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Paul Krugman’s Bubble

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Paul Krugman’s Bubble

The New York Times columnist should leave the Upper West Side once in a while. July 25, 2016
Economy, finance, and budgets
Politics and law

Paul Krugman is confused. He can’t figure out why Americans are so gloomy that they might vote for Donald Trump in November. From the columnist’s perch at the New York Times, things in America seem A-okay:

If you want to feel good about the state of America, you could do a lot worse than what I did this morning: take a run in Riverside Park. There are people of all ages, and, yes, all races exercising, strolling hand in hand, playing with their dogs, kicking soccer balls and throwing Frisbees. There are a few homeless people, but the overall atmosphere is friendly—New Yorkers tend to be rushed, but they’re not nasty—and, well, nice.

Most Americans have never heard of gorgeous Riverside Park. In fact, they may have only a vague idea about the Upper West Side of Manhattan, the neighborhood where Riverside Park is located. But they understand that life on the Upper West Side—and places like it—is fabulous for the people who live there. Such places have boomed thanks to changes in the economy, but also from deliberate government policies designed to make them prosper. Wall Street, unlike Main Street, got bailed out during the financial crash. Most Americans may not be able to tell you what TARP stands for, or what quantitative easing is, but they have a good understanding of who profited the most from them—and that such people often take morning jogs in Riverside Park.

Most Americans also know that vast swaths of the Washington, D.C.-area are filled with wealthy people gorging themselves at the federal trough. They know that the rules don’t apply in Silicon Valley, where companies have been given a pass from taxes and many of the regulations that overwhelm ordinary American businesses. They know that when Silicon Valley businesses like AirBnB and Uber come to town, the laws often will be rewritten for their benefit.

Most Americans know about corporate executives like Marissa Mayer. She completely failed to turn around the struggling Internet pioneer Yahoo, though that’s what she was hired to do. Her “accomplishments” include buying the now-worthless blogging platform Tumblr for $1.1 billion. Despite her failure, if she’s not retained in the wake of the reported sale of Yahoo’s businesses to Verizon, Mayer is set to collect a pre-negotiated $55 million golden parachute. Most Americans know that they wouldn’t be treated so kindly if they lost their jobs.

Most Americans believe in capitalism, but know that a lot of its top beneficiaries are not fully exposed to marketplace discipline. Most Americans are painfully aware that life is good for people like Paul Krugman, and they know that he doesn’t much care what’s happening to them. Charles Murray created his “bubble quiz” to illustrate the degree to which much of the upper-middle class has grown detached from the experience of workaday Americans. When PBS invited its readers to take the quiz, the zip code where this detachment was most pronounced was my own: 10023, the Upper West Side. It’s a far cry from where I grew up, in Southern Indiana.

That you can go from living in a trailer on a gravel road to living in one of America’s most prosperous and unique neighborhoods is a testament to this country’s greatness. But not everybody’s had the same opportunities I’ve had. Many haven’t been able to improve their lives at all. Millions of Americans are hurting. And similar problems are showing up in other advanced countries. McKinsey Consulting found that real incomes have stagnated or declined in 65 to 70 percent of households in the developed world. That’s 540 million people. Unlike Krugman, journalist Richard Longworth actually went to talk with some of them. “They perceive that these people—globalization’s winners—have never spent 30 seconds worrying about globalization’s losers,” he writes in Caught in the Middle, his 2007 book on globalization. These folks are understandably angry. The economy has dealt them a tough hand, and people like Krugman hold them in contempt to boot.

Instead of jogging in Riverside Park, Krugman should spend some time talking to people in Flint, Michigan, the South Side of Chicago, California’s Central Valley, or any of the many decaying industrial cities and towns throughout the Midwest and Northeast. That might clear up some of his confusion.

Photo by JayLazarin/iStock

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