Krugman Fears Long-Lasting Damage From Recession
NEAL CONAN, host:
This is TALK OF THE NATION. I'm Neal Conan in Washington. This past weekend, in his weekly radio address, President Obama brought us something we haven't heard much of in the last year: good news about the economy.
President BARACK OBAMA: In the last few months, the economy has done measurably better than expected. And many economists suggest that part of this progress is directly attributable to the Recovery Act. This, and the other difficult but important steps that we've taken over the last six months, have helped put the brakes on this recession.
CONAN: But while we've seen a smaller-than-expected contraction in the economy this past quarter, some economists believe the recovery is going to feel an awful lot like a recession, in particular, that it will be some time before the unemployment rate goes from bad to not quite as bad.
One of those skeptics is with us today, Paul Krugman, a Nobel Prize winner and economics columnist for the New York Times. He joins us to take your questions on recovery and recessions - which is which - as well as rage against the Wall Street machine and health care.
Later in the hour, on the op-ed page, an argument that Hawkeye had a point. We should let soldiers drink. But first, do you see recovery where you live? 800-989-8255 is our phone number. Email us, email@example.com. You can also join the conversation on our Web site. That's at npr.org. Click on TALK OF THE NATION.
CONAN: Paul Krugman joins us from a studio on the campus at Princeton University, where he teaches economics, and thanks very much for being with us today.
Mr. PAUL KRUGMAN (Economics Columnist, The New York Times): Well, thanks for having me on.
CONAN: And is the president right, we've done measurably better than expected?
Mr. KRUGMAN: A little bit. I mean, the latest news is bad, but not quite as bad as a lot of people were expecting, you know, that we're reaching a point where numbers are starting to come in a little bit above what the average forecaster expects. So yeah, I mean, we're doing better in the sense that we're doing - things are still getting worse, but they are getting worse more slowly, and the rate at which - the pace of which things are getting worse is declining, is better - see, I'm losing the thread there, too, but you see the point. Yeah, it looks kind of like the - we're reaching the end of the oh-my-God stage of the slump, but we haven't actually seen the turnaround yet.
CONAN: And is that lesser-badness, if you will, attributable to the Recovery Act?
Mr. KRUGMAN: Probably, at least in part. It's not that easy to be definitive about, you know, what we see because you see, you know, consumer spending is still weak, and even though people got tax breaks, it's still weak, but you can argue it would have been even weaker without them. State and local spending is still under terrible pressure, but it probably would have been even worse without the aid from the federal government. You don't see a really overwhelming signature in the data - sorry, sounding like a real wonk there.
(Soundbite of laughter)
Mr. KRUGMAN: But you know, it's not totally, totally clear that - you know, it's not a slam-dunk case, to put it a little differently, that the recovery act is doing it, but it probably is, and we'll probably be seeing more of that in the months ahead. It'll be clearer that the money from Washington is, in fact, helping to stabilize the economy.
CONAN: Okay, so marginal improvements and maybe approaching the corner, if not turning it.
Mr. KRUGMAN: Yeah. Now, you know, you have to bear in mind that things were so bad that probably the effect of the Recovery Act is going to be a lot more than marginal. We're probably talking, even in the near term, about hundreds of thousands of jobs more than we would have had otherwise, but things - the downward momentum of this economy has been so large that that's consistent, unfortunately, with an economy that still isn't by any means delivering the kind of jobs that we'd like to see.
CONAN: And on that last point, the president's press secretary said today, I guess the new jobless numbers come out later this week, and he expects, barring some sort of miracle, they're going to be worse than they were last time, and that there's still hundreds of thousands of jobs to be lost before things do get better on that front.
Mr. KRUGMAN: Yeah. You know, look at one of the ways that a lot of us are tracking this is we get new claims for unemployment insurance. It's something that comes in weekly and sort of gives you some hint of what the overall jobs data are going to look like, and there are always people getting unemployed and filing claims, but we're still running at a rate of, you know, well over 500,000 new claims each week. And that's not good. You really would expect - you won't expect to see employment improving until that number drops below around 400,000. So we're still in the range where things are getting worse for most people.
CONAN: We're talking with Paul Krugman, a professor at Princeton, and a columnist for the New York Times, won the Nobel Prize in economics for his work on global trade patterns. 800-989-8255. Are you seeing recovery where you live and work? Email us, talk@ npr.org. Scott's(ph) on the line from Palo Alto.
