Paul Krugman is concerned about the economy.
“I am worried, very worried about the economy,” the Nobel-Prize winning economist, New York Times opinion columnist and author told “Chicago Tonight.” “A few days ago I would’ve said, ‘I don’t see a really big shock on the immediate horizon.’ Maybe coronavirus is that shock.”
“But what scares me now is that we don’t have any shock absorbers,” he said. “I don’t know what the next bump in the road is, but I do know that we’re not prepared to handle it.”
The Federal Reserve normally uses interest rate cuts to help during economic downturns in America.
“On average in past recessions, the Fed has cut interest rates by 5 percentage points, we’re starting with interest rates of only 1.5 percentage points now,” he said. ”It’s very difficult to go below zero. So we basically don’t have monetary policy.”
“If the Fed, which is still the best technocratic institution we have, doesn’t have any leeway and its counterparts in other countries, the European Central Bank, are even worse shape,” Krugman said. “We don’t have an easy technocratic solution when something goes wrong and then anything else requires good leadership, sophisticated leadership and God knows we don’t have that.”
In his new book “Arguing With Zombies: Economics, Politics, and the Fight for a Better Future,” Krugman calls a number of economic policies “zombie theories” because they have been proved false, refuse to die and keep coming back.
Another example he cites is that “tax cuts pay for themselves.”
“We both tried tax cuts and tax increases and it’s never happened. The Reagan tax cut led to big deficits. George W. Bush’s tax cut led to big deficits. Trump’s tax cut led to big deficits,” Krugman said. “Bill Clinton raised taxes and, you know, Republicans predicted disaster. It goes on and on.”
“This is a theory that has – nothing has been tested as often as this one. And yet, when the Trump tax that was passed just about every Republican in Congress said, ‘Oh, I’m sure this will pay for itself,’” he said.
So why does that theory persist? And did Republicans really believe it would pay for itself?
Krugman has a blunt answer.
“With politicians, do they actually believe in anything?” he quipped. ”The answer is, look at the people whose taxes are cut. A lot of zombie ideas, not all of them, but a lot of zombie ideas are basically kept shambling along eating people’s brains by billionaires.”
Below, the introduction to “Arguing With Zombies: Economics, Politics, and the Fight for a Better Future.”
The Good Fight
Punditry was never part of the plan.
When I finished graduate school in 1977, I envisioned a life devoted to teaching and research. If I ended up playing any role in public debate, I assumed it would be as a technocrat— someone dispassionately providing policymakers with information about what worked and what didn’t.
And if you look at my most cited research, most of it is pretty apolitical. The list is dominated by papers on economic geography and international trade. These papers aren’t just apolitical; they’re mostly not even about policy. Instead, they’re attempts to make sense of global patterns of trade and the location of industries. They are, to use the economics jargon, “positive economics”— analysis of how the world works— not “normative economics”— prescriptions for how it should work.
But in 21st‐ century America, everything is political. In many cases, accepting what the evidence says about an economic question will be seen as a partisan act. For example, will inflation surge if the Federal Reserve buys a lot of government bonds? The clear empirical answer is “no” if the economy is depressed: the Fed bought $3 trillion in bonds after the 2008 financial crisis, and inflation stayed low. But assertions that Fed policy was dangerously inflationary became, in effect, the official Republican view, so simply recognizing reality became seen as a liberal position.
Indeed, in some cases even asking certain questions is seen as a partisan act. If you ask what is happening to income inequality, quite a few conservatives will denounce you as un‐ American. As they see it, even bringing up the distribution of income, or comparing the growth in middle‐ class incomes with those of the rich, is “Marxist talk.”
And it’s not just economics, of course. If anything, we economists have it easy compared to climate scientists, who face persecution for reaching conclusions powerful interests don’t want anyone to hear about. Or consider social scientists studying the causes of gun violence: from 1996 to 2017 the Centers for Disease Control were literally forbidden to fund research into firearm injuries and deaths.
So what’s a would‐ be scholar to do? One response is to ignore the political heat and just keep doing your research. That’s a choice I can respect, and for most scholars, even in economics, it’s the right choice.
But we also need public intellectuals: people who will understand and respect the research, but are willing to jump into the political fray.
This book is a collection of articles, mostly written for The New York Times, in which I tried to play that role. I’ll talk later about how I got into that position, and what I’m trying to do with it. First, though, let’s ask a different question: What’s all the politicization about?
The Roots of Politicization
There are many issues in politics, and you could imagine people staking out a wide variety of positions that don’t correspond to a simple left‐ right axis. You could, for example, envision voters who are strongly in favor of gun control, demand aggressive policies to fight global warming, but want to see Social Security and Medicare privatized if not eliminated.
