The Great Unraveling: Losing Our Way in the New Century

by Paul Krugman

Overview

"Paul Krugman is a hero of mine. Read his book."—Al Franken

No one has more authority to call the shots the way they really are than award-winning economist Paul Krugman, whose provocative New York Times columns are keenly followed by millions. One of the world's most respected economists, Krugman has been named America's most important columnist by the Washington Monthly and columnist of the year by Editor and Publisher magazine.

A major bestseller, this influential and wide-ranging book has been praised by BusinessWeek as Krugman's "most provocative and compelling effort yet," the New York Review of Books as "refreshing," and Library Journal as "thought-provoking...even funny." The American Prospect put it in vivid terms: "In a time when too few tell it like it is...[Krugman] has taken on the battle of our time."

Built from Paul Krugman's influential Op-Ed columns for the New York Times, this book galvanized the reading public. With wit, passion, and a unique ability to explain complex issues in plain English, Krugman describes how the nation has been misled by a dishonest administration.

In this long-awaited work containing Krugman's most influential columns along with new commentary, he chronicles how the boom economy unraveled: how exuberance gave way to pessimism, how the age of corporate heroes gave way to corporate scandals, how fiscal responsibility collapsed. From his account of the secret history of the California energy crisis to his devastating dissections of dishonesty in the Bush administration, from the war in Iraq to the looting of California to the false pretenses used to sell an economic policy that benefits only a small elite, Krugman tells the uncomfortable truth like no one else. And he gives us the road map we will need to follow if we are to get the country back on track.

The paperback edition features a new introduction as well as new writings.

Product Details

ISBN-13:	9780393071177
Publisher:	Norton, W. W. & Company, Inc.
Publication date:	08/17/2004
Sold by:	Barnes & Noble
Format:	eBook
Pages:	560
File size:	512 KB

About the Author

Paul Krugman, recipient of the 2008 Nobel Prize in Economics and best-selling author, has been a columnist at The New York Times for twenty years. A Distinguished Professor at City University of New York, he lives in New York City.

Read an Excerpt

I've tried to make this book more than a chronological sequence of columns. There is, of course, an element of chronology; each column was written on a particular date, and my views on some subjects have evolved, as new facts have come to light. But the columns are grouped according to major themes, and within each theme into "chapters" that focus on a particular subject. I've also added an Introduction that sets the political stage, and further additional material at the beginning of each thematic section, to put the columns into a broader perspective.

The columns begin with the rise and fall of America's stock market bubble, with all that went with it. As the pieces here show, I was always a stock market skeptic—though not, as you will see, skeptical enough. My focus on troubled economies abroad prepared me for the possibility that the United States would suffer serious economic difficulties once the bubble burst—though here again I initially understated the risks. What nobody realized was how thoroughly corrupted the U.S. corporate system had become; like everyone else, I played catch-up here.

The book turns next to the federal budget and the fate of Social Security. It's the story of a debt foretold. From the beginning it was obvious to me that George W. Bush's plans didn't add up, that he and his people were simply lying about all the important numbers, and that their plans would dissipate the budget surplus. It has played out just as I feared, but sooner and more forcefully than I expected. As I write these words, the administration has just conceded that the $230 billion surplus it inherited has been converted into a $300 billion deficit—and you know that's an underestimate.

How was such a misstep possible? In Part III, I go beyond economics pure and simple, trying to understand what has gone wrong with American politics. It seems to me now that many reasonable people, liberals and conservatives alike, still don't get it—as I explain in these columns, the real world of politics is much tougher and uglier than the picture most of us carry in our heads.

The last few years didn't just shake my faith in our political system; they were also a reminder that free markets, while often a very good thing, can sometimes go very badly wrong. Part IV describes some of the shocking failures of the market system in the last few years, from the California energy crisis to the catastrophe in Argentina.

Of course, there's more to the world, even the world of economics, than the ups and downs of the United States. The book concludes with a wider view—a look at the global economy, and at the tools we use to understand it.

This is not, I'm sorry to say, a happy book. It's mainly about economic disappointment, bad leadership, and the lies of the powerful. Don't despair: nothing has gone wrong in America that can't be repaired. But the first step in that repair job is understanding where and how the system got broken.

