Leading Indicator

Paul Krugman, the Times op-ed columnist on economic matters, thinks Alan Greenspan is the biggest idiot since whoever it is who runs the Bank of Japan (surely the world’s greatest idiot).

Almost all the ringleaders of the boom are in a similar image free fall. Goldman analyst Abby Joseph Cohen, the prim, no-nonsense optimist with a pioneer-lady look, still predicting the Dow will go to 13,000, is a ridiculous figure now; Morgan’s aggressive and implacable Mary Meeker seems almost demented; only Treasury Secretary Bob Rubin, crisp and Merlin-esque, seems like a fond memory, no doubt because he is safe at Citibank. As for Greenspan, until a short while ago, he was God, for all secular purposes. Now he’s a boob.

I’ve come down to Princeton to see Krugman, who in his other day job is a professor at the Woodrow Wilson School. I’ve been dutifully reading Krugman’s twice-weekly columns since he took over the spot at the Times a year and a half ago, but in truth, he’s had a certain invisibility. The good times obscured him. Now, though, since the economy’s gone into the crapper, he’s clearly starting to find himself. I think he’s possibly on the verge of becoming the voice of gloom. The Voice. The inverse of Abby Joseph Cohen. The wake-up-and-smell-the-coffee guy. According to Paul Krugman … may soon have a deep and frightening echo.

I make him as the guy who took down Greenspan. This was major – up until he said it, nobody’d said it. And as soon as he said it – that the guy is a political hack, sucking up to Bush, ignoring the market meltdown – it seemed obvious, and suddenly everybody was saying it. But this was a big, ballsy move (my sources at the Times tell me there was lots of clucking – even at the Times you don’t go up against Greenspan lightly).

Then – and this has all kinds of media-culture implications – he’s the first guy in a generation who’s been allowed to talk about money in a big-time way who isn’t rich (I tried, without success, to get a glimpse at the kind of car he drives). With all the other economic analysts and bureaucrats and momzers, it was like we shared their wealth. A good economy was their tip to us. Krugman, however, is just a salary guy (although he does have two jobs).

The face of this New Economy (or New New) will be, I can see now, a bit pillish, definitely moralistic, certainly much less fun than the old New Economy.

Indeed, Krugman doesn’t seem to have been swayed in any way by the New Economy (you might say that he had his tail between his legs during the long boom). The hot macro event in his economic world wasn’t the U.S. expansion but the Japanese collapse. The fragility of our assumptions, the quickness of the turnarounds, the certain end of it all, is what gets him going.

“I am sensitive,” he says grimly, “to things going wrong.”

And, most important, it is Krugman who, almost alone among a pushover press, has, for nearly a year now, characterized the Bush economic proposals as reckless and irresponsible, and the Bush people who have vouched for the numbers in these proposals as incompetents or liars.

Honestly, though, my interest is not so much in the merits of his case but in his presentation. I’m curious about what he looks like; how he acts; what his shtick is. I want to look the face of gloom in the eye – and try to gauge how it will play.

How big, I want to know, can he get?

He sits in a messy office in jeans and a baggy sweater. He moved down to Princeton from MIT last summer and is still not unpacked. At 48, he has a barely gray-streaked dark beard and a barely gray-streaked mop of dark hair – and in the middle a pink baby face. Significantly, he doesn’t look like an entrepreneur or analyst or financial engineer or Beltway guy – or any of those types who seem to grow more and more discredited every day. Krugman is your basic academic – unfriendly, condescending, abrupt. I’m not sure, actually, how different that is from the boom types, but they were certainly salesmen, and clearly he is not.

Right away, we get off on a bad foot when I ask about his media persona – where he sees himself fitting in in the economic sweeps.

I try to explain my view here: It’s not just the stock market that took off in the eighties but economic news as a great popular pastime. With the end of the Cold War, the economy supplanted nuclear destruction as the thing in the middle of the table of politics and culture. By the mid-nineties, business, the markets, and economic forecasting became the most profitable, and fastest-growing, area of media interest. We check in on the economy as we might follow war reports. (The tenor of the recent coverage, as we move from boom to bust, surely has an element of moving from peace to war.) Certainly, Abby Joseph Cohen, Mary Meeker, Bob Rubin, and Alan Greenspan have learned that the economy is a story, and that every story has to have its characters and competing voices – from news releases to cable chatter to Greenspan’s mutterings.

Indeed, Krugman got his twice-weekly spot on the New York Times op-ed page, the most coveted spot in journalism, not just because his liberal economics are the Times’s liberal economics but because it was the height of the boom. The Times had never had someone covering economics on the op-ed page – but all of a sudden the economy was the biggest story in the country. It was bigger than politics. Howell Raines, the Times’ editorial-page editor, told Krugman that the op-ed page had several people talking regularly about Israel but no one talking about the economy. How out of it was that?

