[Applause] [Music] [Applause] [Music] conversations with Tyler is produced by the mercada center at George Mason University Bridging the Gap between academic ideas and real world problems learn more at arcades.in conversations withth tyler.com [Music] today I'm here with Paul Krugman who needs no introduction and just to remind you all this is the conversation with Paul I want to have not the one you want
me to have uh to start with a very basic question the major tech companies have become increasingly controversial do you think there's a significant market failure there and if so what would it be oh wow I mean it's hard I think that it's hard even to start with the market failure I mean everything about Tech certainly everything about networks is a violation of the you know the principles that say
that a market should be efficient uh the trouble is it's it's hard to sort out there it's not that there's any one thing it's it's got increasing returns it's got imperfect competition it's got spillovers uh so I'm not sure what I know is the particular Market F but there's no there's no reason at all to think that Facebook or or Twitter or Google are supplying uh you know are doing the optimal thing from from a
social point of view the trouble is trying to figure out what what to do as an alternative is not trivial but you they have zero price that's very different from the monopolies of the past they don't restrict output they try to build these platforms and it seems increasingly clear the plan is not to raise price someday but just to make the platform as big as possible and is that problematic or is that just consumer
Paradise well what's problematic is that they're they're still although they're not charging us anything they're not in business for their health for our health they're in business for their Health um they're in business to um to sell something else so what Google is selling really is still adds selling Advertiser access uh at some level that's what Facebook is doing as well you know so um
and there's since it's indirect in some ways the reasons to think that it's going to be non-optimal or even greater you can see a little bit I mean I actually don't use Facebook I have an account which I is impossible to close but I don't use it um but uh use YouTube and I use it only for music but I gather that it's there's a lot of politics on it and YouTube actually has algorithms that push you towards more extreme stuff
and that's because that enhances their you know their ability to Market their position it's probably not what most people if you ask is this what you want would say they want but uh YouTube isn't interested in in what you want it's interested in in of course it's part of Google but it's interested in in what it can use to make money which in this kind of completely this is nothing at all
like an Ecom 101 supply and demand market and so there's no reason at all to think it gets it gets it right the New York Times recently referred to a New Movement they called it hipster antitrust the notion for instance that maybe Amazon was bad for a more General commercial ecosystem of publishing and Retail uh do you have an opinion on hipster antitrust I mean yeah I mean we need something I know I I haven't
actually looked at the Hipster antitrust we it's pretty clear well two things actually I think are pretty clear one is the the old antitrust Paradigm still has a lot of relevance you know most of the economy is still not in fact novel Tech zero marginal cost stuff most of it is still uh traditional stuff and the fact that we stopped largely stopped enforcing good old fashioned antitrust
is actually a problem it is part of the problem with our economy and part of the problem with Rising inequality how big a part is something you know that's hard to pin down but it's something uh so good old fashioned atti trust is far from irrelevant but second and yeah there's a whole bunch of issues there's been nothing the role of these handful of of tech platform providers uh in possibly distorting markets is a is a
pretty big deal and I have to admit I haven't put a lot of effort into into trying to think about what the solutions are because just seems like the political climate for actually doing anything is probably not there and and the chance of doing uh anything good is not high but that may be a bad judgment on my part I've just been more focused on other areas where market failure is
so pervasive that it's it even a market failure framework is almost the wrong way to go about it like healthcare you've been tweeting a good deal about politics lately and in particular the notion that malevolent intentions may be stronger than you had thought if you had to explain to someone not using any names or even party names but just in terms of a model what has gone wrong for the United States lately I mean how
would you boil that down to its Essence in terms of what you've called toy models well we have put it this way we we've we have a our our political system is set up on the basis that we elect representatives who will not exactly reflect their voters but will in fact deliberate and exercise independent judgment but we are in an extreme partisan environment in which for all practical purposes only the party
matters all that matters uh on most things is whether there's an r or a d which which means that all of the you know people you know people used to not that long ago people used to refer to the Senate as the world's greatest deliberative body in a non-ironic fashion right and these days it's it's ridiculous to there there is no deliberation that goes on it's it's it's a completely uh partisan institution
where you if the president is of one party and uh and the the Senate majority leaders of of another party well Presidential appointments just don't don't even get hearings and so the structural reason why that's become worse because you said it was once much better I think it's actually it's it's two things one is is simply I do believe that in the end there's a pretty strong correlation between income inequality
and and partisan polarization political scientists who measure polarization uh have found that that's a really strong correlation it kind of makes sense in fact uh the increasing weight of the right tail of the income distribution has dragged one party off in its direction and that's opened up a large gap so that the center really just did not hold there used to be some at least some overlap on economic issues