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From The Great Unraveling: Losing Our Way in the New Century

Table of Contents

	Acknowledgments	xiii
	Introduction to the Paperback Edition	xv
	Preface	xxv
	Introduction: A Revolutionary Power	3
I	Bubble Trouble	21
1.	Irrational Exuberance	27
	Seven Habits of Highly Defective Investors	27
	The Ice Age Cometh	31
	The Ponzi Paradigm	34
	Dow Wow, Dow Ow	37
	Money for Nothing?	40
	Create and Destroy	43
	The Pizza Principle	46
	Damaged by the Dow	49
2.	Portents Abroad	53
	Asia: What Went Wrong?	53
	Why Germany Kant Kompete	57
	We're Not Japan	60
	A Leap in the Dark	63
3.	Greenspanomics	67
	Don't Ask Alan	67
	Eleven and Counting	70
	Herd on the Street	73
	Living with Bears	76
	Dubya's Double Dip?	79
	Mind the Gap	82
	Passing the Buck	85
	Stocks and Bombs	88
	The Vision Thing	91
	Dealing with W	94
	My Economic Plan	97
4.	Crony Capitalism, U.S.A.	101
	Crony Capitalism, U.S.A.	101
	Two, Three, Many?	104
	Enemies of Reform	107
	Greed Is Bad	110
	Flavors of Fraud	113
	Everyone Is Outraged	116
	Succeeding in Business	119
	The Insider Game	122
	The Outrage Constraint	125
	Business as Usual	128
II	Fuzzy Math	131
5.	The Bait ...	137
	Oops! He Did It Again	137
	We're Not Responsible	140
	Fuzzier and Fuzzier	143
	Et Tu, Alan?	146
	Slicing the Salami	149
	The Money Pit	152
	The Universal Elixir	155
	Bad Heir Day	158
	Pants on Fire	161
6.	...And the Switch	165
	Hitting the Trifecta	165
	The Quiet Man	168
	Our Wretched States	171
	Bush's Aggressive Accounting	174
	True Blue Americans	177
	The Great Evasion	180
	Springtime for Hitler	183
	Is the Maestro a Hack?	186
7.	2-1=4	189
	The Pig in the Python	189
	Prescription for Failure	192
	A Retirement Fable	195
	No Good Deed	198
	2016 and All That	201
	Sins of Commission	204
	Bad Medicine	207
	Fear of All Sums	210
III	Victors and Spoils	213
8.	Things Pull Apart	219
	America the Polarized	219
	The Sons Also Rise	222
	Hey, Lucky Duckies!	225
9.	The Private Interest	229
	Paying the Price	229
	The Public Interest	232
	The 55-Cent Solution	235
	Money-Grubbing Games	238
	The Long Haul	241
10.	Exploiting September 11	245
	The One-Eyed Man	245
	An Alternate Reality	248
	The Rove Doctrine	251
	The Reality Thing	254
	The Real Thing	257
	Dead Parrot Society	260
	The Pitt Principle	263
	Victors and Spoils	266
11.	A Vast Conspiracy?	269
	The Smoke Machine	269
	The Angry People	272
	The Bully's Pulpit	275
	For the People	278
	In Media Res	281
	Digital Robber Barons?	284
	Behind the Great Divide	287
	Channels of Influence	290
IV	When Markets Go Bad	293
12.	California Screaming	299
	California Screaming	299
	The Unreal Thing	302
	The Price of Power	305
	The Real Wolf	308
	Turning California On	311
	Enron Goes Overboard	314
	Smoking Fat Boy	317
	In Broad Daylight	320
	Delusions of Power	323
13.	Smog and Mirrors	327
	The Unrefined Truth	327
	Burn, Baby, Burn	330
	Feeling OPEC's Pain	333
	Ersatz Climate Policy	336
	Two Thousand Acres	339
	Bad Air Days	342
	Bush on Fire	345
14.	Foreign Disasters	349
	Hong Kong's Hard Lesson	349
	Crying with Argentina	353
	Losing Latin America	356
	The Lost Continent	359
V	The Wider View	363
15.	Global Schmobal	367
	Enemies of the WTO: Bogus Arguments against the World Trade Organization	367
	Saints and Profits	373
	Workers vs. Workers	376
	The Scrooge Syndrome	379
	Heart of Cheapness	382
	America the Scofflaw	385
	White Man's Burden	388
16.	Economics and Economists	391
	Supply, Demand, and English Food	391
	O Canada: A Neglected Nation Gets Its Nobel	395
	Who Knew? The Swedish Model Is Working	400
	The Two Larrys	403
	Missing James Tobin	406
VI	One Year Later	409
17.	War and Terror	413
	George W. Queeg	413
	Red-Blue Terror Alert	416
	Conquest and Neglect	419
	Matters of Emphasis	422
	Paths of Glory	425
	Dereliction of Duty	428
	Denial and Deception	431
	Who's Unpatriotic Now?	434
	Who's Sordid Now?	437
	Weak on Terror	440
18.	Dollars and Cents	443
	Roads Not Taken	443
	Stating the Obvious	446
	The Trojan Horse	449
	Our So-Called Boom	452
	Red Ink Realities	455
	The Health of Nations	458
	Maestro of Chutzpah	461
	Promises, Promises	464
	The Medicare Muddle	466
19.	Abuses of Power	469
	Man on Horseback	469
	The China Syndrome	472
	Toward One-Party Rule	475
	Exploiting the Atrocity	478
	Lessons in Civility	481
	Hack the Vote	484
	Democracy at Risk	487
	Get Me Rewrite!	490
	The Real Man	493
	This Isn't America	496
	Index	499

