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How Trump's Immigration Crackdown And Growing Inequality Threaten Social Security

How Trump's Immigration Crackdown And Growing Inequality Threaten Social Security

On Tuesday the Social Security Trustees released their latest report on the system’s finances. The numbers didn’t change much: Unless something is done, the Old Age Survivors and Disability Insurance (OASDI) program, Social Security’s official name, will be unable to pay full benefits starting in either 2032 or 2034, depending on some technical issues. That’s not far away: If the Trustees are right, the prospect of a Social Security crisis will loom over the next presidential administration.

It’s important to understand, however, the nature of the looming crisis. It won’t be an economic crisis. It won’t even be a serious fiscal crisis. Whatever you may have heard, Social Security isn’t in danger of going bankrupt.

What we’re facing, instead, is potential political crisis. Congress and the White House could easily take action to sustain America’s retirement system. But given the current state of our politics, there’s no guarantee that they will.

There is a widespread misunderstanding of how Social Security works. While Social Security was designed to look like a pension fund, it isn’t. A pension fund pays benefits out of a stock of assets it has accumulated over time. In contrast, Social Security operates as a government transfer program, like food stamps or Medicaid.

Now, unlike food stamps — but like the highway trust fund — Social Security is on paper supported by a dedicated tax, the payroll tax, that is assigned to that program. But I say “on paper” because from an economic point of view assigning the payroll tax to Social Security is just an accounting convention. What matters for the U.S. economy is the overall balance between government spending and government revenue, not the difference between one type of spending and one source of revenue. So there’s no inherent economic significance to the fact that by 2034 payroll tax receipts will be insufficient to cover promised benefits.

There is, however, a legislative issue. As long as the Social Security Administration can pay benefits out of payroll taxes and its cash reserve, there’s no need for Congress to vote each year to authorize benefits — they just keep going out until further notice. However, once those resources become insufficient, benefits will fall —by 17 percent according to the Trustees — unless Congress passes new legislation that “tops up” Social Security’s finances.

Yet the current administration and Republican party are such extremists that there is a real risk that Social Security will be held hostage on behalf of their goals. If this should come to pass, the hostage-takers will claim that shoring up Social Security is unaffordable. Right on cue, Mike Johnson, the Trump-sycophant Speaker of the House, declared on Monday that “entitlement programs” like Social Security “have to be adjusted and fixed,” and that Republicans will introduce a plan to that effect next year.

But this is a ploy, because while the cost of maintaining Social Security benefits at their promised level isn’t trivial, it is in fact affordable. According to the Trustees’ report, the actuarial balance of OASDI up through 2050 — the amount of additional funds it would need to keep paying full benefits for the next 25 years — is 1.06 percent of GDP. To put that number in perspective, the Trump administration proposes increasing military spending next year by $420 billion, equivalent to about 1.4 percent of GDP – without any discussion of whether that’s affordable

Yet how did we get to the point where Social Security will need to be topped up? The main answer is that we have an aging population, with a growing ratio of retirees collecting benefits to workers paying into the system:

Trump’s anti-immigration policies are making this problem worse. According to the Trustees’ report, lower immigration will deepen Social Security’s financial hole because many immigrants are working-age adults who will pay into the system for decades before they collect benefits. In fact, this problem may be much bigger than the report acknowledges: The report’s baseline assumption is that we’ll have net immigration of almost 1.2 million people a year, and even the pessimistic case assumes 750,000 a year. Meanwhile actual net immigration has already been cut far below that — and may now be negative.

Moreover, Social Security is being financially damaged by growing income inequality in America. Payroll taxes are levied only on wages up to $184,500, and they don’t touch capital income. With the distribution of income increasingly shifting from labor to capital, as well as becoming more unequal among wage-earners, revenue from the Social Security payroll tax has been falling as a share of national income. From 1990 to 2024, it fell from 5.02 percent of gross domestic income to 4.46 percent.

Which brings me to the question that, these days, we ask about everything: How might Social Security be affected by the advent of AI?

A short answer: If, as many of us fear, AI accelerates rising income inequality, it will further reduce the payroll tax receipts that currently pay for Social Security and further endanger its finances.

On the other hand, if AI, as its advocates promise, leads to faster economic growth, it will increase the potential tax base that could and should be used to support Social Security and other social insurance programs. But to take advantage of that larger base, we’ll have to get serious about taxing wealth and capital income.

Is Social Security in trouble? Yes, but only because of the way its financing is currently structured — a structure that no longer works well because our society and economy have become so unequal. Moreover, Trump’s immigration policies are further endangering its already deteriorating financial condition.

So don’t believe Republicans’ gaslighting that it will be necessary to cut Social Security benefits. All that is necessary to preserve Social Security is political will to raise taxes on the wealthy and a sensible immigration policy.

Did We Lose Yet? Trump's Ego-Driven Iran 'Excursion' Crashes Into Reality

Did We Lose Yet? Trump's Ego-Driven Iran 'Excursion' Crashes Into Reality

“Many questions, few details in latest Iran peace proposal,” read the headline on a New York Times report Sunday. As the subhead explained, “It is too early to tell what exactly Trump and Iran have agreed to, or if they have agreed to much at all.” The article, by the way, was written by David Sanger, who Trump called “treasonous” over his clearly accurate reporting on how badly the war was going.

But, in fact, Trump’s Iran war may be over, or virtually over. America lost.

Iran may or may not agree to exercise restraint in its control over the Strait of Hormuz and its nuclear program. But as Donald Trump of all people should know, agreements can be broken. At a fundamental level Trump, who began by demanding UNCONDITIONAL SURRENDER and trying to impose a subservient new regime, is now slinking away, leaving Iran’s hard-liners empowered — and America’s reputation shattered.

How did that happen? America is a superpower, Iran a middle-sized regional power at best. Spending isn’t the only determinant of armed might, but even so a comparison of the two government’s military budgets is ludicrously one-sided:

US and Iran military spending 2025 Data from Stockholm International Peace Research Institute

Yet the Iranian regime is not only still standing, it is stronger than before. Meanwhile, Trump is running away.

Trump’s disastrous leadership isn’t the sole factor behind this debacle, although it’s a large part of the story. In my view there are four main reasons Trump’s Iran “excursion” is ending in humiliation.

First, this was a fundamentally unwinnable war.

Once the initial decapitation strike against Iran’s leadership left the regime’s hold on power intact, Operation Epic Fury became an attempt to end Iran’s threat to world oil supplies by suppressing its missiles and drones with air power. Unfortunately, as the Substack History Does You has documented, such campaigns have never worked. Allied air forces tried to stop Nazi Germany from launching V1s and V2s in World War II; they failed. During the first Gulf War, Coalition air forces devoted huge resources to an attempt to stop Iraq from launching Scud missiles; they also failed. Chasing down mobile launchers, especially in an era of cheap, abundant drones and in a huge, mountainous country like Iran, is an impossible game of whack-a-mole.

Of course, leaders who aren’t terminally arrogant and ignorant don’t start unwinnable wars in the first place.

Second, painful as this is to recognize, the U.S. military, after decades of unchallenged dominance, appears to have lost much of its edge. As Phillips O’Brien recently wrote,

The lack of thought-through US response to the technological changes we are seeing [especially in the Russia-Ukraine war] before it embarked on the Iran bombing shows how smug militaries can be—and the bigger and more powerful they think they are the more smug they tend to be.
…
There is far too much self-congratulation in the US about its military, a belief that US armed forces are highly professional, show initiative, are thoughtful, etc. This is a romantic vision that Americans are using now to throw all blame for the Iran failure on the Trump Administration.

That said, the Trump administration has made the degradation of the military much worse.

Pete Hegseth, the self-proclaimed Secretary of War, has carried out an unprecedented purge of military officers with impeccable reputations, with the majority of those fired Black or female. He has replaced them with political loyalists like Admiral Brad Cooper, the head of Central Command, who has in effect been running Trump’s war.

The officers who survived the purge got the message. Under Hegseth, official accounts of the war’s progress have been a stream of bombastic claims of victory and ludicrously rosy depictions of the situation on the battlefield. Less than two weeks ago Cooper was still peddling fantasies of easy victory to Congress, asserting among other things that the U.S. could easily open the Strait of Hormuz by force.

Do you believe that these delusions are only for public consumption, that Hegseth has been getting and acting on accurate information? I don’t. It’s far more likely that Hegseth and Trump have also been receiving false, optimistic reports, because nobody in the military dares to tell them the uncomfortable truth.

The sycophancy and flattery Cooper exhibited in that testimony surely reflected groupthink that has led to many bad decisions. For example, reporting by CNN, the Washington Post and the Times finds that U.S. bases and facilities have suffered a remarkable amount of damage from Iranian drone and missile strikes, with casualties and much expensive equipment and aircraft destroyed. Why wasn’t the U.S. military prepared for this possibility?