In practice, however, politics in modern America really is pretty much one‐ dimensional. This is especially true among elected representatives. Tell me where a member of Congress stands on issues like universal health care, and you can predict where he or she stands on climate policy— and vice versa.
What defines this single political dimension? It’s basically the traditional left‐ right continuum: How much role do you believe public policy should have in reducing the risks and inequalities of a market economy? Do you want society to be like modern Denmark, with its high taxes, strong social safety net, and extensive worker protections, or like America in the Gilded Age, when laissez‐ faire ruled?
At one level, this axis of contention is about values. People on the left tend to have a concept of social justice along the lines formalized by the philosopher John Rawls: they believe that people should advocate the society they’d choose if they didn’t know who they would be, which role they would play. Basically, this moral position is “There but for the grace of God go I,” although often without the God part.
People on the right, by contrast, view (or claim to view) government intervention to reduce inequality and risk as immoral. Taxing the rich to help the poor, as they see it, is a form of theft, no matter how laudable the purpose.
Economics can’t tell you what values to have. It can, however, shed light on what to expect from policy that reflects any particular set of values. That, however, is where the politicization comes in. In particular, opponents of a larger role for government want to argue that such a role is not just immoral but counterproductive, even destructive. And if the evidence doesn’t agree, they attack both the evidence and those producing it.
In principle, this kind of politicization could come from the left as well as the right. Indeed, there have been times and places where powerful players refuse to acknowledge, for example, that price controls ever cause shortages, or that printing money ever causes inflation— see Venezuela, recent history of. Even in America, there are some people on the left who will attack you (O.K., me) as a shill for corporate interests for pointing out that there are multiple ways to achieve universal health coverage, that it can be done while preserving a significant role for private insurance.
But given the realities of money and power, in modern America most of the politicization of everything reflects pressures from the right.
After all, while there is a philosophical case for a low‐ tax, minimal government society, modern conservatism relies less on philosophical persuasion than on the fact there are people who would gain a lot personally if we were to retrace our steps toward the Gilded Age. There may not be many of those people, but they’re extremely rich. It’s very much in their interest to promote the view that moving in their preferred direction would be good for everyone. And monetary support from right‐ wing billionaires is a powerful force propping up zombie ideas— ideas that should have been killed by contrary evidence, but instead keep shambling along, eating people’s brains.
The most persistent such zombie is the insistence that taxing the wealthy is hugely destructive to the economy as a whole, so that cutting taxes on high incomes will produce miraculous economic growth. This doctrine keeps failing in practice, but if anything has gained an ever‐ stronger hold over the Republican Party.
There are other zombies, too. If you want a low‐ tax, low‐ benefit state, you want to claim that safety‐ net programs are harmful and unworkable. So a lot of effort goes into insisting that providing universal health coverage is impossible, even though every advanced country besides the U.S. somehow manages to achieve just that.
You get the idea. But while it’s easy to understand the politicization of tax and spending analysis, why does the politicization extend to areas that don’t so obviously correspond to class interests? Even billionaires need a livable planet, so why has climate change become such a left‐ right issue? Recessions hurt everyone, so why do conservatives oppose printing money to fight slumps? And why are racial attitudes so closely correlated with positions on taxing and spending?
A lot of the answer is that political players believe— I think rightly— that there is a kind of halo effect that links all forms of government activism. If people are persuaded that we need a public policy to reduce emissions of greenhouse gases, they become more receptive to the idea that we need public policies to reduce inequality. If they are persuaded that monetary policy can fight recessions, they’re more likely to support policies that expand access to health care.
This has always been true. Back in the forties and fifties the U.S. right fought fiercely against Keynesian economics, to the point of trying to prevent it from being taught in universities, even though John Maynard Keynes correctly described it as a “moderately conservative” doctrine— a way to preserve capitalism, not replace it. Why? Because they saw it as the thin edge of the wedge for bigger government in general. But we’re much more politically polarized now than we were then, so the politicization extends further.
Beyond the halo effect, there’s also the effect of political strategizing. You see, politics in America used to have two dimensions, not one— there was a left‐ right axis, but also a racial equality/segregation axis. And to this day there are a significant number of voters who like big government for themselves but don’t like people with darker skins. (The opposite, libertarian position— small government with racial tolerance— is logically coherent, but doesn’t seem to have any supporters beyond a few dozen guys in bow ties.) But there are almost no racist big‐ government politicians. Instead, the economic right has sought to win over working‐ class whites, even as it attacks programs they depend on, by catering to their racial animosity. So racial tolerance, and other forms of social liberalism like gender equality and LGBTQ rights, have been caught up in the same political divide as everything else.