What People are Saying About This

Paul A. Samuelson

The new Krugman book documents why this top-drawer academic economist deserves at least one Pulitzer Prize for his accurate Times op-ed columns that are a lone voice, telling things as they are and debunking Washington policies that are neither compassionate nor conservative. Plutocratic democracy is in the saddle. Rx. Krugman twice a week and in this coherent sum-up on relevant 2003-2010 economics. Buy. Read. Ponder. Benefit.

Arthur M. Schlesinger Jr.

Paul Krugman is the great discovery of recent American journalism. Lively, lucid, witty, superbly informed, his commentary on the state of the union is required reading for anyone concerned about the American future.

Molly Ivins

You need to read this book, and when you do, you'll have only one response: it's time to get mad, for most of the media are in denial about how far the takeover of this country by the radical right has already progressed.

David Levering Lewis

The title of Paul Krugman's The Great Unraveling might well have been The Great Usurpation. In a republic hijacked by the radical right whose leaders reject the legitimacy of our current political system, Paul Krugman's coruscant book calls for a "great revulsion" across the land before it is too late.

James Carville

If I had a tenth of Paul Krugman's brain and a twentieth of his courage, I'd be the happiest person on the face of the Earth.

Anthony Lewis

Paul Krugman is the indispensable American columnist, a voice of truth in a political world of lies and calculated injustice. This book is even better. It makes the case, unrestrained by deference, that a revolutionary right-wing movement is out to transform the United States-and is succeeding, rolling over a supine press and political opposition.

Preface

Preface

Metaphors can be tricky things, but Manhattan's "debt clock" is as good as they come.

A public-spirited businessman installed the clock in 1989, hoping to shame politicians into acting responsibly. Huge numerals counted off the ever-rising national debt—ever-rising because each year the federal government spent far more than it took in, and was forced to borrow the difference. But in the late 1990s a funny thing happened: the government's tax take soared along with the stock market, and those mammoth budget deficits first shrank, then turned into record surpluses. In September 2000, the owner of the clock pulled the plug.

In July 2002, with the nation once again facing deficits as far as the eye could see, he turned it back on.

There's much more to recent American history than the way the federal government declared victory in its long struggle against deficits, only to see the red ink quickly return. But as the budget went, so went many other indicators of our national well-being. In the early 1990s we were a depressed nation, economically, socially, and politically: a best-selling book of the era was titled America: What Went Wrong. By the end of the decade we had, it seemed, pulled ourselves together. The economy was booming, jobs were plentiful, and millions of people were getting rich. Budget deficits had given way to record surpluses. The long crime wave that began in the 1960s came to an end; major cities were suddenly, amazingly, safer than they had been for many decades. The future seemed almost incredibly bright.

Then the good times stopped rolling. By 2003, the fabric of our economy—and, perhaps, of our political system and our society—seemed once again to be unraveling. The nation was gripped by anxiety, with polls showing a majority of the public feeling that the country was headed in the wrong direction.

