When it comes to Krugman’s views on any particular topic, he may be right and he may be wrong, but whatever his opinion he always has a much to say about it (even if the factual backing is of secondary importance or outright missing). Today, his chosen topic is inequality, and in an interview with Bloomberg’s Tom Keene, shown and transcribed below, he certainly says much, encapsulated perhaps by the following gem:
“There’s zero evidence that the kind of extreme inequality that we have is good for economic growth. In fact, there’s a lot of evidence that it is actually bad for economic growth. Nobody wants us to become Cuba. The question is, do we have to have levels of inequality that are getting close to being the highest levels ever anywhere. We’re really starting to set new records here. Is that a good thing for anybody? If you look at our own history, it’s not true. The fact of the matter is since inequality began soaring around 1980, the bottom half of America has been pretty much left behind. It has not been a rising tide that raised all boats.”
Ah yes, inequality, the same inequality that the Fed – Krugman’s favorite monetary stimulus machine, after all it was none other than Krugman who suggested that in order to offset the bursting of the tech bubble the Fed should create the housing bubble – has been creating at an unprecedented pace since it launched QE. Just recall: “The “Massive Gift” That Keeps On Giving: How QE Boosted Inequality To Levels Surpassing The Great Depression.”
So while Krugman is right in lamenting the record surge in class divide between the 1% haves and the 99% have nots, you certainly won’t find him touching with a ten foot pole the root cause of America’s current surge in inequality.
And, tangentially, another thing you won’t find him touching, is yesterday’s revelation by Gawker that the Nobel laureate is the proud recipient of $25,000 per month from CUNY to… study inequality.
According to a formal offer letter obtained under New York’s Freedom of Information Law, CUNY intends to pay Krugman $225,000, or $25,000 per month (over two semesters), to “play a modest role in our public events” and “contribute to the build-up” of a new “inequality initiative.” It is not clear, and neither CUNY nor Krugman was able to explain, what “contribute to the build-up” entails.
It’s certainly not teaching. “You will not be expected to teach or supervise students,” the letter informs Professor Krugman, who replies: “I admit that I had to read it several times to be clear … it’s remarkably generous.” (After his first year, Krugman will be required to host a single seminar.)
CUNY, which is publicly funded, pays adjunct professors approximately $3,000 per course. The annual salaries of tenured (but undistinguished) professors, meanwhile, top out at $116,364, according to the most recent salary schedule negotiated by the university system’s faculty union. And those professors are expected to teach and publish. Even David Petraeus, whom CUNY initially offered $150,000, conducted a weekly 3-hour seminar.
Along with the offer letter, CUNY released dozens of emails between Krugman and university officials. “Perhaps I’m being premature or forward,” the Graduate Center’s President, Chase Robinson, tells Krugman in one of them, “but I wanted you to have no doubt that we can provide not just a platform for public interventions and a stimulating academic community—especially, as you will know, because of our investments in the study of inequality—but also a relatively comfortable perch.”
Which is undeniably true: $225,000 is more than quadruple New York City’s median household income.
Surely, and in keeping with this very vocal beliefs, the good professor
will promptly donate the $225,000 in annual income reserved to help the problem of inequality to a needy charty
catering to the poor, at the first opportunity.
Or not. After all, nobody wants us to become like Cuba, eh?
The full Bloomberg interview below:
And the transcript of the key highlights:
Krugman on dangerous slack in Economy:
“If people are unemployed for long enough, they may never get back into the workforce. If investment is depressed long enough, we never build the capacity. So if you think there is a lot of slack or even if you think that there might be a lot of slack in the US economy, then that should be a tremendous preoccupation. We’ve got to get rid of that. We need to get this economy back to something like full employment. It becomes the most urgent priority we have right now.”
Krugman on Japan vs. Europe:
“I have to say, when the Europeans say we’re not Japan, I agree. Japan was never in as dire straits as Europe is right now. They never had the mass unemployment. There was never a part of Japan that looked like Spain or Greece does in Europe right now. So their notion that they are somehow doing better than Japan, they are doing worse than Japan ever did.”
