Streams

Economic Nobel-ity

Tuesday, December 16, 2008

Paul Krugman, Nobel Prize-winning economist, op-ed columnist for the New York Times and author of The Return of Depression Economics and the Crisis of 2008, gives his prescriptions for the ailing economy.

Guests:

Paul Krugman

Comments [74]

Joanne from Westchester

Why start with projects that are "shovel-ready"? Why not first expedite public works projects that have already been started, and should have been finished years ago (like City Water Tunnel #3, and rehabilitation of the remaining NY City water supply system). Rehabilitation of the tracks used by Amtrak in the Northeast corridor is another idea (and would make rail travel in the Northeast more of an option to driving). The money for these projects is already budgeted and allocated, so they'd be way ahead of the curve. While we're putting people to work finishing up those projects, we can take a hard look at the "shovel-ready" projects being proposed and implement the most promising ones (in terms of jobs and economic stimulus).

Dec. 17 2008 10:01 PM
Elizabeth Cohen from Manhattan

Regarding suggestions for "shovel ready" programs while you were speaking to Paul Krugman: why not invest a lot of money in arts programs around the country that need the funding? Arts inject a lot of additional money into the economy through added travel, restaurant and hotel spending, plus the added employment in those sectors as well as the arts organizations themselves. They would know what to do with the money --Thanks.

Dec. 16 2008 08:54 PM
mc from Brooklyn

Ben:

Perhaps the market "dictates" $78,000 a year. I don't believe for a minute the red herring about unions controlling the purse, that is a fantasy. If they are able to negotiate a good deal for their members, more power to them. If it looks like such a sweet deal to you why don't you try it? They are always looking for new people.

Dec. 16 2008 04:37 PM
Gregory Blasi from Westfield, N.J.

Brian,

As a fan of Mr. Krugman I would enjoy hearing his response to this question. Although we could not put labor and manufacturing to work ammediately we could potentally put architects, engineers, scientist, and invention proposals to work.

Architects/Planners could provide plans and models for future growth, infastructure (transportation routes), possible locations for alternative power sources, and local farming (ie. roof, local parks). These projects could find funding to build existing/new ideas and discuss there successes or failures.

Engineers - unlimited posibilities in mechanical, electrical, structural prototypes. Re-engineering existing manufacturing facilities and locations for future needs.

College/Private competition - provide funding and award programs, design and build prototypes of future transportation, generators, water filtration and storage. Information would be discussed and debated openly for future private/state funding.

Plan and build a virual world, mapping world resourses, distribution, location of manufacturing. Hopefully this would all entail cleaner, healthier, sustainalble approaches to living for all.

Dec. 16 2008 04:29 PM
Joe from New Haven

Also:
Who says there is an army of uneployed construction workers just siting out there waiting to build stuff. You can't just hand a recently laid off realtor or hedge fund goffer a hammer and expect them to pour concrete, erect steel, install drywall. These are skills that take a lot longer than 6 months to learn. It's much easier to go from plumber to presidential campaign advisor than vise versa. Again, at the front end "infrastructure" projects do employ plenty of people (including women). As for the issue of gender and hard physical work, try a grinding 10 - 12 hour shift as a nurse in a typical US east coast understaffed urban hospital. Or for that matter, how about teaching math to an inner city classroom full of 33 teenagers. Yeah....those sectors of "human infrastructure" could use a infusion of help. Just don't plan on hiring unemployed construction workers to do the work.

Dec. 16 2008 03:25 PM
Joe from New Haven

Paul:
"Bricks and mortar" type projects (schools, libraries, bridges, parking garages at train stations, renewable energy infrastructure....etc) will employ plenty of lawyers, financial services people, engineers, architects, computer drafting specialists almost immediatly. These types of firms are currently laying off people by the hundreds!!! And yes, many of these people are women!!! If procurement rules are revised (employing more lawyers) these projects (where appropriate)can be "fast tracked" or executed on a "design-build" basis which will employ construction company project managment teams very quickly. Within 6 months, orders for steel, concrete, electrical systems, heating and cooling systems, elebvators could be placed.
Also, how about direct grants to states and towns who are having to shelf projects that ARE "ready to go" but must instead cut municipal jobs because of budjet shortfalls. This would not have been a problem for Robert Moses!!

Dec. 16 2008 02:56 PM
Ben Thompson from NYC metro area

It's not a stereotype- it's basic commense sense. Most women aren't interested in handling jackhammers and heavy-lifting. Some do, of course, but it's harldy a put-down or offensive to speak in generalities about gender roles.

Dec. 16 2008 01:10 PM
Maura from Smithtown, NY

Brian - usually I love your show, but I'm a little disappointed in you. You discussed that most of the "infrastructure" positions were for male workers - leaving the female worker out of the plan (I guess we can just stay at home, put on our aprons, and bake cookies and cakes). I'm just wondering what you think the difference is between male and female "jobs" - because believe me - If I need to go out to a construction site to work in zero degree weather to keep a roof over my head - you can betcha I'd do it ! Bad Bad Brian for stereotyping!

Dec. 16 2008 12:55 PM
Ben Thompson from NYC metro area

They should get paid what the market dictates. Market considerations don't really apply in NJ, however, as unions control the purse there. I will say this: that it looks like a pretty sweet deal from here to have a recession-proof job, with lifetime employment and benefits, all without having to deliver results. Results aren't factored into the pay scale, period. It's a far cry from my existence in the private sector.

Dec. 16 2008 12:39 PM
mc from Brooklyn

Ben:
I'm not saying I know what the job should pay. Neither do you, evidently. If we are having a hard time retaining quality people then perhaps $78,000 is not enough.

Dec. 16 2008 12:14 PM
Ben Thompson from NYC metro area

MC: So the average of $78,000 per year in NJ is not enough? If not, then what should it be?

Dec. 16 2008 11:40 AM
mc from Brooklyn

@#60:
Then maybe you don't really know what the job should pay? Ot what it's worth?

Dec. 16 2008 11:27 AM
Carlos from queens

I had paid my credit cards on time and most of them are 0% interes...
But my wife was lay off and I would like to pay most of the full amount to not worry about this payment... do you think they will deal with me? and I would be able to pay 20000 instead of 35000? what do you think?

thanks

Dec. 16 2008 11:24 AM
Viviane from NYC

I called AT&T Universal Card to ask if they could lower my rate--I had been in good standing with them for years. I told them if they couldn't that I would be transferring my balance to another card with a lower rate. They said they would look into it and write to me with a response. A week later I received a letter saying that they could not lower my rate, so I transferred the balanced as I'd said I would. Two weeks later I got a letter from them offering a special low interest rate on transfers. What the heck is that about?

Dec. 16 2008 11:18 AM
Ben Thompson from NYC metro area

No.

Dec. 16 2008 10:54 AM
mc from Brooklyn

john earnest:
The Nobel Economics Prize was won by Krugman for writing he did on trade. Not that related to his columns in the NY Times.

Ben Thompson:
Have you ever tried being a teacher in NYC?

Dec. 16 2008 10:45 AM
Ben Thompson from NYC metro area

Miriam #41:
In NJ, the average teacher cash salary is $50,000 per year. Factor in the health benefits and it's up to at least $60,000 per 9 month school year (yes, 9 months due to all of the time off during the year, NJ convention, Christmas week, Spring break, etc). If you pro-rate that for 12 months, then it's $78,000 per year. Not too bad for a job that has good hours and is impossible to get fired from. And has a lifelong pension paid by your fellow taxpayers. Given life expectancy rates for women, you will probably collect a pension for longer than you worked.
Speding for education has never been higher- ever. Folks like me are expecting results, not more pleas for more cash.

Dec. 16 2008 10:40 AM
Ken from Putnam Valley

John from Baldwin,

Paul Krugman won the 2008 Nobel Prize for Economics. Aside from being a long term student and commentator on economic issues for the New York Times, he has also contributed his own analysis in the form of scholarly papers that merited their award.

Dec. 16 2008 10:37 AM
Chris Manschreck from New York, NY

If, based on BLS statistics, a percentage point off the unemployment rate equals about 1.5mil workers, then a $200bil spending should mean each worker could earn $133k.

I don't hear anyone saying that people will actually be making anywhere near amount. Who pockets the rest? Is this really the best way to stimulate an economy?

Dec. 16 2008 10:33 AM
john earnest from baldwin ny

What did Paul Krugman win the Nobel Prize for, and does it relate to our current crisis?

Why did the price of gas go down by half, and how does this relate to the current crisis?

Dec. 16 2008 10:31 AM
Chris Manschreck from New York, NY

How does Paul Krugman figure that $200Billion in spending will reduce the total unemployment by 1% point?

Dec. 16 2008 10:28 AM
Mark Mazur from Irvington NY

Fast projects:

Remediation of invasive species that have invaded massively along our roadways and waterways. Lo tech, lo cost easy training

Accelerate and upgrade road pavement and road sign standards all around the mtero area and the entire US. The situation is pathetic. Again lo tech, low cost and quick

Q for Paul why didnt the inital bailout move money along? are the banks THAT MUCH MORE exposed than they have admitted?

Dec. 16 2008 10:28 AM
Josh Broder from Brooklyn

How about a short term radical tax credit for the purchase and installation of Green technology?

Dec. 16 2008 10:28 AM
Gail from Brooklyn

The oganization Out2Play is currently working on designing and building new playgrounds for public schools and their communities. They are currently in design phase for projects scheduled to be built this summer and ready for the start of the next school year. Budgets are typically around $200,000. Let's fund more projects like that.

Dec. 16 2008 10:28 AM
Catherine from Rhinebeck, NY

OK, lots of the projects suggested are not "shovel ready," but once the funding is guaranteed, doesn't that start credit moving? We have to hire the engineers, surveyors, etc., etc., establish the project plan, standards, etc - all of which has to be funded NOW and the activity promotes the idea of $$$$ in the future.

Dec. 16 2008 10:28 AM
Ken from Putnam Valley

How about addressing the issue of Healthcare reform not as the misleading popular name implies but as "Insurance Reform" that is needed in order to make US production AND labor more competitive in global markets?

By creating a Newer Deal we could remove the need for employers to pay for health directly and shift this directly to individual taxes. By doing this version of *single payer* labor could actually keep current wages and employers could still lower prices and become more competitive.

This is just the beginning of a complex analysis but please speak to the larger issue.

Dec. 16 2008 10:28 AM
Ken Handel from New York, NY

If higher education is a goal to be supported why not reinstate the federal tax deduction on interest paid on student loans? Or emphasize low-interest loans directly from government, eliminating completely the private sector?

Dec. 16 2008 10:27 AM
david from NYC

Brian, who will be getting contracts from the govenment to build to build infastructure are they going to be the same companies that hire illegal immigrants south of the border. Who's unemployment are we going to help ours or south america's

Dec. 16 2008 10:27 AM
David from Columbia University

Also, can you ask about the potential for green investments to revolutionize our economy?

Dec. 16 2008 10:26 AM
John Zhu from New Jersey

How about convincing states to temporarily suspend sales taxes, and then using federal money to compensate states for loss of revenue. Will stimulate consumption fast enough and has the lowest risk (of having federal government running the economy)?

Thanks

John Zhu

Dec. 16 2008 10:26 AM
peter joseph from brooklyn

I know this is not directly on point, but universal health care is crucial to long term economic health. Th question is this: aren't there taxes to be recovered once health care is nationalized (companies could no longer deduct the expense), and couldn't this be applied to a national health care plan?

Dec. 16 2008 10:26 AM
Dr. Sharon from NYC

Did Paul Krugman just say "female jobs"? UGGGGGGGHHH.

Dec. 16 2008 10:26 AM
Michael Scott from Inwood, NY

Are US Treasury Bills safer than putting your money in an FDIC insured CD with US Banks struggling to stay afloat and the FDIC almost broke?

Dec. 16 2008 10:26 AM
Miriam Sumner from South Orange, NJ

Invest in education.. teach teachers! to high levels of expertise..so we train big, creative and careful thinkers.

Dec. 16 2008 10:26 AM
Lindsay from Brooklyn

I am shocked to just have heard both Brian and Paul refer to jobs as "men's jobs" and "women's jobs." This gendered perspective of the division of labor is what the women's movement, affirmative action, etc. has been working to eradicate from our society. We should be moving forward, not perpetuating gender norms from the depression era.

Dec. 16 2008 10:26 AM
KLoew from NYC

Why not fund existing public companies like the MTA to prevent service cuts; therefore prevent job cuts. That would help the jobs sector from both a work standpoint and a service to workers who rely on reasonable mode of transportation to their jobs.
No shovels required!!!
Thanks,
KLoew

Dec. 16 2008 10:26 AM
Janet Godner from Tribeca

The debris from the WTC pile was cleaned up months ahead of schedule and below cost. This shows that with motivation and will projects can be completed faster and cheaper than expected.

Dec. 16 2008 10:25 AM
Ed from westchester

I'm starting a small business and I wish i could borrow at government rates right now, because I would greatly expand my project. With interest rates so low, now is the best time to borrow money and LEVERAGE (i know, its a bad word) the equity capital available. If the whole world is looking to buy 30 year government bonds at less than 3% interest, we should make as much as they want and have the government temporarily take the roll of the banking system.

Dec. 16 2008 10:25 AM
Randy Henriksen from Manhattan

Given the consolidation of wealth that's been occurring and the scandalous collapse of the financial, manufacturing and housing sectors - what distinguishes capitalism as its practiced in the US from a ponzi scheme?

Dec. 16 2008 10:25 AM
Phil Henshaw from NY

The "peak everything" concept is a broad generality about how everything is getting scarce in the sense of being more complicated and expensive and coming in smaller quantities. It's something like an observation of a whole system point of diminishing returns. Development curves for any kind of business or industry always have such points of diminishing returns, where increasing investment results in decreasing future opportunity. Would such a point ever be crossed for multiplying the wealth we create out of natural resources in total?

Dec. 16 2008 10:24 AM
Leo in NYC from soho

how about vouchers for any kind of accredited continuing/higher education?

Dec. 16 2008 10:23 AM
Megan from Manhattan

Although there is much to recommend spending on 'shovel-ready' projects to build America's physical infrastructure, many Americans with college and advanced degrees find ourselves underemployed in today's marketplace. It seems a waste of a highly educated generation's money and effort to hand us shovels with diplomas. Why not, for example, increase funding to the NIH or DOE for scientific and public health research? These programs have been slashed under the Bush administration.

Dec. 16 2008 10:23 AM
Hugo A. Garcia

How about taking all the monies from the corporate bailouts and using those billions to increase the monthly ammount of unemployment benefit so that you can actually survive until you get a new job. Seriously, there is NO New Yorker that can survive on 1200 a month.

Dec. 16 2008 10:23 AM
Steve Berens from Innwood

Help BIG 3 be more competitive and breadboard Nat health care by taking over the 3's health care. Our system is probably the worst since we spend more have more doctors and rank below Cuba

Dec. 16 2008 10:23 AM
David from Columbia University

Can you ask Dr. Krugman whether there are any "green" shovel-ready projects?

Dec. 16 2008 10:22 AM
Charlotte Kaiser

Question for Paul Krugman:

I understand the arguments for the auto bailout, but I really want to understand why this is not just postponing the inevitable--because if it is, I am not sure I see the value of throwing good money after bad. Was the bailout of the English auto company Leyland worth it?

Dec. 16 2008 10:22 AM
Ben Thompson from NYC metro area

The bubble built up; the bubble is deflating. The market is trying to correct itself. Let it. Doesn't it seem obvious that the approach offered by Krugman and other Keynesians will only prolong the agony with all of the new government spending? Not too mention give us rampant inflation?