Before the Times, Krugman had been at Slate; he’d had a column in Fortune too, and before that he’d written a book called The Age of Diminished Expectations. Plus, he had a rep for being the Democratic free-trade go-to guy – if you needed a quote, you called Krugman.

“You’ve been developing your brand,” I say (realizing, too late, that I’m using a discredited boom word).

“My brand,” he says, caustically.

I’m not surprised that Krugman resists this – not many Princeton guys or Times guys are openly comfortable with the black arts of self-promotion and the celebrification process. (I wonder if Greenspan was once media-averse, too?) Krugman also seems to think that when I say media, I mean glamour. He doesn’t go to New York or Washington parties, he protests – or even get invited to them.

Then, too, I’ll bet the gloomsters, quite in character, like to think they’re on the outside looking in; whereas the boomsters definitely considered themselves the center of the universe.

“You’re not talking about anything that is relevant to me,” he says.

Clearly, though, I say, the boom was hot – now the bust is hot. This, not illogically, will give him and other doomers the kind of authority and visibility that the boomers had.

He resists this point – it’s not just ingenuousness, I don’t think, but also a kind of commercial contempt.

Possibly it’s a kind of academic-class disdain. For a second, I think of the Galbraithian hauteur, but Galbraith was a glamour-puss in his own right; Krugman, I suspect, is a puritan. (He refers to Galbraith, whose shadow falls on all media-active economists, as a people’s economist rather than as a professional’s economist; Galbraith, in other words, unlike Krugman, couldn’t do the math.)

I try again to argue that economics has become a media discipline – that it’s not just the math you have to understand but the nature of the message (which starts to sound like one of those absolutely obvious economic formulations that they give Nobel Prizes for). You represent the message. You become the message. It’s all about who’s a player.

I absorb his withering annoyance and condescension.

The face of this New Economy (or New New) will be, I can see now, a bit pillish, definitely moralistic, certainly much less fun than the old New Economy.

He tells me how many serious papers he’s written and that he’s the recipient of the John Bates Clark Medal, which is, he says, the next best thing to the Nobel. “It’s actually scarcer than the Nobel,” he amends. Larry Summers, he adds, got it in the next go-round. The boom economy was a hyped economy, he says (which is exactly my point). Whereas he sees himself as anti-hype (“On the other hand, no one really sees himself as pro-hype,” I say). So many of the people, he says, who talk about economics for the media are people just interested in the drama – “up-and-down economics” he calls what they practice. “I don’t,” he says, “get my jollies out of that.”

It seems important for him not to see himself as doing what people do on cable who talk about the economy (when he says “CNBC,” it’s with the greatest contempt).

“I’m not going to change who I am,” he says (which, it strikes me, everyone who is in the throes of change says).

So, modesty, embarrassment, ambivalence (the way he talks about Larry Summers strongly indicates he’s thought the fame thoughts). But possibly, too, as an economist, he is afraid of the implications of his own potential celebrity. He knows that the nature of the forces moving the economy are softer, stranger, more un-economic than ever before. The science becomes ever more dismal when you add media to it.

The day after Greenspan’s timid rate cut last week (we now, I notice, refer to the Fed’s Open Market Committee with striking familiarity) and the market’s big tumble, Krugman’s column was all about perception (he called it psychology, but he meant perception). Confidence. Credibility. Image. There was no math here. Krugman’s analysis had entirely to do with show, with symbols, with heroes and villains, stand-up guys and wimps. Greenspan wimped out was the Krugman analysis – putting him on a par with his nudnik Japanese counterpart. He looked weak. He looked afraid. He failed to do what the drama demanded he do. He disappointed us.

The economy, in other words, is in our heads (Bill Clinton’s expansive, reckless, casual economy versus George Bush’s stricter, meaner, dressier one).

Krugman’s message is not so much that Greenspan has the wrong economics, or the wrong theory, but that he played his part wrong. Greenspan is no longer the confidence builder, no longer the hero. A good economy depended in part on our trust in Alan – and he is squandering that.

Now, what Krugman is also possibly saying is that Greenspan’s fault lies in becoming a media whore (you live by the media, you die by it). And possibly what Krugman is saying to me – all his demurring – is that if he ever gets to be Greenspan (or Rubin or Summers or whatever onward-and-upward career path he imagines), he doesn’t want to make the same mistake. He doesn’t want to become the story. He doesn’t believe it has to get personal.

I think Krugman is on his way – but he has a lot to learn about economics.

E-mail: michael@burnrate.com

Leading Indicator