【Bloomberg Businessweek】Paul Krugman Won the Crisis—and Lost the Argument

Paul Krugman Won the Crisis—and Lost the Argument ポール・クルーグマンはこの危機に勝った――そして論争に負けた
By Peter Coy September 12, 2013

A lot of people were tired of thinking about the financial crisis by 2012. Not Paul Krugman, the liberal Princeton University economist with a Nobel Prize and a New York Times op-ed column. That April he published a full-on cri de coeur called End This Depression Now! In May his attention-getting taunts of conservatives led the New York Post to call him “the nation’s most dangerous economist.” Then in June he got into a Twitter war over austerity with the president of Estonia that was so entertaining it was made into a short opera.
多くの人は2012年にもなるとこの金融危機について考えるのにうんざりしていた。ノーベル賞受賞者でニューヨーク・タイムズのオプエド・コラムニストであるプリンストン大学のリベラル派ポール・クルーグマンは違う。去年4月、彼はcri de coeur(心からの叫び)で一杯の『さっさと不況を終わらせろ!』という本を出版した。5月には、彼の保守派に対する罵倒が注目を集め、ニューヨーク・ポストは彼を「この国で最も危険な経済学者」と呼んだ。それから6月になると、彼はエストニア大統領との緊縮財政をめぐるツイッター戦争に突入したが、それはあまりにも面白すぎてショート・オペラの域に達していた。

The Lehman crisis was a moment made for Krugman. It prompted policymakers to swallow their pride and take a second look at John Maynard Keynes, the late British theorist whose influence in academia had been fading for decades. The bearded, gnome-like Krugman, as the most famous expositor of traditional Keynesianism, rose to the occasion. As of 2013, End This Depression Now! has been translated into 25 languages. “Paul is a rock star overseas,” says Drake McFeely, president of W.W. Norton, his U.S. publisher.

There are, as the Economist’s Matthew Bishop once observed, two Krugmen: the scholar and the polemicist. The scholar sifts data for patterns. The polemicist picks fights to make points. “It kind of helps to use various people as foils,” Krugman said in an interview this year for this magazine. “If someone has said something that’s demonstrably at odds with experience or just demonstrably stupid, I use it.” He once told a National Public Radio interviewer, “There are so many fools that if you try to suffer them at any great length, there’s no time left.” Columnist George Will said of Krugman: “If certainty were oil, he’d be Saudi Arabia.”
かつてエコノミスト誌のマシュー・ビショップが述べたように、2種類のクルーグマン(Krugmen)がいる。一方は学者で、もう一方は論客だ。学者としての彼はデータをパターンごとにふるい分けていく。論客としての彼は評価を上げるために論争を吹っかける。「色んな人々をダシに使うのは結構便利だ」と彼は今年当誌のインタビューで語っている。かつてNnational Public Radioのインタビューでは「もし誰かが明らかに事実と異なることを語ったとか、もしくは単に明らかに馬鹿なことを言っていたら、僕はそれを使う」と語り、「あまりにも馬鹿が多すぎるから、そんなことを少しでも気に病んでいたら、時間が全然なくなるよ。」コラムニストのジョージ・ウィルはクルーグマンをこう評した:確実性が石油だとするなら、彼はサウジアラビアだ。

Despite his popularity and determination, Krugman hasn’t exactly won the argument. He’s had no luck getting the Federal Reserve to raise its inflation target to 4 percent, from 2 percent. He also hasn’t managed to persuade Congress to increase spending to stimulate growth; with the sequester, lawmakers have done just the opposite. Columbia University economist Jeffrey Sachs, who calls himself a fellow progressive, says Krugman shows too little concern for wasteful government spending. “This approach is disastrous both politically and economically,” he wrote in a Huffington Post column.

Still, Krugman is happy where he stands. By taking positions outside the political mainstream, he bucks up the fighting spirit of fellow liberals. The late Joseph Overton, a libertarian, invented the notion of the Overton window to describe the range of ideas that are politically acceptable at any given time. The window has moved to the right in recent years. But it might have moved even further without Krugman.

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【NHK】Biz plus:ポール・クルーグマン・プリンストン大学教授へのインタビュー 2/8/2013

2/8/2013 Paul Krugman, Professor at Princeton University

The broad outline looks right. Looks like he’s actually trying to do the right things. He’s doing what Japan should have been doing a long time ago. The details are hard to evaluate. For an outsider, it’s hard to know. But the idea that Japan should have a short-term fiscal stimulus to get the economy moving, coupled with a change in monetary policy designed to accommodate the fiscal stimulus translated into a higher rate of inflation, to a positive inflation of a couple of percent at least a year, and thereby sustaining the effect, that’s pretty much what the doctor ordered, I guess I would say.

Given the state of the Japanese economy, this is what Japan should have done years ago. So it looks like the right thing. Whether the fiscal stimulus is actually adequate is something that I’m hearing conflicting reports about. But the market response is good, so it looks relatively favorable.

Well, I think I would actually like it to be higher, but certainly 2% is a lot better than the sort of… we want maybe one or something. And I think the main thing is the signal is being sent. People are hearing the signal that this time the BOJ won’t do what it’s done several times before, which is just as the economy’s starting to recover, it’ll pull back, right? The crucial thing is not what the BOJ does in this moment, but what people expect it will do when Japan… When inflation actually starts to accelerate, will the BOJ be willing to let that happen for awhile? It looks like it will. So that’s very much a good thing. That’s exactly what you want.

Well, we need someone who is less of a conventional central banker. I don’t know who that would be, but you want somebody who is willing to say, okay, price stability, that was the war of the 1970s. That’s not our problem right now. Our problem right now is we need some inflation. We need an accommodative policy, and we don’t need to be so careful preserving the BOJ’s independence that we get in the way of recovery. So, I mean, if I could, maybe Japan should have hire Mr. Carney, the Canadian who’s going to the Bank of England, right? It might have been good just to shake things up to have a real outsider. But if not, someone who is willing to say, okay, this is a different kind of environment and we need to change our concerns.

Well, I mean, in effect I think the BOJ’s independence is being diminished. It is being more or less pressured by the government to changing its stance. But that’s okay. I mean, central bank independence is not a sacred principle. Central bank independence is a strategy that was evolved to meet the challenges of inflation back when inflation was the big problem. And it’s actually turned out to be a problem in the current environment. You can look at history, and you could say that actually there have been a number of cases in which undermining central bank independence has been exactly what you needed.

In the case of the United States in the 1930s, pushing the U.S. off the gold standard, pushing it into… essentially the Fed into an expansionary mode whether it liked it or not was a very important thing.

If you go back to Japan in the 1930s, Takahashi and all of that, removing the independence of the central bank was actually a good thing. The notion that there’s something terrible about losing some of that independence is wrong. These are different times.

