Paul Krugman Podcast

Some quick thoughts about yesterday’s hearing.TranscriptKevin Warsh, the next chairman of the Federal Reserve, is Donald Trump’s sock puppet. But we knew that. The question during yesterday’s confirmation hearing was whether he was sufficiently brave, sufficiently good at acting to pretend that he was more than that. And the answer is no. Hi, Paul Krugman here with a Wednesday update. I didn’t watch or write about the Warsh hearing because it seemed there wasn’t really that much at stake. He’s going to be confirmed pretty much regardless and there’s a whole lot else going on in the world. But I thought I should weigh in a bit on what we actually learned from the hearing. Now about Warsh, he is smart. He is very good at saying things that sound thoughtful and impressive, but he is also, and it’s really very clear, a partisan hack. He’s for tight money when a Democrat is in the White House and for easy money when there’s a Republican. He has managed to claim that he was part of the great economic rescue that took place after the global financial crisis. But at the time, although he was on the Federal Reserve Board, he basically trashed his colleagues for trying to do their job.And he has made a lot of criticisms over the years, but they’re always very selective.Often when he makes a statement, you wonder, what exactly did he say? Because there tends to be lots of complex verbiage that sounds sophisticated, but when you try and distill it down to what it was all about, it’s very hard to figure out, except that, again, it’s always tight money if there’s a Democrat in the White House, easy money if there’s a Republican. Recently, Employ America, which is a group that I follow, wrote about Warsh. They aren’t very partisan. They do mostly inflation analyses and inflation nowcasting, trying to predict what the next number will be. But they had a scathing survey of his positions over the years, which says that he is a partisan who has chosen to align conveniently with the current president, that he is someone who abandons his principles “for whatever might suit his personal and partisan interests.” That’s not very nice, but it seems to be quite accurate. So there was a hearing, and everybody knows pretty much who he is.There are people, sort of centrist Democrats, who claim to find some virtues in him. But I think that’s all positioning. I think everybody understands what we’re getting with Warsh. The question in the hearing was, could he put on an act? Because he is usually a pretty slick customer. He’s not someone who simply rants and raves and spouts MAGA propaganda. And he was asked a a question which isn’t about monetary policy, but is very much exactly a kind of litmus test for, not really for who he is, but what he’s willing to say, at least in the interest of appearing to be not a complete sock puppet. He was asked who won the 2020 election. which is not a question that is remotely in doubt. This is not something about which reasonable people can disagree. There is nothing to the claims of a rigged election except the fact that Donald Trump can’t admit that he lost that election. And Warsh evaded. He said, well, this body certified that election, which is not the question. The question is basically, are you willing to challenge Trump on a completely obvious grotesque lie? And it would have been in Warsh’s interest, you would think, to say, well, no, I believe that Joe Biden won that election. But to do that would be to show some independence, even not in action, but some independence, at least rhetorically, from Donald Trump. And he wouldn’t do that. He was also asked about the spurious prosecution of Lisa Cook, asked about the spurious charges being brought about Jay Powell and refused to take a stand in support of people who will be his colleagues once he gets to the Fed. So what we got was not a test of how he will behave, not a test really of his policy views. I mean, there were no interesting policy arguments going on here. There are some discussions we could have about shrinking the Fed’s balance sheet and all of these things, where I do think that Warsh’s expressed views are quite wrong. But that’s kind of not what was on trial here.What was on trial was, can he at least pretend to be not a total hack? And the answer is no. He’s afraid to even show a little bit of verbal independence without substance when it comes to Donald Trump, which is bad. It should be utterly disqualifying for the position because being the Fed chair is important. It requires a lot of independent judgment and requires a lot of credibility because the Fed is mostly needed in moments of crisis. And in those moments of crisis, people need to believe, markets need to believe, but the general public needs to believe that we’re talking about people who are serious experts and seriously have the interests of the nation at stake rather than their partisan political views. He failed that test with flying colors. And he will be confirmed anyway. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

More than a year ago I interviewed my old friend and colleague Kim Lane Scheppele, a constitutional scholar who speaks Hungarian and knows Hungary, about the march of autocracy. Now, suddenly, a much happier occasion. I found her account of how this happened startling — a lot I didn’t know, even though I’ve been following the news obsessively. And some of it is wild. Here’s a transcript:. . .TRANSCRIPT: Paul Krugman in Conversation with Kim Lane Scheppele(recorded 4/16/26)Paul Krugman: Going back after a number of months to Kim Lane Scheppele, my former office neighbor at Princeton and I think we can safely say America’s leading constitutional scholar who also knows Hungary and speaks Magyar, although you’re probably the only one.Kim Lane Scheppele: Sorry to interrupt you, but the language is Magyar nyelv, and Magyar, the name of the person we’re going to be talking about, who’s also the new prime minister, means Hungarian. That’s your Hungarian lesson for the day. Ha!Krugman: Oh, wow. Thanks. I would have gotten that all wrong. All right. Well, anyway, as you say, it’s been quite a week. You were on this case on my blog starting in 2010, but I think we want to just talk about first reactions to this extraordinary election on Sunday.Scheppele: Well, yeah. It’s been hard to even comprehend the magnitude of this. I mean, not only did Péter Magyar win this election, but he won the election overwhelmingly in a rigged system. And so that’s the miracle magic of it. It turns out that Viktor Orbán had rigged the election rules so that only he could win. And the shortcut of what he did was that essentially a vote in the countryside counted three times as much as a vote in the cities. And what he counted on was that usually, if you get a challenger to a right-wing autocrat, they’re all going to be liberals, right? They’re all going to get their votes from the cities, from the educated populations. And Orban had a lock on the countryside. And then he put all the weight of the system on counting his people more than others. So Peter Magyar spent the last two years going out to villages, just meeting all of these people in person and getting around the fact that Orban also controlled all the media. So the media was rigged, the election system was rigged. And when the vote came in on Sunday, he was at 15 to 20 points ahead in the polls.Krugman: Right.Scheppele: But that did not guarantee he was going to win. And it did not guarantee that he was going to win by the majority. And so when the numbers started piling up, like I was watching the early returns and the early returns were coming in from villages that should have been the Orban vote. And it was a Tisza vote, it was a Peter Magyar vote. And so you knew just from the first 2 or 3% of the vote that it was going to be overwhelming. And sure enough, the whole evening the results came in and Peter Magyar won. It might shift a little bit, 1 or 2 numbers now, but about 138 seats out of the 199 seats in the parliament, and Orban had to concede. There was just no way that he could even claim fraud or try to do anything to change it, because he just didn’t have votes come in from anywhere.Krugman: Okay, it’s funny but that’s the first clear explanation I’ve gotten of how the rigging worked. Because the reporting has been pretty vague. And, you know, there’s still a fair number of people saying, “oh, it can’t really have been rigged, because after all, he lost.”Scheppele: Yeah. No, it was so rigged. I mean, literally, Orban rewrote all the rules in 2015. And, Paul, I need to give you a shout out here because, you know, Americans didn’t know anything about this. And I live in my head in Hungary. And I would come in every day to campus and see you in my office next door and go on whining and complaining about how Orban had been building a dictatorship starting in 2010. And you said, “Well, how come The New York Times isn’t covering it?” And I said, “Well, no one’s covering it because no one can see it.” It was all legal. It was all technical. It was really hard to see how Orban was nailing things down.And then you called me up on a Sunday and said, “Okay, I’m going to do tomorrow’s column on Hungary.” And so, remember, we scrambled around, I was translating documents. The fact checkers were calling me up, and you wrote that blog post on a Monday, and then you said to me, “Look, you know, it’s more complicated than I could say. You can put something up on my blog.” And then we did that for like 3 or 4 years. You were putting all my commentaries up on your blog, and I was the only one covering it in English at that time. So, you know, if it wasn’t for your venue, it would have been impossible to get this on the radar screen of Americans. So, Paul, it’s your victory, too.Krugman: I hope it is. I mean, I feel like I was facilitating your victory, it’s obviously the Hungarian people’s victory. But actually one of the things that strikes me here is that, we talk a lot about how Orban muzzled and controlled the media in Hungary, but, effectively, there was an international muzzling coming out of a couple of things.Scheppele: Yeah.Krugman: I remember you saying that basically even big international news organizations sort of had one stringer in Budapest who often turned out to be somebody affiliated with Fidesz. So.Scheppele: Right. Well, there were a whole bunch of ways that he muzzled the international press. So one was just that, if you were a domestic journalist reporting for the international press, you were under surveillance, you were under threat. The international news organizations, including, by the way, the New York Times, had to start providing physical security for the reporters because they were really being threatened with death threats and the whole nine yards. And, you know, I got death threats, too, sometimes through the comments section on your blog. Right? So, everybody commenting on it was really under threat in some sense.But the other thing that happened was once the international press pulled out because they couldn’t pay for the security anymore, they’d hire Hungarian stringers and then the Hungarian stringers would have other things happen to them, like they’d get doxxed and there’d be mobs outside their apartment and they’d have to move out of their houses. And really, it was a huge campaign. And then the final thing, and maybe not the final thing, but at every single Hungarian embassy in the world, the ambassador was told, “Your job is to keep negative news about Hungary from appearing in the press.” So every time there was a story criticizing Orban, the embassy would call the editors and say, “You’ve got to give us equal time,” or “you can’t trust those journalists,” or “you should never use those sources again.” Going back, this was during your days at the Times, there was a Hungarian-American reporter who was writing for the Times, and the Hungarian government called the Times and said, “we don’t trust this guy.” And they stopped putting his byline on stories until they did a full check on him.Krugman: Okay.Scheppele: So that was happening to the international press. So it’s not just the domestic press that was muzzled, but the international press as well. And so it took a very long time. I mean, Orban had the whole system locked down in just three years, and it took until five, 6 or 7 years later before the rest of the world caught up to the fact that a dictatorship had been constructed in plain sight.Krugman: What’s also extraordinary is that even now — I mean, this is the first time I’ve heard anyone, and I’ve been reading the news reporting obsessively, but the first time I’ve had as clear an explanation of how the rigging worked and how Magyar broke it. And, you know, the eyes of the world have been on Hungary a lot, if only because Hungary has been the star of CPAC for years now. And you would think that by now reporting would have gotten it right.Scheppele: Yeah. Well, I’ll tell you, part of the problem is that Orban and his circle are lawyers, and they pioneered this sort of 21st-century version of dictatorship where you don’t shut down the media. You just regulate them or you threaten them or whatever. Everything was done technically by law. And I think most Hungarians didn’t understand how the law was rigged. I wrote a quite detailed article about this in the Journal of Democracy after the last election, going in detail step by step through all the stages of exactly how Orban rigged things. So, it was gerrymandering. It was things like, the districts expected to vote for Orban had 30,000 voters, and the district expected to vote for the opposition had 90,000 voters.Krugman: Right, right.Scheppele: And then there were all kinds of other election tricks that Orban borrowed. For the 2014 election, I wrote about this on your blog in five parts. Remember? You put up five parts. “Election in Question, part one,” “Election in Question, part two.” There was just every single which way [they could change the rules]. So just another example. Orban said, “we have all these minority groups in Hungary. They should be represented in the parliament.” Everybody’s cheering, like minority representation—what a good thing. So there was this possibility of the Roma having a separate representative in parliament and the Germans and other ethnic groups. And it turns out if you registered to vote on that party list, you only needed 20,000 votes to get a seat. So all those seats got colonized by Orban’s people. The Roma guy was a Fidesz person. That’s Orban’s party. The German guy was a Fidesz person. So all these little things gave Orban one seat here, four seats there and so on. And if you look at Orban’s popularity in Hungarian opinion polls going back to 2010, he never got above 35% in his personal popularity. And in elections, he would struggle to get 45%. But then he would get 67% of the seats in the parliament, and that two-thirds threshold mattered because the Hungarian Constitution can be amended with a single two-thirds vote of the unicameral parliament. And if he could get two thirds, he put himself above the law. So it’s 199 seats in the Hungarian Parliament, 133 is two thirds larger. Magyar just got 138. That’s what’s so stunning.Krugman: One immediate thought is thinking about the extreme unequal representations, rural versus urban. The closest equivalent I can think of is the US Senate.Scheppele: Yeah. The Electoral College, too, right?Krugman: The Electoral College somewhat. But the Senate, where California has two senators and Wyoming has two senators, exactly like that. It over-represents the rural areas. And when you get this urban-rural, educated-uneducated split, it guarantees that the right always has an advantage. And you said Magyar’s been campaigning about two years, right? He was in Fidesz. He had actually been part of Orban’s government.Scheppele: Yeah. So here’s the good news and the bad news about Peter Magyar. So he came of age and was attracted to Orban’s party because he’s basically a center-right kind of guy and Orban’s is the center-right party. So he went into the party machine sort of right after school, and he stayed in the Orban machine for 20 years. He was posted to Brussels. He was in what’s called the Hungarian Perm Rep, which is the big embassy that every member state of the EU has in Brussels, which handles the state affairs with the EU. He was there. Then he came back and he held a variety of positions in the state-owned companies that Fidesz ran. So he was in the system. He benefited from the system. And then there was this really funny event that brought him to public attention. He had this acrimonious divorce.Krugman: Okay.Scheppele: And, like, you can’t make this stuff up. Wait till we get to zebras.Krugman: Okay.Scheppele: But his wife, who was always a trailing spouse with all of his appointments, and also a very clever lawyer, really smart. Orban had named her the justice minister of Hungary. Her name is Judit Varga. And she presided over, really defending Orban’s interests at the EU. And she’s kind of a pit bull like Orban. She and Peter had this acrimonious divorce. But it happened around the same time that —probably Orban, we don’t know for sure—but she approved a pardon of a guy who ran an orphanage in which the orphanage had had state employees who engaged in sexual abuse of children, in other words, a pedophilia scandal.Krugman: Right.Scheppele: And the principal had known about it and cooperated. She issued the pardon for this guy, and there was this huge firestorm of objection. A pedophilia scandal. I mean, you can think of the American parallels, right? And so Orban insisted that she be fired. So she left the cabinet. And that was the moment when Peter Magyar, having just divorced her, popped out of the woodwork and said, “How dare Orban hide behind women’s skirts?” And then he said, “And because I was married to her, I know where all the corruption happened, where all the bodies are buried.” And he had, it turns out, made audiotapes of his conversations with his ex-wife during the acrimonious divorce. I mean, that’s why you can’t make it up. I have to tell you this because this is something that’s not really making the headlines in the U.S. but he actually had the tapes through which she had talked about some of the corruption scandals inside the Orban government. And so he pops out, accuses Orban of hiding behind women’s skirts, then goes on this YouTube channel.Krugman: Okay.Scheppele: So by this time the opposition has no TV, no radio, hardly any major newspapers. The opposition started a YouTube channel. So Peter Magyar goes on the YouTube channel with the audiotapes from his ex-wife, and gives this big interview about how much corruption there is inside the Orban camp. This makes him an instant superstar, right? Because everybody kind of knew it, but nobody knew precisely how. And so he then starts going around the countryside and giving speeches about all the corruption. He attracts a crowd, then he attracts a bigger crowd. This is all a few months before the last European election. I think he begins to get the idea, like “maybe I could form a party and run for the European election.”The European election rules require strict proportional representation, not rigged. So he had a much better chance of getting elected to the European Parliament than he would have getting elected to the Hungarian Parliament but it’s too late to register a party. Okay, so he looks around and he finds that there’s this little party called Tisza, which is the name of a river in eastern Hungary. And he goes to the people who took out the party name and said, essentially, “Can I kidnap your party?” And so that’s how he gets a party, cobbles together who knows who to run on the party list. And he gets actually a pretty big vote to put himself into the European Parliament. Okay, now that matters, because first of all, it’s a clap-a-meter that shows you the guy actually has a real chance of standing up to Orban. But second of all, he becomes a member of the European Parliament and that gives him parliamentary immunity.Krugman: I was about to ask that.Scheppele: And at first he said, I’m not going to take my seat. I’m going to give it to somebody else. I’m going to stay here and work for Hungarian liberation here. And then I think somebody said to him, yeah, but you get parliamentary immunity. So I’m not sure he ever showed up in Brussels, but he did get parliamentary immunity. And so when Orban came after him with sort of—pardon the expression—trumped-up charges to try to sideline him, the government technically had to go to the European Parliament and ask that his parliamentary immunity be lifted. And the European Parliament said, no.Krugman: Right. Like you have to know he got a lot of help. But it’s just too complicated and too detailed. Right.Scheppele: But it tells you how many things had to fall into place for him to overcome how rigged the system was. Okay, so then he figures out that if you don’t win the countryside, you can’t win at all. And he comes out of the countryside, actually, and he’s a center-right guy, which is to say that on left-right issues, he’s unlikely to be very different from Orban. You know, it’s fine. It’s a center-right country. On democracy-dictatorship issues, he’s entirely different from Orban. And that’s what we need, right? And that’s what he’s promised to do, is really restore democratic institutions.Okay, so Peter Magyar has this acrimonious divorce. He was known for wearing these highly, shall we say, form-fitting clothes. He got the nickname “Slim Fit Jesus,” because, you know, he’s pretending to save the masses. But all of his clothes were so tight-fitting that, shall we say, it was almost embarrassing to look at him. And so he gets this kind of name, but of course, he’s also auditioning for girlfriends, right? Because he’s a 45-year-old guy who no longer is married. So the Orban intelligence services send him a girlfriend who then tapes all their recordings. Just what he did to his ex-wife, right? And she comes out with these recordings in which he calls members of his own party idiots because he doesn’t know them. I mean, he just sort of cobbled together the party. That doesn’t affect his popularity.And then actually, during the election campaign, the government did this thing where—I mean, they didn’t say it came from the government, but where else? It goes to the government media. They release a still photograph of a bedroom with a rumpled bed and some white powder on the side table. And it’s got a camera, sort of from the ceiling angled down on the bed. And the media is told: “coming soon.” So you think it’s going to be a Peter Magyar sex tape. He comes out and he says, “I’m a healthy 45-year-old man who has consensual sex with women.” Like, so there.Krugman: As in, regarding the tape.Scheppele: And this is like the brilliant thing that starts happening. He’s got these crowds. He’s got people who are so thrilled to discover that they’re not alone in hating the Orban regime because they’d been threatening people. They’d been separating people. There was no public space in which to figure out that you weren’t the only one who hated Orban. And Magyar’s rallies had become the place where you could do that. So he’s got all these young people who have joined the campaign. And when this still photograph of the bedroom comes out, suddenly all these Hungarian computer whizzes start doing AI-generated videotapes of Orban in bed with Trump and Putin in bed with Orban. And like all of these things. So if they were going to drop a sex tape, it would be indistinguishable from, you know, two dozen or so of these AI fake videos of everything else that might have happened in the bedroom. And so the government never released the sex tape.Krugman: By the way, one of the things that I didn’t really realize, actually, until the craziness of South Korea, is that we were all focused on X, formerly Twitter, and BlueSky was down this morning and I was quite upset—but YouTube is a tremendously important medium for political communication around the world.Scheppele: Exactly. And that’s how the opposition has been communicating. So, for example, on