This book is, first of all, a chronicle of the years when it all went wrong, again—when the heady optimism of the late 1990s gave way to renewed gloom. It's also an attempt to explain the how and why: how it was possible for a country with so much going for it to go downhill so fast, and why our leaders made such bad decisions. For this is, in large part, a story about lead-ership— incredibly bad leadership, in the private sector and in the corridors of power. And yes, it is in particular an indictment of George W. Bush. Helen Thomas, the veteran White House correspondent, has called Mr. Bush "the worst president in all of American history." I'm not sure about that—he has some stiff competition. But the really terrible presidents of the past led a nation in which presidential incompetence and malfeasance mattered far less either to the nation or to the world than it does today.

Most of this book consists of columns that I wrote for The New York Times between January 2000 and January 2003. I hope that readers will find that the sum is more than the whole of its parts—that taken together these columns tell a coherent story. I'll talk shortly about how I came to write those columns. But first, let's recall the background.

The dreary years

During the late 1990s, as everything seemed to be going right— as jobs proliferated, stocks soared, budgets moved into surplus, and even the crime rate plunged—the dreary mood of the decade's early years faded from memory. By 2000, few people remembered the national funk that prevailed in 1992. Yet that funk is essential background to what came later.

If you are one of those people who thinks that national greatness is defined by military success (and such people are running the country right now), the nation's foul mood in 1992 may seem puzzling. Militarily, America was on top of the world. Communism had collapsed. A war in the Persian Gulf that many had feared would become another Vietnam turned instead into a spectacular demonstration of American military prowess. We had already become what we remain today, the world's one and only superpower.

But glory doesn't pay the bills. A tag line of the time—drawing attention to the contrast between American stagnation and the seemingly relentless rise of Japan—said, "The Cold War is over. Japan won." Whether or not you bought the thesis that America was the victim of unfair Japanese competition (it wasn't), it was a time of national disillusionment.

Though Japan wasn't the villain some people imagined—and it was soon to experience economic setbacks that are a cautionary tale for all of us—America's economic woes were real enough. True, by 1992 statisticians had declared the recession of 1990-91 over. But in 1991-92 it was still a "jobless recovery"— that is, a period in which GDP grows but unemployment continues to rise. As far as ordinary Americans were concerned, it was a continuing recession. Nor were things all that great for workers who managed to keep their jobs: the real wage of the typical worker had been stagnant or falling for almost 20 years. Traditional industries like autos and steel, in which ordinary workers could earn good wages, seemed to be in steady decline. Poverty was rising, not falling—more than 20 percent of children were living below the poverty line, the highest percentage since 1964.

Popular culture reflected a deep sense of disillusionment. Among the big movies of the early 90s were Falling Apart, about a laid-off worker who erupts in rage, Grand Canyon, about the menace of crime, and Rising Sun, about American decline and the rise of Japan.

What about the promise of new technology? In the early 1990s, this seemed like a promise broken. For sure, new tech-nology was all around us—but it didn't seem to be delivering much in the way of results. More and more workers were equipped with computers, every office had a fax machine, cell phones and e-mail were starting to become widespread, but none of it seemed to pay off in employment or higher living standards. One prominent economist—he would later be a notable American triumphalist—told me privately that he regarded high tech as "high bull——."

Above all, the American people were disillusioned with their leaders, private and public. Every airport bookstore featured rows of volumes with samurai warriors on their covers, promising to teach readers the secrets of Japanese management; the point was not just that the Japanese seemingly knew how to run modern corporations, but that the people running American companies seemingly didn't. All the latest gadgets seemed to come from Japan; not only had "made in the U.S.A." ceased to be a guarantee of quality, many consumers had come to distrust domestic products. CEOs of major corporations were mocked as bumbling, overpaid incompetents—when President George Bush took auto company executives to Japan to demand economic concessions, the affair turned into a public relations disaster.

The loss of respect extended to our politicians. The most remarkable thing about the 1992 election wasn't that Bush lost. It was that H. Ross Perot, a candidate completely out of the mainstream, took 19 percent of the vote. In a nation where third parties have never flourished, that was a huge vote of no confidence in conventional political leaders.

In short, it wasn't the best of times—and many observers expected things to keep getting worse. Yet over the next eight years the nation would experience an amazing economic and social turnaround.

The good years

It took quite a while before people realized that things had really turned for the better. You might say that pessimism had become a national habit. As late as the winter of 1995-96, despite a steadily falling unemployment rate, the newspapers were full of alarmist headlines about job loss and downsizing. In the 1996 presidential campaign, Bob Dole's economists attacked the Clinton administration for what they claimed was a sluggish, below-par economic recovery. Less partisan economists knew better, but they remained cautious, having seen too many false dawns. Yet eventually the evidence became too strong to deny: the U.S. economy really was on the mend. And so, it began to seem, was our society.