between the parties and there is none now the other which is is a kind of uglier one of one of the bases of our some degree of bipartisanship in our politics was in fact the over it racism uh we used to have uh two dimensions in American politics one of which was race this is what the political science modelers tell us that one one of which was race the other of which was essentially left right on economics uh
those have collapsed into a single Dimension now and that means that you no longer have the sort of populist uh Southern Senator uh that that used to provide part of what was for in bad ways the political Center so that's that's another piece but I have to admit at when all the said and done I find it a little bit mysterious it's hard for me to quite understand I mean I I can talk about I think I think that that the role
of money in politics has created a a kind of um a lot of people in political life now have spent their entire lives within a partisan ecosystem never really having to step outside and and uh and uh any any sort of Independence in judgment any sort of a demonstration of an independent conscience is actually a career destroying and so you the kind of people you get are people who are are
basically bad people uh at the very least very cynical people but I I still find it hard to understand how people can be quite as cynical as they have become so Hayek wrote a famous essay you know why the worst get to the top in politics and at the time he seemed to think it was a fairly Universal tendency which maybe in the 1940s was a reasonable thing to believe but there seems to be a lot of variation like
what's your underlying model for why the worst sometimes do or do not get to the top oh I think there was a time think about becoming being a US senator there was a time time when uh I think voters cared about someone who wanted to be a US senator seeming senatorial seeming to have some gravity some strength of character now often that may have been an illusion but there was still some sense that that you
wanted a a kind of a person of High character to be representing you in in that August body over time with increasing partisanship and tribalism that matters less and less and so you have a lot of people I mean the kinds of things that come out of the the mouths of senators and I don't think I I obviously don't think the parties are the same I think that you can find a lot more just I can't believe he said that
things from the Republicans than the Democrats but the but the point is that for the most part voters don't care they're because they become so polarized that really in a lot of places as long as the the guy is a Republican it doesn't matter what he says are there potentially beneficial changes you think we should at least consider making to the US Constitution well I'm reading a
lot about the Supreme Court discussion now and I have to say I the um you know some people have been suggesting that instead of Lifetime appointments to the Supreme Court we should do 18 years which is probably enough to insulate from uh short-term political pressures but uh ends this at least reduces the extreme drama where when when somebody is is finally you know collapses then all hell breaks loose and would
basically give every president a chance to nominate two supreme court justices that sounds like something that would work but I in many ways I think what what we really need to do if we can is is to recreate the kind of society that supported a more reasonable political process which means uh reducing income inequality let me throw out a number of ways we might do that and tell me what
you think uh Universal basic income I'm still still debating with myself over Ubi the pro is that it's automaticity is a big thing I think it matters a lot that Social Security and Medicare are just there that there no one uh asks do you need it do you deserve it it's just there uh and Ubi would have that character on the other hand it's expensive and if you want to make if you make it generous enough so that people
who really really need help get it then it's a lot of money and if you try to keep the price down then it's not good enough and you need what we have now is is a bunch of means tested programs which uh are a lot more generous to people at the bottom than a a a skinny Ubi would be so I I'm actually unsure but it's a possibility but that's only you know that's just would just that would only really make a
big difference at the bottom and I think we need to do more towards you know further up the the the scale reparations for descendants of slaves certainly just but uh I just find it hard to believe it's going to happen I mean it's but that's not going to change the structure that's just something that you know and if we were really going to talk about Justice it would make sense uh there
will be a fair number of people who say well my grandparents or my great grandparents came over in 1915 and why should uh why should I be liable for this but on the other hand that you know that our country was built in large part on incredible Injustice but uh it but that's not going to change the structure that would be a onetime thing but symbolic actions can matter some of the
Supreme Court debate is about symbolism well I look I think that the um going after the Confederate monuments is a uh you can say what difference does that make to people's lives well it's actually taking away some symbols that that say that that you know violent action on behalf of slavery was was a good thing and I mean that's why the monuments were put in there in the first place they're not actually they weren't
actually put in uh in immediate uh the aftermath of of the Civil War in memory to the heroes they were put in during the Jim Crow era to remind people of uh of the importance of keeping those people in their place so uh those that's the kind of symbolic action I certainly think is it makes sense ending the war on drugs and moving to either decriminalization or legalization would it help our cities or hurt them probably
would help but I think I you know I put in no thought at all on drugs uh I just I've done no homework say immigration policy uh maybe your views on this have changed over time but if you could set an ideal immigration policy for 2018 what would it be and how would it impact income inequality okay first views this is one of those areas where my views have changed um if you'd asked me about it 20 years ago I
