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Ear to the Ground

Krugman to Playboy: Economic Crisis ‘Doesn’t Have to Be Happening’

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Posted on Feb 18, 2012
The Rachel Maddow Show (CC-BY)

Economist Paul Krugman

Playboy magazine sent economics writer Jonathan Tasini to speak to Nobel Prize-winning economist Paul Krugman about the economic crisis and the possibilities for the future. What resulted was a neat picture of Krugman’s views on the state of the U.S. economy, the plight of common Americans and the failure of the political class to do anything about it. —ARK

Jonathan Tasini for Playboy:

PLAYBOY: Some of [the] debate is irrelevant to the average person. All they know is they don’t have a job or they don’t have a job that pays enough.

KRUGMAN: The point is there’s a tremendous amount of suffering. A lot of America is much worse off than it was four years ago. I think the main reason you should be angry about it is that it’s gratuitous. This doesn’t have to be happening. We actually have the tools to make most of this go away. If we could throw aside the political prejudices and bad ideas that are crippling us, in 18 months we could be back to something that feels like a much better economy.

PLAYBOY: So people in America today are suffering when they don’t have to be because of policy makers who won’t do the right thing?

KRUGMAN: That’s right. I’ve gotten some grief for my remark that if it were announced that we faced a threat from space aliens and needed to build up to defend ourselves, we’d have full employment in a year and a half. But that’s true. Why couldn’t we do that to repair our sewer systems and put an extra tunnel under the Hudson instead of to fight imaginary space aliens? Everybody in the world except us is doing a lot of investment in infrastructure and education. This is the country of the Erie Canal and the Interstate Highway System. The Erie Canal was a huge public infrastructure project financed with no private or public-private partnership. Can you imagine doing that in 21st century America? We really have slid backward for the past 200 years from the kinds of things we used to understand needed to be done now and then. And all of that because we are shackled to the wrong ideas.

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vector56's avatar

By vector56, February 20, 2012 at 8:51 am Link to this comment


I too am part of the “looney-Left”; and agree with Anarcissie’s assessment of Capitalism.

You remind me of my truck driver brother-in-law who makes $10/hour less today then he made 15 years ago. Even though the system (capitalism) has screwed him out of thousands of dollars of his “surplus labor” over the last 15 years, he would still fight, die and kill to maintain it.

During American “human” Slavery (the natural conclusion of capitalism) Black people spoke of “good masters” and bad ones. Like most Keynesian groupies you see Capitalism as a “Good Master” that can on occasion go bad.

We on the “looney-left”, like many human beings in the south who happen to be Black, want no master at all! Capitalism at it’s very core is a flawed system.

And, please spare me the Capitalistic, propaganda of how in a seemly fair fight, Capitalism beat out Socialism and Communism as the “peoples choice”. Only with endless propaganda, and countless murders (CIA, proxy wars) did capitalism win the day. 

Communism is pure economic democracy! I agree that as a species humanity may not yet be evolved to the point of maintaining such a system, but to pretend that it is something that we should not aspire toward is intellectual dishonesty on steroids!

“Kill a Commie for mommie!”

The Capitalist “West” has murdered millions of Communist from the “Bolshevik Revolution” to Charley Wilson’s War in Afghanistan; arming terrorist with stinger missiles to end the lives of the Godless Russian boys.

I also reject your idea that Bertrand Russell’s “Good Life” can not be realized under Communism. Marx lived in a time when technology was young; his view of the possible may have been truncated by the times. As we progress technologically and hopefully philosophically, the “unknowable” may come into focus and allow us to crawl out of the dark pit of dog-eat-dog capitalism into the intellectual light of a human “community”; Communism.

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By Anarcissie, February 20, 2012 at 8:18 am Link to this comment

No, Lafayette, I’m asking you how capitalists, as a class, function in a capitalist social order.  Whether individuals go to St. Tropez is irrelevant.

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By Lafayette, February 20, 2012 at 7:57 am Link to this comment


Anar: What do you think they do?

The Europeans winter in Gstaad and summer in St. Tropez.

If they’re American they are never more than two minutes away from a phone-call to their Asset Management honcho who is “optimizing” their investments. Which could mean any number of things - from real estate, to money-market funds, to foreign exchange, to Venture Capital.

They made their money in the simplest way possible - with a bit of luck they were at the right place at the right time. Which means either they inherited it (for a great part of the Ultra-Rich) are they just chanced upon it.