The result of all this is, as I said, that everything is political. “Everyone is entitled to his own opinion, but not to his own facts,” Daniel Patrick Moynihan famously declared; but in modern America a lot of people do believe that they’re entitled to their own facts. This means that the technocratic dream— the idea of being a politically neutral analyst helping policymakers govern more effectively— is, for now at least, dead. But that’s not the only role available to scholars who care about where we’re going as a society.
Punditry in a Time of Polarization
Suppose that you’re someone who knows a fair bit about a technical subject like economics, but also wants to have an effect on public discourse— that is, the way people who don’t know or care about the technical issues discuss that subject. Obviously that describes my status, but it also applies to a number of other people. There are other economists who have moved into the public sphere— people like Joseph Stiglitz, a great economist who has reinvented himself as a public intellectual, or Britain’s Simon Wren‐ Lewis. There are also a growing number of journalists with good backgrounds in economics, like the Times’s David Leonhardt or The Washington Post’s Catherine Rampell. What does it take to play that role effectively?
The final section of this book contains an essay I wrote in 1991, “How I Work,” that lays out four rules for research. So let me similarly lay out my four rules for punditry, which inform almost everything in this book. The first two rules should be noncontroversial; the remaining rules, I suspect, less so. Here’s the list:
Stay with the easy stuff Write in English
Be honest about dishonesty
Don’t be afraid to talk about motives
Staying with the easy stuff: There are many hard questions in economics— questions on which serious, honest researchers disagree. How should pundit‐ economists deal with these questions?
My answer is that for the most part they should stay away from these questions wherever possible. The truth is that the vast majority of real‐ world economics disputes are about easy questions— questions for which there is a clearly right answer, but one that powerful interests don’t want to accept. You can improve public discourse by focusing on these questions, and trying to get the right answers across. The hard questions won’t go away, but the op‐ed page isn’t a good place to argue about them.
For example, when it comes to the effects of government debt, what the public needs to know is that trying to balance the budget in a depressed economy makes the depression deeper, and that fears of a runaway debt spiral are vastly exaggerated. There are other, harder issues, like the question of which interest rate should be used in assessing infrastructure spending. But the easy questions provide plenty of material to write about.
Writing in English: When I say that economist‐ pundits should write in English, of course I don’t mean that literally. In fact, the world would be in better shape if we had more people explaining basic economic concepts in German. What I mean, instead, is that to be an effective pundit, you have to use plain language and not presume that people already understand unfamiliar concepts.
To see what I mean, consider my most cited paper, “Increasing Returns and Economic Geography.” During my research‐ only years (the paper was published in 1991), I had a reputation among economists as a lucid writer, good at providing intuition and keeping the math level down. Yet in that paper, the equations aside, you find statements like this: “In the presence of imperfect competition and increasing returns, pecuniary externalities matter.” Would even one percent of my Times readership have any idea what that’s all about?
Staying away from jargon is harder than it sounds. That’s partly because most jargon serves a purpose— that quote says something important to its intended audience, and it would take a lot of space and time, hundreds if not thousands of words, to make the same point without the terms of art. It’s also because after spending years immersed in a technical subject it can be hard to remember how normal human beings, even smart, well‐ educated people, actually talk.
I’ve been writing at the Times for two decades, yet I still get occasional queries from copy editors about passages they don’t understand (and which readers won’t understand) because I’ve carelessly assumed that general readers will use words the same way economists do. For example, when economists say “investment” they usually mean construction of new factories and office buildings, yet they need to spell this out if they don’t want readers thinking that they’re talking about buying stocks.
This doesn’t mean that you should imagine that your readers are stupid. You just have to think hard about how to communicate. In fact, in 2019 I published a column, “Getting Real About Rural America,” that was in part a sort of stealth restatement of the arguments in that 1991 paper. And I think most readers understood what I was getting at, even if I made many of them angry.
Being honest about dishonesty: now we get into the more controversial aspects of punditry. As I’ve explained, these days everything is political. And as a result, many public arguments, in economics and everything else, are being made in bad faith.
To take the most obvious example, people arguing that we should cut taxes on the rich may pretend to have arrived at that position by looking at the evidence, but that’s not true: there is no evidence that would persuade them to change their view. In practice, they deal with contrary evidence by shifting goalposts— for example, the same people who predicted that Bill Clinton’s tax hike would cause a depression now claim that the Clinton‐ era boom was part of the long‐ run payoff to Ronald Reagan’s 1981 tax cuts. Or they simply lie, making up numbers and other supposed facts.
So how should an economist‐ pundit deal with this reality? One answer, which I know appeals to many economists, is to continue acting as if we were having a good‐ faith debate: to lay out the evidence, explain why it means one view is right and the other is wrong, and stop there.