basically went with a kind of simple model of of the labor force being workers with different levels of education and immigration of low uh education workers would uh widen income inequality and then you could then there was a you could ask uh about some of the other effects and dilemmas so on uh but I've been mostly convinced by evidence that says that an immigrant with a high school degree or or less uh equivalent
is really not competing head-to-head with native born workers who have similar educational credentials it just doesn't look like like they're filling the same jobs it doesn't look like they're competing in the same labor markets so I think the income distribution effects of immigration are actually much less than we thought the backlash effect that if too many foreigners enter too rapidly a lot of
native born Americans become say Trump supporters how much that well just look in general if you have a my my view on immigration has always been that if you aren't at least somewhat conflicted about it there's something wrong with you um if you want to have a strong social safety net which I do and and I think a majority most people do if if if actually pressed on it then completely open
borders is going to get in the way you're going to have whether or not it's really going to bankrupt the system the the sense that lots of people are coming in to take your benefits is going to be a problem uh on the other hand not allowing anybody in is uh from a global Ware point of view is uh is is a terrible thing because one of the best ways to improve people's lives is to give them a chance to move to a a place
where they're more productive and there are good reasons to think that just our own economic prospects are enhanced by by immigration so some kind of inevitably awkward compromise it is is what you're going to do and then the question becomes you know so how many how many million uh immigrants a year are we talking about and that's a hard question to answer but I think uh restricted immigration but but not
slamming the door um has got to be the right place to be and particularly for you know this is America we we're so diversity is is has been our huge strength over over the centuries and it's it's it's a real betrayal of our own history and of our prospects to turn it off by the way I'm sitting here at KI which is you know the the uh quintessential children of immigrants is my school now George Mason yeah and
we're uh and everybody you know it and it continues to fill that role but it and it did of course in in previous gener Janet gornick in the office next door runs uh the stones Center and I are both KY babies her father went to CCM mine went to Brooklyn College and the and the story is the same but the ethnicity is different now in 1996 for the New York Times you wrote a very interesting essay called white collars
turn blue and I took this on your part to be a speculation not an actual prediction but you mused about the possibility that maybe the returns to education would fall dramatically because of automation do you think this has in any way come about or okay so that was a you know the times actually assigned told people write write things from the perspective a century from now looking back and I was the only one who
was willing to actually do it straight predicted ride sharing in that piece by the way I don't know if you remember this I it was it was fun uh and you know so it wasn't none of it was entirely serious but yeah there's this question now at the moment college degrees still carry a significant wage premium but there is a question in in many ways you know in the longer run I think I did say that the a lot of the things we think of
as being high skill uh requiring lots of uh of Education are actually the kinds of things that computers can uh in the end do I mean uh you know AI or machine learning with whether that's really AI or not but it can it can do a a whole lot of stuff that uh that we thought of used not very long ago as as being the stuff that you had to go to school for years and years to achieve whereas robot
plumbers are still quite a ways off because the the material World tends to be full of unpredictable hardto model features so I I think that the the idea that we're always going to be spending huge resources or that it will always make sense to to put a lot of effort into higher education is is at least arguable so I I think the idea that we could become a society where education
goes back to being a status symbol for the elite uh is still a real as a live possibility if I think of a lot of your criticisms of the Republicans of Donald Trump as I read you very often you're saying that what's wrong here is really quite obvious so that it's still happening is your view that somehow shame has become too weak of force or is it asymmetric information is there simply some kind of permanent lock that
bad forces have over various processes kind of the micr foundations of how some very obvious wrongs could persist oh sure the um we have to ask why you know the question is for different people why do certain and Wrongs persist so off the question why do people continue to claim that cutting top marginal tax rates has huge positive effects on growth for you know proposition for which there is zero
evidence the answer is uh well who who benefits from the uh uh perception that cutting top tax rates is good for growth uh and that's almost a a question that answers itself and there's a it doesn't take a whole lot of money to create a you know relative to the amount of wealth in our society to create a whole structure of Institution tions that reward people who will endorse supply side economics uh but at the voter level
most voters don't know that debate they see Republicans doing bad things Republicans are still getting reelected we might have all Republican governors in New England which to me is deeply strange okay at the voter level there's two things I mean actually the Republican governors in New England thing is a little weird because you need to they often don't behave like Republicans and I was in New Jersey I
was in Massachusetts uh both places that are deep blue so much so that you end up with kind of routine machine politics corruption and among the Democrats and and people elect Republicans just to get a break from the machine and that they don't necessarily pursue policies that are anything like that as of the national parties that's that's that's an exceptional case but look the ordinary
