Nobel prize-winning economist and New York Times columnist Paul Krugman is in the current issue of Playboy, talking about everything you can imagine.
If nothing else, this interview is the end of the idea that some people read Playboy for the articles.
KRUGMAN: I was pretty much listening to the golden oldies station with 1960s and 1970s music, Fleetwood Mac being about as modern as I got. And then for some reason after Arcade Fire won the Grammys, I said, "Gee, what is this?" I was shocked. Oh my God, there's music being made now that is really good. It didn't all go away around the time I turned 35. And so that opened me up a lot. Arcade Fire is just the one that provides the most solace. It's gorgeous stuff.
PLAYBOY: You like Feist too.
KRUGMAN: Feist. The New Pornographers are probably technically better than Arcade Fire. But what the hell? It's all good.
PLAYBOY: It sounds like it gives you some hope and uplift.
KRUGMAN: Yeah. And to be honest, I have a crush on the women in Arcade Fire.
Hmm, Krugman's good at math, so take it seriously when he notes that one band is "probably technically better" than another. Such a nuanced insight.
The material doesn't get a lot more cogent when he turns to his area of expertise:
The fact is the Great Depression ended largely thanks to a guy named Adolf Hitler. He created a human catastrophe, which also led to a lot of government spending. As you know, I'm famous for worrying about space aliens. It looks like it has to be some forcing event. Obviously you don't operate on that basis, so what people like me will do is keep hammering on this stuff and hopefully it will eventually break through. The safety net has been enough to avoid mass suffering, to muffle it. People are exhausting their savings.
Krugman is never slow to push a variation on the broken-windows fallacy. Indeed, just a few days after the 9/11 attacks in 2001, he wrote a Times op-ed reminding Americans of the upside to the 1941 Pearl Harbor attacks:
Ghastly as it may seem to say this, the terror attack—like the original day of infamy, which brought an end to the Great Depression—could even do some economic good….Now, all of a sudden, we need some new office buildings. As I've already indicated, the destruction isn't big compared with the economy, but rebuilding will generate at least some increase in business spending.
Thank gawd for small catastrophes. In the Playboy interview, Krugman waxes characteristically about how great the threat of an alien invasion would be, as it would create lickety-split a full-employment plan for all humanity. But alas, he sighs, we can't even get a new Hudson River tunnel built because we don't invest in infrastructure and education. As if massive increases in government spending haven't been happening lo these past few centuries. Between 2000 and 2010 alone at the federal level, spending increased something like 60 percent in inflation-adjusted dollars between 2001 and 2010.
As a point of fact, it's wrong—and popular—to argue, as Krugman does, that World War II ushered in a brave new world of economic boom times. Listen to the interview we did with George Mason economist Russell Roberts (who also co-authored the great Keynes-Hayek rap videos). As Roberts notes, "war spending takes real resources out of the economy" and the idea that a world of nearly universal male conscription and rationed goods is a prosperous one requires a suspension of disbelief few can muster. And, stresses Roberts, the U.S. economy actually took off in a big way in the later 1940s when government spending shrank dramatically and Keynesians cried of impending disaster.
The most interesting parts of the interview are when Krugman, that consumate maverick punk, derides Obama as "establishment" and when he veers oh-so-close to opening up his critique of all that went wrong to include state actions. Consider:
If you're asking why people were buying those houses, it's because the money was being made available. Why was the money being made available? You had a whole machine making it seem as if dicey loans were actually safe, and a fair bit of predatory stuff was also going on. People were being pushed into mortgages they were told they could afford because they didn't understand the fine print. Of course there was the slicing and dicing and tranching and making subprime toxic waste appear as triple-A bonds.
"The money was being made available…" Indeed, and by whom? What pray tell was the role of government housing policy, government-sponsored enterprises, and the Federal Reserve? Krugman walks right up to the edge and then veers away quickly into blather about deregulation and whatnot.