For every Zuckerberg there are 100,000 who tried and failed. He hit on the winning combination. Which he, like Gates and Jobs, et al., sets him up for life. In fact, his biggest problem now is to know what the hell to do with himself for the rest of his life.

When it became apparent to Gates that getting the Golden Ring on the Merry-Go-Round of life was the summum of his career in hi-tech, he did a 180 and started giving it away. (Upon, probably, the insistence of his wife.)

Sic transit gloria mundi.


What pissed-off Marx mightily was to see the 19th century landed aristocrats and gentry who did fuck-all except inherit their money and then live off the menial labor of their serfs. (Who were often indentured to their owners.)

He thought that patently unjust and inhuman - and he was dead right. Where he got his solution dead wrong, however, was to think that all property should be owned by all the people.

That too, however, is inhuman - because we humans like to have our won “things”, which in subtle ways distinguishes all of us. So we have a highly developed sense of property-rights.

The only problem is that we let it get out of hand, particularly in America where obtaining the “property” of Net Worth has become such an obsession. Why did that happen?

Because unlike the Europeans, we never did learn after WW2 that property rights (embedded in capitalism) are fine but equitability (fairness) means that no one should suffer just because too few were obtaining too much.

We went berserk over Communism and thought it meant “equality”, that is, everybody should obtain the same rent from assets that were owned by the state (meaning “everybody”). But human nature does not correspond to that criteria generally - and when it does specifically, we go into monastic reclusion.

We differentiate ourselves from one another, usually by our “conspicuous consumption” (read Veblen), but that variation should never go too far.

In fact, Veblen did first posit the notion of a “Leisure Class” benefiting most from the profits of “our” labor when he devised - and here I quote WikiP - this notion in his book “The Theory of the Leisure Class” (1899),

arguing there was a basic distinction between the productiveness of “industry,” run by engineers, which manufactures goods, and the parasitism of “business,” which exists only to make profits for a leisure class.

Which our Leisure Class still personifies to this very today - more than a century later (!) - in the US. In other words, what Socioeconomic Progress have we made?

Zip, Zero, Nada, Niente, Tipota, Nichts, Rien.


Twenty percent of us have hit home runs and the rest are still on first and second base. That is a sucker’s game.

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By Anarcissie, February 20, 2012 at 7:13 am Link to this comment

Lafayette, February 20 at 12:46 am:


  Anar:  Capitalism depends on scarcity.  That is, the social position and the powers of the bourgeosie (the ruling class of a capitalist social order) require that there be a crisis at all times about production-consumption, because the organization of production-consumption is the capitalists’ specialty.

Of all the Looney-Left bullshit posted on this site, the above is an example of the worst.

Right – capitalists sit around all day thinking up shrewd ways to screw the masses and make a bundle of money doing it. ...’

They don’t?  What do you think they do?

Why do you think things are the way they are?

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By Lafayette, February 20, 2012 at 1:46 am Link to this comment


Anar:  Capitalism depends on scarcity.  That is, the social position and the powers of the bourgeosie (the ruling class of a capitalist social order) require that there be a crisis at all times about production-consumption, because the organization of production-consumption is the capitalists’ specialty.

Of all the Looney-Left bullshit posted on this site, the above is an example of the worst.

Right – capitalists sit around all day thinking up shrewd ways to screw the masses and make a bundle of money doing it. The latest example of that is Zuckerberg over at Facebook who just made a zillion-dollars with an IPO because the world needs Facebook.

What makes the rich first rich and then even richer is our system of taxation that requires a major overhaul so complex is it.  Let’ tax the piss outta the Twenty-Percenters (who own 93% of America’s wealth).

Here’s how:
•  We create two classes of income, one earned and one unearned – both progressive throughout the range of income obtained.
•    Earned income (compensation, exercised stock-options and bonuses) is taxed at some very high rate (above 85%) beyond a certain threshold, say 10 megabucks per annum.
•  Unearned income is taxed at 50% of value up to 1 megabuck per annum and then 85% beyond that amount
•  Unearned income includes both capital gains and inherited Net Worth.
•  Corporate income is taxed at a rate of 50% and all present exclusions are cancelled until reviewed of a Board of Experts to determine their intrinsic necessity to the economy.
•  Create a national Value-Added-Tax to replace the quilt-work pattern of state taxes the revenue of which is shared with the states in a proportion of 60/40 with the states garnering the larger proportion.
•  Any change in the above, once installed in law, will require a referendum of the American people (all states) under the majority rule (more than 50% of registered American voters must approve the change).

