All Segments
Paul Krugman: Economics of Innovation, Automation, Safety Nets & UBI | Lex Fridman Podcast #67
31 segments available
Paul Krugman is a Nobel Prize winner in economics, professor at CUNY, and columnist at the New York Times. His academic work centers around international economics, economic geography, liquidity traps, and currency crises. This episode is presented by Cash App. Download it & use code "LexPodcast": Cash App (App Store): https://apple.co/2sPrUHe Cash App (Google Play): https://bit.ly/2MlvP5w PODCAST INFO: Podcast website: https://lexfridman.com/podcast Apple Podcasts: https://apple.co/2lwqZIr Spotify: https://spoti.fi/2nEwCF8 RSS: https://lexfridman.com/feed/podcast/ Full episodes playlist: https://www.youtube.com/playlist?list=PLrAXtmErZgOdP_8GztsuKi9nrraNbKKp4 Clips playlist: https://www.youtube.com/playlist?list=PLrAXtmErZgOeciFP3CBCIEElOJeitOr41 EPISODE LINKS: Paul Twitter: https://twitter.com/paulkrugman NY Times: https://www.nytimes.com/column/paul-krugman Arguing with Zombies (book): https://amzn.to/2RBZoSb OUTLINE: 0:00 - Introduction 3:44 - Utopia from an economics perspective 4:51 - Competition 6:33 - Well-informed citizen 7:52 - Disagreements in economics 9:57 - Metrics of outcomes 13:00 - Safety nets 15:54 - Invisible hand of the market 21:43 - Regulation of tech sector 22:48 - Automation 25:51 - Metric of productivity 30:35 - Interaction of the economy and politics 33:48 - Universal basic income 36:40 - Divisiveness of political discourse 42:53 - Economic theories 52:25 - Starting a system on Mars from scratch 55:11 - International trade 59:08 - Writing in a time of radicalization and Twitter mobs CONNECT: - Subscribe to this YouTube channel - Twitter: https://twitter.com/lexfridman - LinkedIn: https://www.linkedin.com/in/lexfridman - Facebook: https://www.facebook.com/LexFridmanPage - Instagram: https://www.instagram.com/lexfridman - Medium: https://medium.com/@lexfridman - Support on Patreon: https://www.patreon.com/lexfridman
Segments Timeline
Introduction to Paul Krugman
In this segment, Lex Fridman introduces Paul Krugman, a Nobel Prize-winning economist and columnist. Krugman's work focuses on international economics and the intersection of politics and economics. Lex emphasizes the importance of open-mindedness in discussions, especially when engaging with differing viewpoints.
"the following is a conversation with Paul Krugman Nobel Prize winner in economics professor CUNY and columnist at the New York Times his academic work centers around International Economics economic g..."
The Challenge of Political Discourse
Paul Krugman discusses the difficulties of engaging in political discourse, highlighting the emotional certainty that often clouds rational discussion. He encourages listeners to approach complex topics like government roles and automation with curiosity and empathy, rather than judgment.
"because you're conservative a libertarian the liberal or socialist and anarchist but because you're not open to new ideas at least in this case especially and it's most difficult from people with whom..."
The Role of Cash App
Lex Fridman introduces Cash App, the sponsor of the podcast, explaining its features such as sending money, buying Bitcoin, and investing in stocks. He praises the technology behind Cash App for simplifying complex financial processes for users.
"podcast if you enjoy it subscribe bye YouTube give it five stars an apple podcast follow on Spotify supported on patreon or simply connect with me on Twitter and Lex Friedman spelled Fri D ma M I rece..."
Imagining Utopia in Economics
Paul Krugman shares his vision of an ideal economic system, describing a society with high safety nets and effective environmental regulations. He emphasizes the importance of ensuring that no one is left behind economically, advocating for a society where wealth disparity does not create separate worlds.
"Google Play and use the code Lex podcast you'll get ten dollars in cash Apple also donate ten dollars to the first one of my favorite organizations that is helping to advance robotics and stem educati..."