I imagine it will be a topic of discussion. But the answer is: they will tolerate whatever happens. What are they going to do? I mean, realistically Mario Draghi, they say that he’s very upset. But is Europe going to impose sanctions on Japan? No, it’s not. And the United States I doubt will have much of a complaint at all because the United States has been accused of the same thing. And both the United States and Japan are basically pursuing aggressive expansionary monetary policies, which is appropriate given the circumstance. And one consequence of that is that the currency falls. But that’s a side effect. It’s an appropriate monetary policy. I should say one more thing, which is that until now… until just about now, Japan has stood out as having substantially higher real interest rates than either the United States or Europe because, with deflation embedded in expectations and with interest rates held… short-term rates at zero, long-terms held closed to 1% because of the lower bound, that has meant that Japan has had significantly positive real interest rates at a time when Europe and the United States have had negative rates.
それは議論のテーマになるでしょう。でも、その答えは:彼らは何が起ころうと容認するでしょう。彼らに何ができるのか? 現実問題として、マリオ・ドラギはすごく驚いていたようです。でも、ヨーロッパが日本に制裁を課すでしょうか? そんなことはありえない。そして、アメリカも同じことで非難を受けているので、ほとんど文句を言わないと思う。アメリカも日本も基本的に極めて拡張的な金融政策を追求しているわけで、それは現在の状況では適切なものです。その結果の一つとして通貨が下落している。でも、それは副次的な効果です。やっているのは適切な金融政策です。もう一つ言っておくとするなら、これまでずっと、日本はアメリカやヨーロッパよりも実質利子率がかなり高い状態に留まっていた。デフレが予想に組み込まれて、短期利子率がゼロ下限、長期利子率は1%以下の下限に直面していたために、アメリカやヨーロッパがマイナス金利のころ、日本はかなり高い正の利子率になってしまったということです。

Now Japan is moving to having the same real interest rates as Europe and the United States, so the yen falls. That’s not a distortion; that’s actually things moving in the right direction. There’s no way honestly to complain that Japan is doing something illegitimate. Japan is doing exactly what it should be doing.

But everybody wants the world to be ideal for them. But if Germany was counting on the rest of the world being overvalued so that Germany could have nice exports, well, it’s not going to happen. So I think it’s important to go into the meeting and say… Okay, people will say that they’re unhappy. And you say, yes, I hear what you say, but not change the policy.

Well, I think that the only thing I would say is that now that Japan is getting the monetary policy right, there’s no good excuse for large-scale currency intervention. So if Japan is on top of the new inflation policy, going to buy a lot of dollars, then the United States might complain, but otherwise not.

I think the U.S. is relatively understanding on all of this stuff. And if the U.S. is going to go after currency manipulators, I don’t think Japan would be at the top of the list. So I think that’s a problem And again of course the United States has to be aware that anything that people are going to say about Japan and currency wars can be also… or the same charges can be leveled against the United States. So how can we get angry at Japan for doing exactly what we’re doing? So I don’t think the U.S. is a big concern here.
アメリカはこれらのことを比較的理解してきていると思う。そして、もしアメリカが為替操作について文句を言うとすれば、そのリストのトップに日本が来るとは思わない。だから、そのような難癖は問題だと思うし、また当然に、アメリカは、人々が日本や通貨戦争について文句をつけていることは全て自身に向けられてもおかしくないと気づいているはずです。我々がやっているのとまさに同じことをやっている日本にどうすれば怒りをぶつけられるのか? だから、私はアメリカがこの件で大きな問題になることはないと思う。

I mean, and particularly, by the way, the Federal Reserve, Japan can say to Ben Bernanke, “well, Mr. Bernanke, we’re doing what you told us to do 12 years ago. Now we’re doing it. How can you complain?” So I think that’s not a big problem.

The answer is: no, I think it’s not something to be concerned about. I’m hearing numbers like 2% of GDP. Two percent of GDP more or less in debt is going to not matter at all for the future. And you need a fiscal stimulus as part of the package right now. You need to raise that inflation rate, and one of the main ways you can do that is by pumping up the economy right now. So you need the short-term stimulus.

And for what it’s worth, the financial markets are not bothered at all. If you were too concerned that fiscal stimulus would cause the bond vigilantes to attack, that JGB rates would go soaring, that has not happened. And since expected inflation is up, the real borrowing costs have gone way down. I’d actually say that, given the rise in expected inflation and the fall in real rates, Japan’s fiscal position… it’s long-run fiscal outlook has just improved substantially.

So if we’re actually asking, what’s happened to the Japanese outlook with the coming of ABENOMICS, the answer actually is it’s gotten better because the inflation expectations are a much bigger deal than the short-term stimulus.

Well, that’s where the question comes in. And the question would be about the size. Is a 2% stimulus enough, which partly depends on how far below potential you think the Japanese economy is operating, which is a hard thing to estimate. So I’d actually be more comfortable if it was a bigger stimulus. And is a 2% inflation target high enough, which is again a question. But I think it would have been hard for him to have done even bigger.
それが疑問な点です。疑問な点と言うのはそのサイズです。2%の刺激策で十分なのか? それは、ある程度まで、日本経済が潜在成長率をどれほど下回っていると考えるかによってかかってくるが、それを推察するのは難しい。だから、もっと刺激策が大きければ、私はもっと安心できたでしょう。そして、2%のインフレターゲットで十分なのか、これも疑問です。でも、彼はこれ以上高くするのは困難だと考えたんでしょう。

So I think it’s a good shot. Now people will talk about structural reform and all of that. And, sure, it’s always good to have structural reform. And if Japan could have more structural reform, then that would make it easier to get recovery going. But structural reform is hard; it takes time. And there’s no good reason to have a persistently depressed economy while you wait for the structural reform to take effect. So this is the right thing to do.

I mean, if I could do anything else, I would say ideally Japan should have a higher fertility rate and maybe more immigration because the demographics I think are an important part of the problem. But, okay, that’s not going to happen right away either. So all of these things… So the answer is that Abe’s policies don’t solve all of Japan’s problems, but they’re not supposed to. They hopefully will solve the problem of deflation and persistent inadequate demand, leaving other problems still on the table.

The answer is that there’s serious questions about whether you can get traction. If you use only monetary policy, will it have enough of an effect? You want to get the inflation rate positive; you want to get it up to 2% or higher. Can you do that just using monetary policy, or do you need an extra boost from fiscal policy?
どれが牽引力を持つかに関してはかなり謎があるというのが答えです。金融政策のみで、十分な効果があるのか? 日本はインフレ率をプラスにしたい。2%以上上げようとしている。それを金融政策だけでできるのか、あるいは財政政策の援護が必要なのか?

The fiscal expansion should be not forever; it should be only a couple of years at most to get the economy going. But I think it’s much safer to actually have the fiscal expansion and not just the monetary side. I understand. I mean, I’ve made the argument in the past myself that monetary policy should be the principal tool. But I think we do worry about effectiveness in the short run, which is why you want the fiscal expansion. So I think that’s the answer. You don’t want to be too pure here. You need an initial boost, right? You need a jump-start for the Japanese economy, and it’s not clear that you can get that unless there is fiscal action as well as monetary.
ずっと財政拡大を行うのではなく、経済を起動させるために、最大でも2,3年ほどにすべきでしょう。でも、私は金融政策だけよりも、財政拡張策を使うほうがずっと堅実だと思う。分かってますよ。私は過去には金融政策こそ主要なツールだと主張している。でも、私たちはその短期的な有効性については疑問に思っていて、そこで財政政策が必要になるわけです。だから、それが私の答えです。ここで、あまりに潔癖になる必要はない。まず経済を押し上げる必要があるんでしょ? 日本経済を急発進する必要がある。金融政策と共に財政政策も行わないと、それを達成できるか明白ではない。

Oh, gosh! Well, I hope Japan doesn’t do austerity right now. I mean, obviously Japan in the long run needs eventually to have fiscal austerity. The Japanese debt level is high. The fiscal burden of an aging population is large. So Japan needs over the long term to be doing austerity, but not until you are in a situation where we know that monetary policy can offset the fiscal austerity. And you can’t have that unless Japan is safely off the zero lower bound on interest rates, which really won’t happen until people are definitively convinced that Japan is going to have inflation, not deflation. And so the fiscal austerity, ask me again in three or four years.

Once Japan is looking like a full-employment economy, if everybody expects 2.5% inflation, interest rates are high enough so that there’s room to cut, then you can start having fiscal austerity and offset it with monetary policy. But not now—not under these conditions.

Well, these are the same ol’ people. I mean, this is true. The thing is that, I mean, some people think that they’re doing this for the wrong reasons—that he’s not really trying to do a macroeconomic program; he just wants to go back to hiring lots of people for public works projects. I can’t evaluate that.

But in a way it doesn’t matter. Even if he’s doing it for the wrong reason, it’s actually the right thing to do right now. Now you do want eventually to pull back. You don’t want this endless fiscal stimulus. That may be an issue, but I think people are worried about the wrong thing.

Right now the big concern for Japan is not that we’re going to have old-fashioned stimulus policies. It is that Japan will continue to have orthodox fiscal and monetary policies in an environment where orthodoxy is very wrong and is very destructive. So if the Diet is going to be unorthodox for whatever reason, this is a good thing. And if it takes a dinosaur to break out of an extended depression, then dinosaurs are okay.

Japan had one fiscal stimulus after another over a period of almost 20 years. And those fiscal stimulus measures actually did help. Every time it was done, the economy would grow. Japan actually managed to avoid really severe unemployment. So it’s not as if the fiscal stimulus was a failure, but Japan never broke out of the trap of deflation. But that’s because the fiscal stimulus was never accompanied with a change in monetary policy. It was really in a fundamental sense, the Ministry of Finance would do something, and then the Bank of Japan would take it away.

And so now with a little luck, they’ll be both pushing in the same direction. So that’s what’s different. The problem with Japanese fiscal stimulus wasn’t that fiscal stimulus was the wrong thing. The problem with it was that it wasn’t accompanied by the necessary change in monetary policy.

The biggest thing that I see right now is the concern that the fiscal stimulus is going to be mostly on paper and not real—that there will be sums of money, but won’t end up being new money, or it’ll be projects that take too long to get started. And that’s where maybe the concern about old-fashioned politician stuff comes in. If you’re looking for projects that please your interest groups but take four years to actually really get going, then that’s not helping. So we use the term… what’s used way too much in the United States is “shovel-ready,” but stuff that’s ready to get going quickly.

The Japanese economy needs a short, sharp boost right now. And my biggest concern from what I read is that that may not be… I’m not sure, but I worry about whether there’s enough shovel-ready, quick boost to the economy for Japan. Or to change the metaphor, Japan really needs the jump-start, right? Really is like a car where you need to get it revving to get it going. And is the plan really going to do that? That would be my big question.
現在、日本経済は短期的な巨額の景気対策を必要としている。私が認識している中で最も心配しているのは、日本経済を回復させるためにすぐに実行可能な「shovel-ready」な事業が十分にないかもしれないということです。メタファーを変えれば、日本は経済を急発進させる必要があるんでしょ? 再び動き出すためにエンジンを吹かす必要がある車のようなものです。そのプランでそれが可能なのか? それが最大の心配事です。

Well, in the U.S., profits are very high. It’s a little disturbing actually. The economy hasn’t done all that well, but profits have done very well. And meanwhile of course interest rates are very low. So the alternative investment, bonds are a pretty poor investment. Stocks means you’re buying ownership in these very profitable U.S. corporations. Why shouldn’t stocks be high? So I don’t think it’s unreasonable.
アメリカの企業利益はすごく高い。それには少し困惑させるところがある。経済はそれほど上手く行っているわけではないのに、企業利益はすごく高い。一方、ご存知のように利子率はすごく低い。代替案として、債券はすごくショボい投資先です。現在の株価が示しているのは、人々はすごく利益率の高いアメリカ企業の所有権を買っているということです。株価が高くならない理由がありますか? だから、現在の株価が不合理とは思わない。

I think in a way I’m disturbed because the strong stock market is in part a byproduct of a peculiar economy where corporations do wonderfully but people don’t. But I don’t think there’s anything particularly puzzling or disturbing about the stock market.

Japanese politicians may be dinosaurs; American politicians are crazy people. And so it appears at least for a little while we’re about to have a completely insane fiscal austerity for a little while because of this fight over the “sequester.” I mean, the United States, we have a reasonable intelligent leadership in the White House. I don’t know if you agree with them about everything, but Obama and his people are okay.

But we have one House of Congress controlled by people who are not okay, who are pretty much crazy. And that’s not good for the economy. We have an economy that I think the private sector’s ready to recover, but the political dynamics might undermine that.

I think the United States is… I mean, my pessimism of several years ago was right. We’ve had a very slow recovery. But Untied States think is… we still are a long way from full recovery, but you can see a positive dynamic for the United States. Europe is much more troubled. So Europe, they’re still very much in their crisis, and the financial markets are a little calmer.

Japan, I’m suddenly relatively hopeful about Japan. This is new. So it’s a mixed picture. It’s not that the world as a whole is in terrible trouble. But among the advanced countries, Europe is what scares me now.

Well, Japan looks like… let’s see. If ABENOMICS works, then Japan will for the first time in a long time be a positive contributor. I mean, Japan is… at this point GDP is about 40% as big as either the United States or the European Union. So if we’re looking at the advanced countries as a group, Japan is down to being well under 20% of the total, and if you’re looking at the world as a whole, smaller than that. So Japan is not that big a factor. It’s still a huge economy and an important player. But even if Japan does better significantly the next few years than it has done for the past 20 years, it’s still not going to be… that’s not going to change the global picture all that much.

Well, since Abe is more or less doing what the American economists who were concerned about Japan for a long time have been saying, if I wasn’t at least a little optimistic, I would be inconsistent, right? In a way we’ve… a dozen years ago, people like Bernanke and me were saying to Japan: you need a higher inflation target. You need to break out of this deflation. Now finally you have a government that seems to be making a real effort to do that. So I’m finding myself surprisingly optimistic. Just beginning, yeah. So we see. We see how it works, but one of the more hopeful places in the world right now.
えー、安倍は、多かれ少なかれ、日本のことを気にしていたアメリカの経済学者が長い間言ってきたことをやっているわけですから、そこで私がちっとも楽観的になってなかったら、矛盾したことになりますよね? 12年前、私やバーナンキは日本にこう言っていた:高めのインフレターゲットを設ける必要がある。このデフレから抜け出さないといけない。今になって、政府がそれを本当に実行しようとしている。だから私は自分でも驚くほど楽観的なんですよ。まさにこれが始まった時から。ええ。それが機能すること、現在の世界で希望が膨らんでいる場所になっているのは納得できる。


【NHK】Biz plus:ポール・クルーグマン・プリンストン大学教授へのインタビュー 7/30/2012

Well, I’ve been saying that we are in a depression. It’s not a, it’s not like the 1930’s, it’s not that bad but it is a really sustained period of really poor economic performance with no sign that we’re coming out of it.

You know, the United States is stalled. We’re not actually in recession but we’re stalled. Europe is in a recession with extreme difficulty. Japan is stalled. The emerging economies which are doing pretty well for a while seem to be losing steam as well.

So this is – outside Europe it’s depressing but not scary. In Europe it’s scary, and of course Europe is a big part of the world economy. So the whole thing, this is inconceivable. I mean if you told somebody 6 or 7 years ago that the world economy would look like this in the year 2012 they would have said you’re crazy. But here we are.

2008 was a high speed, it was a, there was apocalypse looming right over the next week. We’re not in that situation now although in Europe it could go that way. But in some ways I think though it’s harder.

In 2008 you thought that “well ok, there’s a panic and we need to stem the panic. And if we can just stem the panic, then normal times will return and that sort of halfway worked.” Now it looks much deeper. To get out of where we are now needs some fundamental changes in policies, and then you have enormous resistance to any change that would matter. So in some ways it’s not as terrifying as 2008, but in some ways it’s more intractable. I have less hope now I think than I did 3 and half years ago.

Because I see how hard it is to get any actual movement. It was – people were rising, leaders more or less rose to the occasion in 2008. Right, there was a crisis on, they did what needed to be done to stop the world from ending.

Where are the leaders rising to the occasion right now? We have every few weeks another incomplete rescue in Europe. We have trench warfare on policy in the United States. We have Japan pretty much where it’s been for the last 20 years. and you don’t see anything that would really turn it around.
今、難局に立ち向かっているリーダーがどこにいますか? 数週間ごとに、ヨーロッパは不十分な救済策を取っている。アメリカでは、政策に関する塹壕戦が繰り広げられている。日本は20年間まったく同じ状態にある。そして、それを本当に転換しようとするものは何一つ見当たらない。

So it’s actually more – it’s more frustrating, harder to be hopeful than it was in the heat of the crisis.

I mean some places don’t have money. Spain doesn’t have a lot of options. Greece has basically no options. But the United States, you know, we say oh we’re worried about a deficit, but the market is willing to lend us money essentially for free. The same is true for the UK, the same is true for Germany.

The European situation, you know, the European Central Bank can print money. You know, they have, they actually have the resources. What they don’t have is the, the intellectual flexibility and …political flexibility actually, to do anything. So no. In fact, the fact that we even phrase it in terms of well there isn’t the money is itself showing how much we’re, our minds have been shackled by bad ideas. I mean that’s, that, you know, every time somebody says “oh America is broke, we can’t do anything.” That’s just showing that you’ve fallen into an intellectual trap and you’ve got the wrong idea about what our problem is.

But that’s simply not true for – it’s basically not true for any government that borrows in its own currency. So you know, everybody, Japan, the United States, UK, Germany doesn’t have its own currency exactly but sort of kind of does because it dominates the euro, Sweden. You go down the list, everybody is borrowing money at, at less than 2%. And with – adjusted for inflation, basically most places except Japan, it’s basically zero. Which is another story about Japan. And that means that the markets don’t see a problem. They’re willing to lend money. I mean obviously they’re – we all worry about the 20 year budget horizon but this year there’s no problem.

So it’s a political decision to frame this as a problem of deficits and a problem that we cannot spend. That’s not, that’s not a fact of nature. That’s a, that’s a construction which is actually getting in our way right now.

I guess I’d say macroeconomics at heart. Intellectually it doesn’t- it’s hard for people to wrap their minds around it. The idea that, people want to think of a country as being like an individual household. They want to say “oh if you’re in trouble you better tighten your belt.” Except that when you’re in this kind of slump that’s exactly the wrong thing to do. The problem is that so many people are tightening their belts; so many people are pulling back. It is driving, it is driving the economy down and you need somebody to spend and that means the government in a time like this.

And yet, the rhetoric of austerity, the rhetoric of deficits and debt means that there are a lot of people with the best of intentions are pushing to do exactly the wrong thing. Are pushing to have government pull back at exactly the moment that it needs to be a support for the economy.

And on top of that, there’s politics. In the United States the deficit has become a convenient tool for people who fundamentally want to undermine our welfare state. In Europe, the international –the nationalities, the issue has become framed as virtuous Germans against spendthrift southern Europeans. Which has a grain of truth to it, but only a grain of truth, but gets in the way of actually solving the problems.

So we end up paralyzed or worse and it’s, it’s not something that – I have to say I thought I was a pessimist about policy but this has been worse than I actually really imagined was possible. I would not have thought you could spend 4 or 5 years in a slump and still be so unable or unwilling to do anything about it.

Oh wow. There are layers and layers right. I mean at some level I think that we went wrong – we started going wrong more than 30 years ago when, when intellectually we lost our way. There was the very real problem of inflation, but that led to a turn away, within the economics profession, from the issues of depression. And people forgot, people drove all of that analysis out of the way, out of thinking.
Oh wow。それはいくつもの階層があります。あるレベルでは、我々の誤ちは30年以上前に始まります、その時に知的な方向性を誤ってしまった。インフレには確かに実質的な問題があるものの、それは経済学の専門家内部で、不況の問題から離れていく転機となった。そして、人々はその分析を忘れ、その全てを捨て去り、考えなくなっていった。

So and then of course we, I guess my view is that, there were a critical few months. The 7 or 8 months after the fall of Lehman was the time when everyone was in fact mobilized to really go big on the response and we didn’t do that. We didn’t do that in the United States, they didn’t do that in Europe and the result was that the moment was lost and so we found ourselves where we are now.

Yeah. If by January or February even of 2009, I thought that the shape of things to come was fairly clear. That we were getting enough support for the banks and fiscal stimulus to avoid a replay of the great depression but not enough to generate a convincing recovery.

And that the trouble was that in the minds of the public that would discredit any sort of active policy. And uh, there would be no second chance. And that’s how it turned out. That, that, I think there’s really no question that the policy measures that were taken then did in fact make a huge difference. They saved us from the worst but they didn’t you know, from the point of view of the public, well unemployment stayed high. Where’s my recovery.

And so the natural instinct to say “oh well that means the government should tighten its belt came back and we’ve never had another opportunity to do anything.

No, The sovereign debt, sovereign debt crisis is a very limited phenomenon. It basically involves the European periphery, only. So only countries that are on the euro or a couple of eastern European countries that borrowed heavily in Euros. But basically only countries that are on the euro that don’t have their own currency and were caught up in the financial crisis are suffering a sovereign debt crisis.

For everybody else, if investors are rushing into sovereign debt, not out of it. so it’s not a sovereign debt crisis except –and even for the euro countries that are in trouble, their problem is only, sovereign debt is just part of the sort of poison cocktail that they’re suffering from. They’re suffering from overvaluation. They’re suffering from a banking crisis, and then oh yes, there’s also a sovereign debt issue. So this is a misunderstanding I think of what the, of what it’s about. And gosh...you know, for the United States or the UK or even incredibly Japan, even after all of these years and all of that debt, sovereign debt is not what the problem is right now.

Well, it is kind of a banking crisis again but that’s mostly a European thing. The, part of what’s driving down the European economies is that their banks are in trouble and the governments don’t have – Europe as a whole has the resources to bail them out, but the trouble is Europe is not a single country and so the individual countries don’t.

But even then, I, my view actually is it’s primarily, it’s a much broader balance sheet crisis, not just the banks. It is the buildup of debt in the private sector in the United States, and to a larger extent in Europe that’s primarily household debt. Japan had a sort of similar story but it was primarily corporate debt so it’s different, different.

But otherwise the logic is pretty much the same. You had a whole bunch of a large part of the economy that ran up a lot of debt when times were good and people had gotten too complacent about leverage. Then stuff happened, housing bubble burst, Lehman failed, everybody said “oh my god I’ve got too much debt.” and they either are choosing to or forced to try and pay down that debt. and the trouble is nobody is on the other side of that. Everyone is trying to spend less than their income, but collectively - I mean you’re spending is my income, my spending is your income. So if you have a whole, a large group of people who are trying to deleverage and you don’t have any counterpart who is willing to take the other side of that transaction and be spending more, you have a persistent depressed economy. That’s the underlying story. Everything else follows from that.

Because Japan in the 90’s was a dress rehearsal for what we’re all going through now. And, so I’ve actually been joking that all the American economists who were so critical of Japanese policy in the late 90’s, the early years of the last decade, should actually all make a visit to Tokyo and apologize to the Emperor. Because we are doing even worse in our policy response than Japan did. We’ve been, had more contractionary fiscal policy. We’ve had comparable inadequate monetary policy. So Japan blazed the trail. Now my current interpretation of the Japanese story is that Japan did actually have a significant recovery. That if you look at japan between around 2003 and 2007, it was actually a reasonably good recovery.

Probably Japan was not too far below its economic potential by 2007 but Japan never broke out of deflation which left it extremely vulnerable. And so it’s been caught up in this global crisis pushed right back into being a deeply depressed economy with the additional problem of inflation.

Inflation is too low in the United States and in Europe. We really, we would be in much better shape if people were looking forward expecting 4% inflation instead of 2 or 1. But in Japan they’re still expecting negative. And that actually puts Japan in a position of serious disadvantage because interest rates can’t go below zero. They’re basically zero all across the western world – I’m sorry, they’re basically zero all across the advanced world.

But in Japan a zero rate is a positive real rate, whereas in the United States it’s a negative real rate. So Japan basically has now become the tight money country of the advanced world which adds to your problems.

Well it’s just kind of a joke. Because it’s more colorful, right? No,obviously we would apologize, apologize to the various past Governors of the Bank of Japan. Not because they were right, they were wrong. But the funny thing is, is that when placed in the same position you see the same behavior.
まあ、これはジョークの類なんで。そのほうがシャレてませんか? いや、我々は明白に歴代の日銀総裁に謝罪しますよ。彼らが正しかったからではない。彼らは間違っていた。でも、奇妙なことに、同じ状態に陥ったときには、我々は同じふるまいをしてしまった。

Basically, when Ben Bernanke criticized the Bank of Japan in 2000, he was entirely right. Unfortunately, Ben Bernanke as Chairmen of the FED is doing the same things that the Bank of Japan did. So, I want Professor Bernanke to yell at Chairmen Bernanke and tell him that he was – that he’s not doing his job.

But I think he may be misunderstanding, Because I’m saying that it’s still wrong. My view is that the apology is to say “ok, we now understand how hard it is politically and intellectually to do the right thing. So now that we’ve seen ourselves make the same mistakes you did, it’s a lot more understandable, I guess forgivable.”

But it doesn’t mean that it’s the right thing. You still need those - I mean what’s now happened is basically that we have duplicated Japan’s failure, not that Japan was right, but that we turned out to be making the same mistakes.

Meaning that you need extremely aggressive, unconventional monetary policy. You need unconventional aggressive policy on both fronts, monetary and fiscal. And we have matched Japan, we’ve actually done even worse than Japan on fiscal. Because we’ve moved towards fiscal austerity way too soon, failed to provide adequate support.

And we have failed to do the things that need to do to give monetary policy a chance of working. You really need to convince people that you’re going to have some inflation. You need to be willing to buy a lot of, a lot of assets. Not just stuff reserves to the banks, but actually go out and buy stuff that you wouldn’t normally buy. And we have done not enough of that. And so same story. We’ve allowed a – what should be a temporary, quickly fixed slump in demand to turn into kind of a permanent depressed state in the economy.

I’m not sure if I said 15, I thought I said 10, but anyway it was – the length of time is somewhat arbitrary but yes. I mean all of this is, even the chief economist of the IMF has said that there’s a strong case for a 4% inflation target. Now he was saying that that’s what you should have so that when you come into a slump like this you have some leeway.

It’s a much more problematic thing to say well suppose your current inflation rate is in fact 1 or 0 or minus 1, can you, can you try to get a target that’s higher than that? But I still think they’re actually, the answer is to try to announce intention. And think we’ve actually seen some pretty strong indication that while the central bank may not be able to hit inflation targets with any accuracy, it matters a lot whether it’s, it shows that it’s willing to -it’s basically mostly about being willing to make it clear that you will allow inflation to rise once the economy does begin to recover. That you will not step on the breaks as soon as, you know, as soon as the risk of deflation has disappeared.
日本の現在のインフレ率が実際に1とか0であることが問題をずっと大きくしている。それよりもっと高いインフレ目標を目指せるんじゃないですか? だけど、私は今でもその答えは意図を示そうとすることだと考えています。実際、中央銀行がどれだけ正確にインフレ目標に合わせられるか分からないにしても、経済が回復し始めた時に、インフレの上昇を許容するという強い意思をはっきりと見せることがすごく重要であることを強く示す指標を見てきている。デフレの危険性が消え去っても、すぐにはそれを止めてしまわないこと。

And that can make a big difference. I mean the current, the unraveling of the Euro really began in April 2011 after the European central bank raised interest rates. It was a very small rise interest rates. It shouldn’t by itself have mattered very much. But you can look at various measures of inflation expectations which dropped sharply right then because the ECB had just signaled that it was really going to hold to a 2% ceiling on inflation no matter what. Which meant in practice was likely to be lower than that. And lower inflation, looking, you know, lower inflation for the next 5 years is really fatal to the prospects of the euro zone. So that kind of movement on the expectations front matters a lot. And central banks unfortunately have all done - I mean in Japan’s case, there was a moment there in that boom in 2003-7, if the Bank of Japan had let the economy rip Japan might have gotten out of deflation, might have been in much better position right now.

Instead, at the first hint of normalization, it started raising rates. Only a little again but enough to create the clear signal that inflation was not coming, which was a really bad thing. And now the European Central Bank has done the same thing on less, on even less justification. And the fed hasn’t done that but it’s becoming increasingly clear as each month passes with no action that the fed is you know, much more allergic to inflation than it is concerned about unemployment. Which again effects expectations.

1%, well it’s better than zero or – but it’s, it’s way - I mean given the realities, given what we know about Japan, which is that it has persistently, still, not as much as before, still persistently high saving. Weak investment demand because of the demography. Japan needs a low real interest rate. And that’s, that low real interest rate is really hard to do if, with only 1% inflation.

So if there’s a case in general for a 4% inflation target, which I think there is, Japan if anything should be higher. So it’s a very very small step. It is a step. It is better than saying well you know, in the past we’ve heard the Bank of Japan say “well deflation is not really a problem.” Or “price stability is the goal” and 1% inflation I guess is a step in the right direction but it’s not remotely a big enough step.

I mean Japan is, is a more difficult case in some ways because it has sort of had these stop go fiscal policies for so long. So now it’s got these very high levels of debt, although still the market doesn’t seem concerned. But still, it’s not as easy to make the case for Japan for fiscal stimulus as it is in the United States. Although it’s still, you really should avoid austerity right now. But the door for more adventurous monetary policy is still open.

Well the saying actually not 1% inflation but, but, but 3 or 4. Uh, for saying alright we are going to try some serious British style or American style quantitative easing. Still, there are still unconventional assets to be bought. I have to admit those are highly uncertain. No one, we don’t know if any of this would work. We have, you know, we have models that suggest it should work but we’re not, there’s not a whole lot of certainty in that. But the possibility of making things better is worth, is worth doing it. There’s very little downside to more aggressive monetary policy. So I would be doing that.

I haven’t had time to really analyze that but I do wonder, I mean I understand yes Japan has a long run budget issue and so on. And in the case of Japan, you know, in the case of the United States you can argue that this, we don’t think this slump will go on forever so we can wait on the, on those measures. In Japan the slump has gone on so long that you do wonder a little bit.

But it still strikes me as this is not a really good time to be doing this. And it is a response to a, to a problem that we don’t actually see. I mean right, if it’s meant to head off loss of confidence in Japanese government debt, that hasn’t happened. I have to say even I’m amazed at how high the debt level has gone without any sign of that loss of confidence.

I think you need to be careful about growth rates versus levels. The Japanese economy still looks seriously depressed. And you know, you always want to remember that in the 1930’s you know, the great mistake of US fiscal policy which was the great mistake of 1937, came at a time when the US economy was actually growing quite rapidly but it was still deeply depressed.

It was coming out of a severe slump but – so just Japan is looking to have pretty good growth next year, that’s not a good sign. Not a sufficient reason. I mean if I recall correctly, ’97 japan had some pretty good growth and raised consumption taxes and sure enough the economy slid back into a severe recession. So, just the fact that you have growth is not enough. You also have to believe that the economy is getting closer, seriously close to potential output.

Or at least in the case of Japan not contract fiscally. I understand that it’s a little harder, more than a little harder to make the case for stimulus when debt levels are already that high. But at least postpone austerity and you know, try, try all the things that Princeton professors were telling Japan what to do back in the year 2000. And pay no attention to the fact the Princeton professor at FED (=Chairman Bernanke) isn’t doing it either.

Yeah. that was actually kind of funny. We have this little group of people, when I first came here, all of whom were obsessed with Japanese experience because we thought it could happen to us too. And sure enough it has.

Well, a couple of things. One is he’s not a dictator. He does – and it’s a bad, it’s considered bad form for the fed to take action with a sharply divided open market committee. He’s, I think there’s a – well I’ve been calling it assimilated by the Borg. Which may or may not...

It’s from the old Star Trek series where these, where these robots take people over. That he’s, that, from the point of view of the FED as an institution there’s a temptation to play it safe. Not to try anything that you’re not sure you can’t accomplish. Defining your goals not in terms of the economy but in terms of checking the boxes. Yes we’ve expanded the monetary base, yes we’ve put interest rates at zero, what more do you want us to do? And I think to an important extent Bernanke has been, has come, hey he’s been at the fed a long time now, he’s come to see the institutional interests of the fed as priority. And has lost sight of the fact that the FED is there to serve the economy.

I don’t know other people who, who have been there and they do tend to, to lose their taste for doing you know, really aggressive stuff. Even whatever they may have written in the past, I think it is an issue of the institutional, institutional biases.

Plus we do have an election coming. And for more than a year now the republican party has essentially told Bernanke “don’t you dare do anything to expand the economy because that might help Obama.” And I think it’s pretty clear that there’s a serious element of intimidation going on.

Well not especially, I didn’t actually push for defense, not at all I think.

Well, the US is easy because we have, we’ve actually had major cutbacks and we can get a lot of the way to an adequate stimulus just by reversing those. So we’ve had large cutbacks in education and infrastructure spending. And just restoring those, so it doesn’t even require any major new projects, it just means restoring, reducing class size back to what it was a couple years ago. Rehiring the school teachers. Resuming maintenance on school buildings, on roads.

Resuming construction projects that have been put on hold which would – so and the mechanics of that, because of our federal system, that requires that the federal government provide aid to the state and local governments. But it’s not hard to come up with a list of stuff to do.

I don’t know Japan well enough to know what – I mean Japan of course has spent vast amounts on infrastructure over the last couple of decades. I don’t have any independent view, but by rumor Japan has too much infrastructure.

That’s what happens. We have this, you know, global deleveraging. I mean we had all around the world –certainly, I shouldn’t say that. Japan’s debt cycle is, is you know, a couple of decades ahead of the rest of us.

Right. Japan is the cutting edge here. but all, both the north Atlantic, the United States and Europe both had a period of financial deregulation, financial complacency. I think there’s a lot of psychological contagion between the two basically on both sides of the Atlantic we spent the period between 1990 and 2008 with great and greater belief that higher levels of debt were ok. That there was no problem.

And whether that was, whether that was complex financial derivatives being used to finance bum mortgages in Nevada or whether it was German “landesbanken” lending to Spanish “cajas” to finance bum construction in Spain, it was the same basic kind of thing.

And then of course the bubble burst and that was contagious as well. And so now we’re all – by the numbers things are not so different in the United States and in Western Europe. Lots of details, the additional problem in Europe of having single currency without a single government. But the basic story is quite similar

Oh wow. I have to say that there are huge uncertainties which, and I think I can tell you what the uncertainties are.
Oh wow、巨大な不確実性が広がっていると言わざるを得ません。その不確実性がどんなものか説明しましょう。

So, one uncertainty is Europe. As currently constituted the Euro will not work, or under current policies. So we’re heading – so one of two things is going to happen. Either there’s going to be some very dramatic policy shirts, which in the – you know, we’re not going to get a United States of Europe anytime soon. So the question is are the Europeans basically going to be willing to do a lot of, basically print a lot of Euros.
一つの不確実性はヨーロッパです。現在の構成、あるいは現在の政策では、ユーロは機能しない。そこで、我々が向かっているのは――2つの内1つが起ころうとしている。どちらも、すごくドラマチックな policy shirtsが起こることになる。と言うのも、我々は今すぐにはヨーロッパ合州国を手にできない。疑問なのは、ヨーロッパ人が基本的にユーロをたくさん刷る意思があるかだ。

Print a lot of Euros both to buy the bonds of Spain and to buy, and to push for higher growth rate, higher inflation rate in Europe, in which case the euro can be held together. Or will the Germans say no we won’t allow that, in which case the Euro breaks apart.

So you know, both of those, if you say well the – if you list the things that need to be done to save the euro people say “oh that’s impossible.” You say well then the Euro will break up, they say “well that’s impossible.” so one of those 2 things is going to happen right. And I don’t know which one. I think they’re about even odds. So that’s huge uncertainty.

And of course if the Euro breaks up, then that has pretty huge effects in Europe and also has, it’s very nasty transition costs, very disruptive and some backwash to the rest of the world. so that’s ugly.

In the United States we’re going to have an election. And there’s a range of outcomes there. Obama reelected but is Obama reelected with a congressional majority? In which case we get a second chance to try and fix this thing. Or do we have more trench warfare in the United States. Or is Romney elected? And if Romney is the President, since what he’s actually says makes no sense at all we have no real idea of what he would do but I suspect it would be the worst. I think he would simultaneously pursue austerity on the spending side and worsen the deficit with unhelpful tax cuts for rich people. So I think that’s a bad scene.
アメリカは選挙を控えている。その結果にも範囲がある。オバマは再選されるか? オバマは議会で過半数を得て再選されるか?  その場合には、このことをやってみる2度目のチャンスが手に入る。あるいは、アメリカで塹壕戦が続くことになる。もしくは、ロムニーが当選するのか? ロムニーが大統領になれば、彼の言っていることは実際何の意味もないから、彼がすることは見当もつかないし、私はそれが最悪なものになると思っている。私は、彼が支出サイドで緊縮財政を追い求めると同時に、何の効果もない金持ち減税をやって財政赤字を悪化させると考えている。それは酷いありさまになると思う。

So there certainly is – not, not minor chance that we will have really bad policies all around. That we’ll have Europe, essentially by failing to change course, the breakup of the Euro with all of the acrimony that goes there. That we’ll have a completely wrong headed policies in the United States, in which case this starts to look more like the 1930’s than it has.

It’s been hard to be optimistic. I mean where is the leadership? And we’ve seen – I mean back when we made this huge wrong turn in policy a couple of years ago, when austerity became the answer, you know at first I couldn’t believe it. I couldn’t believe that people were really going to make that mistake. But they did.
楽観的でいるのは難しい。と言うのも、どこかにリーダーシップがありますか? 数年前に、大間違いの政策変更があった。緊縮財政が答えということになった時、最初、私はそれを信じられなかった。人々がそんな間違いを本当にするということが信じられなかった。でも、それは実際に起こったことです。

And there’s been very little acknowledgment, I mean hardly anyone has been willing to say “that was a wrong turn we need to fix it.” and so it’s hard, hard to be an optimist in that environment. Where are the, where are the leaders who will deliver us a change in course?

I mean as I’ve been saying, so far, I mean we’re already 5 years in basically in the western world now, with no sign of recovery. Things are continuing to get worse in Europe and they’re marginal in the United States so we already have our lost decade. We already have half our lost decade and you know, it’s very, not at all hard to see a lost decade. And our 5 years have been worse than Japan ever was. Mass unemployment, The suffering has been much worse than anything that happened in Japan. The collapse of public services in a large part of Europe, that never happened in Japan.

So boy, no I mean it’s, again it’s kind of a joke I make but Japan instead of being a cautionary tale is almost starting to look like a role model. Because although it was bad it’s not as bad as what we’re going through in the United States and Western Europe.
So boy、また私のジョークなんですが、日本は訓話と言うより、お手本として見えるようになってきている。それは酷いものではあるものの、アメリカや西ヨーロッパで我々が経験しているものほど酷くはないからです。

What do we need? Well we need, basically we need massive monetary and fiscal stimulus. Massive monetary stimulus, some significant fiscal stimulus. We need, basically you know the last time we went through anything like this which was the 1930’s, what we got was a war which was a terrible thing but had the side effect of finally getting us to spend and print enough money to get out of the great depression.
何が必要か? 基本的に、大規模な金融政策と財政政策が必要です。我々がこんなことを経験した最後の時、1930年代に、我々が手にしたものは戦争でした。それはすごく恐ろしいものだったが、もっとお金を使わせ、十分なお金を刷らせることになる結構な副作用をもたらし、我々は大恐慌から脱出できた。

So again one of the jokes I’ve made is that you know, if only we can invent a threat from space aliens and say well we need to spend to prepare for the space – that would get us out of this. But barring that it’s hard to see what will.

But the policies are not hard. The policies to actually do it are easy to describe, the problem is how do you get politicians to actually adopt those policies.

A couple of things. One is that if you’re really worried about the children, then you should be worried about massive youth unemployment. I mean this is a terrible, terrible time to be young all across the western world. and if you are concerned, even if you’re concerned purely fiscally, there’s a lot of reason to believe that high unemployment, particularly high long term unemployment, has a corrosive effect on the economy which is a corrosive effect on the future tax base.

A lot of reasons to believe that at this point if you try to save a dollar by cutting spending you’ll actually end up worsening the long run fiscal position, not improving it. so it’s not a good argument. It’s, fiscal austerity now is probably self destructive even in a purely fiscal sense, let alone the effects on the economy.

And if we do break out then we can – if we can break ourselves out of the slump, then I’ll become a fiscal hawk as soon as we have something like a reasonable full employed economy, then you start to pull back. again, World War 2 we spent these vast sums of money, came out of the war with very high levels of public debt but also with a vigorous economy in which private sector debt had been greatly reduced through a combination of growth and inflation.

And then we were able to – we actually never paid off the debt but we were able to stabilize the debt and it just withered away as a share of the economy. So that’s the model you want to follow.

Well, you know it’s not clear to me that it’s actually – the coordination issues are not such a big deal. I mean people want to say well you know – because actually the thing is that although there are some extra kick, you know, if the if the ECB and the fed simultaneously act that would be, have some extra impact that one of them acting alone wouldn’t have.

On the other hand, any individual central bank by buying a lot of debt can depreciate its currency. Which is actually, you know, which is bad for the other guy but good for you. So I’m not – the incentives are just as strong for each country to do it individually. I don’t think – this is not, the Europeans need to get their act together because they have a single currency and they need to act together or watch that crack up. But aside from that the fed has the power, Bank of Japan has the power, Bank of England has the power so no, we don’t need global –we don’t need another G-20 meeting to do this.

The rooms where this has to be settled are inside the US congress and inside the Board of Governors of the Federal Reserve, not some international session.

Oh wow.
Oh wow。

Growth with inflation. If ever there was a country that needed inflation, it’s Japan.

Because, actually now it’s multiple. Japan needs, Japan needs a reason for people not to sit on cash so it needs inflation. It needs growth and inflation both because there’s so much debt out there. Because the – you know right now Japan’s got this legacy of the, of the 2 lost decades which is a big overhang of debt.

Historically, countries deal with those kind of overhangs in part, in part by inflating them away.

But you never had the inflation. Every time that it looked like Japan was going to get out of the trap, out of deflation, the Bank of Japan said oh ok, we can return to normalcy and raise rates. So no, the fact of the matter was Japan aborted, aborted its chance of getting to where it should be.

The point is not to – being respectable and responsible, which is what the BBank of Japan has kept on doing and what the European, everybody has been doing, there’s a time for that but this is not that time. This is the time to really go all out.

The Government should not get in the way by having austerity policies. But Japan, even I can’t make the case for a big fiscal stimulus. It might be, it might work but I’m a little nervous just because the level of debt. Maybe I shouldn’t be. I mean the markets don’t seem to share that.

You know and there are other things. Japan has got, underlying Japan has the demography issue. And Japan it would be a lot easier to see a way out for Japan basically if Japan were, had the prospect of having more people. But you know, maybe a French style policy to encourage to have more children. Maybe if Japan can find a way to deal with its culture and accept more immigration.

I know but, I know...that’s, I know. Actually my sense is that, that yeah that hasn’t changed at all. That Japan seems, no more melting pot oriented I guess, maybe if anything a little more, a little more insulated than it was 10 years ago. So that’s, alright.