Aside from the “no new taxes!” stupidity of the present election campaign we will see that the rich will want to keep every penny of their taxed income rather than give it away willy-nilly to the SuperPACs.

We will also see that the government will then have the means to develop/implement Public Services (like a National Healthcare Service) that really benefits the well-being of all Americans and not just a select few.

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By gerard, February 19, 2012 at 7:28 pm Link to this comment

I have several beefs against these people who keep harping on the “end of the world, “Armageddon”, the “Second Coming” and all such prophetic nonsense.
  The main beef is that such talk works in favor of doing nothing because doing anything is futile, even irreligious.  (What a great way to relieve oneself of civic responsibility!)
  My second major beef is that it makes plenty of space for the rich to exploit the poor.  If the end is near, why not get all you can get, secure yourself in isolation and drink yourself to death watching others disappear?  No motivation to be pro-active and save anybody—not even yourself. You’re
not guilty. you didn’t make it happen. It’s God’s will.
  My third beef is that it makes people more or less hysterical and prone to act out of fear. People are then less able to take proper care of themselves and of each other, and that makes disaster even more likely. It feeds the beast.
  But most of all I hate the utter lack of gratitude it encourages. For no apparent reason, we were all
given a life on a beautiful planet full of wonders to be explored and enjoyed.  We love each other if given half a chance. We know the difference between good and bad, generally speaking. Belief in “end times” paints humanity as evil, depraved, deserving of destruction, and that kind of attitude breeds self-destruction and mass suicide.
  On the other hand .....

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By berniem, February 19, 2012 at 1:23 pm Link to this comment


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By mrfreeze, February 19, 2012 at 11:42 am Link to this comment

sofianitz, “The Economic Crisis is caused by Obama, and the cause is that the homeowners of US have had their equity wiped out by the housing bubble.”

Obama is causing this crisis?

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By sofianitz, February 19, 2012 at 8:27 am Link to this comment

Of course, Krugman is exactly right.  The Economic Crisis is caused by Obama, and the cause is that the homeowners of US have had their equity wiped out by the housing bubble.  This means that (1) perceived loss of wealth by middle class. (2) immobility because people cannot move, since their equity in home is lost, (3) liquidity crisis, owners of capital cannot find profitable investments, since demand side has collapsed, (4) banks have been granted huge bailouts, and subsidies by US taxpayers, but this does no good.  In simple terms, the poor people don’t have enough money, and the rich have too much.  (5) Efforts to subsidize the poor have been too little, not enough.  Is there anybody that does not understand this?  The poor people need a huge ($1.5 trillion?) infusion of liquidity to right the economy.  And this is easy, since borrowing cost of US govt are now ridiculously low, inflation is non-existent, we need investments in infrastructure, and we need this now.  But the unnecessary suffering continues, since this problem cannot be understood by the bourgeoisie.  Got it?

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vector56's avatar

By vector56, February 19, 2012 at 8:13 am Link to this comment

“The free market profit motive economic model works great with an ever increasing market.  Once too many people become non-consumers and too few are making babies all the productivity is for naught.”

Surfboy: brilliant analysis!

Our underlying problem seems to the the “structural” defects of Capitalism. I read a great book written by a guy (Fred Goldstein) I met at a local Lefty meetup in Detroit; “Low-Wage Capitalism” (” Colossus with feet of clay”). Goldstein detailed how our “surplus wages” were being funneled out of the “real” economy and on to Wall Street where “filler” is added to create the illusion of greater wealth. Great book, highly recommend.

In my opinion we are in a period of reverse-nationalization of natural resources. The people who invaded this land killed millions of the natives to grab as much land and resources away from them as possible would be rolling in their graves if they knew that we were giving away their ill-gotten gains to the very Brits the fought to keep it! With NAFTA and the WTO those resources (oil, minerals, land lumber…) worth “Trillions” of dollars in real wealth are being given to multinational corporations for “pennies” on the dollar!

Example: For BP to extract oil from US soil they pay royalties to the US government of 18%. in the 50’s BP (then called the Anglo-Iranian Oil company) tried to get Iran to take a 70%-30% deal which they rejected outright and caused Mossadegh to Nationalize their oil! BP called in the CIA and the rest is history. The thing is if a 70-30 deal from BP brought down a government in Iran, why is it that our 18%- 82% deal with BP is not even a “blip” on the corporate media’s radar?