election night, I couldn’t go there, but I was just watching the Partizán channel and they just had all these commentaries. They had good graphics and actually the funny thing was that they had in their studio a spinning head where one side of it had the face of Orban and the other side had the face of Magyar. And the whole evening it was spinning. And then when it became clear, it stopped and you saw only Magyar. So it was fun to watch Partizán this time. But the campaign had turned out to be fun. This was the thing we’ve all missed. Like the rallies were just occasions to find out that everybody didn’t want Orban. And they got bigger and bigger. There were rock bands, there were speeches, there was humor, and then there were the zebras. I promised you, zebras.Krugman: So, the zebras. I know a little bit, but tell us about the zebras.Scheppele: Yeah. So it turns out that Peter Magyar became this sort of rock star because of his exposure of corruption. There were some great investigative journalists and some anti-corruption campaigners. And one of the anti-corruption campaigners discovered this palace that was being built outside of Budapest, allegedly by Orban’s father. So we know his father and it was Orban’s money, right? And next door is the palatial estate of Orban’s best friend, the blue-collar worker who is now the richest man in Hungary. Everybody knows that’s Orban’s money, right? And somehow they got a picture over the fence of a little—I keep saying I’ve got to look up the collective noun for zebras.Krugman: Okay.Scheppele: But they found a gaggle, a flock, a herd of zebras, and took pictures of zebras. And suddenly this became the symbol of Orban’s corruption. So people are turning up at the rallies with zebra heads and zebra costumes and little zebra pins wearing black-and-white striped t-shirts and all this kind of stuff. So the zebra became the meme. But the reason why I mentioned the looking over the fence is that this anti-corruption campaigner, Ákos Hadházy is his name, sponsors tours where he takes a ladder and a bunch of people, and he puts up the ladder on the fence and everybody climbs up and looks over and sees for themselves. And that’s also been part of the anti-corruption campaign.Krugman: Right. So I think the original picture may have come from drones, but then other people are climbing over the wall to look at the zebras. And just a quick thought, I mean, actually it reminds me a bit of the fall of communism when people were going on about the luxury in which the East German leadership lived. And I was thinking, yeah, that’s not luxury by US standards. Even then, with US inequality being what it was. I saw the photos of the Orban estate and it’s very nice, maybe particularly since we know it’s all stolen money. But my God, it’s not something that Mark Zuckerberg would find remotely impressive.Scheppele: Exactly. It’s got one of those one-lane lap pools instead of a giant kind of private lake like Yanukovich had in Ukraine, which had his own yacht in his private lake. It’s not that kind of estate, right? But in Hungary, it’s shocking, because Hungary had one of the most egalitarian distributions of wealth after communism. Not so many visible oligarchs. So the oligarchs have only become that rich more recently and under Orban. That’s also what’s happened. And this is, like, “it’s the economy, stupid.” I mean, I’m sure you were watching this. The pandemic hit Hungary very hard because it exposed that the hospital system had been chronically underfunded for years. So another meme that Peter Magyar used very effectively was toilet paper. The hospitals don’t have toilet paper.Krugman: My God.Scheppele: And of course, when I lived there in the ‘90s, the hospitals also didn’t have toilet paper, but never mind. But he would go into hospitals with a camera crew and look for the toilet paper. Just look at the peeling paint on the walls and stuff like that. So the pandemic exposed the underfunding of the health care system, and the death rate from Covid in Hungary was actually quite high. And they put the military in charge of the hospitals so that the information wouldn’t leak out about how bad things were. That was, you know, 2020-2021. So then what happened, of course, was the post-pandemic inflation that hit the world. And you’ll know what that was in Hungary, right? It got to 20% a year.Krugman: Yeah. I’m not quite sure I fully understand that. I mean, that’s supposed to be my department. But why inflation was so bad in Hungary was always a bit of a puzzle.Scheppele: Yeah, I was hoping you’d explain that to me. But there were, I think, a couple of things going on. One was that Orban was both spending well beyond his means and spending corruptly. So it wasn’t actually benefiting the economy. Like, more and more money was going to private pockets. So the whole economy was sort of teetering on the brink. I think that’s part of it. And you’ll know better how that feeds into inflation. But I was trying to get the EU to cut their money ever since 2012.Krugman: Right.Scheppele: And so I got together with a group of wonderful friends, academic scholars. We first wrote the law review articles that explain why they could do it under EU law, then lobbied for the laws so they had a structure for doing it, then had to lobby the European Commission to actually do it in the courts to uphold it. And anyway, it was a ten-year process. And in December 2022, the EU cut almost all the funds to Hungary overnight. So this is cohesion and a lot of other funds. Remember, there was a big recovery fund where the EU had gone to the markets to make up for the budget hole caused by Covid and the UK departure. The total EU budget was sort of half the usual budget, and that was half the recovery fund. But they had built so-called conditionality into both those streams of funding. So Hungary lost about €36 billion in a sharp cut overnight. And that was on top of inflation creeping up. But I think the markets were also anticipating this was going to happen.Krugman: Okay. And you know, Hungary has the same population as New Jersey, it turns out. And much poorer than New Jersey. So €36 billion is a lot of money for Hungary.Scheppele: Right. Exactly. And Orban had been siphoning off about a quarter of that money just straight off the top into private pockets. And the EU knew that. So when the EU cut the funds, it was a huge hit. And it was the disposable income that Orban used to hold his party together. And, you know, frankly, I’d been saying, at least to you, I mean, we used to have these conversations. “If we can just cut Orban’s money, his crony system will fall apart because they’re all on the take. That’s what holds him together.” And if you cut off their source of funding, think of it as like a resource curse problem, right? Where the resource curse is EU money. It was the only money really coming in. So, yeah.So sure enough, that happens in 2022. Peter Magyar jumps out of the woodwork in February 2023 or a little bit later that year. But it doesn’t take long for the inside of the Orban machine to start to crack. And I think that’s one of the things that gets Peter Magyar to jump out, because he can see that the ship is going to sink if it doesn’t have the EU funds. And the EU was pretty serious about all of that. So, I do think that was a contributing factor, but there were all these other things too. I mean, just the exposure of corruption. And it was the high inflation. It was “the economy, stupid.” You know, just everything. The growth rate had flatlined. So the economy was just in serious trouble.And Peter Magyar’s through line was “Orban is corrupt. And that’s why public services are underfunded and that’s why the economy is mismanaged. And this is why your lives are miserable in the countryside.” And so that was his pitch. And I think that’s not a left or right pitch exactly. You know, that’s something everybody can get on board with. So as it became clear he was going to really be able to run in the Hungarian parliamentary election, all the small center and center-left parties just collapsed and stood behind him, even though they knew he was not one of them at one level. But the campaign was about the elimination of corruption and the restoration of democracy. It was not about the usual left-right issues.Krugman: Yeah. I noticed a number of people were saying, “Well, Magyar will be Orbán-ism without Orbán,” but that is referring to more left-right issues.Scheppele: That’s right. So for example, I think he’s going to carry on with most of Orban’s policies about things like immigration or about, you know, support for families as opposed to single people without kids. All these kind of center-right things. But he has already said he’s going to lift his veto on UN sanctions against Russia and on money for Ukraine.Oh, by the way, I should mention one other thing that came out during the campaign, which was, again, not surprising, but it’s different when you hear the tapes. Probably European security services—that’s my guess about the source—were taping Putin and Lavrov, the Russian foreign minister. Now, there are tapes that came out a couple weeks before the election of Viktor Orban, talking to Vladimir Putin and saying things like, “Well, you are the lion and we are the mouse.” Like, “How can we be helpful?”Krugman: Wow, I hadn’t seen that.Scheppele: Yeah. And so again it came out through the Hungarian investigative journalists, but they said they had been talking to European security services. And what also came out were these other tapes in which Peter Szijjarto, who was the foreign minister of Hungary, had been calling Sergei Lavrov, the Russian foreign minister, after every European Council meeting and disclosing what happened behind closed doors as the EU was trying to decide how to counter Russian aggression in Ukraine. And those tapes came out too. And so the slogans then started to be, “Ruszkik, haza!” which means “Russians go home.” And then actually, the final little bit of Russian intrigue here was that Orban’s campaign was floundering and failing. I mean, he was trying to run this as a foreign policy campaign but he just wasn’t getting any traction. He was sinking in the polls. So about a month and a half before the election, he invited in the Russian disinformation team that had rigged the Moldovan election by running Russian bots, by taking over Facebook feeds and just swamping the thing with disinformation. They had to move to Hungary because they can’t do it in Hungarian the way they can do it in Russian from Moldova. And so they were literally there. The investigative journalists figured it out and Orban didn’t deny it. And everybody could see their Facebook feed slowly getting taken over by Russian bots. So again, Hungarians take to this and they start labeling and flagging and making fun of and meme-ing the Russian bots.It was just incredible how many people were online fighting this thing. I mean, maybe Peter Magyar organized some of it, but some of it was probably a spontaneous reaction. Like, “We’re fed up with Orban thinking we’re still part of the Soviet Union.” Right?So, “Ruszkik, haza!“ was one of the main chants at the rallies and at Magyar’s election victory, because Orban had so tilted toward Russia and so far away from the EU. Peter Magyar’s slogan was, “We will rejoin Europe and I will get the money back.”Krugman: This is something I was thinking a lot about. The role of the EU. If somebody tried to lean a ladder up against the fence at one of Putin’s estates to take a look, you know, I don’t think they’d come back to tell the tale. And then in general, just sort of the willingness to just plain use violence as opposed to legal stratagems.Scheppele: Yeah. That surely has a lot to do with the fact that Hungary was still in the EU and under restraints.Krugman: Yeah.Scheppele: I think that the EU puts a floor underneath how far the government can sink to using coercive measures. And so they never really resorted to violence against Hungarians. Now of course immigrants—that was a different story, right? And that was sort of with a wink and nod from the EU, as well. But in terms of actually assaulting journalists, you’ll probably recall because this happened when I was guest blogging on your blog, but I had a source that was feeding me a lot of information from inside Hungarian institutions. And that person was beaten up and left for dead on one of the main streets of Budapest.Krugman: Yeah.Scheppele: And he went and reported this to the police. I think we talked about this at the time, and the police said to him, “Oh, it just so happens the CCTV cameras were turned off at that time.” And he and I both interpreted this as they knew he was the one feeding me a lot of sensitive information. And he was getting beaten up and I got death threats. And as you know, the last time I went to Hungary, which was before the pandemic, I was literally met at the plane door inside the jet bridge by six uniformed police. So it’s not that they were above using coercion, but they wouldn’t have shot someone on a ladder looking over the fence, right? They’d harass you. They’d arrest you. You’d suddenly discover that you needed a tax audit or, you know, it was that kind of stuff instead of overt violence.Krugman: Given all that, it’s still kind of astonishingly brave that people were willing to stand up in this campaign.Scheppele: Absolutely. And Peter Magyar developed into this role, right? Because he came out of Fidesz circles. I don’t think he imagined himself as the opposition. He spent 20 years in the shadows. This is not what most leaders do. So he kind of grew into the role as people projected onto him a role he should play. And so one of the things he started saying at his rallies is “We shall not live in fear ever again.” And so it was the fear thing. And he would travel. I mean, Peter Magyar never had security. I’m sure he had death threats. I’m sure that they had a target on his back. He was clearly bugged and wiretapped. They would occasionally release conversations between him and close associates. Like I said, they sent him a girlfriend from the security services. I mean, they had him on their radar but he never traveled with security. He’d dive into crowds to shake hands and so forth, and he would say, “This is our country. We cannot live in fear.” And then crowds were chanting like, “We shouldn’t live with fear!”And today, actually, I was just in tears this morning reading this. One of my close friends wrote to me and was trying to make sense of everything. He’s also a sociologist, I might add. And he said, “What just happened can be expressed in the most beautiful way by the word “awakening.” I felt the country is waking up to self-consciousness as we wake up every morning. Hungarian society woke up from an unbearable world into a normal and livable world. It took time, but I feel like in the last two years, people’s attitude toward each other and toward politics has changed step by step. I just had to follow the events of the Tisza Party. [Magyar’s Party] Because whoever saw these events could testify that not only more and more people came out to the streets to listen to Peter Magyar, but people were smiling more and more and became more intimate, more joyful, more confident. And they were increasingly connected to the community with a sense of belonging. On the day after the election, Peter Magyar put it simply: ‘What happened was this is the end, and what lies ahead is change and creation.’”I mean, that’s what those rallies were. More than what he actually said, you showed up and saw how many other people felt the same thing you did. And then the fear went away as the crowd expanded.Krugman: That’s it. I mean, at one point I talked to Erica Chenoweth, who’s at Harvard, on the importance of the revelation that you are not alone being a very big deal. I mean, obviously it’s something that’s happening here.Scheppele: Absolutely. All the “No Kings” demonstrations are meant to achieve that kind of sense, right? That it’s your neighbors, it’s people you know. You see who turns up at the demonstration, and then you realize who are your allies in this political fight.Krugman: Yeah, but still extraordinary to see that happening when—it’s not quite a mailed fist inside the glove because they were restrained. I mean, none of this would have worked in Putin’s Russia, but it’s still kind of amazing.Scheppele: Yeah, but now I think this week is euphoria week. And then we have to start looking ahead because even though Peter Magyar has this overwhelming supermajority, Orban’s system is still in place.Krugman: Right.Scheppele: I feel like you see the yellow brick road heading to the Emerald City, but between here and there is a swamp full of alligators, right? So, first of all, he met with the President of the Republic yesterday, who is sort of a figurehead but the President of the Republic has to sign all the laws. The President of the Republic is a Fidesz holdover. You can expect him to veto reform laws. And then the Constitutional Court is packed. And so you get a case to the Constitutional Court but it’s all packed with Orban people. They can veto whatever Peter Magyar does, right? And then it’s the audit office. It’s all these different things. And so he has to get rid of these people, and has to recover the offices. And he can change the offices by law, but not through this set of veto points, unless he finds a way to fire the people. And that won’t be a legal step, you know.And so then how does he do that? So far, one of the disappointing things is that there’s a European advisory body called the Venice Commission which reviews laws for their compliance with European standards. And they were very important in a lot of these transitions. But in the last couple of years they’ve gotten hugely formalistic about things. So this problem recently came up in Poland, where the Tusk government came in, swept away the aspirational autocrats. They had a president who was a veto player associated with the past regime who vetoed all the laws, the Constitutional Court had been captured and declared everything else unconstitutional. The government can’t do anything. It may get voted out of power because it’s been ineffective, right? Because of the veto.At Princeton we just had Adam Bodnar who was the justice minister in the Tusk government, who came out with a plan about how to sort of get rid of all the veto players. He sent it to the Venice Commission, which is usually the gold standard on legal advising. Basically, is it compliant with European norms? And the Venice Commission said, “No, all these people were lawfully appointed. You can’t fire them.” And I finally lost it. I’ve worked with the Venice Commission for 35 years. I’ve really appreciated their work. I broke with them and wrote an article called “Blinded by Legality.” And I said, look, the laws under which these people were appointed, that you’re now saying is a lawful appointment, were laws you told the Polish government they shouldn’t pass because they violated European standards. Right? So they passed the law that you told them not to pass, and now you’re telling them they have to follow the law you told them not to pass. What kind of advice is that?Well, it was slightly embarrassing because I’d been invited to be the keynote speaker at their 35th anniversary, and that was after I’d come out with the broadside. So I had a very frosty reception for my keynote address. But they’re still doing that. So, you know, Peter Magyar is going to have to figure out a way through this. And it’s a little unclear how he’ll conquer the alligators before he gets to the clear path ahead.Krugman: Well, I have to say, when I’m feeling down about the European idea, it’s that kind of thing. The Euro pettiness. Beyond the alligators, although that may be the big story, what do you think he’s going to try to do? I mean, again, this is no liberal.Scheppele: Yeah. No, it’s true. But again, as I keep saying now, there’s a left-right political spectrum which is perfectly consistent with democracy, European values and everything else. And, you know, you and I would be on one part of the spectrum. Peter Magyar would be in another part of the spectrum, and I wouldn’t vote for him in an ordinary election, okay? But then there’s another political spectrum which runs from democracy to dictatorship.Krugman: Yeah.Scheppele: And on that, we’re all on the same side, right? And Peter Magyar has signaled, and I hope he follows through, that he is really in favor of restoring democratic institutions, fighting corruption. And he’s come up with two concrete proposals. The first two are pretty good. And this is where, again, the EU can be petty and it can be very helpful. So the European Union set up something called the European Public Prosecutor’s Office. And the European Public Prosecutor’s Office is just—for the EU law people in your audience—it’s an “enhanced cooperation mechanism.” That means that a number of states got together and said we want to integrate even more than the EU allows us to integrate. And so we want to do this thing. The EU says “Fine, as long as everyone can join it.” So a number of states got together, created the public prosecutor’s office. And the only two countries that hadn’t joined were Poland and Hungary. You know, they were the dictatorships, right?So Peter Magyar promised—and he could do it by himself, actually—on day one, Hungary will join the European Public Prosecutor’s Office. Members of the Hungarian Prosecution Service is like the current DOJ, right? It’s totally in the pocket of Orban. So now he has a spare set of prosecutors from the EU who can come in and investigate the mis-spending of EU funds. And since most of Orban’s corruption came out of EU funds, that will go a very long way, and that’s he’s already said “we’re doing this day one.” And then the second thing is, he said, “The first constitutional amendment we want to pass is to limit the Prime Minister to eight years in office, and no more, starting with me. Including me.” And if that passes, it also disqualifies Orban from coming back.Krugman: That’s an interesting backdoor way of doing it.Scheppele: Exactly. So that’s the first constitutional amendment, he says. So that’s not bad, right? For a start. I mean, I think he’s just getting his mind around it all. He knows because he’s been inside the system and he’s a good lawyer so he’ll know how many obstacles there are, and a lot is going to depend on timing. So, like yesterday, he had a meeting with the President of the Republic, Tamas Sulyok, who used to be President of the Constitutional Court. He’s a Fidesz guy. And they came out. They posed for pictures, both looking severe. Not the best pictures of either of them. They’re full of gloom because Peter Magyar called on the president to step down. And again, just since you love the legal detail, Paul, and you’ve listened to me for so long, let me tell you one more little legal detail. I could tell Orban knew he was going to lose the election back in December because he pushed through the Parliament an amendment to the Act on the Presidency, and they changed the system for impeaching the president to make it impossible for the Parliament to impeach the president.Krugman: Okay.Scheppele: So my thought was, okay, that’s the office they’re going to rely on if Peter Magyar wins the election and Orban loses. So here again, you’ve got this guy in power. And actually he said yesterday he might step down. But everything depends on when he steps down. If he steps down, even with Orban’s parliament, as a lame duck, his two-thirds Parliament is still there for another few weeks.Krugman: I was wondering about that.Scheppele: Yeah, if Sulyok steps down, Orban’s Parliament can elect somebody. And the reason why they might do it is because Sulyok’s term expires before Magyar’s term is over. And if they reset the clock, the presidency lasts five years, the government lasts four years, they would have somebody who would be there through the whole Magyar term. And I thought that was going to happen regardless. So that may still happen. But they came out and they said, “Well, look, maybe what we should do is change to an