Given our current state of renewed disillusionment, it's tempting to dismiss everything that went right in the Clinton years as a mirage. Indeed, the manic optimism of the late 90s got ahead of the reality. But the nation's real achievements were spectacular.

First and foremost for the lives of most people, by the end of the 90s jobs were plentiful—more plentiful than they had been for decades. Between 1992 and 2000, U.S. companies added 32 million workers to their payrolls, driving the unemployment rate to a 30-year low. Full employment meant jobs, and a chance of escape, for families that had been caught in the poverty trap: poverty rates fell sharply, for the first time since the 1960s. Partly as a consequence, social indicators like crime rates showed spectacular improvement: by the end of the 90s, New York City was as safe as it had been in the mid-1960s.

If job growth was impressive, the increase in productivity— the amount produced per worker—was even more impressive. In the 1970s and 1980s, low productivity growth—barely 1 per-cent per year—was the greatest failing of the U.S. economy. Poor productivity performance was the most important reason why living standards stagnated for typical American families: an economy without productivity growth can't deliver a sustained rise in wages. But during the 1990s productivity took off; by decade's end it was rising faster than ever before in American history, and wages had ended their long stagnation.

Why did productivity surge? The main answer, probably, was that information technology had come of age: all those computers and networks were finally showing what they could do. But business leaders, understandably, took much of the credit. As Japan faltered, American business regained its confidence, and American businessmen became heroes. It was the age of the CEO as superstar. And if those superstars took home super-sized paychecks, why not? America, it seemed, had devised a system in which big incentives produced big results.

Then there was the stock market. At the end of 1992 the Dow investors felt like losers: they had missed out on the really big gains, as tech stocks made many people instant millionaires. Not since 1929, and maybe not even then, had quick wealth seemed so attainable. And authoritative-sounding voices assured us that there was more to come, that the Dow would soon reach 36,000.

There were stock market skeptics; I was one of them. (I also had some initial doubts about the U.S. productivity miracle. By 2000 I was a believer, but I still thought stock prices were way out of line.) And those of us who followed foreign economies also worried a bit about what would happen when the stock market rediscovered the law of gravity. There were some undeniable similarities between the U.S. economy in the late 90s and Japan's "bubble economy" a decade earlier—and after Japan's stock market bubble collapsed, the seemingly unstoppable Japanese economy fell into a profound funk, which has continued to this day.

Yet the 90s had given us reason for optimism, even if the bubble burst. For the problems of Japan had been exacerbated by poor leadership—and the economic leadership of the United States was exceptionally good.

In the early years of the Clinton administration this wasn't clear to everyone. I myself was a pretty harsh critic of the new president's economic team, in the days before the ascendancy of Robert Rubin was fully established. But by decade's end "Rubinomics" was triumphant. First, Bill Clinton dared to raise taxes to help close the budget deficit—an action that was dou-bly brave. His predecessor, George Bush, had been vilified for his own tax increase (though even Ronald Reagan had retracted part of his own tax cut); and conservatives predicted that the Clinton tax increase would sink the economy. Nonetheless, he did the right thing—and got a booming economy and a budget surplus as his reward.

Moreover, Washington proved itself flexible and effective in dealing with crises. When the Mexican peso plunged in 1995, the administration—again braving harsh criticism from the right—came to our neighbor's rescue. Then an even bigger financial crisis erupted in Asia. In the fall of 1998 the crisis spread to the United States, as Russia's default on its debt led to the downfall of Long-Term Capital Management, a huge hedge fund. Financial markets briefly seized up: borrowing and lending came to a virtual halt. I was at a meeting in which one Fed official briefed us on the situation; when asked what we could do, he replied, "Pray." Yet Rubin, together with Alan Greenspan, managed to exude a sense of calm—remember what it was like when people actually admired the Treasury secretary? And the markets recovered. Early in 1999 the cover of Time featured Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, and Deputy Treasury Secretary Larry Summers, whom it dubbed—cornily, but with considerable justification—the "committee to save the world."

