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Saturday, January 17th, 2004


The Great Unraveling: Losing Our Way in the New Century

by Paul Krugman

A review by C. P. Farley

Paul Krugman was once a mild-mannered economics professor at Princeton with a reputation for brilliance, an impressive track record (his economic predictions had a tendency to prove accurate) and, many said, a shot at the Nobel Prize in Economics. Then, the New York Times hired him to write a twice-weekly column about economic issues for the op-ed page, and his days of professorial tranquility were over. These days, he receives death threats.

Though the Times hired Krugman at the height of the Internet bubble with the expectation that he would explain to an eager public issues pertinent to the new economy, it didn't turn out that way. Shortly after he took the job, the Internet bubble burst — and George W. Bush was elected... er, became president. Krugman did turn out to be a lively writer with a jaunty wit and a knack for making complicated issues understandable. What the paper didn't count on was that Krugman, who is also uncommonly plainspoken, would become the Bush Administration's most feared critic.

Unfettered by traditional codes of journalistic reserve, Krugman was among the first to use the "L" word in an article about the Bush administration. As early as 2001, here's what he had to say about the Bush administration's first tax cut: "So how did the conferees manage to preserve almost the whole Bush tax cut despite a budget resolution that should have forced a substantially smaller cut? They lied."

In fact, Krugman's accusations against the Bush administration go much deeper than dishonesty. In the forward to The Great Unraveling, a selection of his New York Times columns, Krugman cites a passage from a now-obscure history of 19th-century diplomacy written in the 1950s. Using Napoleon as a case study, the author analyzes how a "revolutionary power" goes about overturning a stable political system. In short, the revolutionary power rejects the legitimacy of the system in power, but instead of stating this openly to a fickle public, the "revolutionary power" maintains a public façade of support for the current system, all the while working under the table to undermine it, only coming clean once the change has become irreversible. Clearly implied are parallels between Napoleon's tactics and the rise of 20th-century fascists, who generally came to power unopposed. Or, as Krugman quotes: "Lulled by a period of stability which had seemed permanent, they find it nearly impossible to take at face value the assertion of the revolutionary power that it means to smash the existing framework."

Who was this author? Henry Kissinger.

Krugman claims that we are currently witnessing a similar attempt by the Bush administration and his far-right supporters to undermine and eventually destroy two of the most popular American institutions created in the 20th-century, Social Security and Medicare, but that no one is willing to admit this is really what is happening. No one, that is, except Paul Krugman.

It's true, these claims are shocking. Critics claim they amount to little more than conspiracy theory. Krugman is described as "shrill," "strident," or "irrational" by his detractors. He is also labeled a "radical." Which is ironic. Not only is Krugman, in terms of the content of his economic views, close enough to Alan Greenspan for government work, but "radical" is also his more consistent characterization of the Bush administration. So who to believe?

Well, that's for the reader to decide. But Krugman does have a few heavy hitters on his side. George A. Akerlof, winner of the 2001 Nobel Prize in Economics, called the Bush administration "extraordinarily irresponsible." Joseph Stiglitz, another Nobel laureate, said that Mr. Bush's plans were "fiscal madness, fiscal irresponsibility." Last year, 400 economists, led by ten more Nobel Prize winners, took out a full-page ad in the New York Times criticizing the administration's economic policies. Finally, in a report released early this month, the International Monetary Fund stated that the US "is running up foreign debt of such record-breaking proportions that it threatens financial stability of the global economy."

With supporters like that, who needs enemies? Well, not Paul Krugman, who has plenty already, thank you very much. But it's foolish to dismiss someone entirely who has a dozen Nobel Prize winners on their side, just as it's foolish to trust someone entirely that the IMF considers a threat to world stability.

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