elected presidency, because right now the parliament elects the president.” And Peter Magyar said, “Well, maybe that’s a good idea.” And everyone listening is going to say, “Yeah, what a good idea.” And here’s the caution: we had the same debate in 1989. The outgoing communist parliament knew it was going to lose the election. And so they said in the new constitution, “what we want is an independently elected president,” because what they knew was that the only people that had public personas were all the communist guys. And the communist reformers, they were probably going to put up somebody like that, whereas the opposition had all these people who had been denied access to public media. Nobody knew who they were. And it was a ploy by the communists to keep control, even though they were going to lose the election. Here we go again, right? It’s the same thing. Who would run for president? It could be Orban, right?Krugman: Wow.Scheppele: He might be disqualified from being prime minister, but he’s not disqualified from being president. Who else do people know? It’s like this echo of 1989. It’s the same debate. So the way they solved it in early 1990 was that the Constitution left that space open, and the two sides agreed that it would be decided by a public referendum. And the public voted, having heard this was the debate, for the Parliament to elect the president to keep the communists out.So it’s here we go again. And just one last thing while we’re on 1989 and the echoes of communism. I like the way Peter Magyar talked about the Hungarian government—not to say the “Orban kormany“ which would be the government or, like, administration, like we say, “Trump administration.” He would say it was the “Orban rendszer,” which means the Orban regime. And so his motto toward the end of the campaign and the big slogan behind him at the big rally where he declared victory on Sunday night was, “Most, Rendszervaltas,” which means NOW, SYSTEM CHANGE. And that was the slogan from 1989.Krugman: Wow. I mean, I think it’s really important to understand this is not over. On the other hand, I have to say, it does sound, with the role of the Europeans and probably European security services—probably meaning the French and the British— in some ways the whole argument made by JD Vance that “the European globalists are plotting against us,” it was sort of true.Scheppele: Well, they cut the money and the security service provided the information. They have this European public prosecutor’s office ready to go. And I think it was always aimed at Hungary. So that’s also ready to go. They’ve sort of recognized Peter Magyar. They may—and I have mixed feelings about this—but they may just give him all the money back now. I mean, there’s all these frozen funds. They haven’t made the changes yet that would deserve getting the money back, but theoretically, they could give at least some of this money back now, because Orban has overspent. Orban has spent 85% of the 2026 budget already.Krugman: Yeah. So this could be a significant boost. They could have a “morning in Budapest” or whatever if these frozen EU funds are coming back.Scheppele: Yeah, but since I know you follow the money, here’s one more money thing to follow. So in the last round of EU budgets, they had this recovery fund to overcome Covid. And this time they’ve got this huge amount of money that they’re raising on the markets to fund what’s called the SAFE fund, which is to fund the European defense build-up that’s coming.Krugman: Okay.Scheppele: So again, I think Orban’s known for a long time he would lose. I don’t think he thought he would lose this big, but he would lose. So what they’ve done is they’ve rapidly privatized the whole Hungarian defense sector. So if and when that money comes to Hungary, it’s going to go straight through the government into the pockets of Orban’s cronies, because all of the defense sector in Hungary is now privatized with his friends.Krugman: Interesting.Scheppele: Yeah. So, you know, it’s not over yet. You can’t get rid of 16 years of this with one election.Krugman: But they got rid of at least some of it.Scheppele: Oh yeah. It’s a necessary but not a sufficient condition, as the philosophers would say.Krugman: Congratulations above all to the Hungarians. But to you. You’ve been on this case since the beginning, and at least some good has prevailed.Scheppele: I couldn’t have done it without you, Paul, because you were the only one willing to post all the kind of legal detail about how this stuff was happening. And really, it was a team effort at the beginning, and I really appreciate all you did.Krugman: Well, it’s trivial compared with this. Anyway, so great to talk to you. And we may come back on in a few months when hopefully we know a little bit more about how this is playing out. But wow, what a revolution.Scheppele: I know. I mean, people were dancing in the streets. Just the euphoria and the number of young people. We didn’t lose that generation and they didn’t forget what democracy could be, even though they’d never experienced it. Right? I mean, it’s just amazing. And, you know, we could do that here, right? We can do that.Krugman: Here’s hoping.Scheppele: Okay, Paul. So we’ve got our next task cut out for us. 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Thank you Quentin Hardy, Beth Arnold, Jane Trombley, Resistance Media, Victoria Priya, and many others for tuning into my live video with Heather Cox Richardson! Join me for my next live video in the app.TranscriptHCR: Hey, everybody here from Bonita Springs, Florida and Elgin, Illinois and Portland, Oregon and Seattle, Washington, Fairbanks, Alaska. Boy, it must be getting beautiful up there right now. Newfoundland, Canada, Oak Park, Illinois. Still, we do not have a duplicate Plano, Texas. Then we got I think we got Oak Park, Illinois. That’s two Illinois.We got Cuyahoga Falls, Ohio, Vienna, Austria. Where is our Facebook? from Albuquerque, New Mexico, Dublin, Ohio. And Kristen is here from Facebook. So welcome, everybody. And here, Dr. Krugman and I go again with Lunch Money. Hey, Paul, how are you? PK: Hi, I’m good. How are you? HCR: I’m good. We have spring here, finally, which is unbelievable.PK: We’re hitting 86 this afternoon in New York.HCR: Oh, I can be there in about three hours. We’re not going to be 60.PK: So yeah, here from beautiful New York City, actually more or less across the street from the Empire State Building. This is my academic office.HCR: Oh, that’s nice. That’s nice. I’m just across from trees. Listen, so the world is changing so quickly that it’s kind of hard to get your mind around it. And one of the things that jumped out to me this week was the degree to which we’re focusing on the loss of soft power. We’re looking at the loss of you know, the idea of American military dominance. That’s another question. But I’m really interested in what it means for the U.S. economy to have taken such a dramatic turn away from dominance around the world. And what got me thinking was I did an interview the other day with Vanessa Williamson of the Brookings Institution about taxes, right? And she really offhandedly said, well, you know, we have this thing in economics called the resource curse, where if you have a country that has a reliance on an easily accessible resource like gold or oil or whatever, it means that they don’t really the leaders don’t really have to pay any attention to the people, because they can just dig it out of the ground. And she said, I’ve always kind of thought that maybe America’s resource curse was the fact that we were the world’s reserve currency. So we could borrow as much money as we wanted at really low prices. But that’s changing. And she just kind of threw it out there. And I thought, oh, my heavens, I have never thought about this at all that way. And I thought to come to you and say, I don’t know if she was right. I don’t know if this makes any sense at all, but what are we looking at in terms of the economy with the extraordinary instability of the United States on the world stage right now?PK: Okay, so let me first of all just say that, one resource curse that we have in the U.S. is an actual resource curse. We would not be rejecting renewable energy, we would not be rejecting electrotech, probably, if we didn’t have all of this oil and gas. That in some sense, our politics are kind of polluted by the power of our own fossil fuel industry. And that’s actually probably ending up being an economic disadvantage. So just to say that we’re not that different from countries that actually have mineral resources that end up to be negatives, not positive for them.On the dollar: I do need to say that that’s one of those things where the people who have studied it most tend to think that the special role of the dollar is least important. And it’s people who haven’t who tend to think that it must be tremendously important.So, okay, the dollar is the overwhelmingly dominant currency of international business. If somebody in Brazil wants to do business with somebody in Malaysia, the stuff’s going to be invoiced in dollars. The debts are going to be in dollars. And those private uses of the dollar are more important than the official reserves, although that’s part of it as well.HCR: Can I stop you for a second there? And for them to do that exchange, it has to go through the SWIFT bank, right? Probably, yes. Can you explain all this stuff?Yeah. So there’s an interbank market. So if you’re going to exchange reais in Brazil for Malaysian ringgit banks that are going to do the deal. And the interbank markets are all against dollars. There is no market where you can exchange Brazilian currency for Malaysian currency directly. The banks will sell one for dollars and then use dollars to buy the other. The interbank market is conducted primarily through this thing called SWIFT, which I forgot what the acronym stands for, but anyway, it’s the electronic settlement system based in Belgium, rather oddly, but effectively answering to the United States. There are ways around it, but it’s by far the most convenient way to, to do these transactions. And the role of the dollar gives the U S government a lot of power. Everything that goes through SWIFT is revealed to the National Security Agency. The United States can effectively veto transactions. Because everybody needs to have an account at a U.S. bank in order to do basically any business anywhere in the world, the U.S. government can blockade transactions. And so this is an extremely powerful lever of power. Actually, I’ll recommend a book by friends of mine, Henry Farrell and Abe Newman, called Underground Empire, which is all about these invisible channels of power, and the currency stuff is a big part of it. There are ways around it. The United States has tried to embargo Iranian transactions for many years, and the Iranians have costly, kludgy workarounds, but they do have workarounds. The Chinese yuan has done nothing as international currency, but people do make deals that involve using China’s banking system to get around the U.S. blockade. But it’s still a big influence of the United States.So, okay, this is really important. Now, some think that the dollar is about to collapse, that people are going to stop using dollars. Yeah, if we are crazy enough, we can do that, but it’s really hard. I think I’m getting a little nonlinear here, but anyway, the best essay I’ve ever seen on this — the best paper I’ve ever read, but it’s just in the form of an essay, no math, no diagrams, was on the dollar. It was an old article by, my late teacher, Charlie Kindleberger, called The Politics of International Money and International Language, in which he said that the role of the dollar in the world economy is like the role of English. Everybody in the world who needs to communicate does it in English, because everybody else does it. Everybody uses dollars because everybody else does it. And that’s actually extremely hard to dislodge.Even if United States policy is crazy, it’ll take a lot to change that. Think about what it would take for us to start doing international business in Mandarin. That’s not going to happen overnight. Sorry, I’m going on too long. I haven’t let you get a word.HCR: No, no, no. This is great.Does all of this translate into the United States can borrow without limit? PK: Well, first of all, we are not the only country that can borrow a lot. It turns out that if you are looking at the ability to run large trade deficits year after year, the United States has done that, but so has Australia. So has Britain.So it’s not actually the case that the United States has a unique ability to borrow. We are impressive in the ability to borrow in dollar denominated debt. Not that we get free borrowing, but that U.S. borrowers — the government, but also corporations —issue debt that’s payable in dollars, which does give the United States some autonomy. If the dollar plunges on world markets, so do our debts. So we’re insulated from that particular concern. But it’s not unique. We aren’t uniquely able to run big deficits. Whether we get cheaper borrowing or more borrowing, whatever the effect is, it’s not strong enough to be clear. for the signal to overwhelm the noise. You try and look for, is America able to borrow more cheaply than Britain or Japan? Maybe, but you can’t really see it in the data. It’s not overwhelming. So at a basic level, I don’t think that the resource curse story vis-a-vis the dollar is especially compelling. I would say that the role of financial services qualifies, although that’s much bigger for Britain than for the United States. I mean, Britain really suffers, everything in Britain except for London suffers from the city of London’s role in international finance, but the United States a little bit. But I think it’s more a psychological thing, a sense of impunity that the United States tends to have because of the role of the dollar. We don’t think about, nobody ever thinks about a U.S. financial crisis and the IMF having to come in. And maybe we should.HCR: So that was just sort of a starting point because what that did, whether or not that was something that I should be staying up at night about, was it really made me think about, you know, I look at the politics of where we are and I look at soft power and I look at the cultural norms and so on And certainly I look at individual pieces of the fact, for example, that oil is getting very expensive and therefore we’re going to see inflation, more inflation than we’re already seeing and so on. But on a cosmic level, you know, on a really big level, what does it mean for the what is the instability that we are seeing coming out of the Trump administration? And you can define that however you wish. What does that mean for the American people? I mean, like literally, I don’t even know where to start with that. Does it mean nothing? I can’t imagine that.Does it just mean inflation? You suggested it doesn’t mean that we have to worry about not any longer being able to borrow. What does it mean? PK: Okay. So, the U.S. is, less of a trading nation than almost anybody else. We’re less dependent on export related jobs than anybody else. But that doesn’t mean zero. It’s actually quite large. And I’ve been thinking about this a lot. I mean, the United States has really made it sort of dead obvious that we are we’re not reliable. We’re not serious people. You cannot trust the United States to behave. You cannot trust the United States to honor its promises. You cannot trust the United States to behave rationally. Sorry to say that, but that’s where we are right now.This has to have some negative effects. There’s some sort of almost crude mechanical stuff that people don’t think about. I never looked at this, before, but how much does the US export economy depend on selling arms? Just plain selling military equipment.It turns out that more than 10% of our exports is military equipment. I had no idea myself, and I should know these things. And Mark Carney, Prime Minister of Canada, just said, we will no longer spend 70 cents of every defense dollar on the United States, right? And around the world, governments must be thinking about that. Should their next fighter plane, should their next anti-aircraft system be U.S.? Partly because the U.S. is not reliable, partly because it turns out that maybe U.S. military technology is not quite as supreme as we thought, given what’s happened the past six weeks.So that right there, that’s probably millions of jobs in the United States that are directly or indirectly linked to the world, having relied on our weapons, which it probably won’t do to the same extent anymore. PK: So I’m sitting in my academic office here. One of America’s biggest, biggest exports is higher education.HCR: Yeah.PK: Right. We get a a lot of foreign students. We’ve just, we just had Mayor Mamdani here this morning, uh, believe it or not, um, for an event. And we were all talking about how the student, foreign students who are very big here at CUNY, but throughout the U.S. educational system, they’re not coming anymore. We’re having a big hit. And if you think it’s just those academics, but even if you’re not in academia, there’s a lot of jobs, employment opportunities, and also our scientific base that is ultimately dependent on foreign students. Also, there are some reports this morning that hotels are slashing prices. They were expecting to be able to rent out a lot of rooms for the World Cup, but the world is not going to come to this World Cup because it’s in Trump’s America. So putting all that together: the U.S. economy is so huge that even all of this it’s very unlikely to subtract even 1% from U.S. GDP.But 1% of U.S. GDP is $300 billion a year. So this is all, in the end, fairly big stuff.HCR: So I want to be clear that people understand. When foreign students come to the United States of America, they pay full freight. U.S. students often get discounts through scholarships, through simply rake-offs, through, you know, they pay quite a bit less for their tuition dollars than foreign students do. So increasingly higher education has focused, and sometimes prep schools as well, have focused on attracting foreign students to basically to make their ends meet. So you’re seeing in a lot of universities right now, not only cuts coming from the administration, but also the loss of these foreign students on which a lot of the tuition depended.So there’s a real crisis going on in higher education. Lots of people don’t understand that this is not just a question of getting widespread good intellectual talent. It’s also dollars.PK: That’s right. I mean, education is a business, among other things. I mean, it’s a lot of money. There’s kind of synergistic effects as well. I mean, the foreign students... It’s not just that they pay in full and the domestic students don’t. It’s also just having more students.So we’re able to maintain the size of the U.S. educational system in part because of the foreign students. Advanced degree students are also a large part of the workforce for U.S. research. So it’s all pretty critical. Now, there’s also foreign tourists. Again, Carney, I think in that same speech where he talked about the defense dollars, he started with a joke: “Has anybody drunk any bourbon lately?” And, of course in Canada, basically no, and they’re also not coming as tourists. So turning yourself into a global pariah, which is what we’ve been doing is, bad for business. There are there are worse things than being bad for business, but it is also bad for business.HCR: Well, so what about the long term? Because you’re talking about slower growth. You’re talking about a more stagnant economy. But, you know, I’m watching the the Trump administration trying basically to move us back to the 19th century dependence on old technologies, including petrochemical, you know, including fossil fuels.And watching China and the rest of the world moving forward toward new technologies … I have a sister who’s a marine biologist in another country, and she has been saying to us for years that if the U.S. didn’t get its act together, the next generation of appliances and of technologies and of energy are going all to be keyed to Asia and not to the United States of America. And Biden and his team seemed to be aware of this and to work really desperately with the Inflation Reduction Act, among other things, to try to bring America up to speed and the Chips and Science Act to compete with China and to regain control of that future. And I’m watching us just piss that away and thinking, What does this look like in terms of jobs, in terms of technology, in terms of producing energy and so on in the future? And how long down the road are we looking at that problem? And is it recoverable?PK: Okay. Some friends of mine who are in the kind of energy future space say that, look, at this point, effectively, the United States and China are offering to the whole world two different visions of what your energy future will look like. China, even though the Chinese themselves still burn a lot of coal, which we wish they would phase out quickly, but China is basically saying the future lies in wind and solar and batteries and electric cars and buy our technology and you can enter that wonderful world. The United States is saying No, none of that stuff. That’s bad. Windmills kill birds or something.Anyway, we’re saying reject that vision of the future. What we need is hydrocarbons, back to oil and gas. And hey, we have lots of oil and gas, which because we do all this fracking, and we can supply you. You can buy your oil from the United States. you can get liquefied natural gas from the United States, and that’s the route you should go. Now, that was probably a losing proposition to begin with, because the fact of the matter is that at this point, the sort of clean energy technologies are getting just plain cheaper, even aside from all of the environmental issues and so on.They’re just getting cheaper. But In any case, would you now trust this America to be your supplier of LNG? Who knows whether Trump or the next Trump-like U.S. president will decide that you’re not our friend and cut off your supplies of resources. We used to be the country that whatever else you could say, America honored its promises. And we are not that country anymore. We’re not reliable. It’s unfortunate but unfortunately, I think it’s true that people consider China a more reliable, rational player than the United States, and this has a direct impact on that choice. And you can see it’s happening overwhelmingly. The world is not rushing to install new gas-fired power plants. It is rushing to install solar panels, of which 80% are made in China. So, that is bad, although a world in which China produces the equipment that allows us all to have abundant energy is not such a terrible world, but still does mean that the U.S. is losing out on that. But I also worry that the United States will refuse to use this technology. So we will be, in some sense, the last country that still has internal combustion cars and still has fossil fuel power plants when the whole rest of the world has moved on to a better cleaner and cheaper technology HCR: Well the cost of gas is certainly making a lot of people who loved their big trucks rethink that up here although as you yourself have pointed out it takes about 10 years for the fleet to turn over.PK: Right, that’s one of those shocking little things i didn’t know. I’ve been around for a while and i remember when you know we used to say, well, cars stay on the road for nine years. It’s now 14 years. And that’s partly because Detroit, the big auto companies kind of made a decision not to sell affordable cars, that they would focus on SUVs and luxury vehicles. And then people who didn’t make a lot of money would rely on secondhand vehicles. So we turn over our auto fleet very, very rarely. And that means that if we don’t start moving to the future, we will be stuck. And of course, the autos are the visible part of it. But it’s just a lot of our infrastructure that, you know, we’re not doing a whole lot of building in this country. And so that means, among other things, that