The lack of preparation clearly reflected a predetermined view that Iran would be so devastated by U.S. attacks that it would be unable to strike back. And it’s reasonable to infer that any officers who tried to warn of the dangers were treated as defeatists and silenced.

Finally, success in modern war depends crucially on out-thinking one’s enemies. But MAGA is all about deprecating hard thinking and valorizing belligerent ignorance.

On Saturday Hegseth addressed the graduating class at West Point. In war, he declared, “you can’t throw your pronouns at the enemy.” He congratulated the cadets on being “fit, not fat.” Despite humiliating failure, Hegseth still has his job — and is still asserting that eliminating DEI wins wars and that bulging biceps can beat drones.

Can America still snatch victory from the jaws of defeat, or should it accept a deal that leaves us clearly worse off than we were before the war? The answer is that running away — if that is what Trump is doing — is now the right move. It’s better to accept a bad deal, one that leaves America much weaker than it was a few months ago, than to double down on a failed war. Time is not on our side: looming shortages of critical weapons, the imminent exhaustion of world oil inventories, and the lost support of our allies and the American public mean that this war needs to end soon.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.

Looting America: Trump's Corruption At The Point Of No Return

Looting America: Trump's Corruption At The Point Of No Return

So the Trump administration is creating a $1.776 billion slush fund — 1776, get it? — to pay off victims of “lawfare and weaponization.” Just to be clear, if you’re a U.S. taxpayer, this action means that almost $1.8 billion of your money will be handed out to whomever a panel appointed by Donald Trump decides to reward. The beneficiaries are likely to include January 6 insurrectionists, as well as Trump, his family, and his allies.

Few things shock me these days, but this development — in which a Justice Department that works for Trump is paying a vast sum to “settle” a lawsuit brought by Trump himself — is a new nadir in self-dealing, further revealing Trump’s utter contempt for the American people.

Now, massive corruption on the part of Trump and his minions isn’t new. But the shamelessness of this latest episode of looting takes it to a new level. Until now, we’ve seen a combination of crony capitalism and insider trading. Plutocrats and corporations have been enriching Trump through back channels, especially crypto, in return for government contracts and policy favors, while Trump himself and people close to Trump have been making hugely profitable market bets thanks to advance knowledge of government policies.

But now Trump has eliminated the middlemen, effectively telling his officials to pay money directly to him or anyone else he favors.

Granted, we already knew that Trump was, by orders of magnitude, the most corrupt president in U.S. history. But now Trump is the most explicitly corrupt leader in today’s world. After all, Vladimir Putin has obviously stolen billions, but never this brazenly. Even Third World dictators normally try to mask their corruption.

Don’t say that this taxpayer-financed slush fund won’t have political consequences.

On the contrary, the polling and focus-group analyses I’ve seen say that voters are very angry about corruption. Trump’s theft of taxpayer money, while people are losing healthcare coverage and food aid while suffering from Trump-induced higher prices, is perfect fodder for the Democrats in the upcoming elections.

So we should ask ourselves why the Trumpists have abandoned all restraint. There have been many corrupt politicians in U.S. history – although they were pikers in comparison to Trump. Yet they at least attempted to hide their corruption, or at least keep it discreet and deniable, in order to avoid a voter backlash.

I would argue that the blatant nature of the new looting is a signpost of where America under Trumpism is heading in the months and years ahead.

It’s true that Trump has a base that will support him no matter what, in many cases literally believing that he has been chosen by God. This puts a floor under this support. But his disastrous recent polling, as Nate Cohn writes in the Times, suggest that this floor may be lower than many thought.

Now, we already know that Trump and his allies have no intention of facing free and fair elections. With the unstinting help of the Roberts Supreme Court, they have already rigged the midterms through redistricting. Trump minions are actively trying to depress Democratic-leaning voter turnout, by demanding from states the right to challenge their voting rolls. And it would be naïve to think that redistricting will be the end of the MAGA effort to undermine democracy.

Still, Trump is aware that, even with Republican gerrymandering, November may deliver a blue wave big enough to hand Democrats the House and, quite possibly the Senate. G. Elliott Morris estimates that Democrats will need a 4-point popular vote advantage to win the House, but the latest Times poll gives them an 11 point lead. Why, then, isn’t he trying to be at least slightly discreet in his corruption?

One answer is that even if MAGA loses big in November, Democrats can’t count on wave elections every cycle, and the field is now strongly tilted against them. As Morris writes.

While the situation for Democrats is not necessarily dire for 2026, the situation for democracy in 2028 and beyond certainly is.

So you can think of the $1.8 billion slush fund as a promise to MAGA-world that there is a payoff to be had if they just stick with him for the next two and a half years.

Beyond that, we are, in effect, watching what happens when a quasi-authoritarian regime’s corruption and criminality pass the point of no return.

At this point Trump and his MAGA minions have stolen so much, committed so many crimes — not just theft but taking America to war illegally, abusing ICE detainees, and much more — that if and when they lose power many of them will face personal ruin at best, years of jail time at worst. This would happen even if they stopped committing more crimes.

So there’s no incentive for them to end their criminality, or to end the attempts to bribe others to go along. Either they succeed in destroying America as we know it, or they won’t. And until that’s resolved, they may as well engage in even more corruption and criminal acts.

Think of it this way: The gravity of what the Trumpists have already done has created a sort of black hole at the center of American political life — and the Trumpists have already crossed the event horizon, the boundary beyond which there is no escape. So they will do ever more terrible things, because they have nothing more to lose.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.

Under Trump, 'Predation Economy' Swells As Insiders Scam The Oil Market

Under Trump, 'Predation Economy' Swells As Insiders Scam The Oil Market

At this point it’s almost routine: Almost every time Donald Trump makes a major announcement about the Iran War, that announcement is preceded — sometimes by only a few minutes — by huge and hugely profitable bets in the oil market.

The influential Kobeissi Letter documents the latest example:

BREAKING: According to our analysis, ~$920 million worth of crude oil shorts were taken 70 minutes before an Axios report claimed the US and Iran were near a “14-point” deal to end the war.
At 3:40 AM ET today, nearly 10,000 contracts worth of crude oil shorts were taken without any major news.
This is equivalent to ~$920 million in notional value, an unusually large trade for 3:40 AM ET.
At 4:50 AM ET, just 70 minutes later, Axios reported that the US is “close” to a “memorandum of understanding” to end the Iran War.
By 7:00 AM ET, oil prices had fallen over -12% with these crude oil shorts gaining approximately +$125 million.
Minutes later, Iran launched the “Persian Gulf Strait Authority” and oil prices surged +8%.
What just happened?

As the BBC among others has documented, this isn’t the first time, or the second time, that this has happened. Again and again, just before Trump makes announcements that raise hopes about the reopening of the Strait of Hormuz, one or more “whales,” very large traders, sell large quantities of oil futures, almost instantly reaping big profits as prices fall.

What’s truly remarkable is that this keeps happening even though the pattern has become familiar. This tells us two things: The Trump administration is making no real effort to crack down on whoever is trading using inside information, and these inside traders are operating with a complete sense of impunity, assured that they can get away with it.

The stench of corruption is overwhelming. Yet aside from the raw corruption, these incidents also raise a larger question. The insiders ripped off the parties who sold futures to them at what turned out to be very unfavorable prices to the sellers. What broader damage does this kind of unchecked insider trading do?

There’s both a narrow and a broad answer.

The narrow answer involves economic efficiency. How is the functioning of the economy affected by the realization that somebody — it’s not hard to make guesses, but we don’t know for sure — is trading oil futures based on advance knowledge about what will soon appear on Truth Social or Fox News?

It took me a while to figure this out. But I think I have an answer.

First, ask yourself what purpose is served by the oil futures market. Unlike the prediction markets Polymarket and Kalshi, the oil futures market is not intended to be mainly a vehicle for gambling. Instead, it is a market that serves to reduce risk through hedging.

Here’s how it works. There are people and institutions, such as oil producers, who will need to sell oil at a future date. They want to lock in the price today on those future sales. There are also people and institutions, such as airlines, who have a future need for oil and would like to lock in the price today. Thus the futures market lets both sellers and buyers of oil eliminate a major source of risk – fluctuations in the price of oil. This reduces uncertainty in the economy as a whole.

But what if there are substantial players in the futures market with inside information? Then if you are, say, a corporation trying to lock in the price of oil you plan to buy next month, you may not be making a mutually beneficial deal with future sellers. You may, instead, be played for a sucker — paying what in retrospect will have been an excessive price — by people who know what’s about to appear in the president’s social media feed.

The same could apply to sellers of oil futures, although the examples of insider trading we know about involved Trump insiders getting ahead of falling, not rising, prices.

Either way, the effect of traders’ suspicion that they may be losers in a rigged game will be to make them reluctant to play at all — reluctant either to buy or to sell oil futures. And this will mean losing the risk-reducing benefits of a properly functioning futures market.

Now, insider trading of oil futures probably isn’t big enough to do critical damage to those markets. But it does do damage, which hurts all of us, not just the buyers who got stuck with the immediate losses.

