For all my interviews and more, <a target="_blank" href="https://www.youtube.com/@PKrugman">subscribe on YouTube</a>.Note: After I recorded this it was reported that Trump officials are threatening to demolish the Kennedy Center if it can’t be renovated to Trump’s taste (and presumably with his name added). Matches my argument exactly.Der Untergang naht.Pardon my German pronunciation. I’m going to take a break today from wonky economic analysis and talk about, well, Donald Trump, but in a slightly different way from what I think most people are saying. Not positive, obviously. Just before recording this, I saw that Trump wants to rename Lake Ontario Lake America. Which is silly, would be funny, except that this guy is the President of the United States. And it’s really kind of troublesome that someone in that position is that out of it, that petty, disconnected from reality. And look, it’s not news to anybody that Trump is ego-driven, disconnected from reality, and at the same time, somehow commands a level of deference and obedience from the entire machinery of the federal government that no president has ever had before. So this is really quite serious. What I don’t think people are fully aware of is just how bad it can get, given that Trump is so obviously dissociating, decompensating, that he’s not all there. Obviously, he was already a very problematic personality, which was doing a great deal of damage to the United States. I don’t think even now people fully appreciate the amount of damage that has been done. Even before the Iran War, Trump’s provocations, insults, his trade wars, really destroyed the world’s trust in America.America became a country that could not be trusted to honor agreements. It was a country that constantly tried to bully other countries. Our word was worth nothing. Our sanity was not to be taken for granted. And then, of course, along comes Iran, where in addition to showing that we’re not to be trusted, that we’re not going to be relied upon., we also showed that we were far weaker than people imagined. If there’s one thing people thought it was, well, America has a powerful military. It turns out, well, not as powerful and not nearly as competent as people thought. How much of that is the result of Trump and Hegseth degrading it and how much of it was there to begin with is an interesting question. But anyway, at this point, we are not loved, we are not respected, and we aren’t even feared. And we’re not getting that back. Even if Trump is succeeded by someone decent —God help us if he isn’t— but even if we have a more or less rational, well-intentioned government that follows, the world now knows that we are capable of putting someone like Trump in a position of unprecedented, almost absolute power and that it can happen again. And the world also knows that we’re just not as fearsome as we seem to be. That we can be defied much more successfully even by smallish countries than anyone really imagined. And we’re not getting that back. I anxiously wait for the days when we’re no longer a Trump-ruled country, but this is my country, and what will be left of us, what will be left of our role in the world, even once he’s gone? Okay, the title I gave, the way that I opened this talk was Der Untergang, which is the German title of the movie Downfall, about the last days of Adolf Hitler. I hope that nobody is going to complain about my using the German, right? We’re long past the point where it’s considered unthinkable and incredibly rude to make Nazi parallels. There’s a lot of people in this administration or close to this administration who are effectively Nazis, in some cases explicitly Nazis. America is not yet Germany under Hitler. But the reason we don’t have a functioning Gestapo in this country is not for lack of desire to have one. It’s because these people, at least so far, don’t have the juice. So all of the stuff, all of the parallels seem appropriate.And the parallels are there. I mean, the parallels are there even in seemingly small things. Hitler was obsessed with building a gigantic gaudy ballroom. So there’s just a lot of parallels in there. Now the main message of the movie Der Untergang is that it’s about Hitler in his final days who knew that he was losing. He knew that defeat was looming. He knew that his power was collapsing. And his reaction was, among other things, to take it out on his own country. Hitler never accepted that he had failed Germany. He felt that Germany had failed him. And so he had a plan, often called the Nero Decree, which was to destroy as much as possible of Germany’s infrastructure. Supposedly to deny it to the victorious allies, but in large part to punish Germany. Well, Trump knows. He may deny it, he may have his moments when he actually believes that the polls are all fake and all of that, but in many ways he is behaving like somebody who knows that his days of supreme power are about to end. He, of course, is not going to accept that it’s his fault. It’s the fault, obviously, of the Democrats, who are all communists. It’s the fault of the Republicans, who didn’t live up to his leadership. The fault of everybody but him. What does he do in the position of losing? Probably not committing suicide in the Fuhrerbunker, but still in the position of losing all of his power. Well, what you do in that position, if you are somebody like Trump, who is an empty vessel: there’s nothing in there, the only pleasure he appears to take in life comes from dominating other people. Well, one thing you do is you try to stick your name everywhere, or leave your imprint everywhere. So Trump, according to reporting by Swan and Haberman, spends most of his time thinking about his construction projects and trying to leave his mark on everything in Washington. What I don’t think we’re fully appreciating even about those projects is that there isn’t a whole lot of actual construction. There’s a lot of starting of stuff, but so far it’s been mostly destruction, mostly tearing stuff down. We don’t have a triumphal arch, but we have a hole where the ballroom is supposed to be. We have just a lot of damage having been done to our nation’s capital and to the iconic structures that were supposed to define, symbolize who we are as a country. The scale of the destruction is really quite amazing. So I’m not going to try fancy video editing here. I’m just going to show you a picture of what the environs of the White House look like right now. There you go. That bare area is the South Lawn, ripped up because of Trump’s cage match. You can see in the corner there the hole in the ground, which is where the east wing of the White House used to be. Basically, Trump has left, so far, wreckage in his wake. Even the things which have not involved tearing stuff down, the gilding of statues, the horrific redecoration of the White House, is surpassingly ugly. That’s partly because Trump has terrible taste, but it’s also, I think, a clear sign of aggression. He’s saying, oh yeah, you’re going to give me a 33% approval rating? Well, I’m going to make the nation’s capital as ugly as I can in this little time as I possibly can. Now, this is all superficial. This is stuff that can and will be repaired. It’ll cost a lot of money, but OK. So we’ll rebuild the White House. We’ll reseed the South Lawn. We’ll strip the gilding off the statues. We’ll make the White House a dignified place again. But how much more will be coming? When we talk about Hitler’s last days, as I said, one of his last attempted acts was what’s called the Nero Decree, which was an attempt to destroy as much of Germany’s infrastructure as possible, supposedly to deny it to the victorious allies. But clearly, and even there’s some evidence that he actually he clearly thought this as a way of punishing the German people for failing him.Now, historiography is a little more complicated than that, as it usually is, but that’s clearly the gist of it. That Hitler’s final acts were to basically try to bring everyone else down with him. Do you really want to say that that’s not what’s going to happen with Trump? Assuming that he loses much, if not all, of his power to shape events this November, and of course we’re all worried about how he may try to disrupt or overturn the election, but assuming he doesn’t manage to do that, he will find himself much diminished. How much damage will he do basically taking revenge on America?Because always you want to bear in mind that Trump hates America. He hates the values on which America was built. He hates democracy. He hates rule of law. He hates all of the things that are what we’re supposed to be about as a nation.But increasingly it looks as if he just plain hates this country because it doesn’t love him. How much damage will he do? How much damage can he do? I don’t want to make a specific prediction, but I’m worried. And don’t say that he won’t do that or he can’t do that. Those have been famous last words again and again over the past decade. So this is going to be even worse, even uglier, I think than most people imagine. Have a great rest of your day. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

For all my interviews and more, subscribe on YouTube. Note: After I recorded this it was reported that Trump officials are threatening to demolish the Kennedy Center if it can’t be renovated to Trump’s taste (and presumably with his name added). Matches my argument exactly. Der Untergang naht. Pardon my German pronunciation. I’m going to take a break today from wonky economic analysis and talk about, well, Donald Trump, but in a slightly different way from what I think most people are saying. Not positive, obviously. Just before recording this, I saw that Trump wants to rename Lake Ontario Lake America. Which is silly, would be funny, except that this guy is the President of the United States. And it’s really kind of troublesome that someone in that position is that out of it, that petty, disconnected from reality. And look, it’s not news to anybody that Trump is ego-driven, disconnected from reality, and at the same time, somehow commands a level of deference and obedience from the entire machinery of the federal government that no president has ever had before. So this is really quite serious. What I don’t think people are fully aware of is just how bad it can get, given that Trump is so obviously dissociating, decompensating, that he’s not all there. Obviously, he was already a very problematic personality, which was doing a great deal of damage to the United States. I don’t think even now people fully appreciate the amount of damage that has been done. Even before the Iran War, Trump’s provocations, insults, his trade wars, really destroyed the world’s trust in America. America became a country that could not be trusted to honor agreements. It was a country that constantly tried to bully other countries. Our word was worth nothing. Our sanity was not to be taken for granted. And then, of course, along comes Iran, where in addition to showing that we’re not to be trusted, that we’re not going to be relied upon., we also showed that we were far weaker than people imagined. If there’s one thing people thought it was, well, America has a powerful military. It turns out, well, not as powerful and not nearly as competent as people thought. How much of that is the result of Trump and Hegseth degrading it and how much of it was there to begin with is an interesting question. But anyway, at this point, we are not loved, we are not respected, and we aren’t even feared. And we’re not getting that back. Even if Trump is succeeded by someone decent —God help us if he isn’t— but even if we have a more or less rational, well-intentioned government that follows, the world now knows that we are capable of putting someone like Trump in a position of unprecedented, almost absolute power and that it can happen again. And the world also knows that we’re just not as fearsome as we seem to be. That we can be defied much more successfully even by smallish countries than anyone really imagined. And we’re not getting that back. I anxiously wait for the days when we’re no longer a Trump-ruled country, but this is my country, and what will be left of us, what will be left of our role in the world, even once he’s gone? Okay, the title I gave, the way that I opened this talk was Der Untergang, which is the German title of the movie Downfall, about the last days of Adolf Hitler. I hope that nobody is going to complain about my using the German, right? We’re long past the point where it’s considered unthinkable and incredibly rude to make Nazi parallels. There’s a lot of people in this administration or close to this administration who are effectively Nazis, in some cases explicitly Nazis. America is not yet Germany under Hitler. But the reason we don’t have a functioning Gestapo in this country is not for lack of desire to have one. It’s because these people, at least so far, don’t have the juice. So all of the stuff, all of the parallels seem appropriate. And the parallels are there. I mean, the parallels are there even in seemingly small things. Hitler was obsessed with building a gigantic gaudy ballroom. So there’s just a lot of parallels in there. Now the main message of the movie Der Untergang is that it’s about Hitler in his final days who knew that he was losing. He knew that defeat was looming. He knew that his power was collapsing. And his reaction was, among other things, to take it out on his own country. Hitler never accepted that he had failed Germany. He felt that Germany had failed him. And so he had a plan, often called the Nero Decree, which was to destroy as much as possible of Germany’s infrastructure. Supposedly to deny it to the victorious allies, but in large part to punish Germany. Well, Trump knows. He may deny it, he may have his moments when he actually believes that the polls are all fake and all of that, but in many ways he is behaving like somebody who knows that his days of supreme power are about to end. He, of course, is not going to accept that it’s his fault. It’s the fault, obviously, of the Democrats, who are all communists. It’s the fault of the Republicans, who didn’t live up to his leadership. The fault of everybody but him. What does he do in the position of losing? Probably not committing suicide in the Fuhrerbunker, but still in the position of losing all of his power. Well, what you do in that position, if you are somebody like Trump, who is an empty vessel: there’s nothing in there, the only pleasure he appears to take in life comes from dominating other people. Well, one thing you do is you try to stick your name everywhere, or leave your imprint everywhere. So Trump, according to reporting by Swan and Haberman, spends most of his time thinking about his construction projects and trying to leave his mark on everything in Washington. What I don’t think we’re fully appreciating even about those projects is that there isn’t a whole lot of actual construction. There’s a lot of starting of stuff, but so far it’s been mostly destruction, mostly tearing stuff down. We don’t have a triumphal arch, but we have a hole where the ballroom is supposed to be. We have just a lot of damage having been done to our nation’s capital and to the iconic structures that were supposed to define, symbolize who we are as a country. The scale of the destruction is really quite amazing. So I’m not going to try fancy video editing here. I’m just going to show you a picture of what the environs of the White House look like right now. There you go. That bare area is the South Lawn, ripped up because of Trump’s cage match. You can see in the corner there the hole in the ground, which is where the east wing of the White House used to be. Basically, Trump has left, so far, wreckage in his wake. Even the things which have not involved tearing stuff down, the gilding of statues, the horrific redecoration of the White House, is surpassingly ugly. That’s partly because Trump has terrible taste, but it’s also, I think, a clear sign of aggression. He’s saying, oh yeah, you’re going to give me a 33% approval rating? Well, I’m going to make the nation’s capital as ugly as I can in this little time as I possibly can. Now, this is all superficial. This is stuff that can and will be repaired. It’ll cost a lot of money, but OK. So we’ll rebuild the White House. We’ll reseed the South Lawn. We’ll strip the gilding off the statues. We’ll make the White House a dignified place again. But how much more will be coming? When we talk about Hitler’s last days, as I said, one of his last attempted acts was what’s called the Nero Decree, which was an attempt to destroy as much of Germany’s infrastructure as possible, supposedly to deny it to the victorious allies. But clearly, and even there’s some evidence that he actually he clearly thought this as a way of punishing the German people for failing him. Now, historiography is a little more complicated than that, as it usually is, but that’s clearly the gist of it. That Hitler’s final acts were to basically try to bring everyone else down with him. Do you really want to say that that’s not what’s going to happen with Trump? Assuming that he loses much, if not all, of his power to shape events this November, and of course we’re all worried about how he may try to disrupt or overturn the election, but assuming he doesn’t manage to do that, he will find himself much diminished. How much damage will he do basically taking revenge on America? Because always you want to bear in mind that Trump hates America. He hates the values on which America was built. He hates democracy. He hates rule of law. He hates all of the things that are what we’re supposed to be about as a nation. But increasingly it looks as if he just plain hates this country because it doesn’t love him. How much damage will he do? How much damage can he do? I don’t want to make a specific prediction, but I’m worried. And don’t say that he won’t do that or he can’t do that. Those have been famous last words again and again over the past decade. So this is going to be even worse, even uglier, I think than most people imagine. Have a great rest of your day. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