SCOTT (Caller): Hi there. My wife and I both run small businesses out here, and I remember thinking back in the fall, actually when I was listening to Mr. Krugman, that everything was going to really hit the fan. So we kind of hunkered down and really didn't spend anything, but our businesses have not been hurt. In fact, mine is growing. And now we're at the point where each month that goes by, we're, like, getting more confident to kind of make some of the larger purchases that we've been waiting on. I'm going to be buying a new truck, and she's going to be investing in her business, as well.
SCOTT: But I'm very encouraged - and we've got a high unemployment rate out here, as well. So it just kind of depends upon where you're focused in your particular business, but we've definitely done - seen some growth out here. So I just wanted to share that comment.
CONAN: Is it scary, Paul Krugman, when somebody like Scott calls to say I was listening to you last fall, I took your advice?
Mr. KRUGMAN: Yeah, it's always scary. I worry - among other things, this is America, so you immediately think lawsuits, but anyway…
(Soundbite of laughter)
Mr. KRUGMAN: No, but the - look, I mean, there are - part of the thing about things not getting bad as quickly as - you know, not getting worse as quickly as they were before is there will be more positive stories. I mean, you know, I have relatives who were laid off and have now found jobs. So there are - the picture is not uniformly dismal now. So this is good. I mean, this is - we just need lots more stories like that.
CONAN: Scott, thanks very much for the call. Let's go next to Chicago, and this is Anthony(ph), Anthony on the line with us.
ANTHONY (Caller): Hey, good afternoon.
ANTHONY: Yeah, actually, I don't see anything new going on here, as far as - especially in construction because construction was one of the big keywords that was used as far as making the economy recover - helping the economy to recover. So I don't see anything new going on here in this city or in the surrounding suburbs and even downstate. I've been down there a couple of times. I haven't seen anything new going on there. So I guess maybe everything's being shored up in the business sector.
CONAN: But you don't see any new construction, and that's going to be a problem down the road because those things - these things take time.
ANTHONY: Okay, well no. I was assuming that because they were talking about it back in February and March that this was going to go on over the summertime, especially if we're talking about roadwork, because I guess…
ANTHONY: … (unintelligible) in the summertime.
CONAN: Yeah, and that would have been stimulus money, Paul Krugman.
Mr. KRUGMAN: Yeah, now roadwork is done at the state government level -or local government level. And the trouble here is that state and local governments are in a terrible fix. They're, you know, they've got a projected deficit over the next two years of about $350 billion, which means that they're cutting back. Now, they've gotten aid as part of the Recovery Act, which means that those cuts are not as deep as they would have been otherwise. But the aid wasn't as big as it was supposed to be because the three centrist senators cut out a large part of it in the final deal for the bill. And this is the kind of aid which you're going to - you're not going to see that there are a lot of new construction projects starting up - and certainly roadwork. You're going to see that the cutbacks are not as severe as they would have been otherwise. We're all in this kind of funny mode.
The other - the bigger, long-term projects that are part of the Recovery Act are just getting started now. They weren't - no one thought you could start really brand new projects in a matter of months. So those things are just going to be starting to happen.
But yeah, bear - I think - this is one of these things where you want to say look, if you actually still have any kind of work coming out of state or local construction spending, that's because of the Recovery Act because otherwise, the states would be in total disaster. It's - there is this little problem, right? They kind of need to have more logos, more, you know, sort of, this project was made possible by the Recovery Act, and there aren't enough out there for the political fortunes of the White House.
CONAN: Anthony, thanks for the report from Chicago.
ANTHONY: I have one other question, if I can.
CONAN: Go ahead.
ANTHONY: Okay. One of the things we were talking about when the stimulus - when the recession first was announced - and everyone was losing their homes, there was foreclosures and everything, and President Obama was talking about a stimulus package - a lot of people I've heard in coffee shops, and business owners, were talking about what would happen if the president, or the government actually, gave every working American who worked 40 hours or more a week $50,000, and every American who worked -taxpaying American - who worked part-time, $25,000 to help stimulate the economy, what effect would that have had?
Mr. KRUGMAN: Yeah. We actually - there were proposals like that, and the argument against them has always been that people would probably put a lot of the money aside. So it would be a big, you know, you'd have to run up a lot of debt to hand out those checks, and you probably wouldn't get very much increase in jobs out of it. So that was the problem with it.
There is a tax break in the Recovery Act. There are some - you know, the Making Work Pay is - people's paychecks are a little bit bigger than they would have been because of the Recovery Act, and Social Security recipients got some extra money, as well. But most - that's not the core of it because the trouble is there's a high risk that people will save it, you know, which is a good thing from their point of view but won't be creating jobs.