And beyond the narrow economic losses, insider trading on oil is part of the broader rise of what we can call the predation economy.

Under Trump II, corruption runs rampant. Success in business depends not on what you know but on who you know, and there are no rules beyond having — and, obviously, buying — the right connections.

This is bad for everyone who doesn’t have those connections. It’s bad for economic growth. And it undermines the moral basis of the economy and society as a whole. It’s the path of how a country slides into third-world status.

I’ll have much more to say about the predation economy in future posts.


Pushing Military Toward Despotic Cultism, Hegseth Endangers Troops And Democracy

Pushing Military Toward Despotic Cultism, Hegseth Endangers Troops And Democracy

In February 1777 George Washington issued an order requiring that American soldiers be inoculated against smallpox:

Finding the Small pox to be spreading much and fearing that no precaution can prevent it from running through the whole of our Army, I have determined that the troops shall be inoculated. This Expedient may be attended with some inconveniences and some disadvantages, but yet I trust in its consequences will have the most happy effects. Necessity not only authorizes but seems to require the measure, for should the disorder infect the Army in the natural way and rage with its usual virulence we should have more to dread from it than from the Sword of the Enemy.

It was a wise decision. Smallpox was a debilitating, often fatal disease. And Washington’s army, which put many farm boys with little previous exposure to infectious disease into crowded encampments, was especially vulnerable. As Washington said, the situation “seems to require the measure.”

It was, nonetheless, a bold, enlightened move. And why not? Washington, like many of the Founding Fathers, was very much a man of the Enlightenment.

By contrast, Pete Hegseth, the Secretary of Defense who insists on being called the Secretary of War, is a bloodthirsty religious fanatic. He’s more comfortable with fascism than with America’s founding principles. And in another attempt to prove his manhood, he announced on Tuesday that he was ending the sissy requirement that members of the military be vaccinated against the flu.

This was, he said, to “restore freedom” to our armed forces:

If you, an American warrior entrusted to defend this nation, believe that the flu vaccine is in your best interest, then you are free to take it. You shouldn’t. But we will not force you because your body, your faith, and your convictions are not negotiable.

Even before we get into the practical damage Hegseth’s move will inflict, note the bizarre framing. Personal freedom is great and should be granted wherever appropriate. But one place where it isn’t and never has been appropriate is in the military. When Americans sign up to serve the nation under arms, they agree to temporarily forego many of the freedoms of civilian life. They must wear uniforms, not street fashion. They must eat Army or Navy food. They must salute officers and obey orders. They must, in other words, adhere to military discipline.

It won’t surprise you to learn that Hegseth is completely hypocritical on this subject. He says that your body, your faith, and your convictions are not negotiable. But he has banned most beards from the U.S. military and cracked down on religious exemptions. After all, bearded men can’t be effective warriors:

He has also demanded that members of the military lose weight, because he doesn’t like how they look:

Frankly, it’s tiring to look out at combat formations or really any formation and see fat troops. Likewise, it’s completely unacceptable to see fat generals and admirals in the halls of the Pentagon and leading commands around the country and the world. It’s a bad look. It is bad and it’s not who we are.

But requiring that serving troops receive a vaccine that helps maintain their military effectiveness and also helps protect their comrades from infection? Tyranny!

This isn’t simply about vaccines and facial hair. These directives are part of a larger project, another step in Hegseth’s drive to cultify the US military.

What do I mean by cultifying the military? I mean creating an environment in which professional integrity, military discipline, and historical precedent are destroyed in service to the personality cult of Donald Trump and his enforcer, Pete Hegseth.

Think of these directives as loyalty tests. Hegseth can indulge his faux concerns about liberty while aligning himself with the science-hating right. If you are an officer concerned about the welfare of your troops and voice your concerns, you are out. Mention that the directive against beards is nonsensical and disproportionately harms black male soldiers with a common skin condition, then you are a woke weakling and are sent packing. If you are a general in possession of critical skills and hard-won experience, but served during the Biden administration, you will be unceremoniously fired.

Simply put, the method in Hegseth’s apparent madness is to destroy the integrity of the professional military corps through destructive and despotic behavior that drives out those – like Admiral Holsey – who hold to their principles.

And this should terrify every American. A powerful military always poses a potential threat to democracy. To keep that threat in check, the military must be presided over by an officer corps that understands that its duty is not to any one person, but to the Constitution and the rule of law. The U.S. military has been largely insulated from political influencesince the nation’s founding. But Hegseth is trying to subvert that.

Gratuitously exposing service members to disease isn’t a small issue. But it’s much more important as a symptom of the ongoing effort to corrupt the military and make it a servant of extremist politics and politicians.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.


Inflation Irritation: Are Voters Still Enraged Because Trump Lied About Prices?

Inflation Irritation: Are Voters Still Enraged Because Trump Lied About Prices?

According to Donald Trump, the U.S. economy is doing great. We’re enjoying a huge boom, there’s no inflation, and we’re all getting tax cuts. We have prosperity like nobody has ever seen before.

But it’s probably not news to you that reality doesn’t agree. Inflation was stubbornly elevated even before the Iran debacle, while growth has been sluggish. Jobs for entry-level workers are hard to find while mortgage and car loan rates are up. Gas-pump prices are above $4 on average and around 10 million Americans are projected to lose health insurance by 2028. Yet the one economic variable that stands out, that really is like nothing anyone has ever seen before,is consumer confidence: The long-running University of Michigan index of consumer sentiment just hit its lowest point ever recorded.

And that’s a puzzle. Obviously, I’m no defender either of Trump’s policies or of his lies. But while the U.S. economy isn’t nearly as good as he claims, it’s objectively not bad enough to justify the worst consumer sentiment in history — worse than during the stagflation at the end of the 1970s, worse than in the aftermath of the 2008 financial crisis.

Warning: Today’s post is wonkier than usual, at least in tone. It basically ends with a question mark. My main goal today is to share a puzzle with readers and explain why I’m not satisfied with the answers smart people — especially two of my favorite data analysis gurus, Jared Bernstein and G. Elliott Morris — are offering. They argue that it’s all about the level of prices. While that is certainly an important factor, I believe that there is more to the story. I believe that the current extremely negative sentiment is a result of Americans’ correct sense that they have been lied to. To discuss this fully will take a couple of posts. So today I will introduce the puzzle and enlarge on the range of explanations in the next post.

Start with the puzzle: Why are Americans so down on an economy that, while not the greatest, isn’t terrible by the usual measures? This isn’t a new question: Kyla Scanlon coined the term “vibecession” in 2022 for a situation in which people feel bad about an economy that doesn’t look that bad by the numbers. But the puzzle has intensified over time, both because the bad feelings have gotten worse and because the vibecession has been so persistent.

Historically, consumer sentiment tracked objective measures of the state of the economy. In fact, you could predict sentiment fairly well using just one variable: the so-called “misery index,” the sum of inflation and the unemployment rate. Here, using annual averages (and the first three months of 2026) is what the relationship between the misery index and consumer sentiment has looked like since 1990:



You can get an even better fit to pre-Covid consumer sentiment by adding other economic variables, such as the performance of the stock market. But any way you cut it, since 2022 Americans have felt much worse about the economy than conventional economic measures say they “should.” Moreover, that pessimism has gotten worse over time: consumer sentiment is much worse now than it was in 2023 and 2024.

Many observers have attempted to explain these unusually bad feelings by claiming that the economy is worse than it looks, especially for working-class families. Going through those arguments would take me too far afield right now. But let me just say that some of those arguments, like claiming that ordinary workers didn’t share in the post-Covid recovery, are just wrong. Others, like pointing to much higher interest rates on mortgages and other loans, have validity. But they aren’t sufficient to explain why consumer sentiment is now worse than it was under stagflation and mass unemployment.

So what does explain the current dismal consumer sentiment? Both Bernstein and Morris argue that it’s about the price level as opposed to the rate of inflation.

The chart below illustrates what they mean. It shows the log of the Consumer Price Index since 2014. I use the log because this means that a given vertical distance always corresponds to the same percentage change, and the slope of the line shows the rate of inflation:

The U.S. experienced a bout of high inflation in 2021-22, largely because of disruptions to supply chains in the aftermath of Covid, plus fallout from Russia’s invasion of Ukraine. This inflation spurt ended as supply chains became unsnarled and oil prices stabilized, and inflation since 2023 has been only modestly higher than it was pre-Covid. However, prices have never come back down and have remained persistently higher than the pre-2020 trend would have predicted.

And the story is that consumers aren’t fully mollified by the fact that inflation — the rate at which prices are rising — has slowed. They’re angry and upset that the level of prices remains much higher than they expected.

Both Bernstein and Morris find that if one adds a price-level variable to an equation predicting consumer sentiment, it tracks the data well. Morris concludes,

When it comes to how Americans feel about the economy today, whether you are measuring using objective structural price data or the polls, it’s the prices, stupid.

