We could be out of what he calls the Lesser Depression in 18 months. We could have been out before the 2010 elections. If politicians listened to mainstream textbook economics...
PLAYBOY: Is that the cause of the financial crisis, people buying big houses?
KRUGMAN: No, it’s not. They did that because they believed the prices would continue to rise, and the lenders believed the prices would continue to rise. It’s not an evil thing to buy a house in the belief that if things go well, you will be able to afford it or sell it and pay off the mortgage. Of course, as always, people are trying to make it into “those people” being irresponsible and doing in the financial system. But it’s not that story. It’s just a classic bubble, but it’s an enormous one.
[On Alan Greenspan] how wrong do you have to be to get written out of the debate? He assured us that deregulation was making the system more stable. He was repeatedly wrong as the crisis unfolded. Look at Paul Volcker, whom I disagree with on some stuff but who is certainly an incredibly upstanding human being. When he left the Fed, he deliberately went silent to leave the field clear for Greenspan. Greenspan instead raced out to cash in personally on his role. He’s been so completely wrong at this point that the idea that some people still listen to him as a source of wisdom is awesome.
PLAYBOY: Is it accurate to simplify our modern economy as a choice between working for a high-wage General Motors model versus the low-wage Walmart strategy?
KRUGMAN: I think the choice we made, really without understanding that we were making the choice, was to make Walmart jobs low paying. They didn’t have to be. In a different legal environment, a megacorporation with more than a million employees might well have been a company with a union that resulted in decent wages. We think of Walmart jobs as being low wage with 50 percent turnover every year because that’s the way we’ve allowed it to develop.
Suppose you were given the choice of being born in America or in Ethiopia. What proportion of your eventual fortune would you be willing to give to be born in America? Given the great good fortune of getting to live and run a business in this country that has all the advantages an advanced country with a decent system provides, how can you think it’s all you? And then, how can you feel you don’t have any obligation to pay it back?
He's also jostled about how he gushes about optimistic bands he's discovered on Youtube. Who are apparently all Canadian, according to the comments. Is US music, like US science fiction, DOOMED? (That's pure James Nicoll bait.)
See the DW comments at http://mindstalk.dreamwidth.org/307802.html#comments