Paul Krugman, the Last Liberal?
Has the "newspaper of record" unleashed a leftist? That’s the claim of the Paul Krugman-haters at the conservative National Review Online, where a fanatical "truth squad" attempts to refute the Princeton economist’s columns in the New York Times .
It isn’t hard to see why Krugman infuriates the Republican right. Virtually alone in the mainstream media, Krugman defied the post-September 11 lockstep patriotism to expose George W. Bush’s repeated deceptions–on tax cuts, the Iraq war, the environment and much more. In an introduction to his new book, The Great Unraveling: Losing Our Way in the New Century, Krugman goes even further, likening the Bush administration to a "revolutionary power" willing to do and say anything to carry out a "radical challenge to our social and political system."
A collection of columns and a few previously published articles, The Great Unraveling is arranged thematically. Sections include the economy and corporate crime wave ("something was very rotten in the state of American capitalism"); the tax cuts ("Bush has pulled the largest bait-and-switch operation in history"); and inequality ("a form of class warfare–driven not by attempts of the poor to soak the rich, but the efforts of an economic elite to expand its privileges").
Some of Krugman’s most controversial columns, grouped under the heading "Exploiting September 11," denounce Bush for using the crisis to round up Arab and Muslim immigrants and push legislation benefiting oil companies tied to the administration. Polemical, clever and well written, these columns are worth a second read, even by those who follow Krugman regularly.
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HOW DOES Krugman get away with it, when a previous Times columnist–the veteran war correspondent Sidney Schanberg –was fired, apparently for straying too far to the left? The key is that Krugman’s career is secure with or without the Times. He’s considered one of the world’s top economists specializing in international currency crises–and, at 50, he’s younger than most leaders in his field.
Moreover, Krugman has established himself as a writer for popular audiences through numerous articles and books such as The Age of Diminished Expectations, Peddling Prosperity, Pop Internationalism and The Accidental Theorist. In these writings, Krugman aims to expose Reagan-era free-market dogma, which claimed that tax cuts for businesses and the wealthy would stimulate the "supply side" of the economy so much that the overall growth would eventually make up for government budget deficits created by the lost tax revenues.
In reality, "supply-side economics is a feel-good cover story for a movement with a much harder-nosed agenda," Krugman wrote in the September 13 New York Times Magazine. The conservatives’ real plan, Krugman argues, is to "more or less deliberately, set the U.S. up for a fiscal crisis" to justify huge cuts in Social Security, Medicaid and Medicare.
"The middle class America of my youth was another country," he wrote last year in another New York Times Magazine article not included in the book."…You can’t understand what’s happening in America today without understanding the extent, causes and consequences of the vast increase in inequality that has taken place over the last three decades, and in particular the concentration of income and wealth in just a few hands."
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KRUGMAN’S CRITICISMS of mainstream economic policy have another aim– to rehabilitate and popularize the ideas of the British economist John Maynard Keynes. In the 1930s, Keynes theorized that economic depressions could be ended–and prevented–by increasing government spending to boost demand.
Ultimately, spending during the Second World War proved that point–and in the following decades, Keynesian policies were common in advanced countries until the rise of the free-market economists in the 1980s. Today, Krugman argues, that there’s no recession that can’t be cured by an injection of government spending and stimulative economic policy.
In his 1999 book on the East Asian economic crisis, The Return of Depression Economics, Krugman showed how the International Monetary Fund–acting as enforcers for the U.S. Treasury and State departments–compelled countries like Thailand, Indonesia and South Korea to replay the same disastrous policies carried out by President Herbert Hoover in the Great Depression–slash government spending and jack up interest rates.
The result was a catastrophic economic contraction at enormous social cost–all to restore what policymakers called "market confidence."
But skewering free-market fundamentalists–and, for that matter, bashing Bush–doesn’t make Krugman a man of the left. Consider Krugman’s hostile review of progressive journalist William Greider’s 1996 book on corporate globalization, One World, Ready or Not: The Manic Logic of Global Capitalism.
Krugman sneered at Greider’s claim that the world was heading for a crisis of overproduction –too many goods produced to be sold at a profit. But when the East Asian crisis vindicated Greider soon afterward, Krugman shrugged it off as a case of a chronic economic "doomsayer" finally turning out to be correct.
Moreover, on the 100th anniversary of the Communist Manifesto, Krugman wrote that "by my reckoning, Karl Marx made about as much contribution to economics as Zeppo Marx made to comedy," arguing that "it was Keynes, not Marx, who cracked the code of crisis economics –who explained how recessions and depressions can happen." Keynes claimed never to have read Marx, and perhaps Krugman hasn’t either.
The fact is, Marx–some 60 years before Keynes–showed how investment by competing capitalists periodically leads to too much productive capacity to sell goods at an adequate profit, leading to a pullback in investment and a slump. Marx also demonstrated how individual capitalists’ attempts to boost profits by investing in machinery to replace labor creates a tendency in the rate of profit to fall in the system as a whole–a theoretical framework that explains today’s stagnant economy.
In any case, Krugman considers capitalism the final stop on the path of human progress. "Who can now use the words of socialism with a straight face?" he wrote in The Return of Depression Economics. Krugman’s alternative– "My Economic Plan," a column reprinted in The Great Unraveling, does diverge sharply from current policy.
He calls for cutting payroll taxes, extend unemployment insurance and bail out state budget deficits with federal money–all needed steps to help create jobs. Such measures, however, were standard procedure for even Republican administrations in the 1970s–and wouldn’t be enough to reverse the loss of jobs in the Bush era and solve the problem of a glut of goods.
Moreover, Krugman declares in his book that "in general I am pro-globalization–much more so than many people I agree with when it comes to current U.S. politics"–and includes a nasty column attacking Ralph Nader to emphasize the point. One of his worst columns–thankfully, not reprinted in the new book–slammed the protesters against the Free Trade Area of the Americas in Quebec City in April 2001.
Defending the use of child labor in the Third World, Krugman wrote that the activists, "whatever their intentions, are doing their best to make the poor even poorer." A leftist? Not at all. Rather, Krugman is one of a species rarely encountered in recent years–a liberal willing to be highly aggressive against the right.
Yet although Krugman makes it clear that the massive shift in wealth to a wealthy few has happened during Democratic and Republican administrations alike, Bill Clinton gets off easy in The Great Unraveling. In the main, it’s an anti-Bush tract with an unstated but unmistakable, and acceptably mainstream, conclusion: vote Democratic to oust Bush in 2004.
Nevertheless, unlike the status-quo commentators of the op-ed pages, Krugman has sometimes reconsidered his opinions in light of new evidence. The book includes his column titled, "The Lost Continent," in which Krugman admits that the economic collapse in Argentina forced him to rethink his free-trade views: "One has to sympathize with Latin political leaders who want to temper enthusiasm for the free market with more efforts to protect workers and the poor." That willingness to face the facts makes Krugman unusual in the mainstream media–and well worth reading.