At the beginning of the new millennium, then, it seemed that the United States was blessed with mature, skillful economic leaders, who in a pinch would do what had to be done. They would insist on responsible fiscal policies; they would act quickly and effectively to prevent a repeat of the jobless recovery of the early 90s, let alone a slide into Japanese-style stag-nation. Even those of us who considered ourselves pessimists were basically optimists: we thought that bullish investors might face a rude awakening, but that it would all have a happy ending.

America: What went wrong?

The satirical weekly The Onion describes itself as "America's finest news source"—and for the last few years that has been the literal truth. The mock news story for January 18, 2001, reported a speech in which President-elect George W. Bush declared, "Our long national nightmare of peace and prosperity is over." And so it has turned out.

What happened to the good years? For many people, the great emotional turning point—the moment when their dreams of security were shattered—was September 11, 2001. But for me the turn was slower and broader than that.

I don't mean to belittle the horror. But anyone who followed Middle Eastern events knew that the United States was a terrorist target. You may remember that at first everyone assumed that the 1995 bombing in Oklahoma City involved Muslims. Experts on terrorism warned us repeatedly over the years that there would someday be a major attack on U.S. soil—though the sheer size of the mass murder on September 11 was a shock. We knew there were people out there who wanted to hurt us; it wasn't that much of a surprise when they finally scored a hit.

The real surprise was the failure of leadership, private and public, right here at home.

Some people realized that there were business excesses in the 1990s, though they had a hard time getting themselves heard. But the extent and brazenness of the excesses was greater than anyone realized. The bull market, we learned too late, both encouraged and concealed corporate misbehavior on an epic scale. Who could have imagined that famous companies, lauded in business schools as the very models of a major modern corporation, would turn out to be little more than Ponzi schemes? (Actually, some people did say that, but they were dismissed as cranks.)

Even more troubling was the revelation that our political system was far less mature than we thought, that the responsible leadership we had come to take for granted had been a sort of accident. In the 2000 campaign, George W. Bush offered a tax plan and a Social Security plan that were obviously, blatantly based on bogus arithmetic. Yet the media focused on the politics of personality, and avoided explaining the issues. Mean-while, Alan Greenspan turned out not to be who we thought he was: the stern advocate of austerity and fiscal discipline when a Democrat was in office became an apologist and enabler for irresponsible tax cuts, even in the face of soaring deficits, once the White House had changed hands.

Moreover, the new team showed neither the long-run responsibility nor the short-term flexibility of its predecessors. The original Bush economic plan involved big, long-run tax cuts that phased in only gradually. By 2002 it was clear that this plan had it backwards. Like his father, Bush was presiding over a "jobless recovery"—that is, an economy that was growing, but too slowly to provide new jobs, so that most people found their lives getting worse. This economy badly needed a short-term boost, not a long-run tax cut. And the spectacular deterioration of the budget meant that long-run tax cuts were no longer remotely affordable. Yet Bush's aides continued to insist that their program, formulated back in 1999 at the height of the bubble, was exactly the right solution for the economy's current difficulties. And in early 2003, when they finally seemed to realize that something more was needed, the new "stimulus" plan was practically a clone of the original plan: hardly anything to stimulate the economy now, but lots of long-term tax cuts, mainly for the rich.

More ominously, it gradually became clear that something deeper than mere bad economic ideology was at work. The bigger story was America's political sea change, the central theme of this book's Introduction.

Why me?

I began writing for The New York Times in January 2000. Neither I nor The Times knew what I was getting into.

I was and am an economics professor by trade. International financial crises were one of my main specialties, and I spent much of the 1990s tracking and commenting on disasters abroad. Some of my work consisted of what I call "Greek-letter" economics, abstruse papers for the professional journals. But I also wrote about global economic issues for a wider audience. By 1998 I had two regular monthly columns, one in Fortune and one in the online magazine Slate; some of those columns are included in this collection.

In the summer of 1999 The New York Times contacted me about writing for the paper's Op-Ed page. Howell Raines, then the paper's editorial page editor, felt that in an age when, more than ever, the business of America was business, The Times needed to broaden its Op-Ed commentary beyond the traditional focus on foreign affairs and domestic politics. I was brought on in the expectation that I would write about the vagaries of the new economy, the impacts of globalization, and bad policies in other countries. I didn't expect to spend a lot of time on domestic politics, since everyone assumed that American policy would remain sensible and responsible.

