Krugman ‘Unravels’ Economics

Paul Krugman came to The New York Times’ op-ed page as an economist, not a liberal guru. But try telling that to the enthusiastic crowd who packed the pews of Cambridge’s First Parish Church last Friday, eager to see the man described by the National Review Online’s Donald Luskin as “America’s most dangerous liberal pundit.”

When he began his column in 1999, Krugman told the crowd, “I expected to write about the follies of the new economy. The last thing I expected was to be a Jeremiah, warning about terrible things to come.”

Yet his column has evolved over the past four years into a bully pulpit for criticizing George W. Bush and his administration, accusing the White House of pursuing wrongheaded fiscal policies and telling outright lies to promote them.

Krugman’s spirited lecture was sponsored by the Harvard Bookstore and was moderated by Christopher Lydon, Harvard Law School fellow and former host of NPR’s “The Connection.” Infusing his lecture with tidbits about the nature of his job as columnist for the Times, Krugman focused discussion on his new book, The Great Unraveling: Losing Our Way in the New Century.

The Great Unraveling is a compilation of Krugman’s op-eds since he began writing for the Times.  Krugman’s commentary is astute and accessible. A winner of the highly selective John Bates Clark Medal for outstanding economists under the age of 40—an honor he shares with University President Lawrence H. Summers—and a professor of economics at Princeton, Krugman is adept at translating economic phenomena and jargon into everyday language. His columns are often constructed around metaphors that help readers understand not only what is going on in the markets, but how that connects to policies emanating from Washington. In his new book, Krugman admits that even he was surprised by how intertwined economics and politics have become in his columns. He writes that “it gradually became clear that something deeper than mere bad economic ideology was at work. The bigger story was America’s political sea change.”

For Krugman, analysis of the Dow also requires analysis of George W. Bush. Krugman explains in The Great Unraveling’s preface that he hopes his book will show how “taken together these columns tell a coherent story.”

That story, as the title suggests, is America’s sudden plunge from the peaks of the technology boom to the depths of widespread unemployment and war. But Krugman does more than detail how isolated events like the demise of the dot-com era, the Sept. 11 terrorist attacks and Bush’s tax cuts contributed to America’s current economic malaise. His story, as he explained to his audience on Friday night, is also that of his own disillusionment. Krugman says the election of 2000 thrust him into a crisis of confidence, and that he too has been surprised by the manipulation he believes he has uncovered in the administration’s words and actions.

Krugman began crying foul during the 2000 campaign, when he accused Bush of using “fuzzy numbers” in his economic calculations. He noted discrepancies between Bush’s platform promises and the actual proposals the Bush team released while campaigning. Sometimes Candidate Bush’s emphasis was misleading; the future president stumped about unburdening the middle class but reserved his largest tax cuts for the income tax and estate tax, taxes that most affect the wealthiest Americans, Krugman charges. On other occasions, Krugman points out, the economic policies Bush proposed in his campaign simply did not add up. Krugman calls this the problem of “2 – 1 = 4,” demonstrating how the Bush plan to privatize Social Security could, at best, provide for future generations of senior citizens but would leave today’s retirees without benefits or a financial safety net.

After Enron’s collapse, Krugman also assailed Bush and Vice President Dick Cheney for doing fuzzy math of a different sort. He accuses Cheney of engaging in a less than immaculate collaboration with Enron when creating an energy plan. He excavates an embarrassing connection between the defense-contracting Carlyle Group, of which George H. W. Bush is an employee, and the bin Laden family. And he exposes Harken Energy’s fake profits and hidden losses, noting that George W. Bush had not only heavily invested in the company, but sat on its board of directors and its audit committee. Why, asks Krugman, was $70 million poured into the Whitewater investigation when these murky waters remain unexplored?

Even Krugman’s regular readers will find the indictment of the Bush team in his new book striking. In his introduction, which serves to contextualize his columns, Krugman likens the administration to a “revolutionary power.” He sees the Bush administration as a group of zealous ideologues rooted in the radical religious right, who not only aspire to diminish the separation between church and state, but also seek to completely dismantle the welfare state and aim at a total restructuring of the international geopolitical landscape. What’s worse, according to Krugman, is that the White House will do anything to accomplish its goals. “Why don’t the usual rules apply?” he asks. “Because a revolutionary power, which does not regard the existing system as legitimate, does not feel obliged to play by the rules.”

Krugman’s premise, his insistence that administration officials will use any means available to realize their vision, is central to his book. It is also what has made him a highly controversial figure, and according to him, a target for the Right’s vitriol. Krugman received hate-mail after suggesting that Bush was exploiting the terrorist attacks to achieve his pre-Sept. 11 budgetary and foreign policy objectives. In a column on February 5, 2002, he wrote, “In short, the administration’s strategy is to prevent criticism of what amounts to a fiscal debacle by wrapping its budget in the flag.” Krugman even labels a section of his book “A Vast Conspiracy?,” having no qualms about resurrecting the phrase that Hillary Clinton infamously invoked during the Lewinsky scandal.

Krugman does not prescribe a program to help the United States out of the economic, political and moral quagmire he describes. As he declares at the end of his introduction, “This is not, I’m sorry to say, a happy book.” But, he continues, “Don’t despair: nothing has gone wrong that can’t be repaired. But the first step in the repair job is understanding where and how the system got broken.”

Many will find Krugman’s analysis jarring, perhaps even blasphemous. But few will be able to ignore the book’s significance as a testimonial. The Great Unraveling is the ultimate primary source. It is an informative and impassioned guided tour, ushering us from America’s glittering innocence during the bubble days of the 1990s through trials of the country’s more recent past.

—Crimson staff writer Jessica E. Gould can be reached at gould@fas.harvard.edu.