The Value and Limits of Competition
In this segment, Krugman discusses the benefits of competition in various industries, using the telecommunications sector as an example. However, he also points out that not all sectors, such as healthcare, benefit from competition due to the complexities involved.
"Krugman what does a perfect world a utopia from an economics perspective look like Wow I don't really I don't believe in perfection I mean somebody once once said that his ideal was slightly imaginary..."
Challenges of Being Well-Informed
Krugman reflects on the difficulties of being well-informed in today's information-rich environment. He highlights the challenges posed by misinformation and the complexity of understanding critical topics like healthcare, contrasting it with simpler purchasing decisions like buying a car.
"and so it's it's it there's it's not one size fits all it's interesting what is competition now work in in health care oh there's a long list I mean there's a famous paper by Kenneth arrow for 1963 wh..."
Disagreements on Utopia and Justice
The conversation shifts to the concept of justice in society. Krugman explains the differing views on what constitutes a just society, referencing John Rawls' theories. He discusses the legitimate disputes among economists regarding the effectiveness of various policies and their outcomes.
"more information at your fingertips than ever before in history the trouble is first of all that some of that information isn't true so it's really hard and and then some of it's just too hard to unde..."
Metrics for Measuring Economic Success
Krugman critiques the Gini coefficient as a measure of inequality, advocating for a broader set of metrics to assess societal well-being. He emphasizes the importance of median income, poverty rates, and life satisfaction as indicators of a healthy society.
"I have a pretty strong view that the evidence is points to a conclusions that are considerably to the left of where most of our politicians are but but that there is legitimate room for disagreement o..."
The Need for a Stronger Safety Net
In this segment, Krugman discusses the inadequacies of the U.S. safety net, particularly in healthcare and support for families. He argues that a wealthy nation should ensure basic health care and support for children, highlighting the moral and economic implications of neglecting these responsibilities.
"rich as ours so we we we have somehow managed to produce a crueler society than almost any other wealthy country for no good reason what do you think is lacking in the safety net that the United State..."
The Invisible Hand: Limits and Realities
Krugman delves into the concept of the 'invisible hand' in economics, explaining its effectiveness in certain sectors while acknowledging its limitations. He argues that while markets can align incentives and drive productivity, they fail in areas like healthcare and education. This segment highlights the need for a balance between market forces and government intervention to ensure societal well-being.
"okay so invisible hand Smith where does that fit in the power of just people acting selfishly and somehow everything taking care of itself to where you know the economy grows nobody there's no cruelty..."
The Magic of Market Dynamics
In a reflective discussion, Krugman and Fridman marvel at the seemingly magical dynamics of market economies. They explore how self-interested actions can lead to beneficial outcomes for society, such as the abundance of goods in supermarkets. However, Krugman cautions against romanticizing this process, emphasizing the importance of regulation to address market failures.
"seems to be the balance that works best it's just don't want to you don't want to romanticize or missed it you know make it something mystical out of it it's just this is is one way to organize stuff ..."
Government's Role in Society
Krugman discusses the often-misunderstood role of government in the economy, arguing that it can effectively manage certain sectors like healthcare and education. He contrasts public services with private alternatives, highlighting the successes of government programs like Medicare. This segment challenges the prevailing anti-government sentiment by showcasing the benefits of public intervention.
"doesn't so how do you get regulation right how do what can government at its best to government strangely enough in this country today seems to get a bad rap like everyone seems to everybody's against..."
Tech Regulation: A Necessary Balance
In this segment, Krugman addresses the need for regulation in the tech sector, particularly in social media. He expresses skepticism about the notion that technological change is unprecedented, arguing that society has always adapted to shifts in work and job availability. Krugman emphasizes the importance of finding the right balance between regulation and innovation to ensure that technology serves the public good.
"you know the world of social media is is one in which competitive forces aren't working very well and trusting the companies to regulate themselves isn't working very well but I'm on the whole a tech ..."