For all my interviews and more, <a href="https://www.youtube.com/@PKrugman" rel="noopener noreferrer">subscribe on YouTube</a>.Note: After I recorded this it was reported that Trump officials are threatening to demolish the Kennedy Center if it can’t be renovated to Trump’s taste (and presumably with his name added). Matches my argument exactly.Der Untergang naht.Pardon my German pronunciation. I’m going to take a break today from wonky economic analysis and talk about, well, Donald Trump, but in a slightly different way from what I think most people are saying. Not positive, obviously. Just before recording this, I saw that Trump wants to rename Lake Ontario Lake America. Which is silly, would be funny, except that this guy is the President of the United States. And it’s really kind of troublesome that someone in that position is that out of it, that petty, disconnected from reality. And look, it’s not news to anybody that Trump is ego-driven, disconnected from reality, and at the same time, somehow commands a level of deference and obedience from the entire machinery of the federal government that no president has ever had before. So this is really quite serious. What I don’t think people are fully aware of is just how bad it can get, given that Trump is so obviously dissociating, decompensating, that he’s not all there. Obviously, he was already a very problematic personality, which was doing a great deal of damage to the United States. I don’t think even now people fully appreciate the amount of damage that has been done. Even before the Iran War, Trump’s provocations, insults, his trade wars, really destroyed the world’s trust in America.America became a country that could not be trusted to honor agreements. It was a country that constantly tried to bully other countries. Our word was worth nothing. Our sanity was not to be taken for granted. And then, of course, along comes Iran, where in addition to showing that we’re not to be trusted, that we’re not going to be relied upon., we also showed that we were far weaker than people imagined. If there’s one thing people thought it was, well, America has a powerful military. It turns out, well, not as powerful and not nearly as competent as people thought. How much of that is the result of Trump and Hegseth degrading it and how much of it was there to begin with is an interesting question. But anyway, at this point, we are not loved, we are not respected, and we aren’t even feared. And we’re not getting that back. Even if Trump is succeeded by someone decent —God help us if he isn’t— but even if we have a more or less rational, well-intentioned government that follows, the world now knows that we are capable of putting someone like Trump in a position of unprecedented, almost absolute power and that it can happen again. And the world also knows that we’re just not as fearsome as we seem to be. That we can be defied much more successfully even by smallish countries than anyone really imagined. And we’re not getting that back. I anxiously wait for the days when we’re no longer a Trump-ruled country, but this is my country, and what will be left of us, what will be left of our role in the world, even once he’s gone? Okay, the title I gave, the way that I opened this talk was Der Untergang, which is the German title of the movie Downfall, about the last days of Adolf Hitler. I hope that nobody is going to complain about my using the German, right? We’re long past the point where it’s considered unthinkable and incredibly rude to make Nazi parallels. There’s a lot of people in this administration or close to this administration who are effectively Nazis, in some cases explicitly Nazis. America is not yet Germany under Hitler. But the reason we don’t have a functioning Gestapo in this country is not for lack of desire to have one. It’s because these people, at least so far, don’t have the juice. So all of the stuff, all of the parallels seem appropriate.And the parallels are there. I mean, the parallels are there even in seemingly small things. Hitler was obsessed with building a gigantic gaudy ballroom. So there’s just a lot of parallels in there. Now the main message of the movie Der Untergang is that it’s about Hitler in his final days who knew that he was losing. He knew that defeat was looming. He knew that his power was collapsing. And his reaction was, among other things, to take it out on his own country. Hitler never accepted that he had failed Germany. He felt that Germany had failed him. And so he had a plan, often called the Nero Decree, which was to destroy as much as possible of Germany’s infrastructure. Supposedly to deny it to the victorious allies, but in large part to punish Germany. Well, Trump knows. He may deny it, he may have his moments when he actually believes that the polls are all fake and all of that, but in many ways he is behaving like somebody who knows that his days of supreme power are about to end. He, of course, is not going to accept that it’s his fault. It’s the fault, obviously, of the Democrats, who are all communists. It’s the fault of the Republicans, who didn’t live up to his leadership. The fault of everybody but him. What does he do in the position of losing? Probably not committing suicide in the Fuhrerbunker, but still in the position of losing all of his power. Well, what you do in that position, if you are somebody like Trump, who is an empty vessel: there’s nothing in there, the only pleasure he appears to take in life comes from dominating other people. Well, one thing you do is you try to stick your name everywhere, or leave your imprint everywhere. So Trump, according to reporting by Swan and Haberman, spends most of his time thinking about his construction projects and trying to leave his mark on everything in Washington. What I don’t think we’re fully appreciating even about those projects is that there isn’t a whole lot of actual construction. There’s a lot of starting of stuff, but so far it’s been mostly destruction, mostly tearing stuff down. We don’t have a triumphal arch, but we have a hole where the ballroom is supposed to be. We have just a lot of damage having been done to our nation’s capital and to the iconic structures that were supposed to define, symbolize who we are as a country. The scale of the destruction is really quite amazing. So I’m not going to try fancy video editing here. I’m just going to show you a picture of what the environs of the White House look like right now. There you go. That bare area is the South Lawn, ripped up because of Trump’s cage match. You can see in the corner there the hole in the ground, which is where the east wing of the White House used to be. Basically, Trump has left, so far, wreckage in his wake. Even the things which have not involved tearing stuff down, the gilding of statues, the horrific redecoration of the White House, is surpassingly ugly. That’s partly because Trump has terrible taste, but it’s also, I think, a clear sign of aggression. He’s saying, oh yeah, you’re going to give me a 33% approval rating? Well, I’m going to make the nation’s capital as ugly as I can in this little time as I possibly can. Now, this is all superficial. This is stuff that can and will be repaired. It’ll cost a lot of money, but OK. So we’ll rebuild the White House. We’ll reseed the South Lawn. We’ll strip the gilding off the statues. We’ll make the White House a dignified place again. But how much more will be coming? When we talk about Hitler’s last days, as I said, one of his last attempted acts was what’s called the Nero Decree, which was an attempt to destroy as much of Germany’s infrastructure as possible, supposedly to deny it to the victorious allies. But clearly, and even there’s some evidence that he actually he clearly thought this as a way of punishing the German people for failing him.Now, historiography is a little more complicated than that, as it usually is, but that’s clearly the gist of it. That Hitler’s final acts were to basically try to bring everyone else down with him. Do you really want to say that that’s not what’s going to happen with Trump? Assuming that he loses much, if not all, of his power to shape events this November, and of course we’re all worried about how he may try to disrupt or overturn the election, but assuming he doesn’t manage to do that, he will find himself much diminished. How much damage will he do basically taking revenge on America?Because always you want to bear in mind that Trump hates America. He hates the values on which America was built. He hates democracy. He hates rule of law. He hates all of the things that are what we’re supposed to be about as a nation.But increasingly it looks as if he just plain hates this country because it doesn’t love him. How much damage will he do? How much damage can he do? I don’t want to make a specific prediction, but I’m worried. And don’t say that he won’t do that or he can’t do that. Those have been famous last words again and again over the past decade. So this is going to be even worse, even uglier, I think than most people imagine. Have a great rest of your day. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