Why am I not fully convinced by this explanation? I have three questions:

First, does correlation imply causation? Consumer sentiment fell off a cliff after 2020. Also, prices surged after 2020. But lots of things changed with Covid. How sure are we that the second observation explains the first? Morris points to other survey data that support the prices to confidence link, but we’re still talking about basically one observation, which is always problematic.

Or to use a bit of jargon, is including the jump in prices in your equation just introducing a dummy variable? That is, is it simply a marker that something changed, but not a clear indication of what?

Second, shouldn’t this story have a sell-by date? The big price surge began five years ago. That’s a long time. Do you remember what groceries cost in April 2021? I don’t, not really. At some point one would expect people to recalibrate their expectations of what things “should” cost. Yet the vibecession is if anything deepening with the passage of time.

Third, what about Morning in America? Joe Biden presided over rapidly falling inflation for the second half of his term, yet received no credit because, we’re told, people were upset that prices hadn’t actually come down. But you know who else presided over falling inflation but a still-rising price level? Ronald Reagan. Here’s what happened to the overall level of consumer prices during Reagan’s first term and the Biden presidency:



The two presidents’ track records on prices were almost identical. Yet Reagan ran a triumphant reelection campaign on the theme that it was Morning in America, while the Biden economy was vilified. What was that about?

Jared is too good an economist to be unaware of this puzzle. He has shared with me a draft of a forthcoming paper with Daniel Posthumus, in which they do indeed find that the level of prices historically didn’t matter the way it seems to now. They suggest that the long era of relatively low inflation since the mid-1980s may have made people more sensitive to price shocks:

Our findings suggest that a huge storm after a long calm can be more upsetting to people who are not used to bad weather.

Indeed. But why has consumer sentiment gotten so much worse over the past year, even as the low prices people remember recede further into the past?

My speculative answer is that it has a lot to do with the lies of 2024. Remember, millions voted for Trump because he promised to reduce grocery prices “on Day One” and promised to cut energy bills in half. Now they know that they were had.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.

Ignorance And Ignominy: MAGA's Arrogant Theocrats Humiliated U.S. Over Iran

Ignorance And Ignominy: MAGA's Arrogant Theocrats Humiliated U.S. Over Iran

So the world’s greatest military power went to war with a poor, medievalist theocracy. It was an incredibly uneven match. Here’s are the GDPs of Iran and the United States in 2024:

Yet Iran won. The Iranian regime has emerged far stronger than it was before, controlling the Strait of Hormuz and having demonstrated its ability to inflict damage on both its neighbors and the world economy. The U.S. has emerged far weaker, having demonstrated the limitations of its military technology, its strategic ineptitude and, when push comes to shove, its cowardice.

We’ve also destroyed our moral credibility: Trump may have TACOed at the last minute, but he threatened to commit gigantic war crimes — and for all practical purposes our political and civil institutions gave him permission to do so.

How did this happen? Naturally, the Iranian Minister of War credited divine intervention, declaring that “God deserves all the glory.” His nation, he said, fought with the “protection of divine providence. A massive effort with miraculous protection.”

Well, theocrats gonna theocrat.

But I lied. That wasn’t a quote from an Iranian official. That’s what Pete Hegseth, our self-proclaimed Secretary of War, said while claiming that one of the worst strategic defeats in American history was a great victory.

There will be many analyses by military and strategic experts of the Iran debacle. But let’s not lose sight of the larger picture: We were led to disaster by the boastful ignorance of men like Trump and Hegseth — boastful ignorance made even worse by claims that God supports whatever they want to do.

With men like that running America, major disasters were just a matter of time. I’d like to think that they have been chastened by this debacle, that they have learned something. But I don’t believe that for a minute.

God help us.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.

Behind Trump's Attacks On Clean Energy Lie Corruption -- And Masculine Insecurity

Behind Trump's Attacks On Clean Energy Lie Corruption -- And Masculine Insecurity

We are now in a global fossil fuel crisis. With oil and liquefied natural gas from the Persian Gulf unable to reach international markets due to Iran’s blockade of the Strait of Hormuz, hydrocarbon prices have been soaring around the world and widespread shortages are emerging. Anyone who thought that the U.S. would be insulated from this dire picture thanks to its large domestic oil production has had a rude awakening: the average retail price of gasoline has risen more than $1 per gallon over the past month, while the price of diesel is up $1.60.

But the Trump administration hasn’t allowed these short-run distractions to divert it from its long-run goals: It remains deeply committed to killing renewable energy, especially wind power, and increasing America’s reliance on fossil fuels.

True, some of the administration’s attacks on wind power have failed: Its efforts to throttle offshore wind development by ordering developers to stop work on projects that are already underway have repeatedly been overruled by the courts. But the administration is continuing to block development of onshore wind and solar power by freezing the issuance of federal permits.

And on Monday the Interior Department unveiled a new tactic in its war on wind: It announced that it will pay TotalEnergies, a French energy giant, almost $1 billion to not produce energy — specifically to abandon its plans to build two large wind farms off the East Coast.

To understand the Trump administration’s motives in its campaign to kill renewable energy, one must realize that this campaign is both economically self-destructive and, despite the best efforts of the fossil fuel industry, deeply unpopular.

Fifteen years ago wind and solar power were still relatively marginal energy sources, which those hostile to their development could portray as unproven and uneconomic. Today they are major contributors to energy supply in many nations — and in some U.S. states. Perhaps most notably, as the chart at the top of this post shows, renewables — mostly wind, but with a growing role for solar — now account for more than a third of electricity generation in Texas, America’s largest producer of electricity and not exactly a state run by environmental extremists.

Even more impressively, renewables have dominated the growth in Texas’s electricity generation in recent years:

You almost have to admire the administration’s persistence, its determination to turn back the clock on energy even though renewables are big business, its tenacity in trying to block new, secure energy sources even in the face of a global energy crisis. But what’s this all about?

The administration has argued that offshore wind farms are a threat to national security, supposedly interfering with radar. But that doesn’t explain the efforts to block onshore wind and solar, and the courts have remained unconvinced. In announcing the buyoff of TotalEnergies, the Interior Secretary claimed that wind power is expensive and unreliable; but in that case why is it necessary to pay private companies not to develop it?

Campaign finance is part of the story. At this point, political contributions from fossil fuel companies go almost entirely to the GOP, while alternative energy favors Democrats.

Beyond campaign finance, fossil fuel interests, especially but not only the Koch brothers, have spent many decades promoting hostility to renewable energy and any effort to mitigate climate change. They have done so by every means possible, including faux environmentalism. When Donald Trump makes bizarre claims about how wind power is massacring birds and “driving whales crazy,” he’s getting his fantasies, whether he knows it or not, from the fossil-fuel propaganda machine.

Now, this long-term project has had limited success at moving the broader public, which remains favorably disposed toward renewable energy. In fact, as late as 2020 large majorities of rank-and-file Republicans held favorable views of both solar and wind power. Those views have shifted against renewables in Trump’s second term, but even now they aren’t nearly as extreme as the views of the Trump administration. And according to Pew, a substantial majority of Americans still believes that promoting wind and solar is “a more important priority” than promoting fossil fuel production.

But the right-wing elite is completely anti-renewable.

In large part this reflects long-term indoctrination by fossil-fuel backed think tanks and media. In addition, however, to make sense of the right-wing elite’s intense hostility to renewable energy one needs to think about psychology (psychology that the fossil fuel cabal exploits.)

Bear in mind that on the political right wind and solar power are routinely condemned as “woke.” Real men burn stuff.

What this reflects, I believe, is a common factor underlying many right-wing obsessions. Why cling to fossil fuels in the face of a technological revolution in energy? Why valorize “warrior ethos” and bulging biceps in an age of drone warfare? Why build economic policy around a doomed attempt to bring back “manly” jobs? At a deep level, I’d argue, it’s about nostalgia for an imagined past in which brawn mattered more than brains, combined with, yes, a hefty dose of insecure masculinity.

The world keeps declining to cooperate with these macho dreams. Tariffs aren’t bringing back blue-collar jobs. Setting out to “destroy the enemy as viciously as possible” — as Pete Hegseth said Tuesday — isn’t winning an easy victory over Iran. And turning our back on the energy revolution, even paying the private sector to reject new technology, means both making America less secure and ceding the future to other countries that aren’t ruled by MAGA’s obsessions.

But that appears to be a price both fossil fuel interests and the Trump administration are willing to pay.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.

Why America Is On Its Own: Slavery, Tariffs And Trump's Dire Strait

Why America Is On Its Own: Slavery, Tariffs And Trump's Dire Strait

Donald Trump is now pleading with other countries to rescue his war on Iran by helping to open the Strait of Hormuz — although Trump being Trump, his pleas for assistance take the form of threats. Regardless, help is not on the way. Germany, Australia and Japan have flatly said no, while Britain and France have been slightly equivocal but at most hinted at willingness to supply forces after the fighting stops.

