Paul Krugman on the Green New Deal, Income Inequality, and The Destruction of Society
VINCENT CATALANO: One more zombie to deal with, and that deals with the economy, excuse me, with the environment, and regulation, bad and government is the problem and so on and so forth. Is that a zombie that at least for now, for the moment, there's going to be like, put aside or ignored? How do you see that playing into the role of where we are right now? PAUL KRUGMAN: Yeah, we were doing nothing about it a month ago, and we will continue doing nothing about it for the next couple of months. I hope that it'll come back. In the end, it's the most important issue out there. Climate change denial is literally, everything else is bad, but that's existential. We're putting the future civilization on the line. We seem to be making some progress under Obama and then that fall apart. Now, we'll see. I think, really realistically if the political power changes hands in the United States, we have a new administration that once again takes the climate threat seriously, then I'm all for a Green New Deal. VINCENT CATALANO: That's what I was going to ask you, too. PAUL KRUGMAN: Nobody could notice quite what Green New Deal means, which is a great advantage. Green New Deal would be [indiscernible]. We'd be doing investing in lots of stuff, we'd be investing in infrastructure, we'd be investing in energy, technology. We would do no doubt some taxes on emissions, put a grab bag of stuff, have a lot of goodies for lots of people, because that's how you get something done politically. Above all, just act. I'm hoping that-- Times columnist, I'm not allowed to do endorsements but let me say I look forward to February 2021, when the Biden administration unveiled the enormous environmental program. VINCENT CATALANO: Yeah, maybe that'll tie in at that point, and then we'll see where we're at economically. PAUL KRUGMAN: Yeah, that's right. Economically, who knows? It's all of these things. The world is already-- sometimes, it makes sense to just calm down but right now, the world is already a completely different looking place than it was just a month and a half ago. VINCENT CATALANO: Can monetary policy ever be not political? They said the Fed should be independent, et cetera, but monetary policy is going to have an influencing factor on the political environment. How is it not, let's say, in a worst-case scenario, would be backstopping bad behavior? PAUL KRUGMAN: Yeah, that's people-- I know people who worry about that, that central banks are going to encourage politicians to be irresponsible. Have you seen any of that? The reality, it's funny because the modern idea of the independent central bank, the modern idea which Ben Bernanke or even Mario Draghi is a superstar independent to the political process, that's a new thing. It was created over because people feared that governments would be inflationary, which has not been the problem actually, in recent years and basically anywhere except Venezuela. As it's turned out, those independent central bankers have been good guys. Bernanke helped hold things together in America. In Europe, Mario Draghi saved the euro by backstopping that sovereign debt. He said, whatever it takes, and that ended a run, a panic attack that almost sank the whole euro. At the moment, it seems to be a system that's working well. Particularly, I guess, maybe you could say that the Fed and the European central banker appeared to be a lot less zombie infested than other parts of the power structure on both sides of the Atlantic. VINCENT CATALANO: Where does income inequality fit within the context of everything that's going on now? I would imagine that when you have massive deficits then start to come about because of the programs that are instituted, where's the money going to come from, so on and so forth and inequality and exacerbated? PAUL KRUGMAN: I think in terms of where the money's going to come from, it's really this, first, it's not a problem. We live in a world which is awash in savings with no place to go. People want to save. Businesses don't want to invest that much. That's why interest rates are so low and just not a problem. You can borrow the money. Income inequality, there's probably some, there's some economic problems that made worse and other things, too. Part of our problem with the pandemic is that there are lots of people without health insurance, who can't afford to stay home from work and so on, all of that. The real thing, it turns up by zombies theme is most, not all, but most of the zombies, what keeps them up, with keeps them alive is actually money from billionaires. Climate change denial is almost entirely something that is sustained by fossil fuel billionaires. Tax cuts zombie is entirely sustained by right wing, hired guns propagandists, because rich people like to disseminate the idea that cutting taxes on rich people is good for the economy. VINCENT CATALANO: Some policies, let's say we go through this valley, economic valley. What does it look like? It's difficult to know but what would you imagine it looks like three months, six months down the road where we are at? Business as usual, because a lot of investors are going to look at this from the point of view of what does it mean for earnings? PAUL KRUGMAN: Well, a lot of us, the way I've been putting it for a while, is that I didn't know where the next bump in the road was going to come from, but that our shock absorbers were shocked, that we had no good way to respond. That was always hard to get people's attention about because we hadn't hit the bump yet. Now, everybody can see it. Now, everybody's out there looking in, and seeing how hard it is for us to respond and maybe, maybe we get a change in mindset. I'd like to imagine that we come out of this with a renewed appreciation for the fact that there are some jobs we do need the government to do, that we see the government cope with a public health crisis and also with the economic fallout from that crisis and people say oh, yeah maybe the New Deal idea made sense. Maybe FDR knew what he was talking about and maybe John Maynard Keynes knew what he was talking about and that we come out. I think businesses, stock market predictions are a mug's game, and I've been the mug myself, so I know better than that. I will say that it does, a lot of assets until just a few weeks ago, were priced as if nothing bad would ever happen again. Something bad always does happen and here we go.