Krugman: Income Inequality Pricks 'Conscience' In his book, The Conscience of a Liberal, economist and New York Times columnist Paul Krugman examines how political polarization has driven growth in income inequality in the United States. His prescription: a new New Deal.

Krugman: Income Inequality Pricks 'Conscience'

Krugman: Income Inequality Pricks 'Conscience'

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Economist and New York Times columnist Paul Krugman's latest book, The Conscience of a Liberal, looks at the growth of income equality and the political polarization in the United States over the past 80 years. Dan Deitch hide caption

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Dan Deitch

Economist and New York Times columnist Paul Krugman's latest book, The Conscience of a Liberal, looks at the growth of income equality and the political polarization in the United States over the past 80 years.

Dan Deitch

In his new book, The Conscience of a Liberal, economist and New York Times columnist Paul Krugman examines two trends of recent years: the rise in economic inequality in the United States and the number of wealthy Americans, as well as the growth in political polarization.

Krugman argues that the political development drove and enabled the economic change. Movement conservatives took over the Republican Party, won elections, and began rolling back the power of unions, federal welfare programs and, above all, taxes.

The result, Paul Krugman tells Robert Siegel, is a class of very rich Americans, whose size is unprecedented and whose good fortune is not shared by the vast majority of their countrymen.

Of course, the United States is a much richer country than it was 35 years ago, and most Americans possess things such as homes and consumer goods unimaginable in the past. But they are more likely to be without health insurance, Krugman notes.

"So in some crucial ways, things have not made progress. Above all, we haven't had the kind of progress we should have had," he says. "People aren't nearly as much better off as they would be if the gains from economic growth had been broadly distributed."

Krugman says that the economic inequality in the United States is the direct, intended result of programs Republicans brought to government, starting with the election of Ronald Reagan in 1980.

"Since the 1970s, the conservative movement that took over the Republican Party has systematically set out ... to dismantle all of the institutions created by Franklin D. Roosevelt and the New Deal to make this a more equal society," such as unions, progressive taxation and the minimum wage, Krugman says.

He also discusses the role race has played in influencing Americans to vote against their own economic self-interest, as well as how the shortcomings of the Clinton administration helped develop today's progressive political movement.

Excerpt: 'The Conscience of a Liberal'

Cover 'The Conscience of a Liberal' by Paul Krugman

A New New Deal

A few months after the 2004 election I was placed under some pressure by journalistic colleagues, who said I should stop spending so much time criticizing the Bush administration and conservatives more generally. "The election settled some things," I was told. In retrospect, however, it's starting to look as if the 2004 election was movement conservatism's last hurrah.

Republicans won a stunning victory in the 2002 midterm election by exploiting terrorism to the hilt. There's every reason to believe that one reason Bush took us to war with Iraq was his desire to perpetuate war psychology combined with his expectation that victory in a splendid little war would be good for his reelection prospects. Indeed, Iraq probably did win Bush the 2004 election, even though the war was already going badly.

But the war did go badly — and that was not an accident. When Bush moved into the White House, movement conservatism finally found itself in control of all the levers of power — and quickly proved itself unable to govern. The movement's politicization of everything, the way it values political loyalty above all else, creates a culture of cronyism and corruption that has pervaded everything the Bush administration does, from the failed reconstruction of Iraq to the hapless response to Hurricane Katrina. The multiple failures of the Bush administration are what happens when the government is run by a movement that is dedicated to policies that are against most Americans' interests, and must try to compensate for that inherent weakness through deception, distraction, and the distribution of largesse to its supporters. And the nation's rising contempt for Bush and his administration helped Democrats achieve a stunning victory in the 2006 midterm election.

One election does not make a trend. There are, however, deeper forces undermining the political tactics movement conservatives have used since Ronald Reagan ran for governor of California. Crucially, the American electorate is, to put it bluntly, becoming less white. Republican strategists try to draw a distinction between African Americans and the Hispanic and Asian voters who play a gradually growing role in elections — but as the debate over immigration showed, that's not a distinction the white backlash voters the modern GOP depends on are prepared to make. A less crude factor is the progressive shift in Americans' attitudes: Polling suggests that the electorate has moved significantly to the left on domestic issues since the 1990s, and race is a diminishing force in a nation that is, truly, becoming steadily less racist.

Movement conservatism still has money on its side, but that has never been enough in itself. Anything can happen in the 2008 election, but it looks like a reasonable guess that by 2009 America will have a Democratic president and a solidly Democratic Congress. Moreover, this new majority, if it emerges, will be much more ideologically cohesive than the Democratic majority of Bill Clinton's first two years, which was an uneasy alliance between Northern liberals and conservative Southerners.

The question is, what should the new majority do? My answer is that it should, for the nation's sake, pursue an unabashedly liberal program of expanding the social safety net and reducing inequality — a new New Deal. The starting point for that program, the twenty-first-century equivalent of Social Security, should be universal health care, something every other advanced country already has. Before we can talk about how to get there, however, it's helpful to take a good look at where we've been. That look — the story of the arc of modern American history — is the subject of the next eight chapters.

Excerpted from The Conscience of a Liberal (c) Copyright 2007 by Paul Krugman. Reprinted with permission by W. W. Norton.