How Long Will The Corona Recovery Take? (w/ Paul Krugman & Vincent Catalano)
VINCENT CATALANO: Is there anything in history that we can point to, to look at to say, okay, you've had this hit, and this hit is a relatively, let's say relatively short period of time, months. It's powerful and dramatic, just like the stock market showed with the plunge in yields so you get the economic, Goldman Sachs has got numbers for first quarter and second quarter and really to the downside. Now, we come through the valleys, so almost like a Passover period. Stay indoors, everything would pass over us. Do we have anything in history that we can point to economically that will give us some sense of how this works out? PAUL KRUGMAN: There's actually there's a problem. A lot of actual interesting, if slightly grim discussion going on among economists on this, there's two models. Sometimes, the closest thing we've had to this sudden onset, maybe has been we've had recessions that were generated because we had inflation and the Fed put the economy through shock therapy. After those, we have what everybody calls a V-shaped recession, the economy went plunging and then went zooming back up again. One argument that says that this is not because there are underlying imbalances. This is not like the housing bubble or something where people had run up too much debt and there's all that. Once the virus threat recedes, then the economy will come roaring back. I guess that's what everybody's hoping for. The one concern that some people have, and I actually don't know which of these stories is true, the other possibility is that we actually were building up structural problems, but they were concealed by all of the optimism and that corporate debt had been rising, emerging market debt had been rising, student loan debt had been rising. Then it's when the house falls down, you find the skeletons in the closet that there'll be that-- VINCENT CATALANO: The water goes out and you see who's not wearing trunks. PAUL KRUGMAN: Yeah. There's some possibility of that. I don't expect this one. I don't think this is going to be like 2008 where it took seven years to get back to anything that resembled full employment. That shouldn't be that kind of thing. Whether everything will look fine a year from now is much more doubtful. VINCENT CATALANO: U-shape, more U-shape rather than V-shape in other words, because when you have that peaking, if you're looking at the projections of the infections and everything else, you've got a peaking but they-- PAUL KRUGMAN: I've seen it. That Goldman forecast is one which is a-- I'm sorry, yeah, the virus is supposed to follow this hump shaped and actually everything depends on how high the hump is, whether it overloads our hospitals or not. The economy, yeah, most of those forecasts, which are terrifying economic descent in the next few months, call for rapid recovery late this year. They don't know that, that's one possible scenario. Honestly, I don't know. If I had to take a picture of it, what I would do is draw a V and then a much shallower, longer U on top of it, and then step back away and take off my glasses and get a blurry picture, either one of them could be true. We really don't know. This is albeit cliché, but uncharted territory. We really have never seen anything like this before. VINCENT CATALANO: Right, exactly. Who was the person that you admire, and why? PAUL KRUGMAN: Among economists, we all have our sub thing, who I know a little bit professionally but Bob Solow, Robert Solow of MIT who was my colleague during the years I was there, and has always been my model for being first of all, just a great economist but more than that, just an incredibly balanced human being that just that the humanity, sense of good humor shines through even this technical paper. There's somebody that I really, really admire and he's in his 90s now is still going strong and I hope that I can be like that. Actually, who I enormously admire in political life is in fact, Nancy Pelosi. That combination, actually I've interviewed her, I've done your roll with her and you'd never know it but she's actually not as sharp as a tack but she's a riot. She's hilarious and but her ability to stay focused and we wouldn't have had Obamacare without her. The only sense we have gotten right now is in governance, is coming from her and have intellectual sets to be a woman and to be doing that is really amazing. Those were the probably the two people that come to mind right now. VINCENT CATALANO: What is the bulk of books that have changed how you view the world, and how so? What are you reading right now? PAUL KRUGMAN: I see. When I was a teenager, I read Isaac Asimov's foundation science fiction novels, which were about mathematical social scientists who saved civilization. At some level, that's where I wanted to be. I was hugely influenced. I took one philosophy course in college and I've read David Hume about skepticism. Basically, the question is how do you know? Do you know what you know? That has had a tremendous influence on me just in terms of they don't take things on faith, you ask yourself, where does it come from and that had a really lasting influence. It was only much later on I learned that David Hume probably brought the first thing that we would consider economics in the modern sense even before Adam Smith so he wrote a piece called, On the Balance of Trade in the 1750s, which is the beginning of economics as we know it now. John Maynard Keynes, John Maynard Keynes' General Theory of Employment Interest and Money is not recommended as light reading. It's difficult and a little bit torture even for a professional, but