Automation's Impact on Jobs
Krugman examines the impact of automation on the job market, arguing that while some jobs may be lost, the overall trend is not as dire as often portrayed. He reflects on historical shifts in employment due to technological advancements, suggesting that society has always adapted. This segment provides a nuanced view of automation, challenging the narrative of widespread job loss.
"may be some things I mean actually translators there's really reduced demand for translators because we've translation ain't perfect but it ain't bad there are some kinds of things that are changed bu..."
Understanding Productivity Metrics
In this insightful discussion, Krugman explains the concept of productivity metrics and their significance in evaluating economic health. He outlines how productivity is measured and discusses historical trends, noting that current productivity growth is unimpressive compared to past periods. This segment highlights the importance of understanding productivity as a key indicator of economic performance.
"maybe there's a singularity maybe there's a moment when when the machines get smarter than we are and sky tech kills us all or something right but the but that's not visible in anything we're seeing n..."
Psychology Behind Blaming Automation
In this segment, Krugman explores the psychological tendency to blame automation for economic issues like wage stagnation and inequality. He highlights how public discourse often defaults to technological determinism, overlooking macroeconomic factors such as demand failures. Krugman reflects on the historical context of economic crises and the public's inclination to attribute job losses to technology rather than economic policy.
"which we did for in the generation after World War 2 productivity rose a 2% a year on a sustained basis then it dropped down for a while then there was a kind of a decade of fairly rapid growth from t..."
Politics vs. Economy: A Complex Interaction
Krugman delves into the intricate relationship between politics and the economy, asserting that both influence each other significantly. He uses the example of unionization in Denmark versus the U.S. to illustrate how political choices shape economic outcomes. This segment emphasizes the importance of understanding the political context behind economic policies and their effects on workers.
"that in the 30s and that same thing happened after 2008 the assumption that it has to be something some deep cause not something as trivial as a failure of investor confidence and inadequate monetary ..."
Understanding the Welfare State
In this discussion, Krugman defines the welfare state and its role in mitigating market risks and injustices. He argues that programs like Social Security and Medicare are essential components of the welfare state, which are often misunderstood or demonized. Krugman advocates for a broader understanding of welfare programs as integral to societal stability and economic health.
"the in the shape of the economy what is what is a welfare state well in welfare state is the old term that but it basically first all the programs that are there to mitigate if you like the the risks ..."
Universal Basic Income: Pros and Cons
Krugman shares his views on Universal Basic Income (UBI) and its implications for social safety nets. He discusses the trade-offs between universality and targeting in welfare programs, emphasizing the challenges of implementing UBI effectively. Krugman suggests that enhancing existing safety net programs could be more beneficial than pursuing UBI, especially in light of current economic realities.
"incentive problems and kind of political and I would say even psychological issues so the great thing about Social Security and Medicare is no questions asked you know no you don't have to prove that ..."
The Evolution of Political Reporting
Paul Krugman discusses the improvements in political reporting over the years, highlighting the shift from biased coverage to more informed analysis. He reflects on the challenges of voter information and the need for substantive debates, emphasizing the importance of understanding policy issues in today's political landscape.
"better than it's ever been because of what when I first got into the you know the pundit business it was just awful lots of things just never got covered and if things did get covered it was always bo..."
The Challenge of Open-Mindedness
In this segment, Krugman addresses the difficulty of maintaining open-mindedness in political discourse. He critiques the tendency to dismiss opposing views and emphasizes the importance of distinguishing between valid economic arguments and those based on misinformation or ideology.
"a dumb question but from an open-minded perspective when you know people on the left and people on the right I think view the other the others as sometimes Complete Idiot's yeah it what do we do with ..."
Zombie Ideas in Economics
Krugman introduces the concept of 'zombie ideas'—economic theories that persist despite being debunked by evidence. He argues that while radical ideas can be valuable, they must be grounded in reality and not merely repeated without basis. This segment explores the implications of such ideas on public discourse and policy.