Der Untergang

TranscriptWill crypto crash the blue wave? Probably not a question you’ve been asking, but you should. Paul Krugman here with a video update for September 22nd. I want to talk about something that was a very big deal in the way we talked about the 2024 election, which was the role of the cryptocurrency industry.We’re talking about it a lot less this time, I think largely because AI has stolen the limelight. But crypto is still out there. And while it has not succeeded in creating a viable business in the normal sense, it has been extraordinarily successful at buying political influence. And they’re set to do it again.Now, the background here is, as I record this, the midterm elections look, based upon polling, based upon just impressions, looks like a big blue wave. Elliot Morris gives the Democrats a 97% chance of taking the House and two-to-one odds of taking the Senate.But there’s still a few weeks to go and it looks like there’s a big wave of right-wing money that’s going to come crashing in. We don’t know how effective that will be. The role of money in politics, particularly of last-minute advertising blitzes, is somewhat unclear.But it is coming and crypto is going to be a pretty big part of it. Based on Open Secrets, which tracks campaign financing, it appears that the crypto industry, which spent big in 2024, is going to spend even bigger in 2026, which is unusual because midterms are usually lower stakes than presidential years: They don’t usually involve as much spending.But this industry is going to go all in. The crypto political strategy has been to knock out candidates that it considers hostile. And that is a strategy that was very effective in the last election cycle. They spent money in primaries knocking out Democrats, because Democrats were by no means united in their skepticism about crypto, but in some cases in favor. They knocked out Democrats in favor of other Democrats in primaries. And then in the general election, they spent quite a lot, not entirely on Republicans, but there were some big cases. And then Ohio spending was a particular success story.And in general, crypto became seen in Washington as a force to be afraid of. Not a force that has actually managed to get anywhere in the economy. It’s nothing like AI, which is everywhere. Crypto is still barely used for legitimate transactions. According to the Federal Reserve, only 2% of Americans have actually used crypto to buy something other than assets. So basically non-speculative crypto use remains trivial. And that’s after many years of trying to market this stuff. But the political effectiveness has been huge, and it has intimidated a lot of politicians. Back in February, Chuck Schumer warned his colleagues not to do too much to offend Fairshake, the big crypto lobbying group. Crypto has also, in addition to campaign contributions, done a lot of what in the old days, we would call bribery. There’s a lot of money that flows from the crypto industry to politicians and their relatives, and not just Trump. I don’t really want to ask too much about why there’s a lot of money going into a firm founded by Senator Gillibrand’s son. So there’s a big financial issue. Now, the Clarity Act posed as “we’re going to establish a sound regulatory framework, especially for stablecoins” — cryptocurrencies that supposedly have a guaranteed value in dollars. Why exactly did Democrats turn on it? I mean, on the merits, they were right to be against this because whatever one may say, the purpose of the Clarity Act was to kind of legitimize cryptocurrency in the economy and particularly to legitimize stablecoins, which are, once you cut through the jargon and all of that, essentially poorly regulated banks. It would essentially be posing new threats to the stability of the financial system and undermining banking regulation, which is something, of course, that the Trump administration and its allies are trying to do anyway, but this would have been another step in that direction. Presumably many of the Democrats who voted against this, and there were some Republicans as well, but presumably many of the senators who voted against this thing were genuinely concerned.But I also think that there’s some spillover. For analytical purposes, cryptocurrency and AI are quite different things, and they are actually playing a very different role in the economy. Companies are really investing in AI, rightly or wrongly, but they are really trying to put it to use. And cryptocurrency is being used only for, pretty much only for, criminal activities, including, by the way, Iranian efforts to bypass U.S. sanctions. But in the public mind, it’s all tech. It’s all fancy jargon. It’s all doing stuff we don’t quite understand. Sounds fancy. AI turned out to have an interesting political trajectory. It really is impressive. I mean, it really is impressive what it can do. Who would have thought that matrix algebra with a little bit of non-linearity could produce what feels like a conversation with a chatbot? Who would have believed that you could do vibecoding the way you do. Now whether all of that is economically productive is another question. And whether it kills us all is yet another question. Still, crypto has not done any of that. But it feels, I think, to a lot of people similar. And the bad reputation that AI has quickly developed, I think, is spilling over to anything techie and therefore has meant that the support for crypto is weaker than it was.It’s also true, by the way, that there was a big boom in Bitcoin prices after Trump was elected because everybody thought he was going to be the crypto president, was going to do great things for the industry, which then kind of evaporated. There’s been some recovery in crypto in the last few weeks, which I actually suspect, I mean, no one quite knows, but I actually suspect has something to do with the fact that, well, the Iranians have found a use for crypto. That basically illegitimate uses of cryptocurrency are turning out to be significant. So there is that. But in any case, the industry is still out there. There are still trillions of dollars in assets. And it’s an industry that had developed a really effective political strategy. They couldn’t actually produce stuff. But if we count the 1.4 billion or so that Trump personally has made from crypto as part of its campaign contributions, then crypto may be the biggest single political financial force out there. Will it work this time? The answer is, of course, I don’t know. It’s going to be a lot of money. It does look as if basically, as best I can make out from the Open Secrets data, crypto may end up spending, well, something like an Elon Musk-sized amount on these elections. It’ll be much more partisan. The primaries are over, and in the general election, there are not going to be a lot of Republicans out there that they’re going to try to defeat. And also, they have a clear sense of where the balance lies.I mean, Susan Collins did vote against the Clarity Act. Nobody, seriously, is going to give her credit. She’s pulled this too many times. Nobody’s going to think that the crypto industry should try to defeat Susan Collins. But they will try to defeat Sherrod Brown, even though Brown himself has softened his anti-crypto rhetoric. He has talked about it very little.But if he wins, he might well be the deciding vote or one of the two deciding votes in a Democratic majority in the Senate. And we now know that the Democratic Party is not clean as the driven snow. It is not immune to financial influence.It’s not even immune to de facto bribery from crypto.But it’s a completely different universe from the Trumpian Republican Party. And so the crypto industry knows that if Democrats really do sweep, if this is a blue wave which brings them not just the House but the Senate, it will be a less favorable environment. So their scam will be greatly endangered. And so here comes crypto.Now, it’s only part of the broader story. I don’t know how much money is going to come that’s openly from AI, but we do know that the billionaires, that the oligarchs are gearing up, are already starting to spend large sums and will spend a lot of money.So what we’re actually going to see, crypto is an important part of the story, but what we’re actually going to see in a few weeks is the collision of what really does look like a blue wave generated by very widespread public disgust with what has happened to America these past two years against a wave of plutocratic money, including crypto, but that’s just part of the story. And I guess we’re going to learn something about how much of a democracy we remain. I mean, yes, a vote is a vote, even if it’s a vote that was influenced by money, but we’re going to find out, can a wave of largely corrupt money, clearly totally corrupt in the case of crypto, but largely corrupt in other cases, can a wave of corrupt money stop a popular electoral uprising against a really disastrous administration and its allies in Congress? I don’t expect to get a whole lot of sleep on election night, and neither should you. Good luck. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

Transcript Will crypto crash the blue wave? Probably not a question you’ve been asking, but you should. Paul Krugman here with a video update for September 22nd. I want to talk about something that was a very big deal in the way we talked about the 2024 election, which was the role of the cryptocurrency industry. We’re talking about it a lot less this time, I think largely because AI has stolen the limelight. But crypto is still out there. And while it has not succeeded in creating a viable business in the normal sense, it has been extraordinarily successful at buying political influence. And they’re set to do it again. Now, the background here is, as I record this, the midterm elections look, based upon polling, based upon just impressions, looks like a big blue wave. Elliot Morris gives the Democrats a 97% chance of taking the House and two-to-one odds of taking the Senate. But there’s still a few weeks to go and it looks like there’s a big wave of right-wing money that’s going to come crashing in. We don’t know how effective that will be. The role of money in politics, particularly of last-minute advertising blitzes, is somewhat unclear. But it is coming and crypto is going to be a pretty big part of it. Based on Open Secrets, which tracks campaign financing, it appears that the crypto industry, which spent big in 2024, is going to spend even bigger in 2026, which is unusual because midterms are usually lower stakes than presidential years: They don’t usually involve as much spending. But this industry is going to go all in. The crypto political strategy has been to knock out candidates that it considers hostile. And that is a strategy that was very effective in the last election cycle. They spent money in primaries knocking out Democrats, because Democrats were by no means united in their skepticism about crypto, but in some cases in favor. They knocked out Democrats in favor of other Democrats in primaries. And then in the general election, they spent quite a lot, not entirely on Republicans, but there were some big cases. And then Ohio spending was a particular success story. And in general, crypto became seen in Washington as a force to be afraid of. Not a force that has actually managed to get anywhere in the economy. It’s nothing like AI, which is everywhere. Crypto is still barely used for legitimate transactions. According to the Federal Reserve, only 2% of Americans have actually used crypto to buy something other than assets. So basically non-speculative crypto use remains trivial. And that’s after many years of trying to market this stuff. But the political effectiveness has been huge, and it has intimidated a lot of politicians. Back in February, Chuck Schumer warned his colleagues not to do too much to offend Fairshake, the big crypto lobbying group. Crypto has also, in addition to campaign contributions, done a lot of what in the old days, we would call bribery. There’s a lot of money that flows from the crypto industry to politicians and their relatives, and not just Trump. I don’t really want to ask too much about why there’s a lot of money going into a firm founded by Senator Gillibrand’s son. So there’s a big financial issue. Now, the Clarity Act posed as “we’re going to establish a sound regulatory framework, especially for stablecoins” — cryptocurrencies that supposedly have a guaranteed value in dollars. Why exactly did Democrats turn on it? I mean, on the merits, they were right to be against this because whatever one may say, the purpose of the Clarity Act was to kind of legitimize cryptocurrency in the economy and particularly to legitimize stablecoins, which are, once you cut through the jargon and all of that, essentially poorly regulated banks. It would essentially be posing new threats to the stability of the financial system and undermining banking regulation, which is something, of course, that the Trump administration and its allies are trying to do anyway, but this would have been another step in that direction. Presumably many of the Democrats who voted against this, and there were some Republicans as well, but presumably many of the senators who voted against this thing were genuinely concerned. But I also think that there’s some spillover. For analytical purposes, cryptocurrency and AI are quite different things, and they are actually playing a very different role in the economy. Companies are really investing in AI, rightly or wrongly, but they are really trying to put it to use. And cryptocurrency is being used only for, pretty much only for, criminal activities, including, by the way, Iranian efforts to bypass U.S. sanctions. But in the public mind, it’s all tech. It’s all fancy jargon. It’s all doing stuff we don’t quite understand. Sounds fancy. AI turned out to have an interesting political trajectory. It really is impressive. I mean, it really is impressive what it can do. Who would have thought that matrix algebra with a little bit of non-linearity could produce what feels like a conversation with a chatbot? Who would have believed that you could do vibecoding the way you do. Now whether all of that is economically productive is another question. And whether it kills us all is yet another question. Still, crypto has not done any of that. But it feels, I think, to a lot of people similar. And the bad reputation that AI has quickly developed, I think, is spilling over to anything techie and therefore has meant that the support for crypto is weaker than it was. It’s also true, by the way, that there was a big boom in Bitcoin prices after Trump was elected because everybody thought he was going to be the crypto president, was going to do great things for the industry, which then kind of evaporated. There’s been some recovery in crypto in the last few weeks, which I actually suspect, I mean, no one quite knows, but I actually suspect has something to do with the fact that, well, the Iranians have found a use for crypto. That basically illegitimate uses of cryptocurrency are turning out to be significant. So there is that. But in any case, the industry is still out there. There are still trillions of dollars in assets. And it’s an industry that had developed a really effective political strategy. They couldn’t actually produce stuff. But if we count the 1.4 billion or so that Trump personally has made from crypto as part of its campaign contributions, then crypto may be the biggest single political financial force out there. Will it work this time? The answer is, of course, I don’t know. It’s going to be a lot of money. It does look as if basically, as best I can make out from the Open Secrets data, crypto may end up spending, well, something like an Elon Musk-sized amount on these elections. It’ll be much more partisan. The primaries are over, and in the general election, there are not going to be a lot of Republicans out there that they’re going to try to defeat. And also, they have a clear sense of where the balance lies. I mean, Susan Collins did vote against the Clarity Act. Nobody, seriously, is going to give her credit. She’s pulled this too many times. Nobody’s going to think that the crypto industry should try to defeat Susan Collins. But they will try to defeat Sherrod Brown, even though Brown himself has softened his anti-crypto rhetoric. He has talked about it very little. But if he wins, he might well be the deciding vote or one of the two deciding votes in a Democratic majority in the Senate. And we now know that the Democratic Party is not clean as the driven snow. It is not immune to financial influence.It’s not even immune to de facto bribery from crypto. But it’s a completely different universe from the Trumpian Republican Party. And so the crypto industry knows that if Democrats really do sweep, if this is a blue wave which brings them not just the House but the Senate, it will be a less favorable environment. So their scam will be greatly endangered. And so here comes crypto. Now, it’s only part of the broader story. I don’t know how much money is going to come that’s openly from AI, but we do know that the billionaires, that the oligarchs are gearing up, are already starting to spend large sums and will spend a lot of money. So what we’re actually going to see, crypto is an important part of the story, but what we’re actually going to see in a few weeks is the collision of what really does look like a blue wave generated by very widespread public disgust with what has happened to America these past two years against a wave of plutocratic money, including crypto, but that’s just part of the story. And I guess we’re going to learn something about how much of a democracy we remain. I mean, yes, a vote is a vote, even if it’s a vote that was influenced by money, but we’re going to find out, can a wave of largely corrupt money, clearly totally corrupt in the case of crypto, but largely corrupt in other cases, can a wave of corrupt money stop a popular electoral uprising against a really disastrous administration and its allies in Congress? I don’t expect to get a whole lot of sleep on election night, and neither should you. Good luck. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