CONAN: Thanks, Anthony.
ANTHONY: You're welcome.
CONAN: Bye-bye. Just on that note, you had argued for some time that, in fact, we need a second stimulus package. Do you think we still do?
Mr. KRUGMAN: Oh boy, yeah. Look, right now what we're looking at probably, on our current course, is an economy that is no longer on the verge of, you know, plunging into the abyss but is going to be weak for a long time. And weak economy, high unemployment - those are dangerous things to allow to persist for a long time because they can become kind of dug in. If wages start falling - and wage growth is really now very, very low by historical standards - if they start falling, then you kind of get into a cycle of deflation where debts are rising relative to people's income, even if they're not borrowing more, and it's really, really hard to get out.
So sure, we really need - we really need another jolt to this economy, especially because the stimulus is going to deliver its maximum impact late this year, early next year, and then it's going to start to fade away. And there's no way we're going to have a fully recovered economy at that point. So we really need something to keep it going.
CONAN: And you pointed out, the three centrist senators cut a bunch of money out of the previous stimulus package. A second one, that's going to be even more difficult.
Mr. KRUGMAN: Yeah, I mean, there's a question about what's possible politically, and there may - I don't know whether it can be done. Of course, this was the argument for going with as much as you could possibly get, which I still think could have been more than they did in the first stimulus package. But you know, maybe we can keep this drum - banging this drum. I don't think anything's going to happen in the next couple of months, but if we start to see, kind of perversely, if the economy does show some pick-up, which I think it will in the next few months, they might be able to make a stronger case that we need more of that medicine.
CONAN: All right. Paul Krugman is our guest, a Nobel Prize-winning economist, a columnist at the New York Times and strangely has become something of a media hero. Here's a song about him that we found on the Internet. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.
(Soundbite of song)
Unidentified Man: (Singing) Geithner uses Turbo Tax (unintelligible) listen to him (unintelligible) hey, Paul Krugman, where the hell are you, man? Obama breakdown. Sing it with me now. When I listen to you things seem to make sense. Listen to him, all I hear is blah blah blah. Hey, Paul Krugman, where the hell are you, man? Your country needs you now.
CONAN: This is TALK OF THE NATION. I'm Neal Conan in Washington. We're talking about mixed messages we're hearing on the economy: we've hit bottom already versus the worst is yet to come. Tied into the conversation are debates over health care, how to pay for it, growing anger over huge payouts on Wall Street. Paul Krugman writes about a $100 million bonus in his New York Times column today. He teaches economics at Princeton University. He's won the Nobel Prize in economics. Today, he's here to help us decipher the flood of economic news.
Do you see recovery where you live? Our phone number, 800-989-8255. Email, firstname.lastname@example.org. You can also join the conversation on our Web site. That's at npr.org. Just click on TALK OF THE NATION.
And we do want to get to health care, Paul Krugman. I wanted to ask you, though, about the debate of the week, which I guess is about the Cash for Clunkers program, which was so successful, the first billion dollars was run through in a matter of days. The Senate may or may not vote for $2 billion more this week. Is this a stimulus package? A lot of people say this is wildly popular.
Mr. KRUGMAN: Well, it's wildly popular, probably because it's too good a deal. It's not clear that the environmental benefits are as good as they should be. It's probably not the greatest use of public money. But, you know, actually if we've got something that is making people feel better, and it is pumping money into the economy, maybe we shouldn't be too careful about it. I don't have a strong view on it, but I think this is - you might want to really hesitate before you shut this off. I think people do need something that's giving them a lift, even if it's not the best-devised program in the world.
CONAN: Here's some emails we've gotten, this from Susan(ph). I wish I could say I saw some improvement in the economy here in Cincinnati. Two people I know well both lost their jobs last week. I know several people in the construction/concrete business. It is not happening there. I think the Recovery Act helped big banks, AIG, more than it helped anyone I know.
This from Jason in Ypsilanti in Michigan: No, it is not getting better. It amazes me that President Obama hasn't visited Michigan to see some real-life America. They live in a bubble. People are still losing jobs, houses and hopefulness. It has been years since we had good news in Michigan. Wake up.
And this from Ann(ph) in Crozet, Virginia: This week, I saw two contract-pending signs on top of for-sale signs in front of houses. I can't remember the last time I saw one of those. So I took that as a sign of economic recovery in central Virginia.
