Paul Krugman (Fred R. Conrad/ The New York Times Redux/ Getty Images/ Salon)

Nobel-winning economist Paul Krugman is here to fight the undead

In an exclusive interview, the economist and NYT pundit explains why conservatives' "zombie" ideas just won't die


Keith A. Spencer
January 29, 2020 12:00AM (UTC)

It is a great detriment to civil discourse that the divide between left and right in the United States is often depicted as being purely cultural — as if one's politics were solely mediated by aesthetics, such as whether one prefers shooting guns or drinking lattes. This fabulist understanding of politics is harmful inasmuch as it masks the real social effects of the policy agendas pushed by left versus right. Seeing politics as aesthetic transforms what should be a quantitative debate — with statistics and numbers about taxation and public policy, questions of who benefits more or less from policy changes — and devolves it into a rhetorical debate over values.

This is especially bad for liberals because there is a lot of quantitative evidence that the right's economic agenda is a dismal failure in terms of providing any real gains to the vast majority of the population. As most Salon readers are aware, economist, professor, and New York Times columnist Paul Krugman has spent much of his career doing precisely this: debunking the asserted merits of right-wing fiscal and economic policy through unemotional facts and statistics.

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As Krugman's quantitative analyses attest, the economic policies hawked by conservatives have not really worked for anyone besides the super-rich, in any era. So why do right-wing policy ideas, like lowering taxes on the rich or keeping health care privatized, continue to be celebrated by conservatives? Krugman, winner of the 2008 Nobel Memorial Prize in Economics, has penned a new essay collection on that very theme. Titled "Arguing with Zombies: Economics, Politics, and the Fight for a Better America," the book features over 400 pages of snappy essays that deflate just about every right-wing and neoliberal economic talking point — "zombies" that should have died long ago, as he says.

"While there is a philosophical case for a low-tax, minimal government society, modern conservatism relies less on philosophical persuasion than on the fact there are people who would gain a lot personally if we were to retrace our steps toward the Gilded Age," Krugman writes in the book's introduction. Moreover, he says, the malign influence of these few super-rich people is "propping up zombie ideas — ideas that should have been killed by contrary evidence, but instead keep shambling along, eating people's brains."

In interviewing Krugman about his book, I opted to go broad — as throughout the years there are few subject areas untouched by his pen. Hence, our interview touched on economic trends, global politics, and the relative popularity of an especially nerdy theory of economics. As always, this interview has been condensed and edited for print.

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You were one of a few mainstream pundits who correctly foresaw the Great Recession as early as 2005. What do you make of the current economic situation? Why hasn't a recession come yet, and are we overdue?

I don't see any misalignment as obvious as the housing bubble; inequality and homelessness are bad things, but macroeconomics isn't a morality play, and injustice doesn't necessarily lead to recession.

The real secret of the current economy, as I see it, is deficit spending. The 2019 federal deficit was $300 billion higher than CBO [Congressional Budget Office] projected in 2017, before the Trump tax cuts. That's a lot of stimulus, after years of austerity imposed by the GOP on Obama. It's badly designed stimulus, but it's still a lot of money.

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Sooner or later something will go wrong, and the idea of Steve Mnuchin in charge of the response is pretty terrifying. But I can't point to an immediate source of danger.

You write about Social Security, and that being a policy debate the left ultimately won. And yet, one zombie idea, which I still see bandied about, is the idea that social security "is bankrupt" or "will run out of money" by the time millennials like me retire. To me, the normalization of this notion has always seemed like a ploy by the rich to make it so that my generation doesn't fight back when Congress slashes social security. What do you make of this sly rhetorical turn of phrase, that is, the notion that Social Security will "run out" of money?

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It's not all a conspiracy: right now Social Security is funded by a dedicated tax plus a trust fund accumulated out of past taxes. At some point, probably around 2035, the trust fund will be exhausted and revenues won't be enough to pay full benefits. So that's a real thing.

But there are various ways to deal with this; we could easily find new revenue sources to maintain and even expand benefits. So [Social Security] will face an action-forcing event, but that doesn't mean it has to be slashed.