I have tried, as best I can, to cover economics and business. As you'll see, some of the columns in this book are straight economic analyses, without a political edge. But as events unfolded, politics inevitably intruded. More and more, I found myself speaking very uncomfortable truth to power.

Why me?

These days I often find myself accused of being a knee-jerk liberal, even a socialist. But just a few years ago the real knee-jerk liberals didn't like me at all—one magazine even devoted a cover story to an attack on me for my pro-capitalist views, and I still have the angry letter Ralph Nader sent me when I criticized his attacks on globalization. If I have ended up more often than not writing pieces that attack the right wing, it's because the right wing now rules—and rules badly. It's not just that the policies are bad and irresponsible; our leaders lie about what they are up to.

I began pointing out the outrageous dishonesty of the Bush administration long before most of the rest of the punditocracy. Why did I see what others failed to see? One reason is that as a trained economist I wasn't even for a minute tempted to fall into the he-said-she-said style of reporting, under which opposing claims by politicians are given equal credence regardless of the facts. I did my own arithmetic—or, where necessary, got hold of real economists who could educate me on the subjects I wrote about—and quickly realized that we were dealing with world-class mendacity, right here in the U.S.A. I wasn't entirely alone in this: one thing I've noticed the last few years is that business reporters, who know a bogus number when they see one, have often accused our leaders of outrageous mendacity even while political pundits celebrate those leaders for their supposed sterling character. But the writings of business reporters necessarily have a narrow focus, and rarely affect political commentary. With a wider brief, and a spot on the Op-Ed page, I attracted a lot more attention.

I have also been willing to see things differently, and report on what I see, because I'm not properly socialized. The commentariat mainly consists of people who live in Washington and go to the same dinner parties. This in itself foments group-think; at any given moment there is a story line that shapes journalists' perceptions. Until September 11 this story line had it that George W. Bush was dumb but honest; after September 11 the new story was that he was a tough-minded hero, all determination and moral clarity, "Texas Ranger to the world." (Yes, one prominent pundit actually wrote that.) The over-whelming evidence that neither of these pictures bore any resemblance to reality was simply brushed aside.

But I'm not part of the gang—I work from central New Jersey, and continue to live the life of a college professor—so I never bought into the shared assumptions. Moreover, I couldn't be bullied in the usual ways. The stock in trade of most journalists is inside information—leaks from highly placed sources, up-close-and-personal interviews with the powerful. This leaves them vulnerable: they can be seduced with offers of special access, threatened with the career-destroying prospect that they will be frozen out. But I rely almost entirely on numbers and analyses that are in the public domain; I don't need to be in the good graces of top officials, so I also have no need to display the deference that characterizes many journalists.

Whatever the reason, I have spent much of the last three years providing a picture of the world that differs greatly from the vision of most other mainstream pundits. (Web-based commentators have done yeoman duty—but they don't land on a million doorsteps twice a week.) One of the columns in this book is titled "An Alternate Reality"; that about captures it. At a time when most pundits were celebrating the bold vision, skill, and moral clarity of our leaders, I saw confusion, ineffectuality, and dishonesty. It wasn't a popular point of view, especially in the early months after September 11. But have I been right? Read the book and decide for yourself.

Editorial Reviews

This collection of his incisive New York Times op-ed pieces by noted economist Paul Krugman examines the implosion of the '90s boom, assessing the disastrous effects of corporate scandals, scams, and deficit spending on the economy and assigning blame to the current administration. Krugman was the first mainstream columnist to ask the key questions about the Bush philosophy, and that fearless style is fully displayed here.

bn.com

....It seems slightly scandalous that Krugman has persisted in noting that the present administration has been moving the lion's share of the money to an array of corporate interests distinguished by the greed of their CEOs, an indifference toward their workers, and boardroom conviction that it is the welfare state that is ruining the country. Krugman has been strident. He has been shrill. He has lowered the dignity of the commentariat. How refreshing.
— Russell Baker

New York Review of Books

Krugman's best columns showcase his fluency in economics, analytical power and willingness to go out on a limb.—Peter Beinart