people people with real lives real jobs people who aren't paid to to think about abstract policy issues are understandably really more poorly informed than those of us who do you know who push around words and symbols for a living can can easily appreciate if you ask people do they actually know what policies are being propounded if they you ask them do they know what Republican Healthcare policies actually
are maybe more so now than than a year or two ago but but still mostly not people have a very poor uh people are poorly informed of course sometimes they're actively misinformed by you know Fox News or something but it's just it's it's it's instructive being out there in public writing for a newspaper even writing for the New York Times and then looking at the mail you get uh you know
leaving aside the crazy and hate stuff but just the sort of ordinary citizens who you know they've heard from somebody that that uh that there's a plan to replace the US dollar with some Global Currency well you know and I know that that's ridiculous that there nothing but these aren't necessarily stupid people they're just there's they're not devoting a lot of time to public affairs and of course the news environment leave
aside again the partisan media is tends to be very information scarce you know years back I did a uh during the 2004 campaign I I actually went through transcripts for Network news over a three-month period on the issue of healthcare to find out how much with somebody who got their news from watching the TV news programs have learned about uh Bush versus kry on Healthcare and the answer was not one
thing there was not one mention of the actual there there were a couple of stories about how their health care strategies were playing politically but there were none at all about the actual content of their health care programs so why would would we expect voters to necessarily recognize bad ideas a lot of times you remind me of the earlier Progressive historians the notion special interests and self-interest is
rif that it's quite obvious that someone needs to blow the whistle that there's a kind of ongoing moral struggle in America a lot of it's about economic self-interest is that an identification you either agree with or make self-consciously or you just think it's evolved that way because of historical concience I think it's evolved that way I mean first of all that that that's always been somewhat true you know you
always need to be blowing the whistle on self-interested stuff that's going on that in the hope that the public won't understand it uh but it's also true you know the Progressive Movement arose during a period of great income inequality and corporate dominance of a lot of politics and here we are in an era of great economic inequality and corporate dominance of politics so of course we're going to sound the same
when when when critiquing a lot of the conventional wisdom you've written a few times that you started with history before economics but never explained that much besides mentioning Isaac asimov's Foundation Trilogy a funny kind of history but still a historically oriented series of novels what else did your early history background consist of and how has that shaped your thought
well I just I took lots of courses I just read tons and I still actually probably read in my non-fiction reading history is dominant I don't know I just find that that the story of of the past whether or not it actually translates into any kind of direct parallels with the president is it's just a a great way to to have a sense of the world you have a paper with Van from the mid90s in the
QJ I think it's called globalization and inequality of Nations it's really a paper about history for some reason it's become somewhat neglected but the notion that his Transportation costs fall very low that Nations on the periphery come back at the expense of nations in the center do you think that's what's happening to the world today I think we don't really know I mean we just just around the corner Bronco milanovich has
his office and Broncos has the famous elephant curve that shows income growth around the world world and there's a clear transition in after the light 1980s as globalization really takes off uh you start to see Twin Peaks uh the global 1% pulling away from the rest but also the global middle the the Chinese middle class really experiencing rapid growth and with a trough in between which is the working class in advanced
countries is that actually because of globalization or are common factors driving both globalization I I don't think we really know but it's certainly you know it's it's a nice story but yeah Tony benol and I were having some fun we were working on economic geography and realized that one way you could cast the models would be one that would give you this this u-shaped behavior in which you
start from a world of of high transport costs with very little globalization reduce them some and the and the world differentiates into an advanced region and a a a peripheral region and then reduce them further in the peripheral region with its lower costs makes a comeback and that was that's a nice story it's probably too simple to to capture what what really went on what's your view on nimi versus
yimi do we need to build more in America's major cities oh yeah I'm I'm a total y be on that I mean there there are reasons for certain kinds of zoning restrictions but that has very little to do with most of the reasons we don't we don't build housing and uh no this is this is a place where I I if if you like it it's a place where at least a lot of Liberals are wrong and and the de facto
policies of a lot of conservative places are right you want to you want to allow more building uh you New York is a is a in many ways a thriving successful example of what you can do we make it way too hard to um to build housing for people who want to come here and uh and the result is to price out a lot of people who really should be part of this experience Henry George's single land tax would you consider it as a means of
both encouraging building and reducing inequality hav hav't done my homework just haven't done my homework on that if you think of the International Supply chains that spread across many countries Richard Baldwin has written on this you have yourself do you think we're now in an era where those chains are in essence Contracting or collapsing and what is now done in China may end up being done