we are stuck with legacy energy systems, legacy industrial systems. And we’re building that legacy right now. And it’s not the right one.HCR: OK, so I’m going to ask you this and it’s just an observation. And if you feel like you don’t want to answer it, I totally get that. But it’s a little hard to miss the fact that the countries where Trump has exerted his power are ones that control a lot of oil and and, you know, Iran and Venezuela. And do you and of course, he works very closely with Vladimir Putin, whose money depends on oil and the sale of oil and that internationally. Do you think that that is playing a role in the places that Trump is trying to gain control over?Or is that just me with a tinfoil hat over here in my study in Maine?PK: You don’t want to dismiss that sort of thinking, but I think in some ways you may be imputing too much calculation and rationality. HCR:That’s fair. PK: If Trump was trying to seize the oil in Iran, then that’s insanity. He sometimes talks as if we can just go in and take the oil, and it’s like, you know, 20 million barrels a day is the amount that flows through the Strait of Hormuz. You don’t just take that, right? And are you really thinking that we can occupy Iran? Now, it’s actually funny. I have to give some, I guess, credit. Venezuela has turned out to be less of a disaster than I expected because it is a completely corrupt regime, and Trump has basically been able to kill off the old capo and install a new capo who is just as bad as the old one, but gives him a cut.HCR: That’s what Iran was about.PK: That’s what they thought was going to happen in Iran, and the current management of the United States is continually surprised to learn that other countries are real, have real ideology and nationalism of their own. So that’s not going to happen. I actually think that the channels here are generally subtler.It’s not that Trump and Hegseth and executives of the major oil companies sat down and plotted this thing together to seize the oil. But it’s been clear all along that current U.S. government is much more comfortable with petro-state oligarchs, whether it be Vladimir Putin or Mohammed bin Salman, that those are more their kind of people than, you know, basically American workers, and that more, I think, out of instinct than calculation, they do tend to follow policies that are favorable to them. So one of the many conspiracy theories is that this whole war was about raising the price of oil to help Putin. Well, I don’t think it was, I think that’s been a consequence, but I don’t think it was carefully calculated to do that.HCR: Yeah. Yeah. I’m afraid I’d agree with you on that one. So here’s another question for you. This has been an issue in the United States. The attempt to wean ourselves off of fossil fuels and to work in renewables, which as you say are now cheaper than fossil fuels. And I’d love to have you explain that a little bit more closely. But then what what can we do? What can ordinary American consumers do to say to the administration or to say to the country, we don’t want to be left back in? All I can think of is the Spindle Top oil gusher, which was, you know, incredible when it happened. But it was also more than 100 years ago versus where we could be going. So, why is it cheap? What do you mean when you say it’s cheap? Renewables are cheaper than fossil fuels at this point.PK: Well, literally, I mean, there’s something called levelized cost, which is an estimate basically of how much it’s going to take to generate electricity over the lifetime of a power plant or power facility. And the levelized cost for solar and wind are clearly well below coal fired power plants and they’re sort of about even with or dropping below natural gas fired power plants. So if you are a utility company making a decision now should I build another gas turbine electric generation facility or should I build a solar farm or a wind farm um it’s right now just on the sheer dollars and cents you would probably go for the renewables you go for solar or wind.There was a critical problem that we used to have, which was that the sun doesn’t always shine and the wind doesn’t always blow. But there’s also been spectacular progress in batteries. So battery technology has become more effective and immensely cheaper. And all of the renewable related stuff, green energy, has had incredible learning curves. As we accumulate experience, the costs just keep falling. So they are now all cost competitive or more so and that will keep on happening. So on a typical day now in both California and Texas — anyway, most of the electricity on a typical day will be generated by solar and wind. Some of it will be fed into batteries during the day and then the lights will stay on at night because you have the batteries. That is where technology wants us to go. So that’s the big transformation. And of course, electric cars have gone from being cumbersome to actually being, you know, on my Substack I had the other day, I just had a photo of a BYD car and it’s pretty spiffy and the range problems have rapidly diminished. So, you know, this whole the technology of, um, uh, non-fossil fuel future is pretty much already here.And it works. It works on dollars and cents and it works in terms of reliability. Um, now I’m not, I lost the second half where you were.HCR: So, so what, you know, I, I suspect most of the people listening here are not going to disagree. And I certainly don’t. And I’m not even talking about the cost of, you know, data centers, which are sending, uh, electric bills through the roof, the cost of diesel, especially right now, which is prohibitive for farmers and fishermen.I’m just talking about a lot of us would like to see this future and thought we were achieving it. And now we’re looking at an administration and therefore perhaps downstream different kinds of industries that are moving us backward and not forward. And how does one, a normal everyday American put pressure on a country to change their economic behavior, not just their political behavior, that’s my back, but their economic behavior. What do we do? I mean, there’s people who are talking about general strikes. There are people who are talking about at least a May Day strike.You know, how do we make this future happen for us and not just for the rest of the world?PK: I’m not sure that I have an answer there. I mean, politically, I think it’s going to take a while before we get back to the Biden era subsidies for the energy future, which is terrible.But at the minimum, we can really demand that we that the US government not actively block the energy future. What’s been going on under Trump is that they’ve been refusing federal permits for wind farms, for solar farms. There’s really conspicuous cases of offshore wind farms that they’ve been trying to force to cancel midway through construction. They’ve been losing court cases on most of those. But there are just hundreds of smaller developments where more quietly permits are being denied. So we have a government that is actively hostile, not just refuses to spend money on green energy, but is actively trying to suppress it.And I think that political activism to to say stop getting in the way is relatively likely to succeed. You as an individual, I don’t know. I mean, that’s kind of not how it works. Right. I say I’m not a good role model here. I still drive an internal combustion car, which happens to be 20 years old.So I guess I’m OK. Am I right? Yeah, it’s 20 years old. So I think I’m forgiven for not ditching it for a new car yet. But as for the power of individual purchases and even boycotts, not sure. I don’t think we’re going to get general strikes over energy policy, but election outcomes will have a huge impact here.HCR So now we’re back on my turf.PK Yes, we are. I’m sorry. That’s the thing about living in something that still has at least some of the institutions of democracy is that votes matter.HCR: Well, amen to that. And we certainly saw that last weekend in Hungary. Listen, I could talk to you forever. Thank you for doing this. And we, and thank you everybody for being here and we’ll do it again. Is it, is it next month?PK I think so. HCR I haven’t actually looked at the calendar, so I have no idea, but it’s always a pleasure, Paul. I hope you get a chance to get outside in this gorgeous weather.PK I think, I think I’m going to take myself out for dinner. Robin’s away, but even though it’s a luxury, I don’t have outdoor seating at my New York apartment. So I think I’m going to go find someplace that does have outdoor seating.HCR Well, and do you know, I love New York anyway, but one of the things I just, this is so obvious, but just blows me away about New York is you can get any food from anywhere around the world in New York city. It’s just, I mean, I’m in Maine and we’re very lucky for so many reasons here, but like, I can’t get food from Bhutan for, for at least, you know, a long drive.PK Oh gosh. Whenever you’re here, let’s go to Jackson Heights. If you’ve ever been there, there must be 30 national cuisines on every block.HCR That’s just so cool.Anyway, thank you, everybody, for being here. And we will see you again the next time Lunch Money Regroups. Thanks for being here.PK Take care, all. HCR Thanks, Paul. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

Lisa Graves is a legal activist and the author of a remarkable and terrifying book, Without Precedent, that documents the assault on democracy via the story of John Roberts. I spoke with her about how America has come to its current state, and what the future may hold:. . .TRANSCRIPT: Paul Krugman in Conversation with Lisa Graves(recorded 4/9/26)Paul Krugman: I’m speaking today with Lisa Graves, author of an incredibly revelatory and deeply disturbing book called Without Precedent, about the Roberts Court and what it has done to America. And...hi, Lisa. Welcome on.Lisa Graves: Paul, thank you so much for having me on. It’s an honor to be here with you. And thank you for your kind words about my book.Krugman: I guess I was first sort of seriously alerted to what was happening at the Supreme Court in 2000, with the stolen election and all that. But I have to say, I don’t think I fully appreciated what Citizens United would do. And so why don’t you give us a little background on what has happened, the court and its role and what’s been happening to America?Graves: Well, I really appreciate your starting with Bush v. Gore, because that in some ways is the beginning of this period. It’s a precursor in a way to what we’ve been experiencing. And that was when the US Supreme Court, in a sharply partisan decision — although not all the Republicans voted to stop the recount — five Republicans voted to stop the recount in 2000, in Florida. And the effect of that was to give George W. Bush the presidency and with it, not just the power to, in essence, make war with the consent of Congress, but also the power to remake the courts, the Supreme Court in particular.And by the way, as part of my research for the book, I looked into what was happening at that time, and it turned out that Clarence Thomas’s wife Ginni Thomas was working for the Heritage Foundation on the predecessor to Project 2025 — basically Project 2000. And she was screening people for positions in the potential George W. Bush administration. And Clarence Thomas didn’t recuse himself from that case. By the way, that five-four decision — it would have been four-four. The count would have been allowed to proceed. And the count that actually occurred with news organizations after the fact, after Bush was sworn in, showed that Gore would have won Florida and would have become the president of the United States.By the way, after Thomas voted to effectively make George W. Bush the president, Ginni Thomas was given a promotion as the liaison from the Heritage Foundation to the White House, and she became the highest paid non-board member of the Heritage Foundation. And so she was rewarded very well for her work and, basically, for the consequence of her husband’s decision to vote to stop that recount.So that was really a moment where I think a lot of people didn’t understand what was happening. And because that decision happened so quickly, there were no motions for Thomas to recuse himself. It just was a very rapid, very political, partisan decision by the court. And it is really a precursor to what’s happened next, which is that George W. Bush was reelected as an incumbent, or elected anew in 2004. And there were two vacancies that came up immediately. It was for O’Connor’s seat and Rehnquist’s seat. And John Roberts got the role of chief justice, and Sam Alito got the role of associate justice.And then to fast forward to your question about Citizens United, again, this is a 5-to-4 decision issued by the Roberts Court, where Clarence Thomas sat on that case — the fifth vote, in essence, on that case — even though a billionaire named Harlan Crowe had staked his wife Ginni Thomas with $500,000 to launch a group to take advantage of the decision to come in Citizens United, to allow these so-called C4 groups under the IRS code to spend unlimited money to influence elections. And Clarence Thomas did not recuse himself from that case, and even had the audacity to write a concurring opinion saying that disclosure of money being spent by these groups — who the sources are — would chill speech, meaning money, like the money to his wife, which he did not disclose.And so that decision unleashed a tsunami of cash into our elections, where candidates are routinely outspent by the outside groups. And this has given a disproportionate, and extraordinarily disproportionate, power to billionaires in our society, in America, to secretly influence elections in order to get people into positions of power to advance their interests, like the huge tax breaks that Donald Trump signed into law at the behest of Charles Koch and his groups in the first term of President Trump. And again, similarly, in this second term of Donald Trump, the extension of those deeply unfair and destructive tax cuts for the richest few.Krugman: You kind of described what Citizens United is, but let’s talk more about that. Citizens United is the birth of super PACs, right?Graves: Yes.Krugman: And it’s basically saying that outside players — but it ends up being largely billionaires — can put lots of money with some basically tissue-thin restrictions on what they can do, but can basically put in unlimited amounts of money to influence political campaigns.Graves: That’s right. And so Citizens United was a decision that basically asserted that under the First Amendment, money is speech, and that outside groups that were not coordinating with the candidate — so-called independent expenditures — they could spend unlimited money, and they were not subject to the rules that the Bipartisan Campaign Reform Act, BiCRA, otherwise known as McCain-Feingold, sought to put in place to deal with this sort of what they were calling soft money — money that was outside the campaigns that was not required to be disclosed.So Citizens United and its progeny — a case called Speech Now vs. FEC — that’s what spawned these super PACs, where you have enormous money going into PACs, political action committees. That money can be million-dollar, even $10 million checks. For the super PACs that are operating in a particular way, they have to disclose their donors. But for the C-4 groups, which are these other nonprofits, they don’t have to disclose their donors.And so what it’s created is a situation in which, on the one hand, a billionaire can now give millions to a super PAC in a way that they could not give directly to the candidate. They couldn’t just write a check to the presidential candidate or congressional candidate. They can do it now in an unlimited amount through the super PACs. And then separately, they can give tens of millions of dollars — unlimited money — secretly to a C-4 group that runs so-called issue ads. Those are the ads that say vote for or against this person, or call them because you oppose their policy. But it’s really obviously about influencing the election, and that’s the dark money that’s being spent in our elections.Krugman: The Times found that 300 billionaires represented 19% of all campaign financing in the 2024 cycle. But I’m not sure how they know. Are the C-4s even in there? It may be more than that, right?Graves: It’s certainly more than that. And only under certain circumstances can you actually see some of the funding of a C-4, based on how it’s related — who’s funding it, if who’s funding it is known. So for example, if a foundation gives to a C-4, if it has the capacity through a trust or a foundation to give to a C-4, that sort of giving is required to be disclosed. But if an individual, a billionaire like Charles Koch, writes a check to the C-4, that is not disclosed. It’s only if it comes through a nonprofit entity that you can see just a glimpse of the sources of that funding.So whenever I talk to reporters who are doing those calculations about how much money is being spent by billionaires, I always tell them that their counts are going to be extraordinarily under the actual reality, because we know that these outside groups, these C-4 groups, are spending hundreds of millions of dollars cumulatively in the election cycle, and the only people who know who’s giving to them are the groups themselves. And probably some of the candidates know who’s giving to those C-4s.Krugman: Wow. So if we look at someone like Peter Thiel, who basically bought a Senate seat for JD Vance. I don’t actually know the number, but the numbers we see may actually be only the tip of the iceberg.Graves: That’s correct. There are a couple of rules in states and also at the federal level for certain types of independent expenditures, or if you have what’s known as a 527 group under the IRS code, that is allowed to spend directly in elections. But even then, what you see is a shell game. So for example, the Republican State Leadership Committee, RSLC, has created a subgroup to target state Supreme Court races. And it’s the sole funder of the subgroup. So when the subgroup discloses who funds it, it’s disclosing its parent organization. So it doesn’t disclose how much of that money is from Leonard Leo, or how much of that money is from Charles Koch or Koch Industries or the oil companies that goes into the bigger pool of funds.And so there are all these ways in which I believe that most of the money that’s being spent in our elections in America is not disclosed. It’s not disclosed under the campaign finance reports of the candidates, of the party, or the super PACs, because it’s the C-4 money that is most potent, because it’s the vehicle that allows them to hide the true funders — the biggest funders of these operations.Krugman: If we look at issues like energy and climate policy, there’s obviously huge amounts of fossil fuel money flowing into elections, but there’s also huge amounts of money going into supporting pseudo research at think tanks, which is a kind of whole universe. And if they’re already supplying a very large part of campaign finance, then add in all of this stuff, and we really live in a political environment that’s very much determined by big money.Graves: That’s really true, and while the C-4 spending sometimes is not described as political, it’s obviously political. It’s obviously spent around the elections to influence the outcome of the elections. And it’s often spent on ads, which is why there was a bill that was introduced by members of Congress that was called S1 in the previous Congress, which was designed to basically say, if you’re going to spend money around the elections, it really needs to be disclosed.But as you point out, in some ways that enormous money that’s coming in around our elections is, in a way, the tip of the iceberg, because there’s this whole other structure where fossil fuel companies and fossil fuel CEOs like Charles Koch and others, are spending enormous sums year after year on these so-called think tanks — or as some people call them, “stink tanks.”Krugman: Heh.Graves: But really, these are entities that have been stood up over the past few decades to generate research findings that are informed basically by the funders who are funding that research, in order to assail efforts to mitigate climate change, for example.And when you look at the nonprofit infrastructure in the United States, the United States has a thing that is known internally, in essence, by the experts as “the independent sector.” We have the private sector, the public sector meaning government, and the independent sector—and that’s the nonprofit sector. And it is an enormous part of the US economy. That’s like churches and hospitals and colleges. But a significant portion of that nonprofit spending is going into policy operations, operations that describe themselves as informing the public, as public education — not public schools, but educating the public.And the fossil fuel industry has played a big role in funding a number of these groups that are at the forefront of basically “studies” — and I’ll use that term loosely — but studies that then are cited by some members of Congress as a basis for objecting to the reality of climate change, or objecting to government efforts to intervene and try to mitigate climate change. And so it’s a massive distortion machine. We sort of swim in a political environment, a political and social environment, which has been greatly influenced, swayed by the amount of so-called research that these groups are putting out in order to advance the industry’s interests.And this is part of what’s known as a third-party strategy that the tobacco industry really helped pioneer in America, where they were trying to fend off efforts to regulate tobacco and its cancer-causing effects. And so they didn’t want to run ads, for example, saying “tobacco companies say tobacco is just fine” — although they did say smoking was good for you — but they put forward doctors and, you know, so-called studies saying it was safe, even though the actual independent science was showing that there were carcinogenic effects in some instances of smoking.And so that third-party tactic is what the fossil fuel industry and its CEOs are using. They don’t think that people would believe them if they ran an ad saying, “Hey, I’m Charles Koch. Trust me, all this fossil fuel money that’s making me the 23rd richest person in the world — it’s great for everyone. The planet isn’t on fire, and we can solve everything.” You know, instead, what happens is they fund these groups that do bus tours and they lobby Congress, or they do all these influence campaigns. And the objective is to protect the industry basically at all costs.And there was a book that was written a couple of years ago about how in Koch world, both the for-profit part of Koch Industries—which is now known as Koch—and in their nonprofit empire, carbon was job one.Krugman: Right. And there’ve been some studies— I think by Oreskes and others—that demonstrated how among the alleged scientific papers that disputed the consensus about climate change, the percentage funded by the fossil fuel industry was basically 100. That this is an entirely manufactured thing by special interests. So you place a big emphasis on fossil fuels. Tobacco is kind of where the strategy begins. But fossil fuels are, in your view, at the root of this perversion of the U.S. system.Graves: Well, I think it’s a key component of it. Other than, I suppose, the war industry.Krugman: Right.Graves: Which is related. The fossil fuel industry is the most lucrative field of business in the world. And they’ve made so much money, you know, selling fossil fuels. And there’s a real intolerance for any limit. And in fact, when you look at a lot of the groups that have been funded in the US that are part of attacks on the EPA, attacks on the power of the Environmental Protection Agency to regulate carbon, when you trace those back, you can see money from the coal industry and coal barons. You see money from the natural gas—otherwise known as the methane gas—producers, the frackers and the compressing