The New York Times

"This is not, I'm sorry to say, a happy book," says Krugman in the introduction to this collection of essays culled from his twice-weekly New York Times op-ed column, and indeed, the majority of these short pieces range from moderately bleak political punditry to full-on "the sky is falling" doom and gloom. A respected economist, Krugman dissects political and social events of the past decade by watching the dollars, and his ideas are emphatic if not always well argued. He has a somewhat boyish voice and a pleasingly enthusiastic tone, although his enthusiasm sometimes leads him to take liberties with punctuation. The essays are grouped thematically instead of chronologically, which gives this audio adaptation a scattershot feel. Since these pieces were written over a long stretch of time, certain key ideas recur quite often-political reporters don't pay enough attention to the real news, the Bush administration is dishonest, big corporations are inherently untrustworthy-and can become tedious. To his credit, Krugman is not entirely partisan-he reveals himself to be a free-market apologist-and even listeners who disagree with most of the things he says will likely be taken in by his warm and energetic delivery. Simultaneous release with the Norton hardcover (Forecasts, Aug. 18). (Sept.) Copyright 2003 Reed Business Information.

Publishers Weekly

A Princeton economist turned New York Times columnist, Krugman combines colorful writing with astute economic analysis. This book is a collection of his columns from 2000 to 2003 (plus some earlier articles written for non-economists) with new introductory commentary. Krugman is a self-conscious outsider, an iconoclast who offers trenchant commentary on bad policy and bad business behavior, and much of the material here concerns what he considers the Bush administration's systematic deception of the public. In the introduction, he posits the existence of a revolutionary right-wing conspiracy — a term he does not use lightly. His commentary ranges from developments in Japan and Europe to financial crises and foreign trade policy, areas in which Krugman has made important contributions as an economist. He emerges as a strong, insightful critic of an unqualified "market-knows-best" world view.

Foreign Affairs

Krugman, twice-weekly op-ed columnist for the New York Times and a Princeton economics teacher, shares his take on President Bush and the radical right and how the United States has "lost its way amid economic disappointment, bad leadership, and deceit." The book contains more than 100 of the author's Times columns published between January 2000 and January 2003 and a few extras published in Fortune magazine and at Slate.com, plus his added commentary that freshens the material. The articles cover the gamut of national economic and political issues that dominated the period, including the California energy crisis, the Bush administration's tax cuts, and the war on terrorism. Krugman, who is adamantly anti-right-wing, draws on his solid economics training and experience in these credible pieces, which transcend the rant that sadly fills today's political commentaries. Highly recommended for university and larger public libraries.-Dale Farris, Groves, TX Copyright 2004 Reed Business Information.

Library Journal

"The title of Paul Krugman's The Great Unraveling might well have been The Great Usurpation. In a republic hijacked by the radical right whose leaders reject the legitimacy of our current political system, Paul Krugman's coruscant book calls for a "great revulsion" across the land before it is too late."

David Levering Lewis

"If I had a tenth of Paul Krugman's brain and a twentieth of his courage, I'd be the happiest person on the face of the Earth."

James Carville

"A rigorously argued, angrily eloquent, fiercely patriotic book."

Boston Sunday Globe

"Paul Krugman is the indispensable American columnist, a voice of truth in a political world of lies and calculated injustice. This book is even better. It makes the case, unrestrained by deference, that a revolutionary right-wing movement is out to transform the United States-and is succeeding, rolling over a supine press and political opposition."

Anthony Lewis

"Paul Krugman is the great discovery of recent American journalism. Lively, lucid, witty, superbly informed, his commentary on the state of the union is required reading for anyone concerned about the American future."

Arthur M. Schlesinger

"The new Krugman book documents why this top-drawer academic economist deserves at least one Pulitzer Prize for his accurate Times op-ed columns that are a lone voice, telling things as they are and debunking Washington policies that are neither compassionate nor conservative. Plutocratic democracy is in the saddle. Rx. Krugman twice a week and in this coherent sum-up on relevant 2003-2010 economics. Buy. Read. Ponder. Benefit."

Paul A. Samuelson

Krugman, trained as an economist and not as an actor, does a decent job reading this book, which is a collection of recent shorter writings, mostly his twice weekly op-eds for the New York Times. His reading is solid, clear and properly paced. The book is filled with invective for the Bush administration and his reading clearly communicates his contempt. The book covers a wide range of topics, both economic and political. The general thesis is thus: the American polity was getting better during the ’90s, but America has gone into freefall during the present administration. In addition to the Bush administration and its allies, he strongly criticizes many corporate leaders for their malfeasance. M.L.C. 2004 Audie Award Finalist © AudioFile 2004, Portland, Maine

APR/MAY 04 - AudioFile