"so take economics is something where I think I know something and I'm not sure that I'm always right in fact I know I've been wrong plenty of times but I think there is a difference between economic v..."
Economics vs. Quantum Mechanics
In a thought-provoking comparison, Krugman discusses the differences between economics and quantum mechanics. He highlights the challenges of testing economic theories due to the complexity of the system, while also noting the importance of empirical evidence in shaping economic understanding.
"I see so there's a through the scientific process you've shown that this idea does not hold water but I like the idea zombie ideas but they live on through it's like the idea that the earth is flat fo..."
The Role of Data in Modern Economics
Krugman emphasizes the increasing reliance on data among younger economists, discussing how empirical evidence can inform economic theories. He reflects on the consensus among serious researchers and the political forces that often create the illusion of disagreement in economics.
"basic theory of macroeconomics which ultimately goes back to John Maynard Keynes that made a few predictions it said under these circumstances printing money will not be inflationary running big budge..."
Investing in Prosaic Innovations
In this segment, Krugman advocates for investing in practical, everyday innovations that drive economic growth. He critiques the lack of investment in infrastructure and basic technologies, arguing that such investments are crucial for long-term prosperity and should be prioritized over military spending.
"sense a you because you're trying to predict something that hasn't been done before the impact the effects of something that hasn't been done before yeah you're trying you're going out-of-sample and a..."
Government Intervention and Public Perception
Krugman explores the complex relationship between government intervention and public perception. He discusses how political ideologies influence views on government spending and the challenges of gaining public support for infrastructure investments, emphasizing the need for a balanced approach to economic policy.
"I mean sorry to linger on it but do you have any intuition do you have a hope that that changes the idea of intuition why it's not changing it's uncommon in tradition I have a theory I'm reasonably ce..."
Imagining Governance on Mars
In a speculative discussion, Krugman considers what political and economic systems might look like if humanity were to colonize Mars. He advocates for a representative democracy, reflecting on the challenges of direct democracy and the importance of a structured governance system in a new society.
"actions perhaps silly question but as a species we're currently working on venturing out into space one day colonizing Mars so when we start a society on Mars from scratch what political and economic ..."
The Complexity of International Trade
Krugman explains the intricacies of international trade, comparing it to trade between individuals. He discusses how countries benefit from specialization and the mutual advantages of trade, despite the complexities involved. This segment addresses the challenges posed by global trade dynamics, particularly in the context of the U.S.-China trade relationship.
"you're also an expert in international trade what do you make of the the complexity so I can understand trade between two people say to neighboring farmers it seems pretty straightforward to me but in..."
Trade Wars and Economic Realities
In this segment, Krugman analyzes the U.S.-China trade war, emphasizing that trade is beneficial for both nations despite its complexities. He highlights the misconception that imports are detrimental and discusses the impact of trade on income distribution within countries. Krugman advocates for better policies to support those adversely affected by trade changes.
"trade war well first of all international trade is not really that different from trade among individuals when it's it it's vastly more complex and there are there are many more players but in the end..."
Navigating Public Discourse in Economics
Krugman reflects on the challenges of expressing economic ideas in a polarized political climate. He shares his experiences with public criticism and the importance of maintaining intellectual integrity despite potential backlash. This segment offers insights into the role of economists as public intellectuals and the necessity of engaging in difficult discussions.
"I I wouldn't undo what has happened but I wish we had had a better policy for supporting incumbents the losers from that growth so we live in a time of rec reticle ization of political ideas Twitter m..."
The Wisdom of Adam Smith
In closing, Krugman quotes Adam Smith, emphasizing the self-interest that drives economic interactions. He underscores the importance of understanding economic motivations and the dynamics of trade. This segment encapsulates the essence of economic theory and its relevance in contemporary discussions.
"for talking to a great thanks for listening to this conversation with Paul Krugman and thank you to our presenting sponsor cash app downloaded and use code let's podcast you'll get ten dollars and ten..."