companies for those fracking for the gas and oil industries.And you can see within that what’s happened: a number of these big CEOs — for example, the largest seller of compressed gas compressors in the United States for these big fracking operations — they’re paid an enormous amount for running these companies. And then they create a nonprofit that then fuels groups like the Heritage Foundation, American Enterprise Institute, and these other entities that are at the forefront of trying to stop congressional efforts to regulate carbon or to mitigate climate change.Krugman: So, I mean, we’ve seen a lot of certainly favorable tax treatment for fossil fuels forever. But still, you know, I’ve been around for a while. I remember the 70s when, in response to the oil crises, we did get price controls and windfall profits taxes. They may not have been great policy, but it’s kind of unthinkable that we would do that now. What changed, do you think? Why did the U.S. system become so much more porous to this kind of influence?Graves: Well, I so appreciate your raising that, Paul, because the timing of that coincides with a memo that was written by a person who became a justice on the Supreme Court. It’s called the Powell memo. It was written by Lewis Powell to the Chamber of Commerce. And that was just months before Powell was nominated by Nixon to the Supreme Court. And in that memo, the Powell memo, he wrote that American businesses needed to play a greater role in American society. And I think this is a laughable assertion. He asserted in 1971 that no one had less influence on public policy in America than the American businessman. That wasn’t true then. It’s certainly not true now.And that memo helped spawn a new generation of investment in trying to capture these levers of power. And so demi-billionaires like Richard Mellon Scaife and others rose to that call to create this apparatus to oppose government regulation. For example, Scaife helped fund some of these early think tanks in the 1970s. But another key figure in that time was Charles Koch, when he had just inherited his father’s company in the late 1960s. He was very involved in these early right-wing movements. He personally, actively objected to those price controls. He started seeding groups in the Libertarian Party, an adjacent movement, before he ultimately tried to co-opt the Republican Party and move this into the mainstream of that Republican Party agenda, you know, with the help of Reagan, who had deeply antagonistic views toward regulation.When you look at that period, that’s when Charles Koch, as a young man, claimed that America under Nixon was basically socialist because we dared to have any price controls. And then, in response to the efforts of Congress and the White House to address the oil crisis and the challenges that America was facing in terms of the energy crisis and the like, Charles Koch actually opposed the creation of a Department of Energy for the United States of America. He objected to that. And so those are very early parts of this movement that most people don’t know happened. You know, it’s obviously before Google. It was a bit below the radar. But that helped seed decades now — the 80s, 90s, the 2000s into the present moment — where those initial investments really took hold.And I guess the key in some ways to their success is that I always describe Charles Koch as being the deepest, longest, most enduring funder of this effort to attack the regulation of carbon and the like. And he’s been at it now for, you know, going on 50, coming up on 60 years, really.Krugman: Right, so this is going back to the Powell memo in, like, 1970–71. So this is 55 years now. I guess what you’re saying is that the billionaires got smarter and learned to play the long game.Graves: Yes.Krugman: It’s the power of long-term thinking, except not on behalf of the human race.Graves: Yeah. It’s astonishing, because you can see there’s all these different assessments of progressive funding versus so-called conservative funding, and there has not been the type of investment in this infrastructure to push these fringe ideas into the mainstream on the left. It is just not how the funding works on the left. The right has billionaires and families of billionaires and children of children — proto-billionaires, you know, multi-multimillionaires back in the day — whose families have been at this for decades now. You can see it through the foundation work they’ve done, and how the different foundations have spawned other foundations.And so on the right you see a very deep investment in moving these fringe ideas into reality, into legally binding rules for us, including to the Supreme Court. And on the left — for example, on the Supreme Court, or in the middle to the left there — there was this effort to not capture the Supreme Court, to try to put people on the court who had a reputation for fairness, and not because they were going to be someone who was driving the law to the left. But the right has been really disciplined in this court-capture plan, along with its plan to capture these other levers of power.Krugman: Yeah. I think to some extent unions used to be the kind of long-term strategic players such as they were on the at least moderate left. But we all know what happened to unions. Although that’s another story.Graves: But can I add in there? Because part of what we saw was how Reagan came in with this hostility to unions, even though he’d led the Screen Actors Guild. He came in with this real effort to try to break the unions. And then that was met, ultimately, in the longer run, with big funding from these big foundations, including the Bradley Foundation, which had one of the biggest reserves in the country, and it was targeting unions to break unions, but also to break their political power, their political influence.But when I traced this back, this so-called “right to work” movement — which is not about the right to work, but the right to break unions in these states — what you can see in the historical record is one of the early funders of that effort was Fred Koch. Charles Koch’s father, in the 1950s, was one of the big backers of this long-term campaign to limit the power of unions, the power of people to organize in unions, and also to basically try to break their political power.Krugman: Wow. So that means these are sort of dynastic efforts. I haven’t really thought about that. But, you know, we talk about the institutions, but it’s actually also these sort of personalized dynasties, which is just amazing.Graves: Yes, so Dick Scaife and the Mellon fortune. It’s the Mellon Banking Corporation. Andrew Mellon was Treasury Secretary under Coolidge and Hoover, and ended up basically losing his cabinet seat due to a financial scandal. So that Mellon banking fortune became basically Richard Scaife’s fortune. That’s the origin of it.Krugman: Because back in the day, you know, pre-Citizens United, when you looked at right-wing think tanks and all of that, it turns out there was sort of Bradley or Mellon-Scaife money behind almost all of them. But now I think it’s a bigger pool.Graves: It is a bigger pool. We have more billionaires now, or more people in that class — that 0.000001.Krugman: Yeah, I think it’s four zeroes and a one. But I always forget.Graves: Yeah. And it’s interesting, because I used to occasionally talk to reporters about David Koch when he was alive, and they’d say, “Oh, but he’s given so much money to the theater or to cancer research,” but they’ve given less money, in some ways at the time, to political operations, although that’s now increased. And I would say it costs a lot more money to build a building than it does to actually buy policy, unfortunately, in America.And so what’s happened is we have this political class of super-elite, super-rich people who have extraordinary sums at their disposal. So, for example, one of the richest men in America and in the world is a guy named Jeffrey Yass. He got rich on TikTok and also on these super-fast trades on Wall Street. He’s the richest guy in Pennsylvania. When he drops $1 million, $10 million in a race — let’s just put that ballpark out — it’s a huge sum, but from the standpoint of a dollar per dollar, the ratio is the equivalent of an ordinary American buying a coffee and a bagel once a week. It’s just nothing to them.Krugman: I think it’s less true now, but still quite true, that given how much political decisions can influence the wealth of the wealthy, the amount that is spent to influence elections is actually still a pretty small number.Graves: Yes, it really is. I mean, when Elon Musk was dropping 100 million or 10 million a year in these different races, he has so much money. I think at one point I calculated how much he was making per minute, or how much, in theory, his net worth was per minute. And what he was dropping in the races was nothing. It was pocket change to him. Basically, it would be pocket change to an ordinary American. Their wealth is so vast. And so, interestingly, even though they’ve invested a lot of money — people like Musk and Koch — in our elections, they still, in essence, don’t over-invest. They could spend a lot more and still not have it make a dent into their holdings.Krugman: One thing I think most people really don’t have a sense of — even if you’ve heard a number, you don’t have a sense of how rich the rich are. You know, this was a time years ago when inequality was a lot lower. But I remember when I was still at MIT — so it’s a long time ago — but I don’t remember who we had. You know, faculty was rolled out for lunch with some rich guy, and the president of MIT whispered, “If only we could get his daily fluctuation.”Graves: Yeah, that’s how much money. And now it’s incredibly more so.Krugman: Yeah. Fossil fuels was really, really big. Still is, I suppose. But lately we’ve been seeing a lot from crypto and tech. What’s your sense of what they’ve achieved? I mean, they’ve spent an enormous amount of money and obviously bought a lot into this last election. But where are we on that?Graves: Well, I will say just briefly, one last note on the fossil fuel industry, there’s a great news story out in ProPublica this weekend about the money behind the effort to give immunity to the fossil fuel industry, to forbid liability, and have Congress do so and have the states try to help with that. And so that piece really details that spending, that includes some significant amount of spending by Leonard Leo, who is the guy who helped pack the US Supreme Court. And so that issue—the fossil fuel influence on policy, the effort to get them off the hook for the liability for the climate changes that are underway—that is an ongoing, active campaign by the industry, or by the industry’s proxies, by the groups that are advancing that agenda.But you’re right, now with the fossil fuel industry in terms of influence, it is being rivaled by, I guess the new rich in a way, in terms of the tech industry and the tech billionaires. And their influence was enormous in a way. Before this election, they had tremendous capacity, due to their wealth, like the Peter Thiels and others, to spend in our elections or to back certain candidates and get their person in a position of power.But now that you have this administration that is basically making deals with our public policy — which I personally would describe as bribery, but they have not been charged — where you have industry insiders who are getting benefits: the tech industry, the media industry, getting benefits from kissing up to Trump, from doing favorable coverage in essence for Trump, you have a corruption component, in my view, that is combining the effect of the wealth already. And you have the policy distortion. You have this additional component because Trump is so willing to basically bend policy to favor his friends or people who favor him.And then the crypto money, that’s the darkest of the dark money. I used to think that the dark money coming in around the election—the money spent by C-4s or their related C-3s—was dark money, but crypto is the darkest money. I mean, it is inherently concealed in terms of who the money’s going to and who holds the money. And we now have a president and his family that is involved in crypto and adjacent to crypto operations in a way where who knows how much money is coming in and from what sources, foreign or domestic? And crypto has also sought to basically influence politicians on a bipartisan basis, giving money to Senate candidates on both sides of the aisle in order to try to limit the regulation of that industry.Krugman: Yeah, I’ve always thought that we kind of underrated the influence, the importance of sheer actual personal corruption. It’s not just campaign finance, but it’s actually what you yourself get: a bonus for accommodating special interests. But it used to be that led to cushy jobs at think tanks. We used to talk about how if you lost an election, that’s okay. There’d be a Center for Fear and Loathing that would offer you a job. But now it’s actually millions of dollars in the new dark money that somehow flow to you personally. Or in the case of Trump, billions of dollars.One thing I learned from Rick Perlstein, one of my favorite historians of this whole thing, is that there’s another industry which has always played a large role in funding, which is basically the quack medicine industry. I mean, in some sense, that’s what’s going on with RFK Jr. We think of it as just this crazy guy. But actually, there’s a lot of money there.Graves: There’s an enormous amount of money there. This so-called MAHA movement —to “Make America Healthy Again”—has really taken advantage of the internet’s access to create these individual communities, where people are getting really selective science. And I use that term loosely. Dressed up as science. Again, it may be funded by industries that are benefiting from it. But you also just see the rise of this influencer culture in the US, where some of them are also paid by these companies to promote their products or promote their lifestyle. And it has become such an influential, distorting thing.I mean, the notion that we would have a rejection of vaccines and vaccinations for children in the aftermath of eradicating in the US diseases like measles, in the aftermath of a whole period, you know, 50, 60, 70 years, of having a really successful public health policy for vaccination to prevent these childhood diseases that can maim kids or blind them or, you know, basically disable them for life. And yet you can have this surprisingly large number—though it’s still a small percentage of the American population—embrace attacks on that science. And do so despite all of the weight of evidence of how successful these vaccines have been in promoting the health of the American people. It’s extraordinary that this is taking hold.But as you point out, it’s not just the marketplace of ideas. It’s a marketplace. And that marketplace is profiting from pushing quack remedies and profiting enormously from pushing remedies that don’t work. And we saw that in full scream during the pandemic, when quack treatments, which were not effective at all, were so widely embraced and promoted by some of the people profiting from them, and also by Donald Trump himself or his closest advisers.And one of the things I looked at at that time — ultimately there was a New York Times story about this — but I took a close look at how RFK Jr.’s wealth himself had increased over time, moving from his role in the Riverkeepers to his role of prominence in this anti-vaccine movement. And you could just see, as he took more and more aggressive positions against vaccines, how much more he himself was paid. I think in 2021 or 2022, he was making half a million dollars a year from the nonprofit group that he was leading, attacking vaccinations. So he was benefiting himself personally from those attacks.Krugman: You’ve sort of structured your book around John Roberts’ own biography and how that kind of parallels the history of the movement. So tell us about that a bit.Graves: Yeah. Thank you so much, Paul. It was a labor of love to write this book, because I really think that it’s hard to understand what’s happened to America without understanding what’s happened to the Supreme Court. The Supreme Court under John Roberts has exerted extraordinary power. And has asserted power in ways that the court has not previously done, including when John Roberts orchestrated the destruction of Section 4 and Section 5 of the Voting Rights Act. And he’s now on the precipice of doing the same to Section 2 of the Voting Rights Act in the Louisiana vs. Callais case that the court has heard and will be decided this summer.But what people don’t realize is that John Roberts cut his teeth on trying to block the extension of the Voting Rights Act, trying to block the repair of the Voting Rights Act after his mentor, Bill Rehnquist, helped destroy a significant component of that act, which was designed to prevent the dilution of Black votes.Krugman: Right.Graves: And so you have a person who was chosen for the Supreme Court not because they thought he would be fair, but because they thought he would be a ringer. And he spent his early days in the Reagan administration as a Reagan revolutionary at the top of the Justice Department, trying to block the renewal of the Voting Rights Act with the amendments to overturn a Supreme Court decision. He spent time at the White House counsel’s office for Reagan, trying to block civil rights enforcement. He has devoted his life to advancing this very far-right agenda.And he was someone who, when he was nominated, was not met with any of the howls of “No More Souters,” which was the sort of campaign mantra from the Federalist Society of not wasting a Supreme Court seat on a fair judge. And so after Roberts was confirmed, Bush nominated his counsel, a Republican lawyer named Harriet Miers, to the bench. Robert Bork and these other right-wing leaders screamed that this was a betrayal of their movement, to appoint a Republican lawyer and not a loyalist. And so her nomination was pulled down and Alito was swapped in, and again, “No More Souters” was not chanted at him.And so the Republicans were able to secure a court that is now operating like a lever of power, aiding Donald Trump, aiding the Republican Party at almost every turn. And that includes the counter-constitutional ruling John Roberts orchestrated in 2024, giving Donald Trump unprecedented immunity from criminal prosecution. And then he and his fellow Republican appointees married that decision with 24 rulings last year on the emergency docket, the shadow docket, basically telling Donald Trump he could go forward with extreme actions, extreme assertions of presidential power, that were contrary to the Constitution, statutes, regulations, but that he could proceed over the temporary restraining orders that lower court judges had issued. And so this court, in my view, is out of control. It’s in desperate need of reform. And John Roberts is helming this court that is on a path of destruction against our rights.Krugman: So, shadow docket. I didn’t know what that was until I heard you talk about it. So explain to people what that means.Graves: Yes. So what most people don’t know is that the Supreme Court has about 8,000 to 9,000 petitions every year, and it only takes about 60 cases. It chooses 60 cases. These are all matters of discretion. They’re not required to take any of these cases unless it’s a state versus state case. And so the court is taking fewer cases, and it’s basically creating a docket where one year it’s about destroying the separation of church and state, another year is destroying reproductive rights, another year it’s destroying regulation of industry and carbon.And then it has this emergency docket, which typically has been used for death penalty appeals. Someone claims at the last minute, “Please stop my execution,” and the court will issue a ruling, without full briefing, without oral argument, on an emergency basis. That emergency docket has been deployed by John Roberts and his fellow appointees as a shadow docket to basically change the law in America in significant ways over this past year in terms of policies on immigration policy, or allowing these mass firings to go on, allowing the gutting of funding for sciences and more. The court has allowed those things without having full briefings, without having a full opinion on it. They’ve just reversed the decisions of lower court judges.And it’s significant in many ways because—as Judge Michael Luttig has talked about—this is a huge lack of transparency, a way in which the court is operating outside the bounds. But also, it’s the case that in almost every one of those shadow docket cases — where, again, no oral argument, no real public discussion, no opinion written — the court has intervened and overturned lower court rulings that temporarily blocked Trump, after those lower courts made factual findings that people would suffer irreparable harm and that under the law they were likely to succeed. What the Roberts Court is saying is: “you’re not likely to succeed. We are basically pre-reversing those cases.”Krugman: So the contrast is that something like the birthright citizenship — where probably they won’t do the most horrible thing, but there are formal arguments — that’s all in the glare of publicity. But a lot of the things they’re empowering — the sort of pogroms against immigrants — are being done just sort of, “Oh, by the way, the Supreme Court has, without any visible deliberation, suddenly said that what Stephen Miller wants is okay, right?”Graves: Yes.Krugman: That that’s really quite horrifying. Gosh.So now let’s talk about the immunity issue. There’s been a lot of stuff in this since 2004 that is really horrifying. But the immunity for Trump is kind of the most glaring of them. And just tell us about that for a second.Graves: Yes. This case that was issued by John Roberts — it was a 6-to-3 decision right before the election in 2024, and it invented immunity from criminal prosecution for a president. That’s never been the law in America. Ever. Not since the beginning. And that’s why there was a reaction to that decision, in part to have the introduction of the No Kings Act, because that immunity decision basically made Donald Trump king-like in his powers, by saying that he and any future president could not be held accountable for any crimes they committed.When John Roberts wrote that opinion, he basically effectively pardoned Trump for the crimes he had committed. But he larded that opinion with additional assertions, trying to set the pardon power beyond any judicial or congressional review, asserting that there’s no limit on how a president can direct the Justice Department in its prosecutions, even though there have been longstanding limits in order to protect from the weaponization, the politicization, of the Justice Department to go after political enemies.And so you have a situation now where you have a president who can commit crimes—and has committed crimes, in my view, and in the view of Jack Smith—who can commit crimes under John Roberts’ opinion. Hopefully this will be ultimately repudiated. He can pardon his co-conspirators, which is what he did when he pardoned the January 6th people who were convicted. But in essence, he could pardon any of his cabinet members or others—people on the ground in Minneapolis, for example—if he wanted to. He could pardon people who were engaging in illegal activity at his behest in foreign policy, war crimes, or domestically. And that would be okay under John Roberts. That is the essence of the destruction of the rule of law. If a president can break the laws, and he can order people to break the laws, and he can then give them immunity or pardon them for doing so, basically no law can hold.And on top of all that, you know, it’s John Roberts who swears in Donald Trump on January 20th, 2025, where Donald Trump takes an oath to uphold the Constitution, to defend the Constitution. And yet John Roberts has just allowed Donald Trump to violate the Constitution in that immunity decision. A lot of people haven’t read the Constitution all the way through. I’m certain Donald Trump has never read more than maybe a sentence of it. But there are two duties in particular of the president in Article Two of the Constitution, and one is to uphold the Constitution. And nothing could be further from upholding the Constitution than breaking the law, than violating our criminal laws. And so John Roberts orchestrated this. It is a truly destructive decision that puts us all at risk.And I hope that the people will come together to reform this decision, to reject it along with embracing court reform, like I’ve been working on with my work partner Alex Aronson at Court Accountability, and with our allies, to put together a really bold package of reform for the next possible opportunity to reform this court. But also to restore our rights and repeal—in essence reject—this immunity decision, which is counter-constitutional. It’s an anathema.Krugman: So what would that mean? Hope for the best? Hope that we actually have a fair enough election in 2028 and a mass public revulsion against everything that’s been happening? How do we get out of this? Because the problem is a lot of these justices are still fairly young. So how do we get out of it?Graves: Well, there are a lot of reforms that we’ve supported. For example, term limits, but also some jurisdictional changes for the court. I personally have been looking into court expansion and intermediate appellate court changes to try to deal with this court’s excesses and the fact that this court needs to be unpacked. The term limits would, if they were applied immediately, have an effect on removing three of the justices.But I also think we need robust ethics reform, because the idea of taking secret gifts from billionaires, I mean, it’s outrageous. Or having a billionaire or a billionaire-funded group on the right funding a spouse, fueling a spouse’s income that feathers the nest of the justice. That’s outrageous and wrong. But there are so many other pieces that this court has dismantled, including the power to regulate carbon. That effort that the court has engaged in to try to kneecap the EPA [and rollback] voting rights, reproductive rights—there aree so many things where I think most of the American people really want changes. They want to get our rights back and expand them.And so I’m hopeful that we can put together and be part of a movement that makes those reforms not just possible, but that people perceive how essential they are. Or this court—the Roberts Court—will continue to just dismantle our rights.Krugman: Okay. Other than that, we’re doing great, right?Graves: But you know, here’s the thing, Paul. There are more people than ever that are supporting these reforms. There is a growing reform movement. It’s hard to see, given the way Donald Trump captures the headlines and the legitimate controversies over the war and over the Epstein files and more. But beneath that, when you look at the polling, what you see is that people understand that this court is not trustworthy, cannot be trusted, and that we need to reform the court. And they also, on issue after issue, reject this administration’s policies, almost across the board. And so I think that there is a real desire for us to take a different path. A better path.Krugman: That’s, I think, a hopeful note to end on.Thanks so much for talking with me today. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