in Mexico or NAFTA and that will unravel was it all too utopian to begin with it wasn't utopian conert you know it worked um now that it is true that global trade really soared from about 1990 to 2010 and then sort of leveled off and it it does look as if there it was a one-time thing that combination of trade liberalization in uh emerging markets and um reduce transportation and transaction costs because it's not just
the shipping cost but it's it's the uh it's the cost of getting things on and off the ships and and uh all that uh led to but it looks like it was a one-time surge in in trade so this um value this value chain kind of trade and there's some indication that there was a little bit of overreach that businesses got in in search of that saving that last penny built International Logistics change
that were just too complex too subject to delays disruption and that there was an advantage in moving stuff back closer to home so there probably would have been some retrenchment anyway now you tell me what's going to happen with our trade conflict I mean you can we can think ual and Supply chains will contract and become more Regional but how big it how how severe first of all even the regional stuff you know I have
to say the the trade policy guy in me is in some ways enjoying this because it's been historically for a long time pretty boring subject you know World Trade was almost was almost free nothing was happening now all of a sudden not only is is stuff happening but it's happening in unpredictable directions even after the 2016 election if you told me that we would be making nice with Mexico but in
dire conflict with Canada you know so I I have no idea how far this goes I I suspect that let's put this way a good guess would be that the regional trading Agreements are are more robust in the end just because business has so much of a stake in in maintaining them but who knows given the trends and E economic geography we see the trends in evolving Technologies do you think the two American coasts will become increasingly
economically important or will at some point that Trend reverse itself it really looks as if glomeration economies have become more important you really do see a migration of economic activity to the areas that are already rich and that is a little interesting I mean there was a debate still goes on a bit but there was a debate 20 years ago with with the internet with distance shouldn't matter
why won't people relocate to where land is cheap and there's there's no traffic and doesn't seem to happen there seem to be other factors that make it more not less desirable to to locate where the action is so as far as we can tell it's still going in that direction uh I'm I'm a little reluctant to be sure that it continues cuz I don't think you know ex Ane it wasn't at all clear which way it was going to go and
we still to the extent that we can model this at all which is pretty limited um it seems to be there are counterveiling factors I don't think anyone had enough insight to know that it was going to turn out that the big metropolitan areas were going to be winners rather than losers from from this trend a few macro questions how much do you worry about slowing population growth as a factor
for an ongoing slowing of aggregate demand oh very much I was so there's a little story here you know Larry Summers has became famous for advocating the idea that we're facing secular stagnation I had written about the same time or even a month or so earlier along the same lines except what I wrote was very poorly formulated and unreadable and Larry came up with this Crystal Clear explanation
of the the issue so he gets all the credit and what's even worse is he deserves it uh so I get really pissed cuz I I blew it on that one but um no I'm very much I I think that the uh secular stagnation type Stories the stories that say that that with falling population growth we have a hard time generating enough investment demand to use the desired savings so that interest rates tend to be low even when times are
good and tend to hit the zero bound way too often uh is is a good story it's not 100% certain that it's right but I think it's a good story and you know the first sort of dress rehearsal for the difficulties that we've all had since 2008 was Japan and Japan famously is the place where uh declining working age population kicked in well before it it it happened in the rest of the advanced
world so no I think it's it's a big issue political risk aside which we've already discussed but what do you think is the number one danger to the global economy right now is it corporate debt is it China is it turkey plus Argentina something else I've been arguing that the next recession will be a schoras boort recession that it'll be a mix of of all of these that there there's no one huge thing that stands out but
there's a bunch of things where it looks like the kind of Minsky Financial cycle uh people after a long period without shocks people get complacent and they start extending themselves taking risks taking on Leverage that that creates new risks that that all kinds to tends to proliferate and the thing that makes it dangerous is not so much that there this one huge weakness as the fact that a typical
recession the FED Cuts interest rates by something like 600 basis points the moment the FED only has 200 basis points to cut so it's uh we're with it it ties in with the question about secular stagnation it's the fact that we're starting from a position of really low interest rates which means that monetary policy is not very effective and we're accumulating no no one huge problem in the economy but arguably a bunch of
smaller ones and if they several of them come come to a head together then we're set up for a a very difficult business cycle again Janet Yellen mentioned yesterday I read that the FED may need to raise interest rates again at this point if you view that matter different than she does how would you trace that difference back to underlying Frameworks that's an interesting question because
as far as I can tell she's very doish we all know right and as far as I can tell her framework is not very different from mine and what my framework was telling me is don't raise rates because actually a somewhat higher inflation rate would be extremely useful if you if you don't raise rates now you can get up to somewhat higher inflation which means that you'll have room to get real interest rates lower during the next