Why this effectively unanmous rejection? A large part of the answer is that other countries couldn’t secure the Strait even if they wanted to. Boris Pistorius, Germany’s defense minister, was outright caustic in remarks Monday:

What does (...) Donald Trump expect a handful or two handfuls of European frigates to do in the Strait of Hormuz that the powerful U.S. Navy cannot do?

Beyond that, who wants to take risks in support of a U.S. government that nobody trusts, a government that neither shows gratitude for aid nor punishes those who do America harm?

Indeed, even as Trump begs in his graceless way for help, his administration is preparing to hit the very nations he is appealing to with another round of tariffs — tariffs that will be imposed based on an obviously false, bad faith, totally insulting argument.

As most readers probably know, almost a year ago Trump imposed tariffs on almost every other nation, including islands inhabited only by penguins, by invoking the International Emergency Economic Powers Act. This use of IEEPA was blatantly illegal, and after dragging its heels for many months, the Supreme Court finally agreed with lower courts that the tariffs were, in fact, illegal.

One important point that isn’t emphasized enough is that in addition to being illegal under U.S. law, the IEEPA tariffs were a gross breach of contract. Most U.S. tariff rates were set in 1995, as part of the negotiations that among other things created the World Trade Organization. These tariffs were “bound” by international agreements, which have almost as much force as treaties. But the U.S. just ripped those agreements up, without even trying to make a case for its actions.

Now the IEEPA tariffs are gone, but Trump isn’t giving up. On Sunday night he posted a long, falsehood-filled rant about the Court, beginning with a condemnation of its tariff ruling. And while he can’t simply defy Supreme Court rulings — not yet, anyway — his officials have been scrambling for legal strategies to reimpose high tariffs.

And the main one they’ve come up with is a doozy. Under U.S. law the executive branch has the authority to impose tariffs without new legislation in certain specified circumstances. These include Section 232 tariffs to protect national security, the (spurious) basis for most of the tariffs that survived the Supreme Court’s ruling. (I’m ignoring the Section 122 tariffs currently in place to deal with a nonexistent balance of payments crisis, not because they’re legal — they clearly aren’t — but because they will expire this summer.)

Looking forward, however, Trump officials are planning to impose another major round of tariffs using Section 301, designed to cope with unfair foreign trading practices. In particular, they’re proposing tariffs on 60 (!) countries, including Canada, the UK and the European Union, that they accuse of violating rules against international trade in goods produced with forced labor.

Wait — is the administration accusing Canada and Europe of using slave labor to produce their exports? No, they’re saying that these countries’ governments are guilty of “failure to impose and effectively enforce a ban on the importation of goods produced with forced labor,” and that these failures “burden or restrict U.S. commerce.” In other words, they’re going to slap tariffs on Canada, not because they claim that Canada uses slave labor, but because China does, and they claim that Canada is hurting America because it isn’t doing enough to stop those slave-produced goods from entering its own market.

Nobody, and I mean nobody, believes this story. Nobody believes that Canada or Europe are worse at policing global slave labor than the U.S. is. In fact, nobody believes that the Trump administration even cares about slave labor. After all, the alleged concerns that are about to be used to raise tariffs were nowhere to be found until the Court ruled against IEEPA.

So this is nothing but an excuse for another attempted end-run around the law — an end-run that is also a massive insult to other democratic nations, the same nations Trump is pleading with for help in undoing the disaster he has created in the Persian Gulf.

The point is that it’s all of a piece. The current U.S. government has, as Trump would say, treated our erstwhile allies very, very badly in multiple ways, with the arbitrary, illegal imposition of tariffs the most consequential. And now those erstwhile allies have no inclination to help Trump out of the Iran trap he created for himself. Funny how that works.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.

The Impotence Of Drill, Baby, Drill: Why Oil Prices Soar Despite Domestic Supply

The Impotence Of Drill, Baby, Drill: Why Oil Prices Soar Despite Domestic Supply

Donald Trump talked a lot of nonsense about energy during the 2024 campaign. But in fairness, some of the underlying premises behind “drill, baby, drill” were accepted by many people. At the very least, it was widely presumed that U.S. self-sufficiency in oil would protect America from disruptions in oil supplies overseas.

But that presumption was wrong. America produces a lot of oil, substantially more than we consume. Although we import some oil, mainly from Canada and Mexico, while exporting even more oil, mainly from Texas, we buy hardly any oil from the Persian Gulf. Yet the closure of the Strait of Hormuz has caused U.S. prices of oil products to soar. Self-sufficiency in oil has done nothing at all to insulate the U.S. economy from Middle East chaos.

Now, we should have expected that. Oil is traded on world markets, so the price is more or less the same everywhere. The two most widely watched barometers of oil prices are the West Texas Intermediate price in the United States and Brent crude in Europe. America exports more oil than it imports, while Europe is a massive net importer. Yet the two prices have moved in tandem over the years:


Some people have been shocked at the way U.S. gasoline, diesel and heating oil prices have soared over the past few days. But they shouldn’t have been surprised.

So does U.S. oil production give Americans no insulation at all from world market events? Not under the current rules of the game.

It could be different. In the 1970s the U.S. imposed price controls on domestically produced oil and partially insulated consumers from global oil shocks. Over time, however, these price controls led to shortages — the infamous gasoline lines. When price controls were lifted, they were replaced by a windfall profits tax intended to capture part of the gains experienced by oil companies. This tax was repealed after prices plunged in the mid-1980s.

Whatever you think of these past policies, however, they took place in a political environment in which corporations and moneyed interests in general had far less power than they do now. It’s almost inconceivable that 1970s-type price controls or excess profits taxes would be imposed today. So US prices of gasoline and other oil products reflect world crude prices, and the fact that America produces a lot of oil doesn’t matter at all.

If anything, US families are more exposed to Middle East chaos than their counterparts in, say, Europe or Japan, mainly because we drive bigger, less fuel-efficient cars.

The people who decided to begin this war should have seen this coming. All the evidence, however, suggests that they didn’t.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.

War's Oil Shock May Not Sink Economy, But Trump Policy Still Perilous

War's Oil Shock May Not Sink Economy, But Trump Policy Still Perilous

On Monday, the market reaction to the Trump/Netanyahu war with Iran was surprisingly muted. Stocks were roughly flat. Prices of oil and gas futures were up, but only moderately.

Yesterday reality apparently began to set in, although stocks made up most of their initial losses.

This will be a brief post, with some bad news and some good news.

The bad news comes in two parts.

First, any hopes that this war might be extremely brief are fading. The Trump administration may have imagined that decapitating the Iranian government would bring swift regime change, but the Islamic State isn’t a government of mere thugs — yes, they’re evil thugs, but they’re also serious religious fanatics facing what for them is an existential threat, and their grip on power isn’t that easy to break. Furthermore, it’s painfully obvious that Trump and co. had no plan beyond bombing Iran, killing its current leaders, and hoping that something good would happen.

Second, war in the middle of the world’s most important oil-producing region — which is also a key source of liquefied natural gas — inevitably has major consequences for energy prices. Once upon a time US and Israeli air superiority might have contained Iran’s ability to harm its neighbors. But in an age in which even third-rate powers have the ability to launch missiles and drones, Iran has a huge stockpile of drones and also has ballistic missiles that are destructive, hard to intercept, and have a 1200 mile range.

The U.S. embassy in Saudi Arabia has been hit by two drone strikes. Airports in Dubai, Abu Dhabi and Doha and the U.S. consulate in Dubai have also been hit.

U.S. officials have urged all Americans in the region to leave, but they did so after almost all flights had been canceled. Only now are they saying that they’re going to arrange flights on military aircraft and charter flights — an airlift that will have to be immense given that there are surely tens of thousands of Americans currently stranded. Did I mention that Trump and co. clearly went to war without a plan?

The potential targets at risk include key parts of the region’s energy infrastructure. Above all, the war threatens tanker traffic through the Strait of Hormuz, which is how the bulk of Middle Eastern oil and gas normally reaches world markets. And the risk of Iranian attacks has effectively closed the Strait.

Yesterday Trump, obviously scrambling to limit the damage, declared that he is ordering the U.S. International Development Finance Corporation to provide “guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf,” as well as telling the Navy to provide security. Do we have the resources to do all of that?

Oil prices are up around $15 per barrel since mid-February.

In case you’re wondering, there are 42 gallons in a barrel.

Indeed, it’s hard to understand why oil prices haven’t risen even more. “Why has oil not hit $100 a barrel?”, asks the Financial Times. The best answer seems to be that even now traders are betting that the Strait of Hormuz won’t stay closed for more than a few days. I hope I’m wrong, but I expect the strait to remain closed for weeks despite Trump’s assurances.

Now the good news: Even if oil prices go much higher, to $100 a barrel and beyond, it won’t necessarily trigger an economic crisis. I explained why on Monday: The United States and other advanced nations are far less oil-dependent than they were in the 1970s, when oil shocks did cause major economic disruption.