TranscriptThis is America’s darkest hour. Hi, Paul Krugman with an update Tuesday morning. Earlier today, Donald Trump posted on Truth Social, A whole civilization will die tonight, never to be brought back again. Not going to be a problem if we ever do get the war crimes trial that all of this deserves. A statement of motive, intent is completely clear. I don’t need to say how vile it is. It is shocking, although at some level, if you didn’t see this as a real possibility, then you weren’t paying attention. Not much to say here except to talk about how those of us who are not Donald Trump should behave.First of all, any military commander given orders to start destroying civilian infrastructure in Iran should disobey that order, should say it, should not even quietly resign. This is a time to stand up and make it clear that this is totally unacceptable. This is a violation of everything that the military stands for. It’s a violation of everything that America stands for. Second, any member of the Trump administration: to continue in your position doing your job as Trump takes America on the course of becoming a criminal nation, a criminal terrorist nation, you cannot continue in good conscience.Particularly, if you play any role in making this happen, then you are a war criminal too. Then you ought to be brought up someday before an international tribunal. But even if you’re in a peripheral role, even just putting your head down and saying, well, I’m an assistant secretary at the agriculture department or something like that, that’s not good enough. This is not a regime that you can serve in good conscience. Republican politicians, any Republican, I mean, there are people already saying, “oh, you know, I don’t approve of destroying civilizations, but” — that “but” makes you an accessory to the crime, if you are failing to stand up against it.And I really don’t like this notion that only Democrats have agency. This is a very common thing. All of this is made possible by the lockstep slavish obedience of Republicans. Nonetheless, Democrats have a role here, too. And this is not a time to attack Trump’s war because it costs too much money or to attack it because it’s bad for energy markets or raises the price of groceries. I mean, it does do all of that. All of that is true. But we’re way past that point now. We’re at the point where you need to unambiguously condemn the immorality and criminality of what’s going on. No mincing of words. Damned if I know what’s going to happen. I mean, at some level, I think that the civilization that may be destroyed tonight is our own. I mean, are we civilized if we do this kind of thing? If America as a nation doesn’t stand up against this, what are we?So, God help us. Normal life will continue. It’s going to be a really weird thing to be out there, you know, grocery shopping and taking the subway and all of those things. But this is, in a way, the defining moment. The fate of the whole American idea is on the line.I have no idea how this ends. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

Donald Trump isn’t sounding like himself, and that’s terrifying. Hi, Paul Krugman here with a brief update on Saturday afternoon. Not my usual thing. No economics, no analytics, just I felt I needed to say something. On Wednesday, Trump gave a speech, which was... pretty depressing. He was low energy, listless, and seemed to be disconnected from reality, insisting that everything is going great in this war and everything is going great across the board. And in terms of the closure of the Strait of Hormuz, well, it’s somebody else’s problem. And the Strait may naturally open by itself, which didn’t sound like leadership. In some ways it sounded like Trump, always living in a fantasy world in which things are going his way. But if you thought about the outcome for the world, it seemed to be pointing towards the U.S. never admitting it openly, but implicitly basically giving up and leaving a stronger Iran, but with the Strait of Hormuz opening up — maybe with tolls collected by the regime in Iran, and just a diminished, weakened U.S., but better than some of the alternatives. Today Trump put up a Truth Social post, which said that if Iran doesn’t open up the Strait of Hormuz within 48 hours, “all hell will reign down on them.” That was how he put it. All hell will rain down. Misspelled rain, but OK. And then finished it up with glory be to God. GOD in caps. Wow. So first of all, this is a completely different picture suddenly. Aside from the Strait of Hormuz not being our problem to we will commit massive war crimes, presumably. That’s the only thing that makes sense here, unless they open it up, which is pretty bad. And also... I don’t think Trump has ever said “glory be to God.” That doesn’t sound like him. That sounds almost as if Pete Hegseth wrote this post, which maybe in some sense he did. The misspellings and all do look like Trump in his own hand, but it feels like this is the influence of our religious fanatic Secretary of War, or as people in the Pentagon apparently call him the Secretary of War Crimes. This is really bad. It’s hard to see what happens in 48 hours. It’s clear that Trump, for all his pretense of, “I’m always winning,” is aware of how completely he screwed things up, that he’s aware that he has basically led America into an epic strategic defeat. I don’t think he cares about that from the point of view of America, but he is realizing what this has done to him — that he will probably quite rapidly lose his grip on U.S., politics, and certainly to the extent that he cares about his legacy, it’s not going to be his wonderful ballroom. It’s going to be that he’s the man who single-handedly led America to one of its greatest defeats ever. But now what? It would be one thing if he just kind of slunk away into the night, which is what we would have hoped would happen, but instead it sounds like he’s unable to accept it and that he is going to try and do something truly awful in an attempt to somehow redeem himself and the situation. If we had a functioning democracy, this would be 25th Amendment time. This guy should not have any authority at all. Finger on the button, although I don’t think we’re talking about nukes, but he shouldn’t have any authority on matters of state violence when this is the kind of mood he’s in. Just in general, although religiosity is often expected of American leaders, saying glory be to God before you unleash violence, that is not what used to be the American way. Anyway, I’m scared. I wonder very much what the next few days will bring because this is looking like basically a president who is losing it and unfortunately losing it in a way that can really make the world a much worse place very fast.I guess enjoy the rest of your weekend. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

TranscriptSo the world’s greatest military power went to war against a fourth rate nation whose military budget would be rounding error in our defense spending. And it appears that we lost. Hi, Paul Krugman with a late night, well, evening update, which I don’t usually do, but I wanted to get this in before who knows what happens in the news tomorrow. It’s Tuesday. It’s the day that the stock market rallied enormously, that the futures price of oil dropped precipitously, all on the happy news that the United States, at least based on Trump’s Truth Social, appears to be surrendering. Trump put up a Truth Social post saying that, you know, we don’t need to open the Strait of Hormuz. If the Europeans think they need it, they should go ahead and do it. And it’s up to them. And this is pretty amazing. Of course, the idea that it only matters to the Europeans, that it doesn’t matter to us, is all wrong. And that will be a subject of a Substack post shortly. But it is pretty much a confession. Although it’s framed as we won, now let somebody else do the cleanup, the reality is it’s effectively a confession that, well, we lost. We can’t do this.How the hell did we manage to do this? I mean, the objective reality is that this was never going to be... Maybe it wasn’t even going to be doable. There were reasons why we didn’t go to war with Iran, particularly why we didn’t go to war in a way that basically became an existential threat for the regime so that they have no compunction about creating lots of damage because the alternative result is annihilation for them personally. But everybody who thought about it even for a couple of minutes, anyone who knew anything, particularly anyone who’d been paying attention to four years of war in Ukraine … we know something about what modern war looks like and about the inability of countries that have conventional superior forces to avoid major damage from drones and missiles. So this was completely, unbelievably stupid. How did we get there? Well, there was a very good article by Tobin Harshaw in Bloomberg, and mostly I’m just riffing off what he wrote, but I think that it deserves wider circulation. He resurrected a book I had forgotten about, a 1976 book by Norman Dixon called The Psychology of Military Incompetence. It was very British oriented, but the lessons apply; Dixon looked at the great military disasters of British history. You might think there were many reasons why really bad decisions were made, but he actually said there was a kind of consistent pattern. That what happened was that you had military leaders, or people making military decisions, who for the most part shared two things. First, they believed, they had this atavistic, anachronistic belief that warfare is all about muscles and not about minds. which hasn’t been true for a very long time. And second, he argued that they are just generally anti-intellectual, anti-education. So in some sense, it’s all about muscles and don’t give me all of these smarty-pants intellectuals who are telling me about why I’m doing it wrong. It’s an uncannily accurate portrait of Pete Hegseth, down to even seemingly minor details. Muscular Christianity is among the defining symptoms of the bad British military leaders that Dixon analyzed. So this is what happened.This is not about specific bad judgments. It’s not, in a way, about the specifics of the case. It is that we were led into war by people who exemplified in the classic way how really bad military decisions are made. And it all comes down to believing in brute force and toughness and muscles — muscles in the age of drone warfare! — and hate intellectuals, hate learning. What really gets me is that in a war where the deciding factor is having some intellectual understanding of what you’re doing, that a theocratic regime in Iran, which basically wants to bring back the Middle Ages, mostly got it right.And the world’s leading haven of scientific thought, or we were at least until the current administration, got it completely wrong. It’s humiliating. It’s awful. And, you know, we will all be paying the price for this incredible defeat for probably for the rest of our lives. Enjoy the evening. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

For more like this, check out my YouTube channelTranscriptHas the US military already been Kudlowized? Hi, I’m Paul Krugman. I’ll explain what I meant by that in a couple of minutes. It’s Friday morning. The war is continuing. A lot of what’s happened in the Iran war has sadly not come as a surprise. The fact that there was no planning, that there was no plan B in case a decapitation strike didn’t do the job, that Trump’s people didn’t seem to have gamed out at all what would happen if their fondest wishes did not come true — unfortunately, that’s par for the course. There was a famous book in the Vietnam years about how all that went wrong, about how all of the sort of brains trust around LBJ led us into that disaster, and it was called “The Best and the Brightest.” In this case, it’s obvious: Everybody knows that we’ve got the worst and the dumbest. So we knew that the thinking about strategy was going to be nil, that it was going to be all very ill-conceived. The surprise, and it’s an unfavorable surprise, is that the U.S. military has not been doing too well either. I mean, obviously, you know, they can blow up anything they want. There’s no question that the U.S. has unchallenged superiority in all of the conventional aspects of warfare. There’s no Iranian Air Force for, you know, there’s no Iranian Navy in any conventional sense. Unfortunately, it’s not that kind of war. The failure to have a prepared response to the modern world of drones and inferior powers which nonetheless have the ability to do a lot of damage, has been a bit of a shock.Now, admittedly, that is something that I, like I think a lot of people who are amateur followers of military affairs, was worried about watching developments in Ukraine. You couldn’t help but wonder whether the U.S. military, with its emphasis on overwhelming force, with its historic superiority in technology, was actually ready for this new world of kind of democratized ability to inflict damage. And there were some straws in the wind suggesting that we were not, that maybe just the historical record of overwhelming dominance had made the US military complacent. But it still comes as a shock to find that U.S. bases in the region appear to be sort of completely unprotected, unhardened, that the U.S. went into this thing sending, you know, multimillion-dollar interceptors to shoot down multithousand-dollar drones. It’s been really kind of shockingly overwhelmingly, I’m not sure incompetent, but unprepared. It’s just shocking how unready the world’s greatest military seems to have been for a war that was in many ways prefigured by what’s been happening in Ukraine for several years now. So how did that happen? I was motivated to do this video by a report in The New York Times about what Pete Hegseth has been doing to the military, about the passing over of promotions for officers who happen to be black or female. It’s just been this shocking sort of anti, reverse DEI, otherwise known as racism and misogyny. But in general, I think it’s pretty clear, not just that Hegseth doesn’t like women, doesn’t like non-whites, but also he doesn’t like smart people. He doesn’t like people who are competent at their jobs. He wants people who are into lethality and dumb shows of force, which is not a good thing in a 21st century military. But I had thought that this would take longer.And I’m wondering whether this is just Hegseth or whether this is a process that has been underway. And of course, it’s now accelerated drastically under current management. And so let me explain about Kudlowization. In places where I do know something, do know what I’m talking about, which is economic policy making, economic discussion, there has been a long-standing dumbing down on the right wing, a dumbing down of economic thinking, dumbing down of economic discourse. Which is a little odd because for an academic field, economics has a lot of conservative people, not extreme right-wingers, but kind of small government, low tax, deregulation. That kind of comes with the territory. It’s not that it’s necessarily right, but the simplified models that we use in economics do tend to point you that way. We like simplified models in which the market is always right, and in some ways the line of least resistance is to say that the models are right, the market is always right. So there are plenty of people who, at least by conventional, by historical standards, would be considered conservatives. And some of them have spent, over the course of my professional lifetime, have spent a lot of time trying to be part of the Republican policy apparatus, have sought appointments in Republican administrations. But more and more, and totally in recent decades, have been frozen out.It turns out that the modern Republican Party doesn’t want, say, Greg Mankiw. They don’t want moderately conservative, technically competent economists. They want people who have no idea what they’re doing. They want ideologues, not even ideologues, but loyalists, people who will say whatever it is they want, the party wants them to say. They want Larry Kudlow, Stephen Moore. They want the often wildly incompetent but reliable people who are reliable in part because they’re incompetent. Somebody who has a professional reputation, a professional skill set might be tempted to actually someday take a stand on principle, and that’s unacceptable. So we have this kind of real extreme, not just political extremism, but complete lack of ability to do the job, which is almost, in a sense, incompetence is a job requirement.And I’m starting to wonder if that hasn’t started to infect the military as well. Certainly the people that someone like Hegseth wants are people who believe in warrior ethos, who believe in lethality, who believe in muscles in an age when war is largely waged by guys staring at video screens. And it’s a technological war in which all of those things matter not at all. But anybody who is likely to think that is not this regime’s, this movement’s kind of guy. Now, what worries me, I mean, how much damage could they have done in just 14 months? Well, maybe quite a lot, but when I talked with Phillips O’Brien a while back, he said that this rot has been underway for a while, that there’s actually a kind of a MAGA-esque faction even within the professional officer corps.And we certainly seem to be seeing that. So it looks as if the worst and the dumbest are not just at the top of the political leadership. They’re not just on the diplomacy and strategic policymaking end, but even in the cutting edge of the military. And it’s terrifying. America as we knew it may just not exist, even in our military forces. On that happy thought, have a great day. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

The willingness of the Trump administration to let Iran keep selling oil shows that we’re not willing to endure pain in a war that it all about enduring pain.For more like this, see my YouTube channelTranscriptIf you want to understand how things are going in Iran and why it looks increasingly likely that the United States is going to lose this thing in every sense that matters, follow the oil money. Hi, Paul Krugman with another not very happy update Sunday afternoon. Yesterday, Donald Trump threatened Iran with basically a massive war crime, saying that if they don’t open the Strait of Hormuz by 48 hours from the time of the post, which would be tomorrow, that he will order attacks on Iranian power plants, on civilian infrastructure, which is, you know, it is a war crime, not something that has never been done, not something that the United States has never done, but not something that you kind of just openly announce — that we’re going to try and terrorize you with this bombing campaign. But at the same time, the United States is allowing Iran, and only Iran, to export oil, shipping it out through the Strait of Hormuz. The United States isn’t stopping other countries from doing it, but Iran is, and we are allowing them to grant safe passage only to ships that they approve going through that strait. Now that is wild. Sounds completely crazy. It’s not completely crazy, but what it is is it’s a demonstration of incredible weakness. Why would the United States allow Iranian oil to continue to be exported? Or shouldn’t we be trying to, you know, we’re at war with these people, and their revenue base depends basically on selling oil. So why are we allowing them to do that? It would be very easy as a matter of military force for the United States to just stop those oil exports. And the answer is that, well, the two million barrels a day or something like that that Iran is managing to export are two million barrels a day of world oil supply. And we’re in a world in which the total supply to the world market is down substantially. down something like 10 million barrels or more per day because of the closure of the straits to everybody but the Iranians. And the United States is afraid to worsen the shortage by stopping the Iranians from selling oil, presumably because the Trump administration is afraid of the political backlash from higher gas prices. It’s already frantic enough to threaten war crimes in order to try and get oil flowing and gas prices down. But they’re apparently frightened enough of gas prices that they’re willing to allow the enemy to keep making money selling oil in order to keep those prices somewhat lower than they would otherwise have been. That’s an admission, implicitly, of enormous weakness. It’s an admission that the Trump administration is not willing to accept sustained pain as part of this war. They’re willing to drop bombs and all of that, but they’re not willing to accept economic pain in the United States, even enough to shut off the revenue flow to the Iranian government. And this war is fundamentally about who can stand the pain. It’s the United States doing lots of damage to Iran, but the Iranian government seems to think it can handle that. And the Iranians trying to inflict enough pain through hurting the world’s supply of oil that the United States ceases and desists.And given the behavior, who would you bet on in this situation? So this is looking, I don’t want to say this, right? I mean, I do not want to see, obviously for domestic political reasons, I don’t want a Trump victory parade.But a world in which the United States loses this war is going to be really a very dangerous world for all of us. But I’m afraid that that’s the direction we’re heading.Have a nice rest of your weekend. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