My view, as you might guess, is that this isn’t enough, that it’s actually unfair to readers. When you’re confronting bad‐ faith arguments, the public should be informed not just that these arguments are wrong, but that they are in fact being made in bad faith. It is, to take another example, important to point out that the people who predicted runaway inflation from the Fed’s bond‐ buying were wrong. But it’s also important to point out that none of them have been willing to admit that they were wrong, let alone explain what led them astray— and that some of them abruptly reversed position as soon as there was a Republican in the White House.
In other words, we should be honest about the dishonesty that pervades political debate. Often, the mendacity is the message. Which brings me to my final rule.
Don’t be afraid to talk about motives: I wish we lived in a world in which one could normally assume that policy arguments are made in good faith. And some are. For example, there is a real debate about how effective “quantitative easing”— bond purchases by the Fed— actually is in boosting the economy. I’m on the skeptical side, but I can respect the optimists, and both sides, I believe, are open to persuasion.
But in most of the important policy debates in 21st‐ century America, one side consistently argues in bad faith. I’ve already made the point that this needs to be pointed out, that you should tell readers not just that extravagant claims about the power of tax cuts are false, but that those making such claims are knowingly being dishonest. Let me go a step further, and argue that being fair with readers means explaining why they’re dishonest.
For the most part, that means talking about the nature of modern U.S. conservatism, about the interlocking network of media organizations and think tanks that serves the interests of right‐ wing billionaires, and has effectively taken over the G.O.P. This network— “movement conservatism”— is what keeps zombie ideas, like belief in the magic of tax cuts, alive. If you’re having a real, good‐ faith debate, impugning the other side’s motives is a bad thing. If you’re debating bad‐ faith opponents, acknowledging their motives is just a matter of being honest about what’s going on.
I wish the world weren’t like this. There are times when I long for the naïveté of my professional youth, when I was simply trying to get the right answer and could normally assume that the people I was debating with were engaged in the same enterprise. But if you’re going to be an effective public intellectual, you deal with the world you have, not the one you want.
About This Book
I began writing for the Times in 2000. For several years prior I had written monthly columns for Fortune and Slate, but I was still mainly a research economist. In fact, I wrote what I personally consider possibly my best academic paper, “It’s Baaack: Japan’s Slump and the Return of the Liquidity Trap,” in 1998.
The Times expected me to write almost entirely about business and economics. But I found myself in a position neither they nor I expected. The administration of George W. Bush was dishonest to a degree never before seen in U.S. politics (though now surpassed by the Trumpists), and it was obviously, it seemed to me, taking us to war on false pretenses. Yet nobody else with a column in a major newspaper seemed willing to point this out. As a result, I felt I had to do the job.
The best writing I did during that period, however, was published in my 2003 columns collection, The Great Unraveling. So it’s not an era I feel the need to revisit.
Instead, with a few exceptions, this volume picks up in 2004, after Bush was reelected. By then many other people had taken on the fraudulent march to war, leaving me free to focus on issues that were much more up my alley, like the attempt to privatize Social Security and the efforts to expand health insurance coverage.
More than a third of this book is devoted to various aspects of the 2008 financial crisis and its aftermath. Nobody really predicted that crisis, other than people who also predicted many other crises that never happened. I myself recognized that we had a huge housing bubble, but was shocked at the damage the burst bubble inflicted, mainly because I hadn’t realized how vulnerable our financial system had become thanks to the growth of unregulated “shadow” banking.
Once the crash happened, however, economists who had studied these things found themselves in familiar territory. We know a lot about financial crises, from both theory and history. We also know a lot about how economies work in the aftermath of crises: that 1998 paper was about what happens when even a zero interest rate isn’t enough to restore full employment, a condition that went from being a uniquely Japanese problem to the norm across the Western world.
For me, then, the five or so years following the 2008 crisis were both the best and the worst of times. They were the best of times in the sense that my role as newspaper columnist and my academic research converged almost perfectly, so that I was in a position to say a lot about what policymakers should be doing. They were the worst of times in the sense that policymakers insistently refused to use the knowledge we had, choosing instead to obsess over budget deficits based on bad, often bad‐ faith arguments, and inflicting vast unnecessary suffering as a result.
The rest of the book is mainly about what the title says: arguing with zombies, from the tax‐ cut zombie to climate‐ change denial, and also about the movement conservatism that keeps those zombies shambling along. Yes, there’s also quite a lot about Donald Trump, but I see Trump not as a departure from the past so much as the culmination of where movement conservatism has been taking us for decades.
I finish the book with some lighter reading— well, not actually, but stuff that puts me in a better mood. The last section offers a selection of relatively economistic pieces that go back to my intellectual roots. They’re a bit harder and more jargony than my Times columns, but I hope some readers make the effort to see how I actually think about issues.
This book, then, tells a story of the fight for truth, justice, and the anti‐ zombie way. I don’t know if that fight can ever be fully won, although it can be lost. But it’s definitely a cause worth fighting for.