Krugman on current economic conditions:
“We should be vastly impatient. This has gone on. If you had said in 2007, that more than 6 years after a recession begins, we would still be talking about an economy with high unemployment, sluggish job growth, there hasn’t been a single month, that I can remember, where we’ve created as many jobs as we did during an average year during the Clinton administration. This is crazy. The idea that this should be regarded as an acceptable pace of progress is just really, really wrong.”
Krugman on inequality:
“There’s zero evidence that the kind of extreme inequality that we have is good for economic growth. In fact, there’s a lot of evidence that it is actually bad for economic growth. Nobody wants us to become Cuba. The question is, do we have to have levels of inequality that are getting close to being the highest levels ever anywhere. We’re really starting to set new records here. Is that a good thing for anybody? If you look at our own history, it’s not true. The fact of the matter is since inequality began soaring around 1980, the bottom half of America has been pretty much left behind. It has not been a rising tide that raised all boats.”
Krugman on how income inequality gets solved:
“American history is actually very encouraging because in America, we often had leadership, we had often people from the affluent classes themselves who said this is too much. If we could have modern politicians speaking as forthrightly about the danger of high concentration of wealth as Teddy Roosevelt did in 1910, we would be a long way towards having a good solution to this. I guess I believe that America has a tremendous redemptive capacity, an ability to take a look and say, in the end, what our ideals, what do we want society to look like, an ability to step back. We don’t have to become this oligarchy that unfortunately we are drifting towards.”
Krugman on whether we are living in a gilded age:
“It’s more than that. We’re at gilded age level of inequality and beyond. It’s a belle epoque as Pikkety says. It’s an era not just of great inequality but increasingly of inherited inequality and I think if people understand that they’ll say nope, we don’t want that to happen and we can do things that are not Draconian, that are not socialist in the American tradition to limit that rise in inequality.”
Krugman on Obamacare and Obama:
“At this point, Obamacare looks like it is a success. It’s not the program anyone would have designed from scratch but it is a huge improvement for American lives and just having that legacy plus the somewhat weaker but still important legacy of financial reform, Obama is one of our most consequential presidents. You have FDR, LBJ, Ronald Reagan and Barack Obama as presidents who left America quite a different place once they were done.”
Krugman on the basic problem with the US Economy:
“The basic problem with the US economy is that there are not enough jobs. And then, given that, employers get to be picky. Who would they want to offer a job? Preferably somebody who already has one or who lost a job only recently so the long-term unemployed get ruled out.”
Krugman on whether he has seen long term unemployment like this ever in his career:
“No, we know that there’s been nothing like this since the 1930s. This is a completely new thing for almost everybody. People who remember this were children when they saw it…There are many things I’m angry about but that’s certainly one of them. We have millions of people who have just been ruled out of the discussion but we can try to do things to make them more employable but we really just need more jobs. So that employers have an incentive to go out and look for qualified people even if they aren’t people who already have jobs.”
Krugman on proper level of growth that we need to begin solving our labor challenges:
“Well I’m of the belief that we have slack in the economy. Best guess, and we don’t know this for sure but I think we still have 5 or 6% slack in the economy and we should be taking it up fast. We should be growing — we are that deep in the whole that we should be growing several points above the long run growth rate. So we should be having 4 or 5% economic growth at this point. So when we look and we say oh great, we’re doing 2.5%, that’s just showing how far we’ve become accustomed to — how used to really dismal economic conditions.”
Krugman on Government and Wall Street:
“Government has shaped the form of markets all the time. There’s no law of nature that says that people have to be free to build a new fiber optic cable that allows them to be 3 milliseconds ahead of the rest of the market. This is stuff that certainly could be regulated. There’s actually two things. One is, the market being too perfect is actually undermining the work of discovering useful knowledge and the other is, you are spending a lot of your sources on stuff that is of zero social benefit.”
Krugman on whether there is a lack of confidence in our financial system because ‘the smart guys have too much information’:
“I think there’s not enough skepticism. Our financial sector has gotten way bigger and more concentrated. It has grown from 4% to 8% of GDP and it is not at all clear what society is gaining from that. I think if anything, the general public is too willing to take Wall Street at face value as actually performing a useful service.”
via Zero Hedge http://ift.tt/1eEe2Sl Tyler Durden