slump and that would be a good thing so why don't people why doesn't Jan Yellen see it that way and my answer I think is that for reasons that are I think less intellectual and more uh almost social anyone who's been associated with Central Banking is really wedded to the 2% inflation Target and if you accept that the 2% inflation Target is sacrosanct then yeah I think there's pretty reasonable
grounds to think that although inflation has been very low to come along the Chan is that if the FED doesn't raise rates further inflation will start to be creep noticeably above 2% or reasonable uh reasonably high so if if if you take that as your constraint inflation must not be allowed to substantially exceed 2% then yeah you need to raise rates but that's I don't accept the the starting premise if we have a service sector
economy where contracts are not renegotiated all the time workers bargaining power at times will be weak would the American public put up with say a 4% inflation rate knowing their real wages would be cut into and they would have to struggle to get that back every time there's a bargaining cycle well that's a good question although I'm not sure I'm not sure that that makes I'm not sure that the service economy
aspect really makes a big difference and to the extent that but there are fewer unions right that's there are fewer unions but on the other hand that fewer unions might mean that more wages could arguably become more flexible but not what's what is true is we don't have colas actually I'm showing my age but even knowing what a cola is I think but a cost of living so I don't know I mean
it's it's but you know at the moment it's not the public is saying 4% inflation or 3% inflation is unacceptable it's all it's all the central Bankers who are who are there and I am actually old enough to remember a 4% inflation economy which is the uh second half of the 1980s and I don't remember people you know complaining bitterly about inflation during those years it see it it felt okay okay so I think that's a we
shouldn't be in inventing a public objection without clear evidence that it's really there and meanwhile the economics that says that a 4% inflation rate makes a lot of sense I think is pretty strong and the you know the economics that said the 2% was enough has all turned out to be wrong given the experience of the last 10 years in your view how well-run is New York City as an entity
oh not very I mean it's a you compared to what I mean there are pieces that are now I actually I like DeBlasio uh so I actually think he's done some really good things and doesn't get what he's done on education and even on affordable housing is actually quite substantial but you know the city is so big and the problems are so large that that people may not get it I will say it is crazy that you have a a city that is so
dependent on public transportation and yet the public transportation is not actually under the city's control control and has clearly been massively neglected and so uh you know I I don't suffer the full wo of the subway but I suffer some of them even myself and uh so this is not the city could could be run better than it is but it's not certainly not among the worst managed political entities uh in in in the
United States let alone in the world but purely local control of the subway to internalize those gains you think would be a good idea well probably would be because it would mean that the that the complaints would would be felt sooner that there would probably be less I mean we've the Subway has desperately strapped for money but has spent a fair bit on things that that seem to be more
about Prestige than actually improving the the daily ride I don't know there I'm not sure what else is is important and uh I mean uh some place where DeBlasio I think is in the wrong I we could really use a congestion tax if there is uh I guarantee you that outside the window just behind me there there is a standing traffic jam because there always is and uh so there I'm not sure exactly how the politics would uh what
political inst what do I know about political institutions and their effect only only amateur you know only what anybody reads the newspaper does but the uh uh there are things that could be done better bringing down infrastructure costs in part to be able to build more what's the trick there it doesn't seem to be mainly labor unions uh why can't we do it yeah I haven't seems to be
there's just a lot lot of Crosscut cutting interests and it's it's not most of the labor unions it does seem to be something about some combination of opposing bureaucracies I don't know it's uh it is a a remarkable thing though and um why everything is so expensive I still haven't figured it's it's and you that's that's not a New York problem that's a everywhere problem sure but some areas London seems to run much
better than New York cleanliness certain kinds of public order even though New York is safe now but it doesn't look like a well-run city in every way when you walk past garbage say uh there's some of that although actually I would say that the I remember New York 40 years ago it's inconceivable how much it's gotten better and by the way they this is not a re let's I don't think New York gets enough credit for the
brilliant Innovation I don't know how many decades ago of The Four Track subway system with Express and local trains makes a huge difference in the livability of the city and the ability to to commute uh within it but uh yeah but it's there's something in the US build and how did we get there we used to be used to be a great country on infrastructure we used to be incredible the best of the world and and now we
can't seem to you know a mile of anything costs at least a billion dollars and I don't know why what do you think of the Bobo and cost disease hypothesis there are just some sectors where Rising wages mean they cost more and more and become less effective well there's some of that's obviously true of some things but it's not clear that that applies to infrastructure um and you know the old Bal HP hypothesis was very
much service costs were always going to rise relative to Goods production but that's not at all clear more recently where at least during the that productivity spurt we had from 95 to 05 uh a lot of it was in the service sector so I think it varies and with with changing technology the cost disease may be afflicting different sectors machine learning is it is going to that already