TranscriptWill crypto crash the blue wave? Probably not a question you’ve been asking, but you should. Paul Krugman here with a video update for September 22nd. I want to talk about something that was a very big deal in the way we talked about the 2024 election, which was the role of the cryptocurrency industry.We’re talking about it a lot less this time, I think largely because AI has stolen the limelight. But crypto is still out there. And while it has not succeeded in creating a viable business in the normal sense, it has been extraordinarily successful at buying political influence. And they’re set to do it again.Now, the background here is, as I record this, the midterm elections look, based upon polling, based upon just impressions, looks like a big blue wave. Elliot Morris gives the Democrats a 97% chance of taking the House and two-to-one odds of taking the Senate.But there’s still a few weeks to go and it looks like there’s a big wave of right-wing money that’s going to come crashing in. We don’t know how effective that will be. The role of money in politics, particularly of last-minute advertising blitzes, is somewhat unclear.But it is coming and crypto is going to be a pretty big part of it. Based on Open Secrets, which tracks campaign financing, it appears that the crypto industry, which spent big in 2024, is going to spend even bigger in 2026, which is unusual because midterms are usually lower stakes than presidential years: They don’t usually involve as much spending.But this industry is going to go all in. The crypto political strategy has been to knock out candidates that it considers hostile. And that is a strategy that was very effective in the last election cycle. They spent money in primaries knocking out Democrats, because Democrats were by no means united in their skepticism about crypto, but in some cases in favor. They knocked out Democrats in favor of other Democrats in primaries. And then in the general election, they spent quite a lot, not entirely on Republicans, but there were some big cases. And then Ohio spending was a particular success story.And in general, crypto became seen in Washington as a force to be afraid of. Not a force that has actually managed to get anywhere in the economy. It’s nothing like AI, which is everywhere. Crypto is still barely used for legitimate transactions. According to the Federal Reserve, only 2% of Americans have actually used crypto to buy something other than assets. So basically non-speculative crypto use remains trivial. And that’s after many years of trying to market this stuff. But the political effectiveness has been huge, and it has intimidated a lot of politicians. Back in February, Chuck Schumer warned his colleagues not to do too much to offend Fairshake, the big crypto lobbying group. Crypto has also, in addition to campaign contributions, done a lot of what in the old days, we would call bribery. There’s a lot of money that flows from the crypto industry to politicians and their relatives, and not just Trump. I don’t really want to ask too much about why there’s a lot of money going into a firm founded by Senator Gillibrand’s son. So there’s a big financial issue. Now, the Clarity Act posed as “we’re going to establish a sound regulatory framework, especially for stablecoins” — cryptocurrencies that supposedly have a guaranteed value in dollars. Why exactly did Democrats turn on it? I mean, on the merits, they were right to be against this because whatever one may say, the purpose of the Clarity Act was to kind of legitimize cryptocurrency in the economy and particularly to legitimize stablecoins, which are, once you cut through the jargon and all of that, essentially poorly regulated banks. It would essentially be posing new threats to the stability of the financial system and undermining banking regulation, which is something, of course, that the Trump administration and its allies are trying to do anyway, but this would have been another step in that direction. Presumably many of the Democrats who voted against this, and there were some Republicans as well, but presumably many of the senators who voted against this thing were genuinely concerned.But I also think that there’s some spillover. For analytical purposes, cryptocurrency and AI are quite different things, and they are actually playing a very different role in the economy. Companies are really investing in AI, rightly or wrongly, but they are really trying to put it to use. And cryptocurrency is being used only for, pretty much only for, criminal activities, including, by the way, Iranian efforts to bypass U.S. sanctions. But in the public mind, it’s all tech. It’s all fancy jargon. It’s all doing stuff we don’t quite understand. Sounds fancy. AI turned out to have an interesting political trajectory. It really is impressive. I mean, it really is impressive what it can do. Who would have thought that matrix algebra with a little bit of non-linearity could produce what feels like a conversation with a chatbot? Who would have believed that you could do vibecoding the way you do. Now whether all of that is economically productive is another question. And whether it kills us all is yet another question. Still, crypto has not done any of that. But it feels, I think, to a lot of people similar. And the bad reputation that AI has quickly developed, I think, is spilling over to anything techie and therefore has meant that the support for crypto is weaker than it was.It’s also true, by the way, that there was a big boom in Bitcoin prices after Trump was elected because everybody thought he was going to be the crypto president, was going to do great things for the industry, which then kind of evaporated. There’s been some recovery in crypto in the last few weeks, which I actually suspect, I mean, no one quite knows, but I actually suspect has something to do with the fact that, well, the Iranians have found a use for crypto. That basically illegitimate uses of cryptocurrency are turning out to be significant. So there is that. But in any case, the industry is still out there. There are still trillions of dollars in assets. And it’s an industry that had developed a really effective political strategy. They couldn’t actually produce stuff. But if we count the 1.4 billion or so that Trump personally has made from crypto as part of its campaign contributions, then crypto may be the biggest single political financial force out there. Will it work this time? The answer is, of course, I don’t know. It’s going to be a lot of money. It does look as if basically, as best I can make out from the Open Secrets data, crypto may end up spending, well, something like an Elon Musk-sized amount on these elections. It’ll be much more partisan. The primaries are over, and in the general election, there are not going to be a lot of Republicans out there that they’re going to try to defeat. And also, they have a clear sense of where the balance lies.I mean, Susan Collins did vote against the Clarity Act. Nobody, seriously, is going to give her credit. She’s pulled this too many times. Nobody’s going to think that the crypto industry should try to defeat Susan Collins. But they will try to defeat Sherrod Brown, even though Brown himself has softened his anti-crypto rhetoric. He has talked about it very little.But if he wins, he might well be the deciding vote or one of the two deciding votes in a Democratic majority in the Senate. And we now know that the Democratic Party is not clean as the driven snow. It is not immune to financial influence.It’s not even immune to de facto bribery from crypto.But it’s a completely different universe from the Trumpian Republican Party. And so the crypto industry knows that if Democrats really do sweep, if this is a blue wave which brings them not just the House but the Senate, it will be a less favorable environment. So their scam will be greatly endangered. And so here comes crypto.Now, it’s only part of the broader story. I don’t know how much money is going to come that’s openly from AI, but we do know that the billionaires, that the oligarchs are gearing up, are already starting to spend large sums and will spend a lot of money.So what we’re actually going to see, crypto is an important part of the story, but what we’re actually going to see in a few weeks is the collision of what really does look like a blue wave generated by very widespread public disgust with what has happened to America these past two years against a wave of plutocratic money, including crypto, but that’s just part of the story. And I guess we’re going to learn something about how much of a democracy we remain. I mean, yes, a vote is a vote, even if it’s a vote that was influenced by money, but we’re going to find out, can a wave of largely corrupt money, clearly totally corrupt in the case of crypto, but largely corrupt in other cases, can a wave of corrupt money stop a popular electoral uprising against a really disastrous administration and its allies in Congress? I don’t expect to get a whole lot of sleep on election night, and neither should you. Good luck. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

Will Crypto Crash the Blue Wave?

Transcript“Mary had a little lamb, but when she saw it sicken, she sent it off to Packingtown, and now it’s labeled chicken.” Hi, Paul Krugman here. That’s a little ditty that was circulating, I can’t find any original source, around 1905, when Upton Sinclair published “The Jungle” — about the meatpacking industry, one of the sort of founding documents of the progressive movement. The topic today is Donald Trump and beef, because here we are back in Upton Sinclair territory. So you may have seen that last month Trump announced, given that we have high beef prices, that he was going to allow the tariff-free import of 300,000 tons of ground beef.Rather oddly, he didn’t say from where and wouldn’t say from where for a while. And then eventually said, well, from Argentina, Brazil, and other places.There has been a substantial uproar over these imports of ground beef because of concerns about safety. You know, if he won’t even say where it’s coming from or whether the countries involved are going to be practicing food safety, that is kind of an issue. And it turns out it’s not just, you know, not just woke liberal types but ranchers, lawmakers and food safety experts who were very concerned about the plan and were not reassured when Trump said the meat is “very clean and very good.”Okay, little by little details are coming out about how all of this happened. It turns out that the initial plan to allow the beef imports was announced the day after a closed door meeting between Trump and a Brazilian meat packing billionaire who is a major donor to Trump.And they went right ahead and announced the plan, although again without details. There doesn’t seem to have been much discussion of how this would work, of the concerns. After some initial blowback — even ranchers are concerned that people might become worried about the safety of U.S. beef — Trump announced that he was going to also allow farmers and ranchers to process their own beef rather than having to go through the regular meatpacking companies. But it turned out that the ranchers hate that too, because what they want is for people to believe that beef is safe. They want to be assured that there are quality standards being upheld.And now that we have at least some information about the origins of the beef, we are even less reassured. In fact, just the other day, the European Union banned beef imports from Brazil because Brazil was not adhering to EU standards on the use of antibiotics. So there are, in fact, real concerns here about safety.Okay, this is quite a story, and beef is not that trivial a product, but there’s a lot of secondary implications here. The first is that this is a very Trumpian story. It’s got this sort of characteristic combination of raw corruption and raw incompetence. Raw might not have been the best word to use here, but anyway. The corruption: Obviously, this was a decision made because somebody who has given Trump’s campaign and possibly Trump himself money had a meeting with him and got an immediate policy change. So this certainly looks like undue influence. We don’t know exactly how it happened because it was a closed-door meeting.Also, shouldn’t somebody have been in the room to or at least passed on this before it was announced to say, you know, is this a good idea? Shouldn’t there have been somebody from the Agriculture Department, somebody from the U.S. Trade Representative’s Office, but certainly someone from food safety to pass judgment or give some warning?In a normal administration, any kind of decision like this involves a process in which multiple agencies get a chance to weigh in and in which somebody who knows something gets to say, look, there are real problems with this idea. But obviously that didn’t happen here. And basically it doesn’t happen in this administration.This is an administration that does not like experts. Does not listen to expertise. That’s not just a result of particular personnel decisions that Trump made. That is just a defining characteristic. At a fundamental level, they’re just hostile to the idea of expertise in any domain, in pretty much every agency where there’s something to know, where there’s technical stuff that you need to know to make good decisions.The people who actually know things, or the people who are willing to speak up about what they know, have been silenced, purged. That’s across the board. Basically, it’s Hegseths all the way down in this administration.And so in this case, nobody was there apparently to say, this is really not a very good idea. And I think it’s really striking that even Trump thought, well, okay, I can fix this. At least I can mend fences with the ranchers by giving them more leeway to be unregulated themselves. But it turns out that the ranchers want regulation. They want customers to know that the beef that they buy is safe. So just raw incompetence on top of the raw corruption. There’s an even larger issue here. Normally, when we think about, or as we used to think about, left versus right, there is a question about the role of government. How big a role should government play? And ultimately, it’s a values question, normally. It is a question, should it be the government’s business to ensure that citizens are not in dire poverty? Should it be the government’s business to ensure that everyone has access to essential healthcare?And the question of how far in that direction you want to go is the traditional left-right distinction. Obviously, I’m on one side of that, and I think that morally I’m right. I think even in practical terms I’m right, but that is a debatable point. But there are certain roles that government must play. The government needs to provide public goods. The government needs to provide things that the private sector cannot do for itself, which is obviously things like national defense, things like public safety, and it turns out also things like ensuring the safety of the food supply, just like ensuring the safety of the water supply.It turns out that regulation of what goes on in meatpacking plants, regulation of what goes into your food is something that you really want the government to do. Even people in the industries want that unless they are particularly unethical types. The people who are trying to do the business right want those public goods provided because if you don’t have those provided, then people will not trust their products. And this is not something that you can leave up to the private sector. It’s not something where you can do your own research. It’s a very complicated world out there. And the informational burden of trying to figure out whether the people responsible for your package of hamburger are actually following safe procedures, that’s beyond everybody. It’s actually quite similar in a way to public health measures, including, by the way, of course, vaccination. Like I said, it’s all the same story here: This retreat from even the most essential roles of government.So this is not an administration that’s trying to turn the clock back to 1930. It’s not trying to undo the New Deal. It’s an administration that’s trying to turn us back to the 19th century or before. It’s really just trying to undo even the most essential functions of government.They’re not doing this, I think, out of a philosophical concern. I don’t think they have a theory that says that we really don’t need these things. They just don’t think about it at all. They don’t do expertise. They don’t do thinking, really. And a lot of policy is just based upon who last spoke to Donald Trump and who has given him money. It turns out that this is a case in which Brazil — and it appears it’s probably Brazil, there may be some Argentine stuff here, but it’s probably Brazil — Brazil is notorious for not practicing internationally accepted standards on the safety of its meat.And so the last thing you want to do is allow Brazilian ground beef to be admixed. And by the way, none of this would be unique origin. This would be trimmings of beef that get ground up and mixed in with other beef. And basically, if you get a package of hamburger in the United States under this rule, you will have basically no idea where it came from. You’ll have no idea under what conditions the cattle were raised or how the meat was processed. And this is not something that’s in the interest of really anybody except personally this particular Brazilian beef baron who may have a bunch of unsold beef because the Europeans have turned back a shipment. And of course Donald Trump himself presumably is getting some financial benefit personally out of the whole thing. So it’s quite a story. It’s in a way captures all in one place everything that is going wrong, how quickly the United States is descending into kind of pre-modern, pre-development status. We’re just giving up all of the things that make an advanced society and advanced economy work. Okay, that was hard work. And I’m kind of hungry. So I think I’m going to have a piece of hamburger with some iceberg lettuce. Actually, maybe not. Take care. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

