The topics of Krugman’s weekly seminar are sometimes adjusted to follow current events and the demands of his column, and so one Thursday in early April, the class was considering Paul Ryan’s plan to balance the budget, which the House would later approve by an extremely partisan vote. Krugman had prepared slides, but after a sustained five-minute assault on the projection technology, he gave up. “Never mind,” he said, abandoning the projection screen. “I can just sketch it on the board myself.” And he began, as he often does these days, with a graph, the y-axis measuring portion of GDP, the x-axis showing change over time.
These simple little graphs are in some ways the source of Krugman’s academic reputation—he has the ability to distill knotty theories into perfectly contained models. This clarity is the house style of MIT, where Krugman went to graduate school. Some economists refer derisively to “MIT toy models,” arguing that they can elide as much as they reveal, but still it is Krugman’s elegance that is most impressive to those in the field: a mind so precise that it can reduce society to its mathematical essence and reveal its truths on a graph.
At the board, Krugman started sketching the American government’s expenditures, projected into the future and divided into three subgroups—Social Security, Medicare and Medicaid, and “everything else,” which means defense, education, foreign aid, and much more. In 2010, “everything else” required 12 percent of GDP. By 2030, under the Ryan plan, it would get only 5.25 percent, and by 2050, 3.5. Krugman had run the numbers, and he said that the last time that figure had even approached 3.5 percent was during the Coolidge administration, when the country looked radically different—when, for instance, it had effectively no standing military. The Ryan plan made other policy choices that were to Krugman socially corrosive: It would, for instance, effectively end Medicare as we know it. But it was the reduction of “everything else” to a third of its current share that seemed simply impossible. There was a long silence in the classroom. “This is a pretty amazing number,” Krugman said. “I try to present both sides, but this is pretty hard to understand.”
Krugman is always alert to the possibility of the extreme. “When things go crazy, my instinct is to go radical on policy.”
A few years ago, Krugman, having decided that he was going to be writing about politics and so he should know more about it, did a very Krugman thing. He didn’t talk to people who worked in Washington. Instead, he started to read the political-science literature. Krugman had never understood the press coverage of politics, which seemed to emphasize its most irrelevant aspects. Why dwell on a presidential candidate’s psychology when the trends in unemployment would tell you who would win an election? But viewed through the prism of political science, politics began to seem much more familiar to him. There was a mathematics to it—you could assemble data, draw correlations, understand what was essential and what was noise. The underlying shape of politics came sweeping into view: If you arranged members of Congress from left to right based on how they voted on welfare-state issues—Social Security, Medicare, unemployment insurance—it turned out that this left-to-right axis could predict every other vote: On Iraq expenditures, on abortion, whatever. “When you realize the fundamental divide in U.S. politics is just this one-dimensional thing, and that is how you feel about the welfare state,” Krugman says, “that changes things.”
You could see something else in the data, too. From 1979 to 2004, the income of the richest one percent of Americans grew by 176 percent, that of the richest one fifth of the country by 69 percent, and that of everyone else by less than 25 percent. Working through the numbers, Krugman came to believe that “only a fraction” of the change was compelled by global forces, which had been the standard explanation. The rest, he concluded, was political.
It was Krugman’s Princeton colleague Larry Bartels who made the critical connection, in research Krugman devoured and still cites. Perhaps the most important influence on income inequality, Bartels argued, was something economists had not emphasized: whether a Democrat or a Republican was in the White House. Since World War II, Bartels found, wealthy families in the 95th percentile in income had seen identical income growth under both parties. But for families in the 20th percentile, the difference was astonishing: Under Democratic presidents, their income grew at six times the rate it did under Republican ones. There was, for Krugman, a kind of radicalization implied in this.
What is so riveting about the present moment, Krugman told his class, is that “there are wild possibilities.” Perhaps there was a one percent chance, he mused, growing excited, that a Draft Hillary movement would emerge on the left, throwing out the president in favor of the secretary of State; there was probably an equal chance, he said, that the next president would be Michele Bachmann. Society seemed at a precipice: If health-care reform truly takes effect, then popular inertia might take over and “we become an ordinary advanced country, where it’s taken for granted that of course society is going to make sure everybody has basic health care.” But it was easy to see how inertia could also invert into “erosion that eventually swallows Medicare and Medicaid.” Class was ending, the students picking up their books, and Krugman lingered, seeming to want to say something broad about the current political moment. What he settled on was a quiet awe. “God knows,” he said. “It’s amazing.”