means that a lot of stuff that that we used to think of as cost disease Afflicted service sectors has now actually gotten startlingly cheap will there ever be Interstellar trade in intellectual property so you send your technolog to a planet far away it arrives much later of course or you trade Beethoven to the aliens in return for a transporter beam can this work you you've written a paper it seems to
indicate it can work yeah so I wrote a paper on theory of Interest trade when I was a uh an unhappy assistant professor are there any happy assistant professors it's just blowing off steam but no I mean it's an interesting question I mean we it could become your most important paper right we could imagine that there would be some way I suspect that we'd have to find somebody to trade with uh
but yeah the idea although it's the kind of thing I think would if you imagine try to imagine Interstellar trade uh for for real and in in intellectual property um it's probably the kind of thing that would be more like uh government to government uh exchanges it's it sounds like would be really really hard although you know I some s fiction writers are imagining that something like Bitcoin would make it possible to
do these long range uh I have I don't think something like Bitcoin is even going to work here but anyway but you know that the the idea that is one of the things although given the one might hope that in the in in in the 23rd Century or something that we uh we've actually got to the point where we will give we will share our knowledge with the aliens out of out of our goodness and that they will do the
you know the reverse the Star Trek universe is appears to be a post capitalist Society so who knows if you can send humans out into space at near light speeds and bring them back does that mean real interest rates have to fall to zero because many years could pass and you could save and come back and be a trillionaire yeah but that's what I it's it's not clear that the uh first of all actually it's not clear
that that interest rates uh that that returns are high enough uh to to make that you know attractive proposition I mean there was an old old story about the guy who put a dollar in in the bank and left it in a Perpetual trust fund and eventually ends up owning the economy uh but in fact R has been less than G on average historically so that doesn't actually happen and I think the
same thing is true at the and you don't need Interstellar trade for that right you could have uh C cryonics uh people could and but the fact of the matter is that would not have worked right if you had uh found yourself a way to do a r and Winkle and uh with and then to reclaim your invested money from a century ago I don't think you would end up being all that have done all that well and it's I don't I don't think
that's going to be the constraint Star Trek versus Star Wars which do you find more interesting oh boy well good thing about Star Trek is that there were lots of shows um and not three absolutely horrible movies that I refuse to watch um I don't know I've actually never been all that into either one so purely non-intellectual stuff I think the uh the use of iconography of of just the way things look in Star Wars
is a lot more interesting but the uh the social speculation and Star Trek is more interesting so both have their virtues and the truth is I'm not all that into either one what would be a science fiction novel that maybe people don't all know about that you would recommend that's influenced how you think about the world we know the connection to azimov Ian Banks the culture series what
else um Charlie stuss almost everything he writes but he has uh I I actually so Charlie St that people don't know he's uh English uh writer but living in in Edinburgh but he uh incredibly proliferate and writes these multiple linked series of books Andy blogs uh Andy blogs yeah which is also great fun um and uh but the the merchant Prince's novels involve World Walkers people who can step between alternative universes
and they come from an alternative timeline in which uh North America is this backward medieval society and they can step back and forth to our timeline and you would think that they would um you know bring back our technology and and uh and transform everything in fact they have some of our technology but it but their society stays medieval and backward and they basically use their
world walking ability to to be drug smugg and I i' I actually written about this this is um some I view these things as being uh this is a series that's about development economics about having having access to Advanced Technology doesn't make you an advanced society and how hard it is actually to achieve social change the dream of a generalized psycho history is outlined in the foundation Trilogy will it ever be
possible or is just a motivating dream yeah that's what I always wanted that's that's why I went into economics as I say I wanted to be a psycho historian but just there there are uh it is a deeply you the reason we can get even as far as we do in economics is that economics is about the simplest crudest aspects of human motivation and and behavior you know getting and spending basically is a is a uh even there we
don't do too great but but at least we have a pretty good idea of what it is people are trying to do get beyond that it gets way harder so yeah I me returning to non-fiction is there an economically viable role for humans in space that's unclear the moment it doesn't seem obvious that there is uh if you try to think about the things you can actually use space for colonizing space doesn't look like a great thing uh
to do uh there's a lot of things you can imagine spaces in fact space is already extremely useful for communications and could become useful for some kinds of manufacturing and but hard to see that any of these things require that there be people up there so what about just diversification the Earth is vulnerable if only to asteroid strikes yeah but that's a really hard one to uh I mean
there's a case to be made for it but is there really an incentive to do it yeah who internalizes that Cas yeah who internalizes and and uh yeah I mean a lot of the space you know a lot of Science Fiction is is built around the analogy between space and um and and the frontier and uh but it's not much like that there's not like there's rich land Wai need to be exploited there's extremely hostile environments you know