The point is they (Multinational corporations) are extracting real wealth from this country by the “tanker ship load” while the media keeps of narrowly focused on the scraps!

If a fraction of these Natural Resources were sold on the open global market (at something close to market value) our national income would increase by a factor of 100 and taxation as we know it would be unnecessary! Total Healthcare for all citizens, housing, retirement plan and a “social safety net” beyond our wildest dreams would be possible.

At present, we fight and die to support Corporate Socialism on a global scale; one does not need Paul Krugman understand that we have been “duped” on a cosmic scale! 

Again, I offer the Mondragon model as a second choice that might not get us killed by the capitalist:

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Anarcissie's avatar

By Anarcissie, February 19, 2012 at 7:33 am Link to this comment

Capitalism depends on scarcity.  That is, the social position and the powers of the bourgeosie (the ruling class of a capitalist social order) require that there be a crisis at all times about production-consumption, because the organization of production-consumption is the capitalists’ specialty.

The crisis can be maintained in many ways.  The usual method is to destroy wealth.  The three leading categories or methods in use to destroy wealth today are war, waste and consumerism.  (There are others.)

Given the mentality of those who get to the top of a capitalist social order—one of domination, aggression and greed—and of the many who follow them, the social machine constructed by capitalists must be run as fast and as hard as possible, so that more stuff will be produced and destroyed all the time.  The quality of other people’s lives doesn’t matter.  In any case, many of the victims of the project agree with their victimization.

Given the fact that the machine is designed to produce scarcity in the form of war, waste and (generally useless) consumption, and given that it is driven as hard as possible, it is impossible for the ruling class to control it accurately.  It will often go off the rails in one way or another.  This sometimes distresses the ruling class, but the more aggressive and greedy among them will simply use the resultant hard times as another engine of scarcity.

So Krugman is right in a way, but of course his solution is not to change the system but keep it going.  That’s why he gets to write for The New York Times—and Playboy.  But at least in Playboy you can turn to pages displaying the attractively Photoshopped images of young women’s bodies.

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By Lafayette, February 19, 2012 at 2:38 am Link to this comment

Krugmans explanation seems plausible enough.  But, once you hear the words “over-capacity”  meaning we can make more than we can use

That’s not what he meant by “over-capacity”, I suspect.

At present, our economy is running at about 78% of its capacity (of 100%). I think he was referring to the 22% that remains “over our present capacity”. He could have expressed it better by saying that our economy was running far “under 100% of its productive capacity”.

Krugman can be very exact (and cogent) in an economic discussion with economists. Which is hardly the Playboy Crowd. (Except for those, of course, who read PB just for the articles ... ;^)

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By Lafayette, February 19, 2012 at 12:56 am Link to this comment

Krugman: We really have slid backward for the past 200 years from the kinds of things we used to understand needed to be done now and then. And all of that because we are shackled to the wrong ideas.

But let’s not forget, nonetheless, how we got into this mess and why we cannot seem to crawl out of it fast enough.

This mess was not fortuitous; it didn’t happen “by accident”. We went binging on cheap-credit and our market oversight mechanism was defective.  Then, in the mid-terms, out of blind rage, 52% of us stayed away from the elections thus allowing 48% to put the HofR in control of the T-Party (T for Troglodyte).

We want to blame Obama. Ok, blame Obama – but that won’t get us any closer to a solution. We are so disgusted we won’t vote in November? Ok, that will only worsen the situation when the Rabid Right gets a hold on the reins of power once again.

Solving our problems is no QuickFix – regardless of how much you may want one. It will take at least a decade to get us back to where we were economically. And that objective achieved whilst also reforming our laws and institutions such that it never happens again.

Reforming our electoral system, we have all seen, is imperative. From its MoneyPolitics, to the 48% of millionaires whom we elected to Congress, to the lack of foresight on the Key Problem of Income Disparity. Which can be tackled if we raise the tax-base to where it was before Reckless Ronnie Reagan made it come tumbling down.

Then putting that tax-revenue to work to create jobs. Elect progressives to Congress and we just might play catch-up on the past 200 years?