And this from Randy(ph), who writes: Beware of economists. They are always wrong and are related to Chicken Little.
(Soundbite of laughter)
Mr. KRUGMAN: Okay, yeah, that was a favorite cartoon of mine that showed Chicken Little and the guy with the sign saying the end is nigh and a few other people, including me, sitting at a table together, but yeah.
Look, the industrial heartland of America is still in terrible trouble. It is not good and by the way not just. I mean, I - visually around here, in New Jersey, in New York City, things look terrible. The number of vacant storefronts is rising rapidly. The number of unsold houses is still clearly very large. This is not a recovery yet. It's certainly not a recovery in any sense that matters. There are signs of life in the housing market, but as people have been saying, they've been down so long, it looks like up from here. So when you start to see a few things sell, you say oh, well, that's better because we've had virtually a standstill. But no, this is - this is, at best, just the first glimmer of hope. It's not a good situation out there and particularly bad - of course, Michigan is - I was just looking at some data for another purpose there, and Michigan is an extraordinary disaster, which is only partly the result of the national recession but is certainly added to by it.
CONAN: Let's go to Iman(ph), Iman with us from San Antonio.
IMAN (Caller): Yes, hi. I'm actually a small business owner here, and we have been suffering really since last year. But you know, and then the minimum-wage increase that took place on Friday was really going to affect us, you know, as small business owners.
IMAN: But this past week, business has picked up.
CONAN: Oh, well.
IMAN: And, well, we don't know. I mean, obviously, that's only one week, and we don't know if that had anything to do with it, but I was wondering if Mr. Krugman thinks that the minimum-wage increase might help, you know, long term, hopefully. I don't know if our business is going to - you know, if it's going to - if the improvement is going to be consistent, or we're going to go slump back down, but you know, I just wanted to see what he thought because we've been hopeful.
Mr. KRUGMAN: Okay. There have been - here's what we know. There have been some sort of experiments with minimum wages, not intentional obviously, but places that have - like New Jersey had it some years back, had a significant minimum-wage increase, and you were able - people tracked what happened to small-business employment, and it did not fall. It actually - there was no sign that it had any negative effects. It's not clear. You wouldn't want to run to town and say there were positive effects, either, but it was - basically it seems that you'd give some poorly paid people slightly better incomes, and you don't actually seem to pay a price in employment.
Now obviously, if you pushed the minimum wage up to $25 an hour, we would have problems, but in the U.S., minimum wages are so low, we appear to be in a range where there isn't a major economic problem with pushing them up. And there is some social benefit to having higher wages at the very bottom. So I'm certainly in favor of what's happening here. It's not the solution to our problems, but it's a good thing, a small, good thing.
CONAN: Iman, good luck.
IMAN: Thank you.
IMAN: Okay, bye-bye.
CONAN: Let's go next to - this is Michael(ph), Michael with us from Moultrie, Georgia.
MICHAEL (Caller): Hi. I'm a public schoolteacher, and the public schoolteachers in Georgia have had to be furloughed for three days by the end of this calendar year, and we may get furloughed even more days next year because of continued state budget cuts, so…
CONAN: This shortfall in tax collection by the states across the country you've been talking about, Paul Krugman.
Mr. KRUGMAN: Yeah, yeah, exactly. And it's - you know, it is worth, just backing up for a moment from the way things we have arranged now, to just think about how crazy this is. I mean, why - so Wall Street messed up. We have a financial crisis because Wall Street messed up. The United States has not gotten any less productive. We're not poorer, really, as a nation. We have resources. It's not - it makes no sense to be slashing vital public services at a time like this, even aside from the fact that the laid-off schoolteachers add to the unemployment and, furthermore, have less money so they can't buy other things, which adds to the unemployment. But even leaving aside the economic impacts, to be savaging public services, which is happening all across the country, because of a - basically an operating-system crash on Wall Street is fundamentally insane.
Now, the way we've set things up, where state governments have to run balanced budgets year by year, more or less, and where it's all decentralized, leaves officials with no choice. But it is a fundamentally crazy thing - that aid to state and local governments was an attempt to at least limit the craziness. And as I said, of course, in the name of bipartisanship, three centrist senators forced a sharp reduction in what was actually one of the best parts of the Recovery Act.
CONAN: Michael, good luck.
MICHAEL: All right, thank you.
CONAN: Bye-bye. Go next to Tim(ph), Tim with us from Ithaca, New York.
TIM (Caller): Hello there, Mr. Krugman, Mr. Conan.