More videos like this available on my YouTube channel.Also: Substack generates a transcript for these videos, available on the app and the web, but the button doesn’t show up in email. So here’s a cut-and-paste (not edited):TranscriptIs it time to bring back the 55 mile an hour speed limit? Not going to happen, but it’s actually would not be stupid right now. Hi, Paul Krugman. Update on Friday morning where the Strait of Hormuz is still closed, stuff is burning, futures markets are saying that the, you know, pretty sophisticated money thinks that oil prices are going to stay extremely high for a very long time. And we’re starting to hear some talk about things we could do to conserve oil, with the International Energy Agency actually calling for measures to conserve oil, including driving more slowly, working from home, using electric cookers, all things that would be doable. Let’s talk about what the case is, not because it’s going to happen, but because it kind of illustrates where we are right now. By the way, my coffee cup has never seemed more appropriate. I remember the 70s. I’ve been around way too long. And I remember the 55 mile an hour speed limit, which even inspired songs about how people hated it. “I can’t drive 55.” It inspired a lot of sectional tension. Bumper stickers in Texas saying, “drive 100 and freeze a Yankee.” And it inspired Jimmy Carter. who famously or infamously gave a speech from the White House wearing a thick sweater calling upon people to conserve energy and called for energy conservation as being something we should do and he called it the moral equivalent of war. He had really bad acronym advisors because that came out as MEOW but not stupid actually maybe politically stupid but economically not stupid.Where we are right now is that we have essentially a forcible shutoff of a large fraction of the world’s oil supply. Twenty percent of the world’s oil passed through the Strait of Hormuz before this war. Some of that can get out other ways. The Saudis have a pipeline to the Red Sea, which is good for now and until or unless the Houthis start firing missiles at oil tankers in another strait that leads from the Red Sea to the Indian Ocean. The Iranians are still exporting oil. They are letting their own tankers and tankers headed for China pass through, and the United States is not trying to stop them, at least at this point. But still, we’re still looking at something like a 10% reduction in the amount of oil available to the world market. And the trouble with oil demand in the short run, there’s lots of things you can do to burn less oil in the longer run. In the short run, really the only thing you can do is drive less.That’s pretty much... Now, the cooking, natural gas, is also a big issue, especially in Europe, so that’s where that would come in. But basically, oil is used primarily for transportation, and it takes time to switch to change your automotive fleet to more fuel-efficient vehicles. It takes time to just generally shift the way that you drive and the way that you work, but you could simply drive less. Why do that? Econ 101 says that if you want to conserve, and if you want to reduce the amount of something that is consumed, that raising the price is the cleanest, easiest way to do that. That is actually how it’s going to happen. This is all going to happen through high prices of gasoline and diesel and jet fuel. But there are two reasons why a public effort, a public campaign, maybe even rules to induce people to burn less stuff to drive less and so on would make sense. One is distributional. Rationing gasoline, rationing oil through price is a big hit to consumers and a big windfall profit to oil companies and also to oil exporting countries like Russia. And if you could do less of that, that would be, might not be maximize economic efficiency, but, you know, what matters is the welfare of the people that we’re trying to deal with. The second is that there are clear kind of collective action issues. If you were to try to drive 55 on our highways right now, it would be pretty menacing. I mean, there’s a stretch of road in New Jersey heading for the New York Thruway where the official speed limit is actually 55, although nobody does it. And on the rest, where it’s 65, and actually people drive 70 to 75, an individual driver trying to drive 55 would be creating havoc and would be at substantial risk themselves.And that’s the easier part. I mean, things like working from home, we see that’s very much a collective action issue. And if we could get people, you know, a renewed acceptance post-COVID for remote work, that would help. There’s all kinds of reasons why a conservation strategy would, as a short run measure to deal with this fuckup that we’ve created in the Persian Gulf. Makes a lot of sense. Not going to happen, not a chance it’s going to happen, certainly under current management in the United States. It’s all been about burn baby burn and drill baby drill and we’re going to have cheap gas and we’re going to be a power in the world, not through self-restraint, but through warrior ethos and all of that. So it would be an incredibly humiliating climbdown, for them to advocate conservation. But it is worth thinking about the fact that this could be an important part of the solution.I don’t know how this thing ends in the Persian Gulf. I think even if we got better people in charge, now they’ve created a really, it’s a quagmire, and I don’t know how this ends. But one way to mitigate it would be, in fact, to try to burn less gasoline.Not a chance. Take care. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

I don’t believe that it’s corruption, but it’s not a good look. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

Another month, another war — this one looking like a complete c*******k. I spoke again with my go-to military historian, who among other things has thoughts about shoes. Here’s a transcript:. . .TRANSCRIPT: Paul Krugman in Conversation with Phillips O’Brien(recorded 3/12/26)Paul Krugman: Paul Krugman here with another conversation with my favorite military historian/expert, Phillips O’Brien. We do this every time there’s a new war, which means I guess we’re gonna be having a lot of them at the rate we’ve been going.Phillips O’Brien: Yeah, I’ll see you when he attacks Cuba, right? That’s the next one. So we have Iran now, and then Cuba in a few weeks, I think.Krugman: I’m not sure we have the resources for Cuba, but yeah. So okay. We’re recording this a bit less than two weeks into this new war with Iran. There are a couple of specific areas I wanna talk about, but first, do you have anything to say that might be a useful starting point?O’Brien: I don’t think they know what they’re doing. And I don’t think that they had a plan. He basically did what megalomaniac leaders do. They underestimate their enemy and they think they will do this quickly. It’s what Putin did to Ukraine in 2022. “We will just march in, we’ll do what we want. We have this great military.” He was boasting about American military power, and I think he just thought this would be relatively straightforward. He liked to refer to the Venezuela model and I think he thought, ‘okay, what I’m gonna do is blow up the leadership, kill the leadership, and then I’ll get a new leadership that will be much more compliant and do what I want. I don’t wanna actually bring any kind of freedom or democracy to the Iranian people.’ Because, by the way, he’s talking about a leader for the next five to 10 years. So he is actually talking about putting another authoritarian in place. And he thought it would happen, a little bit harder than Venezuela it seems, but not much harder. And he completely underestimated what he was taking on. And what he’s done is caught himself without a strategic plan. They never thought through the second and third order effects, they were nowhere down wondering what would happen if the Strait of Hormuz was cut and they couldn’t get anything out of the Gulf. And I think they’re just making it up now as they go along.Krugman: Yeah. That’s what we’re all seeing. I wanna come back to that a bit, but, your specialty has been air power, sea power, and strategically how wars are fought that way. And in a way the United States came in with “the O’Brien Supremacy.” We have vastly more, in normal terms or in historic terms, complete air superiority. We have the Navy but actually, let’s talk first about air power. In some ways it seems more effective. It can do big things.O’Brien: Well, the United States and Israel can blow up anything they want in Iran. Or practically anything they want in Iran. They can’t get to the deep nuclear stuff, or at least they don’t. They’re not sure if they can get to it, but otherwise they could blow up any target on the ground they want to blow up and there’s nothing the Iranians can do about it. Their air defenses, from what we can tell, have mostly been neutralized.The issue with air power is, it’s great for blowing things up if you have air supremacy, but it’s not great for putting anything else in its place. And this is what they hadn’t worked out. They thought, ‘Okay, we’ll blow things up and something we want will come along and start ruling Iran in a way that we’d like.’ They also didn’t understand that Iran has air power. Not to defend itself, but to strike back. So they totally missed the Iranian capacity to strike back. And Iran has struck back with very cheap drones and very cheap sea drones from what we can tell. And so the Americans haven’t been able to take out Iran’s strike power coming back at them. And it’s why we’re left in this situation.The US and Israel can destroy anything they want in Iran. And that’s what they’re doing every night. But that doesn’t leave them in the ability to keep Iran from striking back. It doesn’t allow them to put anything else in the government’s place.Krugman: They can destroy anything they can find. I guess part of the issue is that there’s stuff you can’t find.O’Brien: This is what I was just saying in the article for The Atlantic. I know it’s only been over a year into Trump’s second term, but already I think we see signs of rot in American institutions. They spent months preparing for this, and on the first day they attacked a girl’s school on one of obviously the high priority targets. You would’ve thought they would’ve had the best intelligence possible. They had a long time to prepare this, but what they did is they committed a massive war crime. Because they didn’t have good intelligence, that alone should set alarm bells off. If you’re planning this intricate military campaign, you would think, at least on the opening strikes, you would have some idea of what you were attacking, but clearly they didn’t have an idea of what they were attacking and if that was the quality of intelligence that they had when it started, now that the Iranians are probably hiding more, spreading things out, trying to protect themselves, we don’t know the quality of the intelligence that they’re gonna have.They don’t seem to have gotten the second supreme leader. So they got the first one because they knew where he was. But since then, they’ve seemed to have had more trouble tracking down the Iranian leadership. So I think it’s a sign of rot that the Trump administration has brought to US institutions.Krugman: Yeah, I was really struck by the decapitation strike. That was an intelligence triumph—not the weapons that were there, but actually being able to find, basically, the entire leadership and wipe them out on the first day. That seemed to say that they had very good intelligence. And yet on the same day, they struck this girl’s school. And I don’t know how to reconcile that.O’Brien: Well, they had very good intelligence on one strike package, but they didn’t have the depth of intelligence throughout the system. A lot of good people have left the US government, a lot of good analysts, so they might have had enough ability to do the strike on the leadership with, by the way, the help of the Israelis. We assume Israelis played a big role in providing a lot of that intelligence, but they haven’t had the depth and they didn’t have the depth to protect those troops in Kuwait. They clearly left American soldiers in Kuwait, unprotected. And unable to fight to protect themselves from what they should have anticipated coming at them. So there’s just all these really worrying signs. The US military is still gonna win every battle it fights with the Iranians. That’s not the issue. They can win any battle. But what we don’t know is if they can maintain the high level of excellence to actually triumph in this war.Krugman: Just as a very casual observation, the Israeli IDF seems to be less degraded as a force. I don’t like at all what Israel has done. Gaza is a massive war crime. But the IDF seems to be functioning in a way that I’m not sure the US military is.O’Brien: No, I think the Israelis have maintained a higher level of military efficiency. What Israel has done, a very small country, arguably has the second most powerful air force in the world, or third most powerful air force in the world. We don’t know how the Chinese one would actually operate, but we could say that the best air power in the world is the US, China, and Israel probably among first rank. No one else would be in that category. And the Israelis also have great intelligence of what is happening in Iran. So that is absolutely key. On the other hand, the Israelis seem to also have a much harsher group of political objectives than the United States. Not that the United States’ objectives aren’t harsh, but the Israelis seem to be wanting to go for full regime change. So they’re helping the United States, but in some ways they’re also leading the United States down a road that the United States might not want to go down.Krugman: And it is striking that they don’t seem to be able to take out the drone sites, the missile sites. How is it that the Iranians are managing to keep these things hidden?O’Brien: Because they’re small, they’re really easy to launch. The US has been thinking in terms of taking out the air power of another country by taking out its major air bases where it keeps its expensive aircraft in actually relatively small numbers. A few hundred would be a very large air force for most people. And you can’t spread all these aircraft around everywhere because they need maintenance. So actually the ability of anyone to exercise traditional air power with fixed wing aircraft would have a relatively limited number of targets. With drones and missile launchers, they’re cheap, they’re unpiloted, you don’t need to build a lot of military support and you can spread ‘em around. So if you have them spread out, it’s very hard to find all of them.Remember the Iranians have been preparing for this since last summer, since they were first attacked in that campaign by the Israelis and the United States. So clearly they have been thinking about some kind of strategy of response since then, and it seems what they have done is dispersed a lot of these drones around the country in very small numbers, which is making it difficult for the US and Israel to track them all down.Krugman: That now is astonishing to me. I thought that they must have been doing that and I’m a pure amateur. But just watching the conflict in Ukraine, it was obvious that drones, cheap missiles were going to be major tools of this war. And that if you didn’t have a strategy for neutralizing those, you didn’t have a strategy. How is it that the US didn’t know that?O’Brien: I really think Trump believed he would’ve had a few days of air raids, decapitate the government, and that would be it. I just don’t think it entered their mind, and because no one stands up to him. Supposedly, there were some military warnings, people saying, ‘the Iranians might fight back and you have to have preparations in case they do. But he seemed to not take those on. And these are people who wear shoes that are too big for them to make him happy.That story about Marco Rubio, that picture reveals a great deal about where we are. I don’t know how he kept them on, but he did and he was humiliated, because Trump gave him those shoes. If that is the culture you create around you, you’re gonna make really bad decisions. You know what I thought? I actually thought, and I’m not saying Trump is Stalin but it’s very much the culture Stalin had around him where he humiliated everyone around him by making them look and be faintly ridiculous. That was actually something he did deliberately. And what happened, of course, is that all they would do is reinforce all his prejudices. And that’s why you end up with Stalin saying, “Oh, Hitler’s not gonna attack me in June, 1941. Never! Not gonna happen!” And everyone around him going, “Of course Joseph, of course they won’t do that.” And that’s where we are. We basically have a Stalin-like court around Trump and we see the decisions that such a court makes.Krugman: Now I’m trying to understand. I think we knew what conventional air power could do. What are the capabilities of the kind of stuff that the Iranians have left? In Ukraine there’s a kill zone, but there’s also a lot beyond that. So can you tell me about that?O’Brien: They have a very great geographical advantage. They control the coast of the Gulf to the north. That’s basically all Iran. So the Iranians are the north coast of the Gulf, and what they really have to attack to keep that closed is shipping. And ships are slow. They’re slow and big and not that difficult to hit with a drone and they can’t maneuver. They’re not gonna be able to maneuver out of the way. And these are civilian ships that don’t have any protective devices on them. No one seems to want to go in and protect those vessels. So actually the Iranians have a very easy job in that way, that the targets they’re going for are targets that really are not protected and as long as they can keep attacking those with a small number of drones, they don’t need a lot. As long as they can keep shutting down shipping, they are going to put massive pressure on the Trump administration.Oil prices are already up. They dipped a little bit when Trump acted like the war was almost over. They’re back up. We’ve seen real problems with nitrogen supplies and real trouble with helium supplies. And the irony is, the only country shipping out of the Gulf is Iran. Iranian shipments of oil are up, so Iran is sending everything it wants out of the Gulf and they’re sending oil directly to the Chinese. I think the Chinese are laughing at this, that they’re seeing the US unable to have its allies get their oil out.Krugman: Yeah. There were Chinese chartered ships going through the Strait of Hormuz broadcasting in English. “We are a Chinese ship carrying Iranian oil,” and they were transiting the strait. But just to enlarge this a bit, there’s a lot of talk about how the Strait of Hormuz is 33 kilometers wide at its narrowest point, but in some ways I think that, as I understand, it’s irrelevant. Essentially, the entire Persian Gulf or Arabian Gulf is easy drone range for the Iranians, right?O’Brien: Yeah. It’s a very narrow body of water considering the vital shipping that goes through it. Far more vital than I understood. I had no idea of the value of the nitrogen exports or the helium exports that went through. I had no idea. If someone had told me that 20% of the world’s fertilizer supplies came out of the Gulf or something like that, I would’ve had no idea. But considering what a narrow body of water it is and how long the Iranian coast is, Iran runs along the Gulf for hundreds and hundreds of miles. It just means the Iranians can really pick and choose their targets and the United States and Israel are gonna be left scrambling trying to find every little drone. It’s a real needle and haystack kind of situation.Krugman: Yeah. Again, Ukraine. There’s obviously tremendous intellectual crossover between these two wars and in Ukraine we talked about this sort of 40 kilometer wide kill zone, but that’s a kill zone for, like, tanks.O’Brien: Yep.Krugman: And the kill zone for oil tankers has gotta be basically....O’Brien: There is not a safe place in the whole Gulf for an oil tanker. I can’t believe there’d be any safe place. And by the way, the Americans are acknowledging that because the tankers have asked for American escorts and the United States won’t even send warships into the Gulf. The fact that the United States is rebuffing requests for escorts means that they don’t believe that they can keep US war ships safe in the Gulf right now. And that’s a pretty damning indictment. If you go to war and have not anticipated that you might need to protect your own warships in this vital body of water… It reveals a lot about the shoddy nature of the strategic planning we’re seeing.Krugman: I’m not even sure what an escort would do.O’Brien: An escort might essentially try to shoot down the drones with Gatling guns or different kinds of technologies that they would have. They could use Aegis or other very expensive systems. But you might try to just shoot down all the drones you can with the escorting ships.Krugman: As I understand it, the Ukrainians have developed some of these technologies since we keep on not giving them Patriot missiles. They’ve developed systems that shoot down drones that are substantially cheaper. The Ukrainians had actually offered to sell them to the United States and are now going to sell them to, like, Saudi Arabia. What exactly is the Ukrainians’ role in this?O’Brien: Well, the Ukrainians understand the cost and expense of the way this war goes. The issue that the United States has been faced with is these drones probably cost the Iranians $30,000 to make, some say 50, some say once you get to mass production, they’re even cheaper. But let’s say $30-40,000 for one of these Shahid type drones. The United States, if they shoot them down with a Patriot or a THAAD, is spending millions of dollars to take down a $30,000 drone. That’s an unsustainable kind of exchange. And plus, the United States stockpiles weren’t that great to begin with. The United States has fired more Patriots in the few days fighting the Iranians than they’ve given to Ukraine the entire war. That’s to give you a sense of the kind depth of fire.What the Ukrainians understood is they’re not gonna be able to rely on their expensive systems. They’ve been trying to keep their Patriots to defend themselves against the very expensive Russian missiles, the hypersonic missiles, the ballistic missiles—that’s what they keep their Patriots for. So they said we have to come up with a system that will protect ourselves against the cheaper drones. And so they’ve come up with anti-drone drones. That’s what these are, they’re basically smaller anti-drone drones, and they cost between $1000 and $5,000. So that actually is a very good cost balance ratio. The United States just didn’t have that. And American partners didn’t have them ‘cause they were relying often on American technology.So Trump will never say thank you, but as soon as they ended up in this situation and their air defense stock came under pressure, they turned to the Ukrainians. To the point, and this is actually something that I think should make people stop and think: Ukraine has provided the United States with more aid in 2026 than