, for addressing income inequality that feel to you equal to the scale of the problem? I feel like you hear politicians rail on income inequality as a defining challenge of our time, and then they want to raise the top marginal tax rate by three percent or something. There's a real gap between the scale of the problem people are describing and the solutions they’re willing to embrace. Do you think this is a problem we actually know how to solve?

Paul Krugman: I think it is, but we know that it takes an extraordinary political environment to change it. The Great Compression took place under FDR. They took a society that was about as unequal as what we have now, maybe more so because of a weaker social safety net, and turned it into a broadly middle-class society that lasted for more than a generation. But that was done through a combination of a dramatic increase in unionization, extremely high rates of progressive taxation, and wage controls during the war that were used to compress the wage distribution.

So we can describe a set of policies that will restore a middle-class society, but they take FDR-sized majorities in Congress, and even then, it took a war to really bring those changes about. Which is why everybody, me included, talks about chipping away at the margins and hopes that, cumulatively, you're going to get something done.