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prisnersdilema's avatar

By prisnersdilema, February 18, 2012 at 11:34 pm Link to this comment

Yes, Gerard, Mr.Freeze, and Vector….The corporate media shuts out the truth, I am
surprized they let Krugman write in the NYT. There are others like him, but they won’t
ever be on the news anywhere.

I think people are just trying to survive, thats all they can think about. They are struggling
with the corporate, systematic, interjection into thier lfe. The are told each day, what to
eat, drink, and think.  But none of the corporate sytems work well, from healthe care, to
the financial industry. And theres not enough money to make it work anymore, so
instead, the cheaper answer is to try and delude people.

But its not what people experience in their life. The corporations can own the
government, but they can’t govern. It will be like the former USSR, in the end, ideological
contol was not enough to make things work.

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vector56's avatar

By vector56, February 18, 2012 at 9:38 pm Link to this comment

If I had to pick “one” component of our overall oppression (and there are many) that stands out more than the others it would be the Corporate Media. The “New Iron Curtain” that locks out the sane voices and amplifies the insane.

The “profit” Naomi Klein should be plastered all over the airways, but all we get is a constant diet of Greenspand and Bernanke; the two clowns who got us into this mess!

Question: When was the last time you say Klein, Chomsky or Dean Baker on MSNBC or Current TV?

Propaganda is a powerful tool; until we can wrestle the airways from the corporations (they will never give them up without a fight) anything close to a Democracy is a “pipe dream!”

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By gerard, February 18, 2012 at 9:11 pm Link to this comment

Another obvious point that sticks in my craw:  Mr. Krugman knows that it doesn’t have to be this way. He’s an economict qualified to know and brave enough to say.  But ... he can’t be the only one, can he.
How many others are there?  Why don’t they get together and “speak truth to power” instead of leaving it all up to the young people whom the police are permitted to beat over the head and arrest?  The economists could appeal to others of their status and put together a constabulary and go down and Occupy Wall Street with a bunch of men in suits and see how that works?  A lot of what’s hapening doesn’t need to happen. In fact, its quite
unproductive, and boring in its stupidity. So far, the young Occupiers are the only ones who manage to have anything to say or any idea how to do things—which they are, little by little all over the country, affecting banks and their foreclosures, educating the grass roots, putting together meaningful local actions, working against the Supreme Court’s silly “corporations are people” ruling, talking with people with some experience in political action, making plans, hoping, thinking, working, hoping ...  We owe them a lot already—and they’ve just begun.  This cruel people-crushing doesn’t need to keep happening!

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By mrfreeze, February 18, 2012 at 8:53 pm Link to this comment

prisnersdilema - I don’t think most Americans realize just how dire a situation we (we meaning ordinary, working folk) are in.

Our whole consciousness as a people is focused on nothing but serving corporate/business interests. I can hardly listen to or read the news these days without wondering why I can’t hear about a movie without knowing how much fucking money it’s expected to gross or if a protest “cost this or that city x amount of dollars.” It’s NEVER about what social, cultural or humane impact something has…’s all about the money, it’s all about the profit, it’s all about making sure that “costs are minimized and business interests are protected.”

I don’t know what’s in the collective American head these days? We have become our own worst enemies.

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By John Poole, February 18, 2012 at 8:23 pm Link to this comment
(Unregistered commenter)

I sense that Krugman knows that 7 trillion of “troubled mortgage assets” still sits
on the books of the banks and investment entities and would approve of any ruse
that would make that problem go away. It won’t and can’t-  end of discussion.
Krugman is a double agent -haven’t you picked up on that yet?

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By gerard, February 18, 2012 at 6:34 pm Link to this comment

Small consolation—“it doesn’t have to be happening.”  Then follows:  Why is it continuing?
One quite possible reason is obvious:  As long as the economy is “bad” it makes Obama look “bad” and so more hurting, disgruntled (and ignorant) people will vote Republican.  Devil take the general welfare. Since when have (rich) Republicans ever cared about that?

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By prisnersdilema, February 18, 2012 at 5:42 pm Link to this comment

Yes. A certain segment of the population believes we should return to the middle ages.
We are serfs, debt slaves, they are the aristocracy the 0ne percenters. Would they
actually use the schools, the new infrastructure? Probably not, and since it might mean
that life would improve for the serfs, that would be bad, becausw they then might lose
leverage against us, and who the hell knows where that would lead?

Without the leverage that our destitution brings, we might actually gain the resources to
fight back against them, and that would cost them money.

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