we haven't colonized Antarctica either finish up the discussion a few questions about what I call the PA Krugman production function so in the 1990s you wrote a well-known paper it's called how I work yeah it was giving people tips and not not quite advice for other people but how it is that you get things done now a few decades have passed since then what do you think you've learned about getting things done that was not
in your paper how I work I put in a lot more effort and you know when I wrote that I mean first of all I I still think that that reads pretty well as a as a description of of of how I work at the time I was wrote that though I was just you know as was writing for academics and uh now I do a lot obviously of public intellectual stuff and so you kind of would probably have to add some principles about thinking
about how this reads to people who are intelligent but don't come at it with no background one of the principles I I think about all the time with the times is the uh uh nobody has to read your column uh so you actually have to you have to have a hook at the beginning and you have to have a Zinger at the end you know style matters and and as it should because people have scarce time and they
you have to give them a reason to to to spend time with you um so oh and of course these days the now with Twitter which you know it turns out I guess if if if numbers are an indication I do well at and there I think the the most important thing is is actually to just not think about how many people are reading it you know that's as if no one is watching tweet as if no one is reading uh and that that just seems to
be the the way to make it work you mentioned having had around 1987 a kind of temporary dry spell in your career how is it you pulled yourself out of that no idea it just happened I just happened to you I was thinking about lots of things doing you know running around to conferences and somehow that gelled into a series of uh of good ideas I mean I I guess given uh the trajectory the dry spell was was the anomaly uh so
if you were given a free decade you could take off and then return to the life you have what would you do with that decade that's hard I mean you know I'm 65 years old I'm pretty set in my ways it's hard to to think about but you could read more books you could travel around you I'm sort of doing that already that's the thing is I'm I'm I'm not working as hard as I was this past summer I was
trying to decide between two bike trips in Europe that both looked really appealing and then I said you know what the hell so I did both of them uh so I'm actually uh just taking more time to to see the world do stuff it's uh the great luxury of being where I am now is the end of ambition that there's nothing more that I there are no more notches I need to put in my belt no more rungs on
I need to climb on the ladder so I'm actually kind of doing you know aside from the fact that that the world is going to hell otherwise I'm just basically having a good time is that Utopia or dystopia however because presumably to have arrived at your current Point you're you're driven in some set of ways right and now if you're you're not sure what the next step is there was a period I have to say that
I'm I think I'm over that hump that we'll see if I go crazy uh in the near future but there's a moment when you I mean I I suspect that quite a few people after getting you know a Nobel Prize or something uh uh actually experience a spell of depression cuz now what you know and uh um had a little bit of that but that's point where you just say okay find find things that you're interested in and try to that they you
know the business about do what you love the money will follow that of course is garbage uh uh but if the money is already there you know you're being pay a nice salary if then then you can do what you love let's say a very smart 20-year-old came to you and said I want to be the next Paul Krugman and they meant as a public intellectual not as a research Economist what advice would you
give them truth is I have no idea but I would I would say maybe that just you know be interested in a lot of things but when you find something that really grabs your attention work at it seriously you know figure stuff out I mean the the uh curiosity is is as opposed to intellectual complacency is is the big thing if if if you don't feel that you've got a you know that the the that the explanations you're being given
of of something whether it's international trade patterns or uh or the Japanese slump or something that if you don't feel that it's uh that the explanations quite hold together then um then worry at it try to try to find something that that scratch that itch don't don't let it go away and then whether that will turn out to do what you wanted to do I don't know and for a budding research Economist would it in
fact be the exact same advice oh yeah except what what I would say is at at this point don't do what I did which was very heavily uh Theory oriented simple models because I think that's uh there may still you know there's always a possibility of that but now we are in this golden age of Miracle work and so the same advice that actually we used to get back we used to give our grad students uh find facts and data that
have not been heavily worked over and uh look for anomalies or look for natural experiments that shed light on on disputed issues so you know go out there and look at the world and I would say probably I I suspect that stepping Beyond traditional economic methodology is going to be productive in the years ahead I mean we just had a the rainwater lecture here we had a lecture from uh an
ethnologist who's goes and talks to uh workingclass fathers and and I was just blown away by this a totally different research method from anything we do in economics normally it's a totally different they requires a degree of of personal interaction with the the subject you're studying that I would find terrifying but that just maybe think you know I wonder how many how many insights might we get by doing
things in in a way that's very different from anything that is now part of the standard economics research Paradigm Paul Krugman thank you very much thank you thanks for listening to conversations with Tyler you can subscribe to the podcast in iTunes Stitcher or your favorite podcast app and if you like this podcast please consider rating it on iTunes and leaving a review this helps other people find the [Music] show