And I've never understood the logic of claims that to avoid the possibility of future benefit cuts, we need to move immediately to . . . cut future benefits. That's where the ideology comes in. Claiming that Social Security faces a crisis demanding immediate action is very convenient for conservatives and centrists who want to sound tough-minded, but it's nonsense.

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You've been trying to debunk myths about debt spending being evil for decades, by my count. Though I know you identify as a Keynesian, I have watched with some curiosity the rise of Modern Monetary Theory (MMT) as a trend — for instance, when I lived in Oakland there was a meeting of MMT enthusiasts that happened outside of any university, which I find remarkable for economics. (Not that it's boring, just that it's not generally a hobbyist pursuit.) I am wondering if you feel enthused perhaps that so many young (and probably old) people have seen the light on government debt spending.

Actually, I'm not sure that [Modern Monetary Theory] really is different from Keynesian economics. Most of the time its devotees seem to be inventing new terminology to make arguments mainstream Keynesians already understood perfectly well. A lot of it, I suspect, involves imperfect understanding of what we already knew and personal self-promotion (Look at me! I'm a radical unorthodox thinker! Pay no attention to the fact that I'm substantively saying the same thing as Larry Summers!).

I am, however, gratified to see the debt obsession wane, although it probably matters more that people like [Larry] Summers or Olivier Blanchard are telling us not to worry than what alternative macro people argue.

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This leads me to a follow-up question about debt. I'm curious if you're familiar with David Graeber's book "Debt," which is sort of both a cultural history and an economic book about debt. Graeber writes of the historical idea of a debt jubilee, something that happens periodically, often in times of political uprisings. In the case of something like, say, student debt or medical debt, do you see as productive a discussion of a jubilee or mass forgiveness? Would anyone truly suffer if, say, the world were to forgive the debt of many of the third-world countries exploited by the IMF? Debt has been on my mind lately given both Sanders' and Warren's plans to forgive a lot of student debt.

I haven't read Graeber. I am, however, all in favor of debt forgiveness when debt is a real ball-and-chain for the economy. Hey, we have Chapter 11 bankruptcies for corporations when they're needed to avoid destructive liquidation, so why not for countries too?

But it's usually something you want to do on a case-by-case basis. Argentina repudiated 70 percent of its debt in 2001, and the results were actually very good for a while. Greece eventually got a lot of debt forgiveness, and the misery there would have been much less if it had happened sooner.

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I really don't know enough about sub-Saharan Africa to know which countries are good candidates for debt relief, but I'm sure there are many.

The thing about student debt is that there was such widespread scamming that a case-by-case approach would be administratively overwhelming. So some kind of broad debt relief sounds good.

I noticed that your writing about different left-leaning states tend to vary in your proscription. You write very positively about Denmark, a social democracy, whereas you don't have as many kind things to say about Venezuela, which you call a "corrupt petrostate." Yet Venezuela's political situation, like Bolivia's and Cuba's, is largely the result of operating under the constraints imposed by imperial powers like the U.S. that punish these countries for refusing to cede U.S. capital. On the other hand, Denmark's high-functioning social welfare state is only possible due to its status as an imperial power in its own right within its situation in the EU. Do you think these subtleties, and these country's relationship to imperialism, are worth explicating deeper for what they say about both capitalism's ability to create or destroy leftist states — or perhaps disagree with this assessment?

I suspect the Danes would find it pretty funny to be described as an imperial state. What they are is a rich democracy that respects market forces without worshipping them; they operate a sort of tamed, bounded form of capitalism, and the result is a pretty decent society.

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Venezuela isn't anything like that. It wasn't always that poor, but the wealth was based on oil, which had a corrupting effect. Before Chavez, they were ruled by a corrupt oligarchy; Chavez came to power for a reason, and the poor did at least get some of the spoils. But the new regime never evolved a sustainable economic model; it combined cronyism (with a different set of cronies) with an attempt to run a command-and-control economy it didn't have remotely enough competence to operate.