It’s true that Europe, which depends heavily on imported LNG from both the Middle East and the United States, will be hit harder than we will. However, even with a sustained closure of the Strait of Hormuz Europe will face a smaller shock than it did following the Russian invasion of Ukraine in 2022.

My back of the envelope calculations say that a $15 a barrel rise in oil prices, which is what has happened so far, will raise overall U.S. consumer prices by about 0.3 percent. A $50 a barrel rise from the pre-bombing level, which would take the price to more than $120, would raise consumer prices by about 1 percent. For perspective, that’s roughly what Trump’s tariffs have done. Yet those tariffs, while they have hurt, have caused neither runaway inflation nor a recession. Neither will rising oil prices on their own even if they go well above $100 a barrel.

However, the key point is that this latest economic shock isn’t happening on its own. The tariffs — and the huge uncertainty they create for the future — haven’t gone away. Neither have draconian anti-immigrant policies and their growing economic drag. There are widespread concerns about AI — both as a bubble that might burst and as a force driving job losses. And many people, myself included, are worried about financial stability: In many ways we have recreated the “shadow banking” risks that made the 2008 crisis possible.

Now we’ve added a fresh level of massive uncertainty. Bear in mind that this isn’t even a war of choice; it’s a war of whim, marked by a near-total lack of planning.

One shouldn’t exaggerate the economic fallout from this war. But it isn’t occurring in isolation: There are many stresses on our economy, and this could be the straw that breaks the camel’s back — a straw that becomes heavier the longer the war goes on. Furthermore, if Trump is this erratic now, what will he do as the midterms get even closer?

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.

So Much Time, So Little Truth: Trump's Longest-Ever, Utterly Hollow Speech

So Much Time, So Little Truth: Trump's Longest-Ever, Utterly Hollow Speech

Well, that was exhausting — or would have been, if I had watched it. But I am not a masochist. I waited to read the transcript.

Trump’s State of the Union was historic in at least one respect: It was the longest SOTU ever. Was the plan to turn public opinion around by boring America into submission?

The address may also have been historic in another way, although it would be hard to quantify. Did any previous SOTU contain so many lies?

For the most part they weren’t Big Lies, lies that are persuasive because people can’t believe that anyone “could have the impudence to distort the truth so infamously”. They were, instead, small lies that added up to a false — and completely unpersuasive — portrayal of where we are.

On economics, Trump has catastrophic ratings even though the economy isn’t a catastrophe. Things aren’t great, but by most metrics they are about the same or a little bit worse than they were when he took office:

The last measure, the labor market differential, is the spread between people saying that jobs are “plentiful” versus “hard to get,” which has deteriorated substantially.

Why are people so negative when the economy isn’t that bad by conventional measures? Affordability, especially with regard to housing and health care, is a real problem, not fully captured by standard measures. And it’s a problem Trump didn’t address at all — instead, he’s doubling down on his massively unpopular tariffs, which make the problem worse.

Also, there are two big disconnects. First is the gap between what Trump promised — he was going to bring grocery prices down, cut energy prices in half — and what he has actually delivered. Second is the gap between his wild boasts about how great things are and the reality of a K-shaped economy that is leaving many Americans behind.

One other lie that struck me, although it may not matter much to voters, was Trump’s insistence that the world admires what he’s doing: “America is respected again, perhaps like never before.”

Trump’s desire for external validation is, frankly, pathetic. And the truth is that we are despised like never before. You can see this in surveys:

Source: Pew Survey

And foreign leaders have completely lost faith in America: We’ve become a country whose word can’t be trusted, a country that betrays its allies:

Source: Kiel Institute

It’s true that in some ways the world fears us in a way it didn’t before — in the same way that one steps carefully around a belligerent drunk in a bar. But we haven’t been this weak on the world stage since before World War II.

Anyway, that speech won’t pull Trump out of his downward spiral. Time to attack Iran?

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.


How The Ultra-Rich Are Different From You And Me (And The One Percent)

How The Ultra-Rich Are Different From You And Me (And The One Percent)

On Wednesday the Wall Street Journal published an article with the headline “Billionaires’ low taxes are becoming a problem for the economy.” Hey, what do you expect from a woke, left-wing rag?

To be honest, the article didn’t make a very compelling case for its ostensible point, that the growing concentration of wealth at the very top may lead to economic instability. But it did offer a good discussion of both the soaring concentration of wealth in the hands of a tiny elite and of the extent to which this elite is able to avoid paying taxes.

Many discussions of inequality in America fail to grapple with the way we have become an oligarchy, with a large share of income, an even larger share of wealth, and a huge amount of political power accruing to a very small number of people. One still sees discussions of the “elite” that focus on the top 20 percent or the top 10 percent, when the real action is much further up the scale. Never mind the one percent. To understand what’s happening to us, we need to focus on the 0.1 percent, the 0.01 percent, even the 0.00001 percent.

True, even the economic position of the top one percent is widely misunderstood. The Journal article misleadingly suggested that Americans in the top 1 percent as a whole are heavily taxed, because they pay 40 percent of income taxes. But the income tax isn’t the only tax! In particular, the federal government also collects a lot of revenue from payroll taxes, which fall much more heavily on low- and middle-income Americans than on the upper class. As a result, the top 1 percent only pays 27 percent of total federal taxes:

Furthermore, state and local taxes are strongly regressive:

Overall, the top one percent as a group pay at most a slightly larger share of U.S. taxes than their share of pretax income.

Furthermore, most people within the top one percent are what Leona Helmsley called “little people,” as in “Only the little people pay taxes.” The ultra-rich — the 0.1 percent, the 0.01 percent, the 0.00001 percent — pay much lower tax rates than the merely rich. I’ll explain how they pull this off shortly. First, let me make the point that it’s the ultra-rich, who account for only a tiny fraction of the one percent, who have been pulling away from the rest of the nation.

The data from the Federal Reserve’s Distributional Financial Accounts are startling. It turns out that the share of total wealth held by the merely rich — those in the top 1 percent but not in the top 0.1 percent — has actually declined since the 2010s:

At the same time, the wealth share of the top 0.1 percent, the ultra-rich, has soared:

In 2022, the minimum wealth required to be in this category was $46 million. It’s more now.

And much of the rise in wealth of the 0.1 percent is accounted for by the super-billionaire class, a tiny sub-group of almost inconceivably wealthy individuals. Reposting a chart from Wednesday’s post:

Why are the ultra-rich pulling away from everyone else? Partly because they pay much lower taxes than the little people. Some manage a full Leona Helmsley, paying no taxes at all. On average, according to recent estimates by Balkin, Saez, Yagan and Zucman, they pay a total tax rate — federal, state, and local — of only 24 percent. That’s less than the average for the whole population, around 30 percent. And it’s much less than the tax rate for “top labor income earners.” That means people who receive big paychecks — but who do receive paychecks. In contrast, the incomes of the ultra-rich flows largely from or through businesses they own.

Put it this way: The “$400,000 a year working Wall Street stiff, flying first class, and being comfortable,” mocked by Gordon Gekko in the movie Wall Street, pays around 40 percent of his income in taxes. The modern equivalents of Gekko — who make orders of magnitude more money than the financial predators Gekko was modeled on — typically pay only around half as much.

How do the ultra-rich pull this off? Most of their success at tax-dodging presumably reflects tax avoidance rather than tax evasion. Avoidance, as opposed to evasion, involves strategies that are legal, although they shouldn’t be. Balkin et al emphasize the way the ultra-rich arrange to ensure that most of their income accrues not directly to themselves but to businesses they control, and are able to benefit from their wealth without ever turning that wealth into taxable income.

The Journal notes one example:

Amassing assets like stocks, borrowing against them rather than selling during the owner’s lifetime, and passing them to the next generation after death is sometimes called the “buy borrow die” tax-avoidance strategy.

It’s clear that by any reasonable standard the extremely rich pay much less than their share in taxes.

Why doesn’t the U.S. government try to close the loopholes that allow the extremely rich to pay so little? Don’t say that it would be technically difficult or that it would hurt the economy. We were able to tax the rich for a generation after World War II, a generation during which the U.S. achieved the best growth in its history. In general, governments in advanced nations have enormous ability to achieve their goals, if they want to.

The problem, of course, is that too many politicians don’t want to collect taxes on the superrich, because the ultra-wealthy have used their wealth to achieve immense political power. And the failure to tax them effectively is reinforcing the vast accumulation of wealth at the top.

It’s a vicious circle. And whatever you think of specific proposals for wealth taxes and other approaches toward reining in America’s billionaire class, we had better take action before it’s too late.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.

Howard Lutnick And The Buffoonish Banality Of MAGA Evil

Howard Lutnick And The Buffoonish Banality Of MAGA Evil

There’s a longstanding tradition in American politics of what Richard Hofstadter famously called the paranoid style – a way of thinking that sees conspiracies lurking everywhere. MAGA-world is particularly riddled with conspiracy thinking – from George Soros and Jewish space lasers, QAnon and the Great Replacement Theory, to Italian satellites hacking into voting machines to deliver the 2020 election to Joe Biden.