the United States has provided to Ukraine. United States provided no aid to Ukraine in 2026. Ukraine has provided military aid to the United States and to American allies in the Gulf. And people might think about that.Krugman: Yeah, there was almost none already in 2025. There’s this chart from the Kiel Ukraine Support Tracker that shows that US aid just disappeared already last year. And it’s all European aid at this point. And Ukraine’s helping us more than we’re helping the Ukrainians.So, as I know from your writings, air power has been tremendously effective in wars, but there’s a context to that. Let’s talk a little bit about what the US is trying to do now.O’Brien: Air power is changing. We used to think about air power from an American point of view, and I think the US Air Force probably still did going into this war. And air power was, first of all, shutting down the ability of the other side to attack you. So you would suppress enemy air defense and destroy the other side’s ability to strike back. And then once you did that, you would go and take out all the targets you wanted. So it was a phase process, but the first phase was to neutralize the other side’s air force. It might be now that you cannot do that. Then you cannot fully neutralize the other side’s air force and air power because the other side can produce quite cheap drones in large numbers. So until you actually have a good defensive system, you can’t do what would’ve been doing in the first step in (classic) American air power, which is to neutralize the other side’s air power, which is why in some ways both sides can still attack, and that is a change in air power.We’ve normally seen air power as a struggle for dominance. One side wins, and when one side wins, it can overwhelm the other side. But we are now in a situation where both sides can continue fighting and actually striking. I mean, my own view on this is that it’s gonna lead us down a very dark road. I wrote a little piece on it saying The future of war seems to be ranged fires and war crimes, because no one’s gonna be able to stop people from having some kind of ranged air capacity. And it will be very tempting to rely on war crimes to try and get your way; threats and that kind of coercive behavior. But it does seem to me that we will have a lot of long range fires and aggressive firing for this period of warfare.Krugman: Yeah, I found myself reading a little bit about Normandy in World War II and where the Germans had a terrible time just getting forces to the front. To go back to Ukraine, both sides are in that position now because of these ranged fires. Neither side has air superiority and both have air superiority in the sense that there’s this wide zone of death.O’Brien: In the second World War, you would think, “oh, the United States made so many aircraft.” The United States made, I think, 88,000 aircraft in 1944 at the absolute high point of production. For one year it was 80 or 90,000 aircraft. Ukraine’s gonna make 7 million drones this year.Krugman: I didn’t know it was that big.O’Brien: The number of systems that are being thrown in the air are so much larger. They’re not always that effective, but they don’t have to be. It’s gonna be impossible to shoot them all down now unless you have a revolution in the ability to do air defense. And so we are dealing with a world where air power is going to be everywhere and it’s going to be very hard to deal with.Krugman: And so how does all this compare with Venezuela, which was a limited operation?O’Brien: My view on Venezuela was, this is not regime change and it’s not bringing freedom to the Venezuelan people. It’s basically replacing one dictator with a compliant dictator. So it’s been great for Trump. It’s been absolutely brilliant for Trump and God knows where the money’s going and who’s getting kickbacks in these business deals. But he has a leader in Venezuela who is, I think, playing for time right now. And as she plays for time, she’s going to make sure that she doesn’t get him upset. I didn’t understand even the total venality of what he was doing. Everyone was saying, “Oh this is all Rubio trying to bring some freedom and openness to Venezuela.” That’s just nonsense.And I think in Iran the problem is, even that is much harder to do. It’s much farther away. The Iranians have a far more capable military. They’ve been preparing for this. And also, by the way, the Russians and the Chinese are going to help the Iranians. No one was gonna step in for Venezuela. But I don’t think the Russians or the Chinese are quite keen to see a pro-western, pro-US Iran. And they’re not going to go down without a fight. So far, the Russians have been helping the Iranians kill Americans. Quite clearly they’re helping them do that. And it will be interesting to find ou—if we ever find out later—what the Chinese have been doing, but I’m assuming they’ve been helping as well.Krugman: There was a comment by Adam Serwer, I think just a day or two ago, that Trump doesn’t understand people who act on principle, that the Venezuelan regime was just thugs. It was just a mafia. The Iranians are thugs, they’re horrible, they’re murderers but they actually also believe in something. They’re genuine religious fanatics and that actually seems to have completely caught Trump and his people off guard.O’Brien: Exactly. He just thought someone would play ball for him. Some second rate, second ranking leader would be brought in to take control. They’d install him and then they would start cutting deals. He has no idea what he’s doing, and that’s the scariest thing, that there’s just so many things they haven’t thought about because they assumed it would be easy. He’s got a very different kettle of fish in Iran than Venezuela, and he was a fool to think that they were similar cases.Krugman: I am surprised that the military didn’t manage to get through at least a sense of fear in Trump.O’Brien: You know, what did Trump do when he first came in? He had an excellent chairman of the Joint Chiefs, General Brown. They got rid of him for no other reason, probably because he was a black guy and he was appointed by Biden. And they went through and they’ve been purging officers. They’ve been getting rid of officers who they do not trust. And yeah, they’ve been doing things like cutting off Ivy League institutions from sending officers there. There is a strong intellectual chill in the US military now, and you get promoted, not because you’re good. You get promoted if you’re considered loyal to the regime. So it will be interesting to see, but I don’t think that the US military is capable now of pushing back because I don’t think the personnel who would do it are near the positions of power to try and have that influence.So I really think what we’re seeing is something that the Trump administration helped bring about by destroying independent thought in the US military. It’s why they’re sitting there now not knowing what the heck to do. If the generals did have courage, they’d go to Trump now and say, “This is a disaster.” But they don’t.Krugman: You must have more contact than me, but I’ve known some people in the military. I’ve given talks at West Point, even. This was back in the Obama years, but I was always struck by how smart, well-informed, almost intellectual the US military was. But no sign of that now. I guess you’re saying that it took only about 13 months to undo all of that.O’Brien: Sadly, there had been a growth of a MAGA officer corps from the first term.Krugman: I didn’t know that.O’Brien: There were a lot of pro-Trump officers. And I think they knew who some of them were from the first term. And there were a lot of military people who were backing Trump. And my guess is they are the ones now who have been freed by all this to bring their own ideologies to go higher. I don’t think under any other president we would’ve had an officer say, “This is a holy war where we’re going to crush the infidel,” and that’s what’s happened. That officers are feeling empowered to say that is really scary.Krugman: Oh boy. That worries me not just about the Iran war, but about domestic stuff.O’Brien: Yes. There are reports that the Iranians might be about to launch some kind of attack on the west coast, from a ship that has some drones in it. This is now a possibility. And I’m like, do you think Kash Patel’s FBI is up for the job of protecting against a counter-terrorist operation on US soil? I don’t. Kash Patel’s FBI is killing Americans.Krugman: We should also think about Tulsi Gabbard as our chief intelligence official. Good God. So we’re now in this stage of war where the attempt to, at one stroke change the regime has failed. Also one in which it’s clear that the air superiority ain’t what it used to be. How does this campaign unfold?O’Brien: I think the real question is shipping in the Gulf. That is the thing that will bring the crunch. If there was no shipping problem in the Gulf, they could keep pounding away for a few weeks and see if they could bring regime change by pounding away. But they cannot have a sustained shutoff of shipping in the Gulf. It just cannot happen. Already oil prices have gone up by 50% and that was even after they thought this might not be a long conflict. If shipping actually stops in the gulf. It’s going to have massive economic ramifications. So my guess is that they are stuck. This is the rock in the hard place, right? They either have to, in some ways, accept they’ve lost and say to the Iranians, “we’re gonna back down now. You just behave and let shipping through.” Or they have to send ground troops into southern Iran to clear out a buffer zone and allow the shipping to go through. Those seem to be the only other options. They have to get the shipping through. And they’re gonna have to do it relatively soon. So it’s either back down or ground troops.Krugman: I can’t imagine we have that many ground troops.O’Brien: We certainly don’t have that many in the theater, I think. They built up air power and sea power. They didn’t build up ground power from what we can tell. So they’d also have to have really good intelligence to know where they would put those ground troops ashore. I assume they’d need a port to bring in sustainment, to bring in supplies. It’s a big operation if they’re gonna send in ground troops. But if they just rely on air power, they’re going to really have to hope they have such good intelligence that they’ll be able to hit every Iranian drone before it takes off to hit a tanker, otherwise the tankers aren’t gonna go. They’re simply not going to head through the Gulf. Trump urged them to head through the Gulf a few days ago. And what happened is a lot of them were hit by drones. So I just don’t see it working in the present way.Krugman: I’m wondering about things like helium. I had not even thought about that. But helium is really critical for the production of I guess semiconductors, right?O’Brien: Yeah, absolutely. I guess a lot of it goes to Taiwan. And if that trade dries up, there’ll be a helium rush around the world. Everyone will be trying to get helium. The price will double, and that means the price of electronics and computers will go up enormously. Everything’s going to go up if this goes on.Krugman: We’re already having this massive crunch with semiconductor memory prices skyrocketing because of the data centers and AI and all that. But I was thinking, I actually didn’t know at all about the shipping of helium. One of those things you never thought you’d have to think about. But there are other ways out of the Gulf. There’s even a pipeline that gets you out to the Red Sea, although that ain’t great either. But I was wondering whether maybe you could start somehow or other trucking helium out to the Mediterranean.O’Brien: I have no idea. I had no idea. The Trump administration never had an idea, right? They simply had not worked this out.Krugman: So you’re basically saying, the one scenario has been basically, “Let’s destroy Iran, wipe out their power plants, their water systems, basically…”O’Brien: That’s a war crime too, by the way.Krugman: That is a war crime. At least the Israelis have definitely committed war crimes on that front and I’m afraid that the US may be doing it too. But the idea that this would be a sustained thing, something like what the Russians have been trying to do to Ukraine, trying to knock out the power systems. But you don’t think that we have time for that.O’Brien: I think the Republicans face Armageddon in 2026. The longer this goes on, the worse it is for the Republicans. And it’s already March. They’re not that far away from the election. We’re only eight months away from the election. So I can’t see it going on, say, over the summer. Then you’re into the campaigning season and this is already the most unpopular military intervention in US history. No intervention has started with such a low base and all the independents are against it. Basically, Republicans are for it, and Democrats and independents are very strongly opposed to it. So I personally think politically the Republicans are really in a bind here. If Trump had another year, if this was his first year in office, maybe he could continue it for longer, but it’ll be hard politically to keep it up. Now, maybe he doesn’t care and maybe he doesn’t plan to have free elections. But these are issues that they’re gonna face if they’re gonna go in and really try to clear out Southern Iran to allow the shipping through. But it’s not gonna be quick.Krugman: One of the things I’ve been wondering, and again, this is not original, but it’s not clear that the Iranians would agree to a quick ending, even if the United States basically admits defeat.O’Brien: That is the real wild card. On the whole, you would think Iran would like some time to consolidate its rule after getting all this bombing. But of course they now have a lot of cards. The Iranians have real cards to play over everyone else in the region by dominating shipping in this way. And so they might demand a lot to stop fighting. If Trump decides to throw in the towel, which he might, I think there’s a chance this is over relatively soon, because Trump just simply can’t sustain it politically. The Iranians might ask for a lot. In fact, they’ll come out of this in a better situation. They’ll make no more concessions on their nuclear program. Why would they? And they’ll demand the end of sanctions. Why wouldn’t they? Trump really needs to get out and get out soon. The Iranians are in a very powerful position.Krugman: And there’s even the concern that the Iranians may want to see a lot of suffering, just independent of what the United States offers. They just might want to make the point that they can inflict massive damage, and the only way to make that absolutely clear is by actually inflicting massive damage.O’Brien: Yep. And they also will want to preserve their leader. That is one thing. Having blown up one leadership, they probably don’t wanna lose another, one assumes. I’m not an Iranian expert, so what the heck do I know? Whenever I’ve tried to put my own rationality in a leader’s mind, it’s always wrong. I thought Putin would never invade Ukraine in 2022. That’s such a disastrous decision. Of course, then they go ahead and do it. So I have no idea what the Iranians are going to want. But certainly, objectively, they would be in a very strong position if Trump needs to get out now.Krugman: Okay. So basically you think the sustained war crime campaign is just untenable from the US point of view. And so then this question of how does an exit happen?O’Brien: Well, remember what he did last summer. He bombed Iran once, decided it was over, then ordered the Israelis to turn around. So he can actually do something like that. That’s the way he behaves. He doesn’t care about other countries really. And therefore, if he decides he’s gotta get out to save himself, he’ll get out. So there’s some talk he’s gonna say to the Europeans, “You clean up the Gulf, I’m outta there. I made the mess and you’ll be the janitors.” And that might be where we are.So if he decides to cut and run, he’ll cut and run. That I think is clear. He’ll just get out, but he’ll leave a mess behind. But, he is weakening the United States. This might be one of those moments as a marker in American decline. Making the United States weak, making the United States seem or be less powerful than it was. We could be seeing quite an important historical moment here. The Chinese are laughing.Krugman: Yeah. And just at the moment when we really need allies. And so in other news we just launched section 301 investigations against everybody. It’s trade sanctions against all our erstwhile allies. It’s really scary. But let’s go back to Ukraine for a few minutes here. What is happening in the Russia-Ukraine war?O’Brien: What is interesting is that Russian advances basically haven’t stopped, but the Russians are taking less and less, and for a while the Ukrainians took more than the Russians. I think the Ukrainians also are not taking a lot now, but the analytical community was talking about how Ukraine is going to have this massive manpower crisis, and collapse throughout 2025. “They needed more men at the front. They’ll have to draft all these young kids.” They’re really quiet on that now. I haven’t heard a lot of talk about the Ukrainian need to draft everyone and send them to the front. The frontline is what the frontline is now. It is the kill zone. And the Ukrainians can make some advances when they have communications help, so actually the Starlink cut from what we can tell helped, but there was more than that.But the Russians can only make advances when they sacrifice large numbers of soldiers. And the reality, from what I’m hearing, and this is anecdotal, is that the quality of the soldiers the Russians have is going down. You have to be a pretty odd duck to join the Russian military. If you’re gonna join the Russian military, you are having a bit of a death wish. So we are left now with a land war which probably won’t change a lot for the next few months and it will be this ranged war that we see. The Russian winter campaign did a lot of damage to Ukraine, but the Ukrainians have made it through. The weather will get better. It is getting better. It’s already warmer.Clearly, Trump helped Putin launch that massive assault by saying, “Oh, Putin’s gonna have a ceasefire.” Remember that? That actually seemed to be a coordinated action where Trump helped Putin go for the big enchilada, and the Russians threw everything into that massive two days of attacks in a short period of time to try and drive the Ukrainians out of the war, deprive them of power. That didn’t work. It was pretty horrible. There were a lot of cold and dying people, but the Ukrainians are making it through.I think the question is, what happens now in the spring-summer in the ranged war? Ukrainians’ systems are getting better. They’re getting more effective. They still don’t get the big Western systems they’d like, like the German Iris-T. I think the Russians are what the Russians are. They’re going to keep pounding away at infrastructure. So, I don’t wanna say it’s swinging towards Ukraine, but it’s actually better for Ukraine now than it was a while ago.Now Trump has come to Putin’s aid by attacking Iran and driving up the oil prices. Russia’s making an extra $150 million a day now because of what’s happening in the Gulf. I think the Russian economy would’ve had real problems in terms of generating income over the summer, but now they get help with that. So I think we’re still in a bit of a stalemate.Krugman: One other striking thing is that—although the US is a net exporter of oil—the US, if you take a national accounting standpoint, is a little bit richer because of oil prices, but the US government doesn’t capture any of that. It’s not there. There is no “we.” There is no United States. There’s only oil companies and there’s everybody else. And in Russia, Putin captures a lot of the extra revenue. So it’s actually a weird thing where this benefits Putin but not the United States. And in a way, the Russians have already tried using the dark side of the force against Ukraine, and that’s the US-Israeli approach to Iran now. “Let’s just knock out the infrastructure.” But it didn’t work. I don’t think they have freezing cold winters in Tehran, but anyway, we’ve certainly done incredible damage. We’ve all seen the photos of the poisonous black smoke covering it. But I don’t think there’s ever been a case where a terror bombing campaign really worked.O’Brien: No. And a city like Tehran has very tenuous water supplies. If the US and Israel were to go against that, that would create a famine of really quite extraordinary proportions, we could compare it to a drought of extraordinary proportions. But the thing about the Iranian people is they don’t seem to be at all convinced Trump wants to help them. Trump said, “Rise up and I will back you.” And in neither case did he back them. And they understand that. I think what they’re hearing is that he wants to put in place someone from the old regime.So the Americans didn’t try to actually work with the Iranian people. They didn’t seem to work with any of the opposition to try and overthrow the regime. So the Iranian people for now just seem to be keeping their heads down. Again, I’m not an Iranian expert, but we don’t see signs of an immediate uprising to go along with these US and Israeli air attacks. That does not seem to be happening. And that’s probably because of what Trump has done and how he’s shown them what he stands for.Krugman: Well, I’m actually a little personally worried—not that I’m gonna be killed by an Iranian drone, but I have plans. I’m supposed to be doing various stuff in Europe in the spring and now, is there going to be jet fuel supplies? How much of the world economy is gonna be really disrupted by this? And I guess you’re telling me that this goes on until, not only Trump cries uncle, but he cries uncle convincingly enough to get the Iranians to go along.O’Brien: Yeah, again, it might happen soon because I think there must be huge pressure on him now to get out.Krugman: I’ve never been the kind of person who is constantly checking the markets, but I’m just looking at the price of Brent Crude, which is $101 as we speak.O’Brien: All right. Now it’s over a hundred again. It was down in the eighties when Trump said the war would be short. And now the markets are figuring out it’s not going to be short. But that’s going to put big pressure on him to end this soon. How much is oil now in America for a gallon? If you go fill up your car—Krugman: The national average was like $3.65 or something, as of yesterday, and rising. And apparently the real thing is diesel. Diesel has gone up more than a dollar a gallon. And there’s a lot of red-hatted truck drivers who are very unhappy right now.O’Brien: Yep.Krugman: I’d say let’s have another conversation, but I’m afraid we only have conversations when terrible things happen. But thanks for the rather grim update.O’Brien: You know, none of this makes sense to me, Paul. None of it makes sense. What the United States is doing, what it’s become, the lack of professionalism in the US government. It just seems like a farce.Krugman: I spent a year in the US government more than 40 years ago. It was the Reagan administration. I was just at the sub-political level but I was shocked at the level of ignorance and incoherence that I saw in 1983. But people said, “Oh, this is just the Reagan administration, this won’t happen again.” And these guys make the Reagan administration look like consummate professionals.O’Brien: Oh my God, I can’t imagine. The picture of the shoes did it for me. Just look at this group of clowns. They’re clowns performing for a ringmaster. Supposedly Trump would just guess their shoe sizes. And if he guessed the wrong size, they didn’t have enough courage to actually get a pair of shoes that fit. They’re wearing shoes because Trump guessed the wrong size. That is a sign of mental illness, I think.Krugman: Yeah. Brings new meaning to the cliché: “If the shoe fits, wear it.”So on that note—God help us all. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe