This exclusive interview with Nobel Prize winner, Paul Krugman was recorded in Silicon Valley. Dr. Krugman was in town to deliver a lecture as part of the Foothill College Celebrity Forum Series. This segment is titled: Will Climate Legislation Kill the Economy? Click here for video
Alison van Diggelen: Paul thank you very much for joining me today on Fresh Dialogues.
Paul Krugman: OK. Good to be doing this.
Alison: Now some people are saying, climate legislation is going to kill the economy. What do you say to that Paul?
Paul: Well, a lot of people have done serious work in trying to figure this out. Now, to some extent it will be unknown territory: we don’t know what happens when you set the price of carbon significantly higher than it is now, but the economy has got a lot of flexibility. We have precedent. We had the problem of acid rain and we introduced a cap and trade system – SO2 permits - and a lot of people said it was going to kill the economy…terrible stuff. In fact it turned out that dealing with it was cheaper than most estimates had suggested before hand. Given the incentives, the private sector found ways to generate a whole lot less acid rain.
So current estimates are that if we did something like the legislation that the House has already passed, that ten years from now it would be maybe one third of a percentage point off GDP. And 40 years from now, when the constraints would be much stiffer, it would be something like 2% off GDP, relative to what it would otherwise have been. So if you think about what it would do to the growth rate, it’s minimal. We don ‘t know if these numbers are right, but if history is any guide, they’re probably too pessimistic. It’s just not a big deal.
Alison: Let’s talk about your column, Paul… Now you didn’t pull any punches with the Bush administration. You talked last night about the Bush White House being evil and stupid. What is your characterization of the Obama White House?
Paul: Oh, they’re good guys and they’re smart but just not as forceful as I’d like. It’s a world of difference. When I argue with them in my column this is a serious discussion. We really are in effect speaking across the transom here…
Alison: Is it really a dialogue, are you hearing back from them?
Paul: Oh yeah. Yeah. I mean yes there’s that…
Alison: Does Ben Bernanke call you up?
Paul: Ben Bernanke doesn’t call me up but is aware of what I’m writing… people in the administration do call me. I’m never going to be an insider type but at this point I do have genuine contact with both the White House and with congressional leadership. It’s no longer this sort of Cold War as it was during the Bush Years.
Alison: Some people describe your writing as having a missionary zeal. Where does that come from Paul. Can you trace that back?
Paul: Oh. Gosh…I have to say that during the Bush Years, if you didn’t feel passionate that we had to change things, there was something wrong with you…
Alison: You didn’t have a pulse?
Paul: Right. So..before that, I was in fact a pretty cool…uh…
Alison: A cool dude…?
Paul: A pretty cool technocratic sort of writer. I had some fun but I wasn’t crusading. So that is what changed it. And now, I’m trying to make this progressive moment in American history a success. So that’s where I’m pushing.
Alison: So you feel the missionary zeal is gone now, or is it just redirected?
Paul: It’s not the same. There was the sheer.. OMG what a horrible thing…we need to alert people as to what’s going on…I’m still trying to get stuff to happen…it’s less doom laden maybe than it was in the Bush years. But stuff has to happen….I’m still pretty passionate about the column.
Alison: And do you feel you’re more effective as a columnist than inside the government?
Paul: Oh yeah! That’s a personal….you have to know who you are…know what you’re good at. I’m not a…being an effective government official, you have to do bureaucratic maneuvering, be pretty good at being polite at the appropriate moment… you have to be reasonably organized…I’m none of those things.
Alison: An honest man.
Paul: I can move into a pristine office and within three days it will look like a grenade went off.
Paul: You really don’t want me doing that sort of thing.
Alison: Right. Paul Krugman, thank you so much for taking the time. I really appreciate it.
Paul: Thank you so much.
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