But these are far-fetched fantasies. The truth is far more banal and shocking.

There are people in positions of great power in the U.S. government engaged in evil conspiracies against everything that is good and decent. Their conspiracies are far more extensive and damaging than almost anyone imagined. But there are no evil masterminds behind this. Only amoral, stupid grifters like Howard Lutnick.

During Trump 47’s first year, Lutnick, the Commerce secretary, was an omnipresent spokesman for Donald Trump’s policies, a constant presence on TV, especially the Sunday talk shows.

He was not impressive in that role. Unlike Scott Bessent, he lacked any hint of gravitas. He doesn’t have Pete Hegseth’s hair. Moreover, Lutnick’s Trump boosterism has been consistently and embarrassingly incompetent.

The only waves he has made are a result of his exceptional combination of stupidity and offensive tone-deafness.

Thus he promised to revive U.S. manufacturing by bringing back “the work of millions and millions of human beings screwing in little, little screws.” Lutnick, a billionaire, dismissed concerns about chaos at the Social Security Administration by saying that his mother-in-law wouldn’t complain about a missed check. He gave a Europe-bashing speech to a private dinner at Davos so offensive that Christine Lagarde, president of the European Central Bank, walked out.

And in Congressional testimony today, Lutnick admitted that he visited Epstein Island, but said that he did so with his wife, nannies and children, and asserted that “We left with all of my children.”

It would be tempting to dismiss Lutnick as a buffoon. Yet despite his intelligence deficit, he sits at the intersection of not one but at least two ugly conspiracies.

Before joining Trump’s cabinet, Lutnick ran the Wall Street firm Cantor Fitzgerald — presenting a huge potential conflict of interest that he claims to have ended by turning the business over to … his sons. Cantor Fitzgerald, in turn, is intimately linked to Tether, a cryptocurrency that is highly profitable because it has become a favorite channel for money-laundering by international criminals.

Nor was money-laundering through cryptocurrency the only criminal conspiracy to which Lutnick was, at the very least, adjacent. Lutnick has in the past vehemently denied having any association with Jeffrey Epstein, insisting that he severed all contact with the pedophile ringleader in 2005. But even the highly limited, extremely redacted release of the Epstein files — everything we’ve seen reeks of a major coverup — shows that he was flat-out lying. Not only did he stay in close contact with Epstein, the two men appear to have gone into business together.

But, at this point, who could possibly be surprised? The more we learn, the more pedophilia and criminal use of cryptocurrency look related, even like different aspects of a single conspiracy. Epstein, it turns out, was a major early investor in the crypto industry. In the backrooms of MAGA-land, passing around under-age girls is a lot like passing around insider crypto deals.

In any previous administration, Lutnick’s naked conflicts of interest and his Epstein lies would have led to his immediate departure. But Trump 47 is using his position to massively enrich himself, and whatever the Justice department is hiding, what we already know about Trump’s personal history is damning — “Grab ‘em by the pussy. You can do anything.”

Lutnick may be under wraps for a while, but don’t expect him to resign. Pushing him out would be a tacit admission that huge conflicts of interest, family business that enables crime and association with sexual predators are bad. Oh, and let’s not forget jaw-dropping stupidity. Not going to happen.

While MAGA-world’s fantasy villains like George Soros are brilliant and subtle, MAGA’s real villains are uncouth and dim-witted. Yet they carry out their sinister schemes in broad daylight. For all they need to flourish is utter shamelessness, along with the backing of a corrupt administration and a corrupt political party.

So it’s worth remembering Hannah Arendt’s observations about the architects of Hitler’s genocide, which led her to coin the phrase “the banality of evil”. As Arendt noted, the horrors of Nazism were not inflicted by brilliant geniuses, but through the normalization of thoughtless, amoral behavior that eventually turned into evil. Thus while Lutnick appears on the surface like a dim-witted backroom grifter, he is a warning of something far more sinister and malign lurking below.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.

Warsh Case Scenario: A Bad Heir Day For The Federal Reserve System

Warsh Case Scenario: A Bad Heir Day For The Federal Reserve System


So Kevin Warsh will be the next Fed chair. The silver lining to his appointment is that he shouldn’t be able to do much damage, although with one big caveat (see below). The Fed is a republic, not a dictatorship; key decisions are made by a committee in which the chairperson has only one vote. Fed chairs can only drive policy through persuasion — and Warsh lacks the intellectual and moral credibility to be effective on that score. But God help us if we enter a crisis that requires decisive Fed leadership, the kind Fed chair Ben Bernanke showed during the financial crisis, or Jay Powell is now showing against Trump’s attacks.

Absent a crisis, my prediction is that the majority of Warsh’s colleagues will largely ignore him, albeit without expressing their contempt openly. Even a coalition among the Trump appointees to the Board of Governors – Warsh, Bowman and Miran – won’t be enough to overturn the responsible monetary policy stewardship of the other governors.

But that’s a low bar, and it may be lower than is generally appreciated. For while I don’t think Warsh will do too much damage to monetary policy, he, along with his fellow Trumper Michelle Bowman, the vice chair for financial supervision, may well eviscerate the Fed’s role as a financial regulator.

As I write this, many media reports are describing Warsh as a monetary hawk. That’s a category error. Warsh is a political animal. He calls for tight money and opposes any attempt to boost the economy when Democrats hold the White House. Like all Trumpers, he has been all for lower interest rates since November 2024.

Depressingly, some Democratic-leaning economists are stepping up to reassure us about Warsh’s qualifications. This is reminiscent of the way many economists rallied around the selection of Kevin Hassett as chair of the Council of Economic Advisers in 2017, although he was an obviously ludicrous hack. Since then Hassett has outperformed my expectations, revealing himself to be such an outrageous sycophant that even Trump realized that it would be a PR and financial disaster to nominate him as Fed chair.

Independent economists who don’t feel the need to maintain good relations with the corridors of power are being quite forthright on the Warsh nomination. Here are a couple of reactions from my feed:

A screenshot of a social media post AI-generated content may be incorrect.A screenshot of a social media post AI-generated content may be incorrect.

What lies behind this contempt? Warsh’s most notable role in policy debate came in the years immediately following the global financial crisis, when he was a member of the Federal Reserve Board who argued strenuously against the Fed’s efforts to boost the economy. As I noted at the time, his arguments were confused and incoherent, but he implied (without saying so in clear language) that the Fed’s actions would be inflationary despite the depressed state of the economy.

He was completely wrong about that. Now, everyone makes bad predictions. But when you do, you’re supposed to admit your mistakes and learn from them. Warsh never did that. Instead, he kept inventing new reasons to call for higher interest rates — notably a bizarre claim that low rates were hurting business investment — as long as a Democrat was president.

So how does someone with that record end up in what is normally the most important economic post in the world (although I suspect that Warsh will be one of the least influential Fed chairs in history)? I would list five reasons, in no particular order.

First, Warsh married into great wealth. Specifically, he married the daughter of Ronald Lauder, the cosmetics billionaire — who, bizarrely, is a key figure behind Donald Trump’s obsession with Greenland.

Second, he has always been very good at ingratiating himself with influential people.

Third, he’s an effective bullshitter. Sorry for the technical language, but I can’t find another way to say it. Listen to Warsh on economic policy, and he throws around a lot of big words that presumably sound impressive to people who don’t know anything about the subject. But there’s no coherent argument behind the verbiage.

Fourth, he’s a Republican loyalist, who always wants to slam the economic brakes when Democrats are in power and step on the gas when Republicans rule.

Fifth, as I highlighted in the Truth Social post screenshotted at the top of this piece, Donald Trump thinks he looks the part.

It’s a humiliating day for the Federal Reserve, which has always prided itself on its professionalism and has been hugely respected around the world. But even the Fed can’t insulate itself from the derangement sweeping America.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.

Courageous Carney, Demented Donald And The Shameful End Of Pax Americana

Courageous Carney, Demented Donald And The Shameful End Of Pax Americana

On Tuesday Mark Carney, Canada’s Prime Minister, gave a remarkable speech at the World Economic Forum in Davos. In effect he announced, calmly and lucidly, that Canada is filing for divorce from the Pax Americana:

Let me be direct. We are in the midst of a rupture, not a transition.
Over the past two decades, a series of crises in finance, health, energy and geopolitics have laid bare the risks of extreme global integration. But more recently, great powers have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited.
You cannot live within the lie of mutual benefit through integration, when integration becomes the source of your subordination.

And he urged other nations — implicitly, although he didn’t say it in so many words, the nations of Europe in particular — to join Canada in a new alliance of democracies no longer willing to take orders from an abusive hegemon:

[T]he middle powers must act together, because if we’re not at the table, we’re on the menu.

It was a brave stand to take. Canada sits right next to the United States, whose economy is a dozen times larger. Moreover, as the map below shows, Canada’s population lies almost entirely within a narrow band on top of the U.S. Back when I was writing a lot about economic geography, I used to joke that Canada was closer to the United States than it was to itself. Nature wants Canada and the United States to be closely intertwined. And for this reason Canada is arguably more exposed to the consequences of Trumpian wrath than any other nation.