Transcript “Mary had a little lamb, but when she saw it sicken, she sent it off to Packingtown, and now it’s labeled chicken.” Hi, Paul Krugman here. That’s a little ditty that was circulating, I can’t find any original source, around 1905, when Upton Sinclair published “The Jungle” — about the meatpacking industry, one of the sort of founding documents of the progressive movement. The topic today is Donald Trump and beef, because here we are back in Upton Sinclair territory. So you may have seen that last month Trump announced, given that we have high beef prices, that he was going to allow the tariff-free import of 300,000 tons of ground beef. Rather oddly, he didn’t say from where and wouldn’t say from where for a while. And then eventually said, well, from Argentina, Brazil, and other places. There has been a substantial uproar over these imports of ground beef because of concerns about safety. You know, if he won’t even say where it’s coming from or whether the countries involved are going to be practicing food safety, that is kind of an issue. And it turns out it’s not just, you know, not just woke liberal types but ranchers, lawmakers and food safety experts who were very concerned about the plan and were not reassured when Trump said the meat is “very clean and very good.” Okay, little by little details are coming out about how all of this happened. It turns out that the initial plan to allow the beef imports was announced the day after a closed door meeting between Trump and a Brazilian meat packing billionaire who is a major donor to Trump. And they went right ahead and announced the plan, although again without details. There doesn’t seem to have been much discussion of how this would work, of the concerns. After some initial blowback — even ranchers are concerned that people might become worried about the safety of U.S. beef — Trump announced that he was going to also allow farmers and ranchers to process their own beef rather than having to go through the regular meatpacking companies. But it turned out that the ranchers hate that too, because what they want is for people to believe that beef is safe. They want to be assured that there are quality standards being upheld. And now that we have at least some information about the origins of the beef, we are even less reassured. In fact, just the other day, the European Union banned beef imports from Brazil because Brazil was not adhering to EU standards on the use of antibiotics. So there are, in fact, real concerns here about safety. Okay, this is quite a story, and beef is not that trivial a product, but there’s a lot of secondary implications here. The first is that this is a very Trumpian story. It’s got this sort of characteristic combination of raw corruption and raw incompetence. Raw might not have been the best word to use here, but anyway. The corruption: Obviously, this was a decision made because somebody who has given Trump’s campaign and possibly Trump himself money had a meeting with him and got an immediate policy change. So this certainly looks like undue influence. We don’t know exactly how it happened because it was a closed-door meeting. Also, shouldn’t somebody have been in the room to or at least passed on this before it was announced to say, you know, is this a good idea? Shouldn’t there have been somebody from the Agriculture Department, somebody from the U.S. Trade Representative’s Office, but certainly someone from food safety to pass judgment or give some warning? In a normal administration, any kind of decision like this involves a process in which multiple agencies get a chance to weigh in and in which somebody who knows something gets to say, look, there are real problems with this idea. But obviously that didn’t happen here. And basically it doesn’t happen in this administration. This is an administration that does not like experts. Does not listen to expertise. That’s not just a result of particular personnel decisions that Trump made. That is just a defining characteristic. At a fundamental level, they’re just hostile to the idea of expertise in any domain, in pretty much every agency where there’s something to know, where there’s technical stuff that you need to know to make good decisions. The people who actually know things, or the people who are willing to speak up about what they know, have been silenced, purged. That’s across the board. Basically, it’s Hegseths all the way down in this administration. And so in this case, nobody was there apparently to say, this is really not a very good idea. And I think it’s really striking that even Trump thought, well, okay, I can fix this. At least I can mend fences with the ranchers by giving them more leeway to be unregulated themselves. But it turns out that the ranchers want regulation. They want customers to know that the beef that they buy is safe. So just raw incompetence on top of the raw corruption. There’s an even larger issue here. Normally, when we think about, or as we used to think about, left versus right, there is a question about the role of government. How big a role should government play? And ultimately, it’s a values question, normally. It is a question, should it be the government’s business to ensure that citizens are not in dire poverty? Should it be the government’s business to ensure that everyone has access to essential healthcare? And the question of how far in that direction you want to go is the traditional left-right distinction. Obviously, I’m on one side of that, and I think that morally I’m right. I think even in practical terms I’m right, but that is a debatable point. But there are certain roles that government must play. The government needs to provide public goods. The government needs to provide things that the private sector cannot do for itself, which is obviously things like national defense, things like public safety, and it turns out also things like ensuring the safety of the food supply, just like ensuring the safety of the water supply. It turns out that regulation of what goes on in meatpacking plants, regulation of what goes into your food is something that you really want the government to do. Even people in the industries want that unless they are particularly unethical types. The people who are trying to do the business right want those public goods provided because if you don’t have those provided, then people will not trust their products. And this is not something that you can leave up to the private sector. It’s not something where you can do your own research. It’s a very complicated world out there. And the informational burden of trying to figure out whether the people responsible for your package of hamburger are actually following safe procedures, that’s beyond everybody. It’s actually quite similar in a way to public health measures, including, by the way, of course, vaccination. Like I said, it’s all the same story here: This retreat from even the most essential roles of government. So this is not an administration that’s trying to turn the clock back to 1930. It’s not trying to undo the New Deal. It’s an administration that’s trying to turn us back to the 19th century or before. It’s really just trying to undo even the most essential functions of government. They’re not doing this, I think, out of a philosophical concern. I don’t think they have a theory that says that we really don’t need these things. They just don’t think about it at all. They don’t do expertise. They don’t do thinking, really. And a lot of policy is just based upon who last spoke to Donald Trump and who has given him money. It turns out that this is a case in which Brazil — and it appears it’s probably Brazil, there may be some Argentine stuff here, but it’s probably Brazil — Brazil is notorious for not practicing internationally accepted standards on the safety of its meat. And so the last thing you want to do is allow Brazilian ground beef to be admixed. And by the way, none of this would be unique origin. This would be trimmings of beef that get ground up and mixed in with other beef. And basically, if you get a package of hamburger in the United States under this rule, you will have basically no idea where it came from. You’ll have no idea under what conditions the cattle were raised or how the meat was processed. And this is not something that’s in the interest of really anybody except personally this particular Brazilian beef baron who may have a bunch of unsold beef because the Europeans have turned back a shipment. And of course Donald Trump himself presumably is getting some financial benefit personally out of the whole thing. So it’s quite a story. It’s in a way captures all in one place everything that is going wrong, how quickly the United States is descending into kind of pre-modern, pre-development status. We’re just giving up all of the things that make an advanced society and advanced economy work. Okay, that was hard work. And I’m kind of hungry. So I think I’m going to have a piece of hamburger with some iceberg lettuce. Actually, maybe not. Take care. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

Transcript“Mary had a little lamb, but when she saw it sicken, she sent it off to Packingtown, and now it’s labeled chicken.” Hi, Paul Krugman here. That’s a little ditty that was circulating, I can’t find any original source, around 1905, when Upton Sinclair published “The Jungle” — about the meatpacking industry, one of the sort of founding documents of the progressive movement. The topic today is Donald Trump and beef, because here we are back in Upton Sinclair territory. So you may have seen that last month Trump announced, given that we have high beef prices, that he was going to allow the tariff-free import of 300,000 tons of ground beef.Rather oddly, he didn’t say from where and wouldn’t say from where for a while. And then eventually said, well, from Argentina, Brazil, and other places.There has been a substantial uproar over these imports of ground beef because of concerns about safety. You know, if he won’t even say where it’s coming from or whether the countries involved are going to be practicing food safety, that is kind of an issue. And it turns out it’s not just, you know, not just woke liberal types but ranchers, lawmakers and food safety experts who were very concerned about the plan and were not reassured when Trump said the meat is “very clean and very good.”Okay, little by little details are coming out about how all of this happened. It turns out that the initial plan to allow the beef imports was announced the day after a closed door meeting between Trump and a Brazilian meat packing billionaire who is a major donor to Trump.And they went right ahead and announced the plan, although again without details. There doesn’t seem to have been much discussion of how this would work, of the concerns. After some initial blowback — even ranchers are concerned that people might become worried about the safety of U.S. beef — Trump announced that he was going to also allow farmers and ranchers to process their own beef rather than having to go through the regular meatpacking companies. But it turned out that the ranchers hate that too, because what they want is for people to believe that beef is safe. They want to be assured that there are quality standards being upheld.And now that we have at least some information about the origins of the beef, we are even less reassured. In fact, just the other day, the European Union banned beef imports from Brazil because Brazil was not adhering to EU standards on the use of antibiotics. So there are, in fact, real concerns here about safety.Okay, this is quite a story, and beef is not that trivial a product, but there’s a lot of secondary implications here. The first is that this is a very Trumpian story. It’s got this sort of characteristic combination of raw corruption and raw incompetence. Raw might not have been the best word to use here, but anyway. The corruption: Obviously, this was a decision made because somebody who has given Trump’s campaign and possibly Trump himself money had a meeting with him and got an immediate policy change. So this certainly looks like undue influence. We don’t know exactly how it happened because it was a closed-door meeting.Also, shouldn’t somebody have been in the room to or at least passed on this before it was announced to say, you know, is this a good idea? Shouldn’t there have been somebody from the Agriculture Department, somebody from the U.S. Trade Representative’s Office, but certainly someone from food safety to pass judgment or give some warning?In a normal administration, any kind of decision like this involves a process in which multiple agencies get a chance to weigh in and in which somebody who knows something gets to say, look, there are real problems with this idea. But obviously that didn’t happen here. And basically it doesn’t happen in this administration.This is an administration that does not like experts. Does not listen to expertise. That’s not just a result of particular personnel decisions that Trump made. That is just a defining characteristic. At a fundamental level, they’re just hostile to the idea of expertise in any domain, in pretty much every agency where there’s something to know, where there’s technical stuff that you need to know to make good decisions.The people who actually know things, or the people who are willing to speak up about what they know, have been silenced, purged. That’s across the board. Basically, it’s Hegseths all the way down in this administration.And so in this case, nobody was there apparently to say, this is really not a very good idea. And I think it’s really striking that even Trump thought, well, okay, I can fix this. At least I can mend fences with the ranchers by giving them more leeway to be unregulated themselves. But it turns out that the ranchers want regulation. They want customers to know that the beef that they buy is safe. So just raw incompetence on top of the raw corruption. There’s an even larger issue here. Normally, when we think about, or as we used to think about, left versus right, there is a question about the role of government. How big a role should government play? And ultimately, it’s a values question, normally. It is a question, should it be the government’s business to ensure that citizens are not in dire poverty? Should it be the government’s business to ensure that everyone has access to essential healthcare?And the question of how far in that direction you want to go is the traditional left-right distinction. Obviously, I’m on one side of that, and I think that morally I’m right. I think even in practical terms I’m right, but that is a debatable point. But there are certain roles that government must play. The government needs to provide public goods. The government needs to provide things that the private sector cannot do for itself, which is obviously things like national defense, things like public safety, and it turns out also things like ensuring the safety of the food supply, just like ensuring the safety of the water supply.It turns out that regulation of what goes on in meatpacking plants, regulation of what goes into your food is something that you really want the government to do. Even people in the industries want that unless they are particularly unethical types. The people who are trying to do the business right want those public goods provided because if you don’t have those provided, then people will not trust their products. And this is not something that you can leave up to the private sector. It’s not something where you can do your own research. It’s a very complicated world out there. And the informational burden of trying to figure out whether the people responsible for your package of hamburger are actually following safe procedures, that’s beyond everybody. It’s actually quite similar in a way to public health measures, including, by the way, of course, vaccination. Like I said, it’s all the same story here: This retreat from even the most essential roles of government.So this is not an administration that’s trying to turn the clock back to 1930. It’s not trying to undo the New Deal. It’s an administration that’s trying to turn us back to the 19th century or before. It’s really just trying to undo even the most essential functions of government.They’re not doing this, I think, out of a philosophical concern. I don’t think they have a theory that says that we really don’t need these things. They just don’t think about it at all. They don’t do expertise. They don’t do thinking, really. And a lot of policy is just based upon who last spoke to Donald Trump and who has given him money. It turns out that this is a case in which Brazil — and it appears it’s probably Brazil, there may be some Argentine stuff here, but it’s probably Brazil — Brazil is notorious for not practicing internationally accepted standards on the safety of its meat.And so the last thing you want to do is allow Brazilian ground beef to be admixed. And by the way, none of this would be unique origin. This would be trimmings of beef that get ground up and mixed in with other beef. And basically, if you get a package of hamburger in the United States under this rule, you will have basically no idea where it came from. You’ll have no idea under what conditions the cattle were raised or how the meat was processed. And this is not something that’s in the interest of really anybody except personally this particular Brazilian beef baron who may have a bunch of unsold beef because the Europeans have turned back a shipment. And of course Donald Trump himself presumably is getting some financial benefit personally out of the whole thing. So it’s quite a story. It’s in a way captures all in one place everything that is going wrong, how quickly the United States is descending into kind of pre-modern, pre-development status. We’re just giving up all of the things that make an advanced society and advanced economy work. Okay, that was hard work. And I’m kind of hungry. So I think I’m going to have a piece of hamburger with some iceberg lettuce. Actually, maybe not. Take care. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

Where’s the Beef (Coming From)?

Henry Farrell and Abe Newman on Weaponized Interdependence

TranscriptAt this point, it’s almost a commonplace to say that under DonaldTrump, America has become a kakistocracy, ruled by the worst. But I don’tthink it’s fully appreciated the extent to which we’ve also become a cheatistocracy, ruled by the most corrupt. Today’s commentary is a follow-upon yesterday’s primer, which was about the role of tax evasion both in leading to or contributing to our downward spiral into oligarchy and also as a surprisingly large factor in the budget deficit and therefore in America’s debt problem. Before I get to tax evasion, let me say something about where I’ve been going in my kind of intellectual journey into understanding oligarchy. As an economist, normally my instinct is to think about the invisible hand, to think about market forces, about technology as driving what happens to society. And even now there’s at least some extent to which the rise of kind of garden variety inequality, the rise of the top quintile at the expense of the middle, may be partially explained by the bias of technology towards higher formal skills, although that may be ending now with AI and all of that. But as I began to focus on oligarchy, on the very small number of people who have enormous wealth, enormous income, but the wealth is an even bigger factor — there are a really handful of people who have come to play such a large role.In our society, in our economy, and above all, of course, in our politics— I was forced more or less by the numbers to say this is not about the invisible hand. This is not about market forces. It isn’t even mostly about technology.Yeah, some technologies create winner-take-all markets that make people int he right place extremely wealthy. But the really big factor that’s driven us from the relatively equal society that we were 50 years ago — not obviously anywhere close to truly equal, but nothing like the dominance of a tiny elite that we have now — the really important factor is policy and above all tax policy. We basically stopped imposing progressive taxes that limited the growth of enormous fortunes. And sure enough, as the tax barriers to accumulation of excessive wealth went away, excessive wealth began to concentrate. This is, in many ways, the fundamental story. We got rid of, we ended the Gilded Age with its dominance by, as FDR said, the power of organized money, largely by taxing a lot of that organized money away. And we got back to something which in many ways is worse than the Gilded Age by taking away those taxes and allowing vast fortunes to snowball and buy themselves enormous political power, which allows them to snowball even further. One factor in all of that is the rise of simply not paying taxes that you’re supposed to pay. A lot of it is reductionist statutory tax rates. We tax corporate profits at a far lower rate than we did In the 1950s, we tax top incomes at a much, much lower rate than we did in the 1950s. But what’s also true is that we simply allow people to get away with not paying taxes to an enormous extent, to almost surely a much greater extent than used to be the case.The numbers are big, and in the primer I go through the tax gap. The money owed but not in fact collected is certainly north of $600 billion a year. It is something like 40% or more of the U.S. federal budget deficit. It is a major contributing factor to the accumulation of vast fortunes.What is striking is that far from really making an effort to rein in that tax gap, for the most part politically our system has moved to let it rip, has basically tried to make America safe for tax cheats. This is something that overwhelmingly benefits people with high incomes and large wealth because people with really big incomes, people who are extremely wealthy, for one thing, they just have much more complicated income. It’s much, much harder to track down and audit someone who has multiple businesses, some of which are dummy businesses, some of which may be real, but nonetheless are conduits through which money can move. And only the very wealthy can maintain offshore accounts that enable them to hide income and so on. So tax evasion is something that overwhelmingly benefits people with very high wealth and income. Not all! Not every billionaire is a tax cheat. There are levels and levels. There are some people who just feel that’s not something I want to do.People who feel that it would be wrong. Morality does exist. There are people who feel that their personal losses, should they be caught out cheating heavily on their taxes, would be large. So they care about their reputation.And then there are those who don’t.What’s astonishing is that we have, especially since 2010, especially since the hard right Republicans took control of the House of Representatives, we have moved to largely eviscerate any attempt to control that type of tax evasion. The numbers are really startling, and the IRS has actually put out very useful information. If you are someone with a very high income, the IRS stops counting pretty much at a million or more a year, but presumably it’s even more true further up the scale. In 2011, before the right-wing Congress was able to do its work, more than 7% of tax returns in that range were audited, which is not unreasonable because there’s obviously a lot of possibility for malfeasance there. It’s not saying that 7% of people with incomes of morethan a million were sent to jail. Obviously nothing like that, but we had widespread auditing, which among other things, encouraged people not to cheat on their taxes.By 2019, just eight years later, that number had gone from 7.2% to 0.7%. So almost nobody with high incomes was being audited for possible tax fraud.Now, why was that happening? There had been savage cuts in the funding to the IRS. Very large, at least 25 to 30% adjusting for inflation, something like a 40% reduction in the staff available for enforcement. And as it turns out, auditing the taxes of a very high income person is a lot more expensive than auditing a regular person. An ordinary blue collar worker, middle income, white collar worker who might be failing to declare some income, in many cases, it’s really very hard for them to evade taxes at all. And if they do, it tends to be relatively straightforward to pick apart what’s going on. And so audits of ordinary people are cheap. Audits of millionaires and billionaires, sounding like Bernie Sanders, are very expensive. And so the IRS, with limited resources and wanting to show that it was in fact auditing people, largely gave up on auditing the extremely wealthy. And this is a big number. The amount that we lose to tax evasion is something like the entire budget of Medicaid. It’s something like six times what we spend on food stamps. It’s something like 15 times the amount of money that Elon Musk saved by destroying USAID and killing millions of people in Africa. And yet it has been allowed to flourish.Notice, by the way, that this is all pre-Trump. Now, under Biden, there was a push to rectify the situation, a push to restore enforcement, increase the resources of the IRS, and increase enforcement actions in an attempt to tilt the agency’s priorities back towards where it should be, which is going after the big money. And that was just getting started. It takes a while to ramp those things up.And you know what happened. Of course, Trump’s one big beautiful bill did savage cuts in IRS resources for enforcement.Savage cuts in personnel. We’re now back to a situation where things are worse than they were before Biden started to try to fix it. So this is going to continue.What I find remarkable and interesting — I mean, I wouldn’t say that I’m baffled, but I think it is something that takes some analysis is why exactly.I mean, it’s one thing to favor the interests of the uber wealthy. Okay, we know that’s what the modern Republican Party is, whatever it may claim to be.But it’s another thing to systematically favor the least honest. What this policy does is It basically says if you are an honest billionaire — I’m afraid to name somebody because who knows what may come out in some future set of files — but if you are an honest billionaire, you are disadvantaged by the fact that dishonest billionaires are able to get away with cheating on their taxes. You should be opposed to that, but obviously the party that currently controls Congress, the White House, and the Supreme Court, that party actually prefers dishonest men of great wealth. It’s actually a positive preference for cheaters.I can speculate very loosely. It’s often been observed of Trump, and it’s probably true of some others in his camp, that at a fundamental level, he does not believe that anyone has good motives. And that someone who appears to actually be a decent person who plays by the rules is, by that very token, someone Trump distrusts.He kind of assumes that they must be even worse than he is. Otherwise, they wouldn’t be faking having good intentions, which people like him never have. Maybe there is something going on, something deeper. But in any case, wehave developed a system where not only do we enormously favor the interests of people who already have vast amounts of money, but we literally favor malefactors of great wealth, to use Teddy Roosevelt’s phrase. We literally favor people who not only have enormous amounts of money, but cheat, who don’t pay their taxes, who break the rules. This is not America. The general public still very much believes that people should pay the taxes they owe. We are not a country that valorizes, that rewards, or that honors people who cheat.But we have become a society that in practice does reward people who cheat. What does that do to our social cohesion? What does that do to our sense of ourselves as a nation? I think in some ways the moral decay is worse than the numbers, which is saying a lot.Take care. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

Transcript At this point, it’s almost a commonplace to say that under DonaldTrump, America has become a kakistocracy, ruled by the worst. But I don’tthink it’s fully appreciated the extent to which we’ve also become a cheatistocracy, ruled by the most corrupt. Today’s commentary is a follow-upon yesterday’s primer, which was about the role of tax evasion both in leading to or contributing to our downward spiral into oligarchy and also as a surprisingly large factor in the budget deficit and therefore in America’s debt problem. Before I get to tax evasion, let me say something about where I’ve been going in my kind of intellectual journey into understanding oligarchy. As an economist, normally my instinct is to think about the invisible hand, to think about market forces, about technology as driving what happens to society. And even now there’s at least some extent to which the rise of kind of garden variety inequality, the rise of the top quintile at the expense of the middle, may be partially explained by the bias of technology towards higher formal skills, although that may be ending now with AI and all of that. But as I began to focus on oligarchy, on the very small number of people who have enormous wealth, enormous income, but the wealth is an even bigger factor — there are a really handful of people who have come to play such a large role.In our society, in our economy, and above all, of course, in our politics— I was forced more or less by the numbers to say this is not about the invisible hand. This is not about market forces. It isn’t even mostly about technology. Yeah, some technologies create winner-take-all markets that make people int he right place extremely wealthy. But the really big factor that’s driven us from the relatively equal society that we were 50 years ago — not obviously anywhere close to truly equal, but nothing like the dominance of a tiny elite that we have now — the really important factor is policy and above all tax policy. We basically stopped imposing progressive taxes that limited the growth of enormous fortunes. And sure enough, as the tax barriers to accumulation of excessive wealth went away, excessive wealth began to concentrate. This is, in many ways, the fundamental story. We got rid of, we ended the Gilded Age with its dominance by, as FDR said, the power of organized money, largely by taxing a lot of that organized money away. And we got back to something which in many ways is worse than the Gilded Age by taking away those taxes and allowing vast fortunes to snowball and buy themselves enormous political power, which allows them to snowball even further. One factor in all of that is the rise of simply not paying taxes that you’re supposed to pay. A lot of it is reductionist statutory tax rates. We tax corporate profits at a far lower rate than we did In the 1950s, we tax top incomes at a much, much lower rate than we did in the 1950s. But what’s also true is that we simply allow people to get away with not paying taxes to an enormous extent, to almost surely a much greater extent than used to be the case. The numbers are big, and in the primer I go through the tax gap. The money owed but not in fact collected is certainly north of $600 billion a year. It is something like 40% or more of the U.S. federal budget deficit. It is a major contributing factor to the accumulation of vast fortunes. What is striking is that far from really making an effort to rein in that tax gap, for the most part politically our system has moved to let it rip, has basically tried to make America safe for tax cheats. This is something that overwhelmingly benefits people with high incomes and large wealth because people with really big incomes, people who are extremely wealthy, for one thing, they just have much more complicated income. It’s much, much harder to track down and audit someone who has multiple businesses, some of which are dummy businesses, some of which may be real, but nonetheless are conduits through which money can move. And only the very wealthy can maintain offshore accounts that enable them to hide income and so on. So tax evasion is something that overwhelmingly benefits people with very high wealth and income. Not all! Not every billionaire is a tax cheat. There are levels and levels. There are some people who just feel that’s not something I want to do.People who feel that it would be wrong. Morality does exist. There are people who feel that their personal losses, should they be caught out cheating heavily on their taxes, would be large. So they care about their reputation. And then there are those who don’t. What’s astonishing is that we have, especially since 2010, especially since the hard right Republicans took control of the House of Representatives, we have moved to largely eviscerate any attempt to control that type of tax evasion. The numbers are really startling, and the IRS has actually put out very useful information. If you are someone with a very high income, the IRS stops counting pretty much at a million or more a year, but presumably it’s even more true further up the scale. In 2011, before the right-wing Congress was able to do its work, more than 7% of tax returns in that range were audited, which is not unreasonable because there’s obviously a lot of possibility for malfeasance there. It’s not saying that 7% of people with incomes of morethan a million were sent to jail. Obviously nothing like that, but we had widespread auditing, which among other things, encouraged people not to cheat on their taxes. By 2019, just eight years later, that number had gone from 7.2% to 0.7%. So almost nobody with high incomes was being audited for possible tax fraud. Now, why was that happening? There had been savage cuts in the funding to the IRS. Very large, at least 25 to 30% adjusting for inflation, something like a 40% reduction in the staff available for enforcement. And as it turns out, auditing the taxes of a very high income person is a lot more expensive than auditing a regular person. An ordinary blue collar worker, middle income, white collar worker who might be failing to declare some income, in many cases, it’s really very hard for them to evade taxes at all. And if they do, it tends to be relatively straightforward to pick apart what’s going on. And so audits of ordinary people are cheap. Audits of millionaires and billionaires, sounding like Bernie Sanders, are very expensive. And so the IRS, with limited resources and wanting to show that it was in fact auditing people, largely gave up on auditing the extremely wealthy. And this is a big number. The amount that we lose to tax evasion is something like the entire budget of Medicaid. It’s something like six times what we spend on food stamps. It’s something like 15 times the amount of money that Elon Musk saved by destroying USAID and killing millions of people in Africa. And yet it has been allowed to flourish. Notice, by the way, that this is all pre-Trump. Now, under Biden, there was a push to rectify the situation, a push to restore enforcement, increase the resources of the IRS, and increase enforcement actions in an attempt to tilt the agency’s priorities back towards where it should be, which is going after the big money. And that was just getting started. It takes a while to ramp those things up. And you know what happened. Of course, Trump’s one big beautiful bill did savage cuts in IRS resources for enforcement.Savage cuts in personnel. We’re now back to a situation where things are worse than they were before Biden started to try to fix it. So this is going to continue. What I find remarkable and interesting — I mean, I wouldn’t say that I’m baffled, but I think it is something that takes some analysis is why exactly. I mean, it’s one thing to favor the interests of the uber wealthy. Okay, we know that’s what the modern Republican Party is, whatever it may claim to be. But it’s another thing to systematically favor the least honest. What this policy does is It basically says if you are an honest billionaire — I’m afraid to name somebody because who knows what may come out in some future set of files — but if you are an honest billionaire, you are disadvantaged by the fact that dishonest billionaires are able to get away with cheating on their taxes. You should be opposed to that, but obviously the party that currently controls Congress, the White House, and the Supreme Court, that party actually prefers dishonest men of great wealth. It’s actually a positive preference for cheaters. I can speculate very loosely. It’s often been observed of Trump, and it’s probably true of some others in his camp, that at a fundamental level, he does not believe that anyone has good motives. And that someone who appears to actually be a decent person who plays by the rules is, by that very token, someone Trump distrusts. He kind of assumes that they must be even worse than he is. Otherwise, they wouldn’t be faking having good intentions, which people like him never have. Maybe there is something going on, something deeper. But in any case, wehave developed a system where not only do we enormously favor the interests of people who already have vast amounts of money, but we literally favor malefactors of great wealth, to use Teddy Roosevelt’s phrase. We literally favor people who not only have enormous amounts of money, but cheat, who don’t pay their taxes, who break the rules. This is not America. The general public still very much believes that people should pay the taxes they owe. We are not a country that valorizes, that rewards, or that honors people who cheat.But we have become a society that in practice does reward people who cheat. What does that do to our social cohesion? What does that do to our sense of ourselves as a nation? I think in some ways the moral decay is worse than the numbers, which is saying a lot. Take care. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

TranscriptAt this point, it’s almost a commonplace to say that under DonaldTrump, America has become a kakistocracy, ruled by the worst. But I don’tthink it’s fully appreciated the extent to which we’ve also become a cheatistocracy, ruled by the most corrupt. Today’s commentary is a follow-upon yesterday’s primer, which was about the role of tax evasion both in leading to or contributing to our downward spiral into oligarchy and also as a surprisingly large factor in the budget deficit and therefore in America’s debt problem. Before I get to tax evasion, let me say something about where I’ve been going in my kind of intellectual journey into understanding oligarchy. As an economist, normally my instinct is to think about the invisible hand, to think about market forces, about technology as driving what happens to society. And even now there’s at least some extent to which the rise of kind of garden variety inequality, the rise of the top quintile at the expense of the middle, may be partially explained by the bias of technology towards higher formal skills, although that may be ending now with AI and all of that. But as I began to focus on oligarchy, on the very small number of people who have enormous wealth, enormous income, but the wealth is an even bigger factor — there are a really handful of people who have come to play such a large role.In our society, in our economy, and above all, of course, in our politics— I was forced more or less by the numbers to say this is not about the invisible hand. This is not about market forces. It isn’t even mostly about technology.Yeah, some technologies create winner-take-all markets that make people int he right place extremely wealthy. But the really big factor that’s driven us from the relatively equal society that we were 50 years ago — not obviously anywhere close to truly equal, but nothing like the dominance of a tiny elite that we have now — the really important factor is policy and above all tax policy. We basically stopped imposing progressive taxes that limited the growth of enormous fortunes. And sure enough, as the tax barriers to accumulation of excessive wealth went away, excessive wealth began to concentrate. This is, in many ways, the fundamental story. We got rid of, we ended the Gilded Age with its dominance by, as FDR said, the power of organized money, largely by taxing a lot of that organized money away. And we got back to something which in many ways is worse than the Gilded Age by taking away those taxes and allowing vast fortunes to snowball and buy themselves enormous political power, which allows them to snowball even further. One factor in all of that is the rise of simply not paying taxes that you’re supposed to pay. A lot of it is reductionist statutory tax rates. We tax corporate profits at a far lower rate than we did In the 1950s, we tax top incomes at a much, much lower rate than we did in the 1950s. But what’s also true is that we simply allow people to get away with not paying taxes to an enormous extent, to almost surely a much greater extent than used to be the case.The numbers are big, and in the primer I go through the tax gap. The money owed but not in fact collected is certainly north of $600 billion a year. It is something like 40% or more of the U.S. federal budget deficit. It is a major contributing factor to the accumulation of vast fortunes.What is striking is that far from really making an effort to rein in that tax gap, for the most part politically our system has moved to let it rip, has basically tried to make America safe for tax cheats. This is something that overwhelmingly benefits people with high incomes and large wealth because people with really big incomes, people who are extremely wealthy, for one thing, they just have much more complicated income. It’s much, much harder to track down and audit someone who has multiple businesses, some of which are dummy businesses, some of which may be real, but nonetheless are conduits through which money can move. And only the very wealthy can maintain offshore accounts that enable them to hide income and so on. So tax evasion is something that overwhelmingly benefits people with very high wealth and income. Not all! Not every billionaire is a tax cheat. There are levels and levels. There are some people who just feel that’s not something I want to do.People who feel that it would be wrong. Morality does exist. There are people who feel that their personal losses, should they be caught out cheating heavily on their taxes, would be large. So they care about their reputation.And then there are those who don’t.What’s astonishing is that we have, especially since 2010, especially since the hard right Republicans took control of the House of Representatives, we have moved to largely eviscerate any attempt to control that type of tax evasion. The numbers are really startling, and the IRS has actually put out very useful information. If you are someone with a very high income, the IRS stops counting pretty much at a million or more a year, but presumably it’s even more true further up the scale. In 2011, before the right-wing Congress was able to do its work, more than 7% of tax returns in that range were audited, which is not unreasonable because there’s obviously a lot of possibility for malfeasance there. It’s not saying that 7% of people with incomes of morethan a million were sent to jail. Obviously nothing like that, but we had widespread auditing, which among other things, encouraged people not to cheat on their taxes.By 2019, just eight years later, that number had gone from 7.2% to 0.7%. So almost nobody with high incomes was being audited for possible tax fraud.Now, why was that happening? There had been savage cuts in the funding to the IRS. Very large, at least 25 to 30% adjusting for inflation, something like a 40% reduction in the staff available for enforcement. And as it turns out, auditing the taxes of a very high income person is a lot more expensive than auditing a regular person. An ordinary blue collar worker, middle income, white collar worker who might be failing to declare some income, in many cases, it’s really very hard for them to evade taxes at all. And if they do, it tends to be relatively straightforward to pick apart what’s going on. And so audits of ordinary people are cheap. Audits of millionaires and billionaires, sounding like Bernie Sanders, are very expensive. And so the IRS, with limited resources and wanting to show that it was in fact auditing people, largely gave up on auditing the extremely wealthy. And this is a big number. The amount that we lose to tax evasion is something like the entire budget of Medicaid. It’s something like six times what we spend on food stamps. It’s something like 15 times the amount of money that Elon Musk saved by destroying USAID and killing millions of people in Africa. And yet it has been allowed to flourish.Notice, by the way, that this is all pre-Trump. Now, under Biden, there was a push to rectify the situation, a push to restore enforcement, increase the resources of the IRS, and increase enforcement actions in an attempt to tilt the agency’s priorities back towards where it should be, which is going after the big money. And that was just getting started. It takes a while to ramp those things up.And you know what happened. Of course, Trump’s one big beautiful bill did savage cuts in IRS resources for enforcement.Savage cuts in personnel. We’re now back to a situation where things are worse than they were before Biden started to try to fix it. So this is going to continue.What I find remarkable and interesting — I mean, I wouldn’t say that I’m baffled, but I think it is something that takes some analysis is why exactly.I mean, it’s one thing to favor the interests of the uber wealthy. Okay, we know that’s what the modern Republican Party is, whatever it may claim to be.But it’s another thing to systematically favor the least honest. What this policy does is It basically says if you are an honest billionaire — I’m afraid to name somebody because who knows what may come out in some future set of files — but if you are an honest billionaire, you are disadvantaged by the fact that dishonest billionaires are able to get away with cheating on their taxes. You should be opposed to that, but obviously the party that currently controls Congress, the White House, and the Supreme Court, that party actually prefers dishonest men of great wealth. It’s actually a positive preference for cheaters.I can speculate very loosely. It’s often been observed of Trump, and it’s probably true of some others in his camp, that at a fundamental level, he does not believe that anyone has good motives. And that someone who appears to actually be a decent person who plays by the rules is, by that very token, someone Trump distrusts.He kind of assumes that they must be even worse than he is. Otherwise, they wouldn’t be faking having good intentions, which people like him never have. Maybe there is something going on, something deeper. But in any case, wehave developed a system where not only do we enormously favor the interests of people who already have vast amounts of money, but we literally favor malefactors of great wealth, to use Teddy Roosevelt’s phrase. We literally favor people who not only have enormous amounts of money, but cheat, who don’t pay their taxes, who break the rules. This is not America. The general public still very much believes that people should pay the taxes they owe. We are not a country that valorizes, that rewards, or that honors people who cheat.But we have become a society that in practice does reward people who cheat. What does that do to our social cohesion? What does that do to our sense of ourselves as a nation? I think in some ways the moral decay is worse than the numbers, which is saying a lot.Take care. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

From Kakistocracy to Cheatistocracy

The latest excuse for imposing tariffs is even less credible than previous excuses. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

The latest excuse for imposing tariffs is even less credible than previous excuses. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

The latest excuse for imposing tariffs is even less credible than previous excuses. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

Slavery and Tariffs

Thank you <a target="_blank" href="https://substack.com/profile/31576347-teresa-hanafin">Teresa Hanafin</a>, <a target="_blank" href="https://substack.com/profile/282557101-lisa-gonzalez">Lisa Gonzalez</a>, <a target="_blank" href="https://substack.com/profile/2800378-stephanie-g-wilson-phd">Stephanie G Wilson, PhD</a>, <a target="_blank" href="https://substack.com/profile/93773929-nenad-georgievski">Nenad Georgievski</a>, <a target="_blank" href="https://substack.com/profile/5561375-diane-osgood">Diane Osgood</a>, and many others for tuning into my live video with <a target="_blank" href="https://substack.com/profile/4875576-heather-cox-richardson">Heather Cox Richardson</a>! Join me for my next live video in the app. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

Thank you Teresa Hanafin, Lisa Gonzalez, Stephanie G Wilson, PhD, Nenad Georgievski, Diane Osgood, and many others for tuning into my live video with Heather Cox Richardson! Join me for my next live video in the app. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

Thank you <a href="https://substack.com/profile/31576347-teresa-hanafin" rel="noopener noreferrer">Teresa Hanafin</a>, <a href="https://substack.com/profile/282557101-lisa-gonzalez" rel="noopener noreferrer">Lisa Gonzalez</a>, <a href="https://substack.com/profile/2800378-stephanie-g-wilson-phd" rel="noopener noreferrer">Stephanie G Wilson, PhD</a>, <a href="https://substack.com/profile/93773929-nenad-georgievski" rel="noopener noreferrer">Nenad Georgievski</a>, <a href="https://substack.com/profile/5561375-diane-osgood" rel="noopener noreferrer">Diane Osgood</a>, and many others for tuning into my live video with <a href="https://substack.com/profile/4875576-heather-cox-richardson" rel="noopener noreferrer">Heather Cox Richardson</a>! Join me for my next live video in the app. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

Lunch Money with Paul Krugman and Heather Cox Richardson

At a summit with Latin American leaders over the weekend, Marco Rubio said a few words in Spanish. Then Pete Hegseth popped up to say “I only speak American.” And that’s why we’re facing disaster in the Persian Gulf. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

At a summit with Latin American leaders over the weekend, Marco Rubio said a few words in Spanish. Then Pete Hegseth popped up to say “I only speak American.” And that’s why we’re facing disaster in the Persian Gulf. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

At a summit with Latin American leaders over the weekend, Marco Rubio said a few words in Spanish. Then Pete Hegseth popped up to say “I only speak American.” And that’s why we’re facing disaster in the Persian Gulf. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

Why I Don't Speak American

A brief reflection on a bad morning for jobs and a bad week for energy. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

A brief reflection on a bad morning for jobs and a bad week for energy. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

A brief reflection on a bad morning for jobs and a bad week for energy. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

Where's My Golden Age?

A reaction to the latest news on how much this war is costing. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

A reaction to the latest news on how much this war is costing. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

A reaction to the latest news on how much this war is costing. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

ONE BILLION DOLLARS

Thank you <a target="_blank" href="https://substack.com/profile/2400370-sonya-lea">Sonya Lea</a>, <a target="_blank" href="https://substack.com/profile/146967170-orientexpress-marga-zambrana">OrientExpress Marga Zambrana</a>, <a target="_blank" href="https://substack.com/profile/46079571-alex-schneideman">Alex Schneideman</a>, <a target="_blank" href="https://substack.com/profile/1452770-dirk-paessler">Dirk Paessler</a>, <a target="_blank" href="https://substack.com/profile/23811217-dixiane-hallaj">Dixiane Hallaj</a>, and many others for tuning into my live video with <a target="_blank" href="https://substack.com/profile/28064135-harry-litman">Harry Litman</a>! Join me for my next live video in the app. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

Thank you Sonya Lea, OrientExpress Marga Zambrana, Alex Schneideman, Dirk Paessler, Dixiane Hallaj, and many others for tuning into my live video with Harry Litman! Join me for my next live video in the app. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

Thank you <a href="https://substack.com/profile/2400370-sonya-lea" rel="noopener noreferrer">Sonya Lea</a>, <a href="https://substack.com/profile/146967170-orientexpress-marga-zambrana" rel="noopener noreferrer">OrientExpress Marga Zambrana</a>, <a href="https://substack.com/profile/46079571-alex-schneideman" rel="noopener noreferrer">Alex Schneideman</a>, <a href="https://substack.com/profile/1452770-dirk-paessler" rel="noopener noreferrer">Dirk Paessler</a>, <a href="https://substack.com/profile/23811217-dixiane-hallaj" rel="noopener noreferrer">Dixiane Hallaj</a>, and many others for tuning into my live video with <a href="https://substack.com/profile/28064135-harry-litman" rel="noopener noreferrer">Harry Litman</a>! Join me for my next live video in the app. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

Live with Paul Kruman: Davos, Powell, world economy

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Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

Live with Heather Cox Richardson

talking with Paul Krugman about the Trump economy and zombie Republican policies

Thank you <a target="_blank" href="https://substack.com/profile/18959935-steve-chapple">Steve Chapple</a>, <a target="_blank" href="https://substack.com/profile/20008836-ethan-phillips">Ethan Phillips</a>, <a target="_blank" href="https://substack.com/profile/1521806-grace-lovelace">Grace Lovelace</a>, <a target="_blank" href="https://substack.com/profile/6666281-jenine-baines">Jenine Baines</a>, <a target="_blank" href="https://substack.com/profile/23811217-dixiane-hallaj">Dixiane Hallaj</a>, and many others for tuning into my live video with <a target="_blank" href="https://substack.com/profile/604782-jared-bernstein">Jared Bernstein</a>! Join me for my next live video in the app. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

Thank you Steve Chapple, Ethan Phillips, Grace Lovelace, Jenine Baines, Dixiane Hallaj, and many others for tuning into my live video with Jared Bernstein! Join me for my next live video in the app. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

Thank you <a href="https://substack.com/profile/18959935-steve-chapple" rel="noopener noreferrer">Steve Chapple</a>, <a href="https://substack.com/profile/20008836-ethan-phillips" rel="noopener noreferrer">Ethan Phillips</a>, <a href="https://substack.com/profile/1521806-grace-lovelace" rel="noopener noreferrer">Grace Lovelace</a>, <a href="https://substack.com/profile/6666281-jenine-baines" rel="noopener noreferrer">Jenine Baines</a>, <a href="https://substack.com/profile/23811217-dixiane-hallaj" rel="noopener noreferrer">Dixiane Hallaj</a>, and many others for tuning into my live video with <a href="https://substack.com/profile/604782-jared-bernstein" rel="noopener noreferrer">Jared Bernstein</a>! Join me for my next live video in the app. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

Let’s Do Lunch!

Thank you <a target="_blank" href="https://substack.com/profile/11624125-jeremy-ney">Jeremy Ney</a>, <a target="_blank" href="https://substack.com/profile/291909738-public-servant">Public Servant</a>, <a target="_blank" href="https://substack.com/profile/5275521-tosh-berman">Tosh Berman</a>, <a target="_blank" href="https://substack.com/profile/18959935-steve-chapple">Steve Chapple</a>, <a target="_blank" href="https://substack.com/profile/19969973-sanjiv">Sanjiv</a>, and many others for tuning into my live video with <a target="_blank" href="https://substack.com/profile/29221451-joseph-gordon-levitt">Joseph Gordon-Levitt</a>! Join me for my next live video in the app. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

Thank you Jeremy Ney, Public Servant, Tosh Berman, Steve Chapple, Sanjiv, and many others for tuning into my live video with Joseph Gordon-Levitt! Join me for my next live video in the app. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

Thank you <a href="https://substack.com/profile/11624125-jeremy-ney" rel="noopener noreferrer">Jeremy Ney</a>, <a href="https://substack.com/profile/291909738-public-servant" rel="noopener noreferrer">Public Servant</a>, <a href="https://substack.com/profile/5275521-tosh-berman" rel="noopener noreferrer">Tosh Berman</a>, <a href="https://substack.com/profile/18959935-steve-chapple" rel="noopener noreferrer">Steve Chapple</a>, <a href="https://substack.com/profile/19969973-sanjiv" rel="noopener noreferrer">Sanjiv</a>, and many others for tuning into my live video with <a href="https://substack.com/profile/29221451-joseph-gordon-levitt" rel="noopener noreferrer">Joseph Gordon-Levitt</a>! Join me for my next live video in the app. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_4" rel="noopener noreferrer">paulkrugman.substack.com/subscribe</a>

Re: money and creativity with Paul Krugman

Notes on economics and more <a href="https://paulkrugman.substack.com?utm_medium=podcast">paulkrugman.substack.com</a>

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