Princeton professor Paul Krugman, top, and former faculty member Joseph Stiglitz discussed the economy at an event in New York City. (Photos: Jon Roemer/Courtesy the Woodrow Wilson School [Krugman]; Wikipedia/Lawrence Khoo [Stiglitz])
In a freewheeling discussion that focused on the United States’ economic slowdown and what to do about it, Princeton economics professor Paul Krugman talked about the need for more government spending with Columbia University professor Joseph Stiglitz during “A Conversation with Nobel Laureates” Oct. 23 in New York City.
The discussion, before about 700 people at an auditorium at the Fashion Institute of Technology, reached back to the Great Depression for historical comparisons and across the ocean for current-day examples of countries with economies that are doing better than ours.
Describing how government spending helped the United States recover from the Great Depression in the 1930s and 1940s, Krugman said an injection of funds during an economic downturn “is not a sugar high. It’s more like a diet of essential nutrients.”
Added Stiglitz, who taught at Princeton from 1979 to 1988, “There is a vicious cycle going on, where a weak economy leads to more inequality, which leads to a weaker economy.”
The Nobel Prize-winning economists (Stiglitz won in 2001, Krugman in 2008) agreed that cutting social safety nets was not a means to a stronger economy. Scandinavian countries, which have strong social programs, have done well in this economy, Krugman said.
On the issue of health care, the pair talked about the ways in which President Barack Obama’s health care legislation has figured in this year’s presidential campaign.
When politicians talk about “health care consumers” and comparison-shopping for health care, Krugman said, “that language is deeply disturbing. You’ve just been rushed to the hospital, you don’t say, ‘I could get a better deal at another hospital.’”
“We are out of tune with the rest of the advanced industrial countries,” Stiglitz said.
On the subject of income inequality in the United States, Krugman had a message for the “Occupy Wall Street” movement.
“They set the bar too low: It’s not the 1 percent, it’s the .1 percent.”