Now, even poorer countries can do a lot to improve social justice. Costa Rica isn't utopia, but it's a lot more inclusive than most of Latin America. Taiwan has single-payer health care! The trouble is that social-democratic experiments in developing countries are all too often cut off by coups led by the old oligarchy; and yes, the U.S. has a lot to answer for in its role in backing these coups.

And when a reformist government does come into power, like the Kirchners in Argentina, it often finds it hard to get the balance right. Heterodox economics is sometimes exactly what you need, but you have to know when to stop.

So I don't see this as a blanket problem with capitalism. Denmark looks capitalist to me, but it's a kinder, gentler form. Rather than railing against the inherent evil of capitalism, we should be asking how to support countries that try to get the balance right.

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Like most Salon readers (and like you) I am no fan of Trump. But also, I don't see Trump, policy-wise, as particularly different than George W. Bush. Policy-wise, they both did the bidding of the prominent right-wing think tanks, both in foreign policy and economic policy. Sure, Trump is more of a narcissist and openly corrupt, but the results of their rule seem the same — and like most presidents, they are merely steering an imperialist ship that goes from country to country, extracting resources, and ousting redistributive political regimes in favor of any centrist or dictator who will kowtow to American interests. Do you truly see Trump as an aberration, as you've written?

I thought I made it clear that I don't think of Trump as an aberration so much as a culmination. The GOP has achieved something impressive: each successive Republican president makes the preceding one look good by comparison. But yes, the Bush administration was rife with cronyism, tried to dismantle the social safety net, and lied us into war.

The thing about Trump is that we've now reached the point where our chances of ever exiting the nightmare are shrinking. There was a lot of vote-rigging, etc., under Bush, but we're now within striking range of becoming a de facto one-party autocracy — someplace we've been heading at least since Newt Gingrich.

We may actually be lucky that Trump is so addled and undisciplined; if he had more self-control, the republic might be gone already.

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The title (and theme) of the book, as you write, is this idea of "zombies" — intellectual or policy ideas that stick around not because they work, but because belief in them, and their being enacted in policy, benefits the very wealthy people who promote them directly and indirectly. I was wondering if this might be a sort of a smaller example of a larger idea, one that has existed for thousands of years in human history — specifically, what the Italian Marxist philosopher Antonio Gramsci called hegemony. In his writing, hegemony was the set of ruling-class beliefs and principles that had been normalized such that anyone who thought otherwise was met with ridicule.

I bring this up only because I found myself wondering, during the course of the book, if perhaps the "zombie" wasn't merely this sort of libertarian free-market view on capitalism. Could it be that capitalism itself is a zombie? Indeed, the majority of my generation (millennials) prefer socialism to capitalism, as polls repeatedly bear out. Do you think that it may be a zombie too?

I guess the question is what we mean by capitalism. If we mean an economy where most (but not all) decisions about production and investment are made by profit-seeking firms, well, we haven't really found an alternative that works.

But the idea that government can never do anything good IS a zombie. As I write in the book, there's a range of things the government clearly does better than the private sector, like guaranteeing retirement and health care. Oh, and the Post Office is actually awesome.

What I take from the polling on socialism is that it's a reaction to right-wing demonizing of every proposal to improve how we live. If you spend 40 years denouncing Social Security, Medicaid, food stamps, antitrust policy, etc as "socialism"; if you say that Denmark is socialist; well, eventually you get a lot of people who say they want socialism.

I suspect that if you asked about what we used to mean by socialism — government control of manufacturing, government-run retailing, and so on — you'd get a much less favorable response.

Paul Krugman's latest book, "Arguing with Zombies: Economics, Politics, and the Fight for a Better America," is out today from W.W. Norton.


Keith A. Spencer

Keith A. Spencer is a senior editor for Salon. He manages Salon's science, tech, economy and health coverage. His book, "A People's History of Silicon Valley: How the Tech Industry Exploits Workers, Erodes Privacy and Undermines Democracy," was released in 2018. Follow him on Twitter at @keithspencer, or on Facebook here.

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