Dec. 16 2008 10:22 AM
ceolaf from brooklyn


What about paying off local or state government bonds? Or, at least pick up the payments for a year or two.

This would have the form of paying for existing or past efforts. So, no that wouldn't be new employment in those projects. But it would allow them to keep other spending where it is now. That is, by paying for existing bonds, other government services/spending/jobs would be preserved.

That could be done virtually immediately.

Dec. 16 2008 10:22 AM
Don from Queens

WWII was a big factor in getting the US out of the Great Depression. How is it that we are a country spending money in two wars and yet we aren't seeing any economic benefit?

Dec. 16 2008 10:21 AM
David from manhattan

Are you saying there is a contradiction in the need to build and the fact that we can't build right away? Or that the Obama administration has to be "smart" about it.

Do they even have the opportunity to think big, like bring high speed internet to the entire nation or build needed highways.

Dec. 16 2008 10:21 AM
Dan Riordan from Red Bank, NJ

Let's spend it on schools. In NJ, there are billions of dollars in projects on hold because the Schools Development Authority (nee Schools Construction Corporation) ran out of money. And millions of dollars in bond referenda for school construction were recently defeated at the polls. These are shovel-ready projects looking for funding.

And if our kids are going to have to pay for all this spending, they might as well benefit directly.

Dec. 16 2008 10:20 AM
Dan Bromberg from Cranford NJ

Is there any talk about expanding our railroad infrastrucutre to the likes of the european system. Public works programs in the 30's expanded our highway infrastrucutre which certainly contributes to some of the climate problems we are facing today.

Dec. 16 2008 10:18 AM
NWP from Greenwich

Please ask for comment as to why the nosedive of the economy occurred so rapidly.

Could it be that big business has learned the lesson that those that fire first get the bigger profits (less loss) while those that believe that a worker you are paying is your customer is the loser.

Dec. 16 2008 10:18 AM
Evan from Brooklyn

Picking up on Obama's intention to perform enrgy improvements on buildings, we already have in NY an extensive program for this through NYSERDA- simply expand the subsidy and scale of this effort.

Dec. 16 2008 10:18 AM
Julie from Hastings-on-Hudson

Why is Obama ignoring Nobelists Krugman and Stiglitz while appointing people who helped create this mess when they worked for Robert Rubin (and in the case of Larry Summers, STILL refuse to admit that deregulation was wrong)?

Dec. 16 2008 10:17 AM
RC

Also what do we do about the off balance sheet items like social security (the government borrowing from itself to pay its self at a later date) and medicare? The costs are suppose to be very large down the line.

Dec. 16 2008 10:17 AM
Jon from Glen Cove

Maybe it is better to consider local, even individual versions of "shovel ready". For example give tax rebates other incxentives to have people install solar heating and electric in their own home.

Dec. 16 2008 10:17 AM
John from Manhattan

Krugman was more than a wee bit harsh on Obama during the primary campaign, forecasting that an Obama administration would be a disaster while championing John Edwards. Had John Edwards become the Democratic nominee, we'd now have a president-elect McCain.

Can Paul Krugman admit that his initial fears about Obama were unfounded and maybe even hysterical? Or, does he never make mistakes--just like George W. Bush?

Dec. 16 2008 10:17 AM
Margaret Fell from Queens

Wait a minute. Infrastructure projects are necessary and important, but-- in given how things really are-- they will address employment overwhelmingly among men only. Women are employed mostly in service industries. What is the massive economic job stimulus program for women-- for all areas of the economy where female employment is concentrated?

Dec. 16 2008 10:16 AM
Bob from Brooklyn

Would Mr. Krugman comment on the Fed's expected "quantitative" easing, directly injecting more currency? Does this amount to a currency devaluation and what are expected future effects?

Dec. 16 2008 10:15 AM
Dan Bromberg from Cranford NJ

Is there any talk about expanding our railroad infrastructure to the likes of the European system. The public works programs of the 30's expanded our highway systems which may contribute to the environmental problems we are having today.