CONAN: Hi there.
TIM: Hi. My question is really about when we were - the health-care debate was just in its nascent stages, they were talking about certain efficiencies and how to come up with them, and single payer was brought up, and it was swiftly swept under the rug. And Obama, there was a - President Obama had a soundbite that I recall hearing. It just seems to stick in my mind. It said - he said something to the effect that if it were up to him, and he was inventing the system, it would have been an okay idea, but since he's not re-inventing the system, he's in no position to have that sort of a negative impact on one-sixth of the nation's economy.
So with that in mind, it seems that this restructuring, or this debate, is continuing on with the notion of, like, remodeling a house of cards. Why wouldn't we - you know, we know that the system is inefficient. Why wouldn't we just feel the pain up front and get a system in place that had the scheduled efficiencies…
CONAN: You're talking about single payer, Tim, here?
TIM: Pardon me?
CONAN: Are you talking about a single-payer system?
TIM: Yes, sir. Why - I mean, that's taken off, but…
CONAN: I'm just trying to clarify your question here. Paul Krugman…
Mr. KRUGMAN: Yeah.
CONAN: …this is as much politics as it is economics.
Mr. KRUGMAN: Yeah. I encourage the economics, if we could do it, if I thought there was any chance I would see it in the next 10 years - I'm almost tempted to say if I thought I'd see it in my lifetime - but anyway, I would go for single payer. Medicare is a - you know, everybody talks about single payer as if it was something foreign, but that's what Medicare is. Medicare has a lot of problems, but it's better, fairer and more efficient, actually, than the private insurance system.
The trouble as a political matter is really two things. One - or three things, maybe. First is, of course, the insurance industry would fight tooth and nail against it, which is, you know, not a good reason in terms of economics but realistically something you do need to think about.
Second, more important, if you're going to have a single-payer system, if you're going to have Medicare for all, then you do have to have additional taxes. Now, those taxes will replace premiums that people are currently paying or that their employers are paying, but you have a tremendously hard political sales job to explain to people that actually paying higher taxes is not going to make them worse off because their employers are going to pay less premiums, and so they're going to end up, on the whole, with just as high a wage as before. That's very, very hard. It's very easily demagogued.
And the third thing is you are telling people - you know, most people who have insurance, private insurance, are at least okay with it, and you're saying to them, we're going to replace with something even better. And so you're attempting - you know, you're offering fear of the unknown.
Now, all of these - in an ideal world, if we had philosopher kings running the country we would pay no attention to any of these things. But realistically, you're not going to be able to get single-payer for a long time. It just doesn't have any chance of getting through the political system. Whereas, we have a better-than-even chance of having an - a flawed, imperfect kind of messy but universal system of coverage enacted into legislation this year.
And so, I'm one of those people who say, you know, I would go for single-payer. It's the best thing that you can do. But it's not something you can actually do. So let's go for something imperfect so that we can do something about those 47 million people who don't have insurance, so that we can do something about the middle-class people who live in constant fear that if their job is lost or their employer changes policies, they're going to lose insurance. Take something that isn't what you really want but is better than what you've got (unintelligible).
CONAN: And that leads to this email question from - I'm not sure from who. But anyway, it says do you think health care bill with a public option will pass?
Mr. KRUGMAN: I don't know. I do believe that we will get a health care bill. I think there will be something that will be - offer an alternative to the private insurers. Whether it will be a true public option, I certainly hope so. And I think it's - there's going to be a lot of pretty stiff campaigning for it. But I would get something like 60, 65 percent odds that there will be a health care bill, but less-than-even odds that it will include a public option. That's just a very, you know, that's a totally unscientific judgment. But it's - that's where - and by the way, this tells you where the single-payer problem is, right?
Mr. KRUGMAN: There are - if all - if merely the possibility of a public option is raising all kinds of opposition, even though the public overwhelmingly favors it, think about what a proposal to entirely replace the private insurance industry would face in Congress.
CONAN: Our guest is Paul Krugman, a professor at Princeton University, a columnist for the New York Times, the winner of the Nobel Prize in Economics. And he's joining us from a studio at Princeton University. If you'd like to join us: 800-989-8255, email: email@example.com. You're listening to TALK OF THE NATION coming to you from NPR News.
Here's an email. This is from Gary(ph). Never underestimate the short-term effects of printing money and the long-term pain it creates. Never trust as accurate any economic data coming from the federal government. If the economy were improving, no one would need to use propaganda to convince anybody. It would be as obvious as rain or sunshine that everyone could see. What I fear is we have not cured the crisis. We have nearly postponed the day of reckoning with more borrowing and financial trickery.