Courageous www.nationalmemo.com

But democracies can no longer maintain close ties with the U.S. The day after Carney spoke, Donald Trump showed why.

I listened to Trump’s Davos speech with fear: How much damage will this demented, vindictive individual do to America and the world? I also felt a deep sense of shame: What is wrong with my country, that we put someone like this in a position of unprecedented power?

As the whole world watched, the president of the United States (God help us) repeatedly referred to Greenland, which he is willing to blow up NATO to acquire, as Iceland. Don’t dismiss this as trivial: if any previous president had been that befuddled, the whole press corps would have been howling about senility and demanding that he step down.

And of course Trump’s press secretary insisted that he didn’t say what we all saw and heard him say.

Trump also repeatedly displayed his trademark willful ignorance, for example when talking about renewable energy. While berating Europe for using wind energy, he admitted that China also has big wind farms — someone must have showed him pictures — but declared that

They put up a couple of big wind farms, but they don’t use them. They just put them up to show people what they could look like. They don’t spin, they don’t do anything.

In reality, China accounts for almost 40 percent of total world generation of electricity from wind power, substantially more than Europe.

Beyond confusion and ignorance, Trump delivered menace:

The horrifying details of Trump’s rant aside, what strikes me about the Trump administration’s performance at Davos — not just Trump himself but his minions — was the utter lack of purpose. The whole Trump team seems to have gone to Europe with no goal other than to belittle and insult their hosts.

On Tuesday evening Howard Lutnick, the Commerce secretary, spoke to a private dinner at Davos — at which he belittled European economies and their lack of competitiveness. He was reportedly booed, and Christine Lagarde, the president of the European Central Bank, walked out.

On Wednesday morning Scott Bessent, the Treasury secretary, dismissed reports that one major Danish pension fund has decided to divest itself of U.S. bonds by declaring that “Denmark’s investment in U.S. Treasury bonds, like Denmark itself, is irrelevant.”

And Trump devoted much of his speech to portraying Europe as a hellhole, its economy destroyed by renewable energy and its society destroyed by immigration.

Never mind whether any of this is true. (It isn’t.) What was the point of saying such things? Do Trump and his Mini-Mes imagine that they can convince European leaders that they, their economies, and their societies are all pathetic losers?

To say what should be obvious but apparently isn’t, we don’t need top government officials playing at being shock-jock podcasters, getting clicks by being outrageous. God knows, MAGA has plenty of those already. Official speeches aren’t supposed to be rants that provide red meat to your political base. They’re supposed to influence people who aren’t your supporters, in ways that serve the national interest.

This doesn’t mean that official speeches must be mealy-mouthed and boring. Mark Carney’s speech definitely wasn’t. But Carney had a clear purpose: To rally other nations into solidarity against U.S. economic blackmail.

Trump, on the other hand, just wanted to swagger, whine, and mostly hear himself talk. And all he accomplished was to turn suspicions that he’s gone off the deep end into certainty.

We’re already seeing some consequences of Trump’s ranting:

There will be much more of this. American power and influence have always rested, much more than many people realize, on the perception of American trustworthiness. We didn’t always do the right thing, but we honored our agreements and were the least greedy imperial power in history.

That’s all over. At Davos, Mark Carney called for giving up hope that the Pax Americana can be restored, and Donald Trump proved him right.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.

'Venezuelifying' America: Don't Cross The Dictator Or He Will Destroy You

'Venezuelifying' America: Don't Cross The Dictator Or He Will Destroy You

So federal prosecutors have opened a criminal investigation into Jerome Powell, the Federal Reserve chair. In his statement in response, Powell, to his credit, didn’t dignify the obviously spurious accusations by protesting his innocence. Instead, he went right to the heart of the matter:

This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.
This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.

Indeed. Surely nobody at the now completely corrupt Department of Justice really believes that Powell has committed any crimes, other than the crime of not doing Donald Trump’s bidding. This is all about intimidation, not just of Powell, but of everyone at the Fed.

I’ll get to the implications for the Fed and the economy in a minute, but let me first say what Powell can’t: This isn’t just about the Fed. It’s part of a broader assault on anyone who doesn’t go along with Trump’s agenda. At the top of this post I’ve put Powell’s picture next to that of Renee Nicole Good, who was killed by ICE last week, because the attack on Powell and Good’s murder are part of the same story: Trump and his minions have zero tolerance for dissent. No matter who you are, if you stand up to them they will try to ruin your life any way they can, up to and including shooting you in the face.

Given this horrifying reality, it almost feels wrong to talk about the economic consequences of an attack on Fed independence. But these consequences are part of the picture.

So, what does the Fed do, and why is it quasi-independent? I published a primer about that last summer, but here’s the short version:

The Fed is America’s “central bank,” which means, roughly speaking, that it controls the U.S. money supply. This control in turn allows the Fed to set the level of short-term interest rates, a powerful tool for managing the economy.

Why put this tool in the hands of technocrats rather than directly under the control of the president? Because cutting interest rates is easy and pleasant — too easy and too pleasant. Unlike stimulating the economy with higher spending or lower taxes, expansionary monetary policy doesn’t require drafting and passing legislation. All it takes is a phone call to the open market desk in New York, which buys Treasury bills from banks to push market interest rates down. And lower interest rates feel good for a while.

This creates an obvious temptation for the White House to push interest rates down, especially when an election is looming. Yet excessively easy money can lead to inflation. That’s a lesson the United States learned after 1972, when a compliant Fed kept rates low to help Richard Nixon win reelection, setting the stage for years of stagflation.

Recent experience in Turkey offers an even stronger lesson. Recep Tayyip Erdoğan, Turkey’s authoritarian, Trump-like president, forced Turkey’s central bank to keep rates down in the face of rising inflation. The result was that inflation (the solid blue line in the chart below) eventually rose above 80 percent:



Before the Great Depression, many countries avoided inflationary monetary policy by pegging their currencies to gold. The gold standard, however, was too inflexible. In fact, the “golden fetters” it imposed played a major role in deepening the Depression.

How, then, can nations limit the temptations of easy money while preserving the flexibility to deal with crises? The answer, adopted by the United States and many other nations, is to put the central bank under the direct control of technocrats, not politicians. Such “independent” central banks are ultimately accountable to elected officials, but they’re insulated from short-run political pressure.

This system doesn’t work perfectly, because even technocrats are human and sometimes get it wrong. But experience shows that central bank independence works much better than letting monetary policy be politicized, especially when the politicians in question are greedy and don’t understand economics — in other words, when they’re like Donald Trump.

Yesterday a who’s who of former Fed chairs and other former top economic officials issued a statement denouncing the weaponization of the Justice Department against Powell, saying that

This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly. It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.

I wish they had been able, just this once, to put aside Fedspeak and use plain language, but let me translate: “emerging markets with weak institutions” means Third World nations like, for example, Venezuela — or, as Trump would say, shithole countries.

Over the weekend, as it happens, Trump declared himself the “acting president of Venezuela,” which he definitely is not. But he is Venezuelifying the United States.

May I say, by the way, that every investor and businessperson who backed Trump or tried to accommodate him once he won should be looking in the mirror and asking why they helped enable this catastrophe. For none of what Trump is doing now is a surprise to people who paid attention.

The irony here is that the effort to intimidate the Fed is likely to backfire on Trump, in three ways.

First, in the near term the Fed will be especially reluctant to cut rates, even if doing so might make sense, lest it seem as if intimidation is working. This reluctance will persist even after Trump chooses a new Fed chair, because interest rates are set by a committee, not an individual, and most of the relevant committee aren’t Trump appointees.

Second, even a politicized central bank can only reduce short-term interest rates temporarily. As inflation rises, the bank will eventually be forced to raise rates higher than they were at the beginning. Look back at the chart for Turkey, above: Erdogan initially pushed the short-term interest rate (the green dotted line) down, but in the face of exploding inflation rate the bank was eventually forced to raise rates to more than 50 percent.

Finally, attacking the Fed’s independence could push long-term interest rates — which are the rates that matter for the economy — higher, not lower, even in the short run. Why? Because bond investors understand that political pressure on the Fed will eventually mean higher short-term interest rates. And long-term rates mostly reflect expectations about the future rather than current short-term rates.

Indeed, although long-term rates didn’t move much after the attack on Powell was revealed, they actually rose slightly.

However, even if Trump understood that his attack on the Fed’s independence will backfire, he would still be going after Powell, because he is less interested in achieving policy results than he is in punishing anyone who crosses him. Powell had the temerity to insist on doing his job rather than prostrating himself at Trump’s feet. So he must suffer — personally.

If top Trump officials like Scott Bessent and Kevin Hassett had any integrity, they would have threatened to resign en masse as soon as the criminal investigation of Powell was revealed. But they don’t and they didn’t.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.