Dec. 16 2008 10:15 AM
Sarah

I have a big crush on Paul Krugman. Love his column.

I do fear that we still have a ways to go before we reach the bottom.

I do agree that we need more government projects and less stimulus packages.

Dec. 16 2008 10:15 AM
Steve (the other one) from Manhattan

Something we could do now? Hire people to go into federal, state, and city buildings and install motion-sensor switches. We'd save tons on the electric bill.

Dec. 16 2008 10:15 AM
Leo in NYC from soho

how about extending the 2nd ave subway all the way to downtown and have two crews working toward each other?

Dec. 16 2008 10:14 AM
RC

Should we expect to see massive corruption from a government stimulus?

We had corruption from the Iraq war, the building of the railroads, world war 2 contracting etc.

Dec. 16 2008 10:14 AM
Susan Benard-Handler from Amityville, NY

We have all heard the suggestion of a plan to put people back to work on infrastructure projects. Who are the people who are going to perform these jobs. Are the white collar unemployeds going to wake up one morning, put on there work boots, fill up their thermoses and go to work? How are these people going to be trained to do this work?

Dec. 16 2008 10:14 AM
Cory from Manhattan

In the 30's most of the unemployed were unskilled or lightly skilled workers used to working physical jobs. Are we really going to give unemployed office workers shovels and set them to work? Using the kind of machinery used in modern construction requires existing skills. Are we going to give shovels to unemployed financial workers? What about all the unemployed female office workers? Give them shovels as well? What can all these people really do?

Dec. 16 2008 10:14 AM
Zuma Jay from Brooklyn

How about imposing a cap on credit card interest rates so that consumers can clear up their debts and begin spending again?

Dec. 16 2008 10:13 AM
Jessica Noon from Jersey City, NJ

Suggested projects:

1. Develop a domestic program to process recyclable items and convert them to materials we can then us in production or export to other countries. (Right now we export our recyclables, and with the current markets, recycling programs across the US are failing).

2. Put all of the potential mass transit projects into work! (already on line and planned through the FTA)

Dec. 16 2008 10:13 AM
AWM from UWS

Mr. Krugman,

Do you fear the dropping of the Alt A and Option Arm mortgage shoe as Whitney Tilson & others do? If so, how can this country avoid a depression if the commercial real estate, credit card and auto loan shoes drop as well?

Why do I keep thinking about shoes?

Dec. 16 2008 10:13 AM
Maggie Clarke, Ph.D. from Inwood

What? There aren't enough projects? What about building more photovoltaic factories and installations? How about more wind turbines? Tidal current turbines in all of the U.S. estuaries. More material recycling and reuse facilities (i.e. separation and product repair facilities)? More water pollution plants? I could go on...

Dec. 16 2008 10:13 AM
Nachshon

shovel ready? isn't the military complex ready and able to go? (sheesh)

Dec. 16 2008 10:12 AM
Leo from Queens

Congratulations Mr. Krugman. I'm a great fan of you though I do disagree with you at times.

Ideas for where to spend on a big stimulus package in NY/NJ area:

1. additional tunnel from NJ to Penn Station - thus expanding NE Corridor and relieving congestion on Amtrak and NJ Transit
2. Rebuild Tapan Zee bridge
3. New/additional subway cars for NYC Subways
4. Build additional schools in NYC
5. Build electric transmission lines/upgrade lines to bring hydro and wind generated electricity from northern parts of NY
6. Expand the River Line in Trenton to the state offices
7. Electrify the Raritan River NJTransit Line
8. Expand N Subway line from Astoria to La Guardia Airport
I can go on and on and on and on..

Dec. 16 2008 10:08 AM
Gianni Lovato from Huntington,NY

Arguably in measures small or large, we, the average Janes and Joes, are all responsible for the current crisis.
Is it possible that someone with mr. Krugman acumen can address what WE can do in our individual lives and with our limited (and now very limited) means to help right some of the wrongs?
Obviously there is no quick fix, but we must start somewhere.
Thanks for ANY suggestion.

Dec. 16 2008 10:06 AM

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