Mr. KRUGMAN: Okay. A word on behalf of the hardworking public servants who produce economic data: They are not fudging the numbers. That doesn't mean that they're right, but I don't think there's any politicization of the data right now. It's not that such things never happen. But I believe that these are actually fairly - as these things go, the people at the Bureau of Labor and Statistics, the Bureau of Economic Analysis who produce all this stuff are really doing their best to stay honest. But it's true. I mean, it's entirely right. If we had a real, real recovery in progress, everyone would know.
Mr. KRUGMAN: You wouldn't need the data. So, there is a certain sense in which you say, well, it's like pornography. I mean, we know an economic recovery when we see it, and we certainly don't see that now. So, we shouldn't make the claim that things are getting better. They're not. All we can say is that there are faint glimmers of a turnaround possibly happening out there. Unfortunately, the business about printing money -they say that, actually, the trouble is, we're, right now, in exactly the kind of situation where printing money doesn't really do anything. The - where - the interest rates on short-term U.S. government debt are approximately zero. It's because people have flocked into safety.
What we actually do when we print money is not that the government goes out and drops stuff out of the helicopters, to use the famous metaphor. What it actually does, it goes out there and the Federal Reserve buys short-term U.S. government debt and pays for it by creating money out of thin air. The trouble is in the current situation that really doesn't do anything, because you're basically trading one zero-interest-rate asset for another zero-interest-rate asset. Banks just hang on to the stuff if you put into bank reserves. There is some actual increase in people hanging on to currency, right? There's less business going on in the economy. But there's actually more money out there floating and there -it's in people's mattresses…
(Soundbite of laughter)
Mr. KRUGMAN: …probably not literally, but it's basically just sitting there which is what happens. This is the kind of situation where…
CONAN: Savings accounts earn half a percent a year, yeah.
Mr. KRUGMAN: Yeah. And so, this is the kind of situation where the whole problem is that you can - the normal response which is just putting out more money is not effective. So if this is - if it was easy to inflate, to cause inflation, we wouldn't have the economic problem we have. It's the fact that it's so hard to actually get people to spend money that is the problem.
CONAN: And let's get one last caller in. This is Bill(ph) in Kansas City.
BILL (Caller): Good afternoon. Great show, gentlemen. Hello, doctor. I'm a big fan of yours. I can tell you that in Kansas City - last month, Kansas City led in the greatest percentage of vacancies in homeownership and apartments. So nothing is rippled. It's all rippling from the coast to here.
CONAN: So, no…
Mr. KRUGMAN: Yeah.
CONAN: …green shoots there in Kansas City?
BILL: No green shoot. Well, my own personal green shoot is I've been suffering a recession for eight years because I lost my job at the beginning of the century and now making 20 - or 40 percent of what I used to earn eight years ago.
BILL: My - and so I don't think this is uncommon. I think this is a ripple which goes to my question to the doctor. I have a theory that goes all the way back to the esteemed Mr. Moynihan(ph) where he was complaining about the lack of purchasing power for the regular worker, in the dark days of the second worst president, Ronald Reagan, when he destroyed the workers' salary base…
CONAN: And Bill, you're going to have to make it really quick.
BILL: I will. I will. I'm going to - quickly, they relied on credit cards in the '80s, they relied on their homeownership in the '90s. And now, how can we even worry about inflation or recovery until we can get true purchasing power back to the consumer?
CONAN: And I will give you 45 seconds to answer that, Paul Krugman.
Mr. KRUGMAN: It's a long question, but let me just say what is true is that one of the reasons this recession feels so terrible is not just the depth of recession but the alleged good years weren't all that good. The, quote, unquote "Bush boom" felt like a pretty poor economy to a large number of people. We never did have that period of prosperity. There wasn't any period when wages were rising solidly. There wasn't any period when people were actually feeling that they were getting solidly ahead except through the rising value of their homes, which turns out to have been a bubble. So, sure it's really a lot of bad stuff that goes back a long way, and now we're paying the price.
CONAN: Bill, thanks very much for the call. And we hope things get better for you. And Paul Krugman, thank you so much for your time today.
Mr. KRUGMAN: Thank you.
CONAN: Paul Krugman, a professor at Princeton, a columnist for the New York Times, where he blogs as well. You'll find a link to his blog, "The Conscience of a Liberal" on our Web site. That's at npr.org.
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