you do get a sense of what it really is to think through and to think different. They all think different but that becomes a slogan, in fact, but he really did and that was reading that. I think in some ways, it wasn't until I was in my 50s so I could properly understand what he was getting at, what it took to write that book. What I'm reading now is I mix a lot of nerdy, silly stuff. I'm reading NK Jemisin's Science Fiction, and I just finished re-watching Season Two of Westworld so I can start watching the new season, and history. Just I'm slowly working my way through William Dalrymple's The Anarchy, which is about the rise of the East India Company, which is just fascinating. Again, the history is full of, I'm not sure what the direct lessons are, but it's just wow. There's a lot of history out there. VINCENT CATALANO: Is there one person, dead or living, you would want to interview more than anyone else? If so, who and why? PAUL KRUGMAN: I would love to interview Julius Caesar, believe it or not, not because of I admire his conquests and all of that, but because what really comes through in everything you read about him and everything, even in his own writing, is that this was somebody who was just way more seems to have been ahead of or outside of his time. He clearly had a level of have self-awareness and ability to weirdly speaking for somebody who conquered the world, he clearly had his ego under control and he's like, well, Cicero, you fought with my enemies, but on the other hand, you are a great orator so I'm going to spare you and let you continue to supply glory to Roman culture so that rather weirdly, I'd like to meet Julius Caesar though preferably unarmed. VINCENT CATALANO: I think that that's a great person. Really, really unique. This next question reminds me of when Jerry Seinfeld talks about the moment before he was on a Tonight Show and then after. There was like a before and after. Here's this next question to you. Some of our guests can tie their success to one key breakthrough. Did you experience a tipping point in your career? PAUL KRUGMAN: Oh, yeah, I did. It's a long ways back. I was 26 years old. I wrote by the breakthrough paper in the work that eventually got me the Nobel Prize, and there was literally-- the way economics works is that stuff gets presented at seminars. You have 90 minutes. You have a paper, you do a presentation, you're barraged with questions. I did a 90-minute presentation in Cambridge, Massachusetts at the Summer Institute at the National Bureau of Economic Research and my life changed. Everyone said, oh, that's a guy with interesting ideas. All of a sudden, that was it. I made that transition from being just another hopeful to being somebody who was taken seriously inside the profession. VINCENT CATALANO: That's separately before and after. Last question, and I think this is such fun because of the one word in this following sentence. What view do you hold that is most controversial in your professional life? PAUL KRUGMAN: Oh, my professional life. Oh, well, it depends. I've had two professional lives. Let's talk about-- see, as a professional economists, I'm probably embarrassingly mainstream, I think largely because of the things I did have that might have seemed radical once upon a time are now mainstream. In my punditry role, I think, being when I say actually in argument with zombies, I talk about being honest about dishonesty, and being willing to talk about motives. Because so much of my time is spent arguing against zombies, I find that it's important to say, look, the people making this argument here are not being honest. This is not a good faith discussion we're having, and I'm doing a disservice to the readers and if I pretend otherwise, even though journalistic conventions aren't, they always try to be nice and give benefit of the doubt, there comes a point when there's no doubt to give benefit to and you just have to say that and you then say, if these people are lying all the time, again, to be honest to readers, you have to say why. You have to say, look, these ideas are sustained entirely by a network of right-wing billionaires or core something like that. The willingness, I don't think I ever engage in personal insults, but my willingness to be rather blunt about what it is I'm arguing with is something that I know a lot of other people in the opinion world find distasteful. They prefer that gentlemanly demeanor, and I say that that's again, that's just not being fair to the readers. VINCENT CATALANO: There's three ways to communicate, subtle, direct and blunt. PAUL KRUGMAN: Yeah, and maybe a little bit below-- yeah, blunt. Blunt is what I do. I can turn it off. I've written a government-- I spent a year in the US government, and I was very good at euphemisms there if necessary. I can't be, but most of the time, I think it's inappropriate. VINCENT CATALANO: Excellent. We'll see how it all works out. Well, everybody, wishes everyone remain safe. Social distancing is what you got to do. That makes all the sense in the world and I think that your comments today will help our viewers quite a bit, quite a bit. The book is called, Arguing with Zombies, Economics, Politics and the Fight for a Better Future. This has been wonderful, and if you're not reading Paul Krugman's statements, and if you're not going on YouTube to listen to what he has to say, and even if you don't agree with his points of view, he's a great teacher. This is a man that you really want to listen to. I have found him over the years to be tremendously helpful and an absolutely fantastic educator, even if I'm not going to CUNY or Princeton before that, et cetera.