But you certainly have a pro-child policy. The French have actually, this is really interesting, they’ve managed to have a pro-natalist policy that has worked.



【The Guardian】Paul Krugman:'I'm sick of being Cassandra.I'd like to win for once'

Paul Krugman:'I'm sick of being Cassandra.I'd like to win for once' もうカッサンドラの預言者やるのはうんざりしている。一度でいいから勝ってみたいですよ

The American economist has a plan to escape the financial crisis, and it doesn't involve austerity measures or deregulating the banks. But will policy-makers, including our coalition government, heed his advice? このアメリカの経済学者は現在の金融危機から抜け出すプランを持っている。そして、それには緊縮政策や銀行の規制緩和は含まれていない。だが、イギリスの連立政権を含む政策立案者らは彼のアドバイスに気を留めるだろうか?

Paul Krugman: 'These are not hard concepts.' Photograph: David Levene for the Guardian

By now you will probably have read an awful lot about the financial crisis. Perhaps I've been reading all the wrong stuff, but until now I hadn't managed to find answers to the most puzzling questions. If the crash of 2008 was preceded by an era of unprecedented prosperity, how come most of the people I know weren't earning much?

Deregulation of financial services was supposed to have made us all better off, so why did most of us have to live off credit to keep up? Now that it has all gone wrong, and everyone agrees we're in the worst crisis since the Great Depression, why aren't we following the lessons we learned in the 1930s?
金融サービスの規制緩和が私たち全ての生活を良くするものなら、なんでほとんどの人が生活を維持するためにクレジットカードに頼らないといけないの? いまや全てが上手く行かなくなり、あらゆる人が大恐慌以来、最悪の危機にいることを認めている。どうして我々は1930年代に学んだ教訓に従えなかったのか?

President Obama attempted one of the biggest Keynesian stimulus programmes. Why has it been only minimally effective? Why do most other western leaders still insist the only way out is to tighten our belts and pay off our debts, when that clearly isn't working either? And how come the bankers, credit agencies and bond traders are still treated with cowed reverence – don't frighten the markets! – when they got us into this mess?
These mysteries were beginning to make me feel as if I must be going mad – but since reading Paul Krugman's new book, I fear I'm in danger instead of becoming a bore. It's the sort of book you wish were compulsory reading, and want to quote to anyone who'll listen, because End This Depression Now! provides a comprehensive narrative of how we have ended up doing the opposite of what logic and history tell us we must do to get out of this crisis.
オバマ大統領は最大規模のケインズ流景気刺激プログラムを試みた。どうしてそれは最小限の効果しかなかったのか? なぜほとんどの他の西洋リーダーは、明らかにあらゆる場所で上手く行っていないのに、ベルトを引き締め、借金を返すという方法一つに固執しているのか? 銀行や格付け機関、債権仲介業者が我々をこんな窮地に追い込んだというのに、今でも敬意を持って扱うように強要されている――市場を怯えさせるな!――のはどういうわけか?
これらの謎を考えていると、自分がまるで頭がおかしくなったように感じてくる――だけど、ポール・クルーグマンの新刊を読んでからは、退屈な人間になる危険性のほうを恐れるようになっている。この本は必読になるでしょうし、誰と話すときでも引用したくなるでしょう。なぜなら、『End This Depresson Now! 』には、どのようにして論理的、歴史的に見てこの危機から抜け出すためにやるべきことと逆のことを我々がやってしまったのかを示す包括的な物語が描かれているからだ。

Its author is a Nobel prize-winning economist who writes a column in the New York Times and teaches economics at Princeton University. An authority on John Maynard Keynes, Krugman wrote a book in 1999 called The Return of Depression Economics, largely about the Japanese slump, which drew ominous parallels between Japan's economic strategy and the pre-New Deal policies of the early 30s that turned a recession into catastrophic depression. At the time, unsurprisingly, most western economists weren't bowled over; in thrall to the seemingly endless boom, the Great Depression looked to them to be more or less irrelevant. Krugman's latest book will be much harder to ignore.
その本の著者はニューヨーク・タイムズでコラムを書いているノーベル経済学賞の受賞者で、プリンストン大学で経済学を教えている。ジョン・メイナード・ケインズ研究の権威クルーグマンは1999年に書いた『The Return of Depression Economics』という主に日本を扱った本の中で、日本の経済戦略と景気後退を破滅的な不況に変えた1930年代早期のニュー・ディール政策以前の政策とが薄気味悪いほど一致していることを描き出した。驚くことではないのだが、そのころ、ほとんどの西洋の経済学者はそれに動転したわけではなかった。表面上の終わりなき好景気にとらわれて、大恐慌など多かれ少なかれ彼らには関係ないもののように見えていた。クルーグマンの最新の本を無視するのはずっと難しくなるだろう。

He doesn't expect it will be an easy message to sell, though. "As far as I can make out, the serious opposition to the coalition's policy is basically a half-dozen economists, and it looks as if I'm one of them – which is really weird," he laughs, "since I'm not even here." Visiting London last week, he met lots of what he calls Very Serious People: "And there are lots of things these people say that sound very wise and sensible. But it's all upside-down; it's all wrong. Yet the power of their orthodoxy – even when it's failing – is quite awesome."
彼は、それが人々に受け入れられやすいメッセージと考えているわけではない。「私の理解している限り、連立政権の政策に強硬に反対している経済学者は実際6人くらいでしょう、と言うと、まるで私がそのうちの一人みたいですけどね――私はイギリス人ですらないですから」と彼は笑いながら言った。先週、彼はロンドンを訪れてから、彼がVery Serious People(すごくマジメな人々)と呼んでいる多くの人と会っている:「これらの人々が言うことの中にも、すごく賢明で分別あるように聞こえることはたくさんあります。でも、それは全部逆さまです。大間違い。だが、彼らの正統派の力――それが失敗している時でも――には実に驚くべきものがある。」

These Very Serious People present economics as a morality play, in which debt is a sin, and we have all sinned, so now we must all pay the price by tightening our belts together. They tell us the crisis will take a long time to resolve, and must inevitably be painful. All of this, according to Krugman, is the opposite of the truth. Austerity is a self-imposed collective punishment that is not just unnecessary, but won't work. We know what would work – but for complex political and historical reasons that his book explores, we have chosen to forget. "Ending this depression," he writes, "should be, could be, almost incredibly easy. So why aren't we doing it?"
これらVery Serious Peopleは経済学を道徳劇として見る。彼らによると、借金は罪であり、我々は全て罪人であり、それゆえ我々は皆でベルトを引き締めることによって全額借金を返済しなければならないとされる。彼らは危機の解決には長い時間がかかるものであり、痛みは避けられないと言う。クルーグマンによると、これら全てが真実の真反対だ。緊縮財政は不必要なだけでなく、機能するはずもない自作の集団的懲罰だと。我々は何が機能するのか知っている――だが、彼の本で診断されている政治的理由と歴史的理由が複合することにより、我々はそれを忘れてしまうことに選んでしまった。「この不況を終わらせることはほとんど信じられないほど簡単なはずだし、たぶんそうなる。なら、なんでそれをやってないの?」と、彼は書いている。

Krugman offers the example of a babysitting co-op, or circle, in which parents are issued with vouchers they can exchange for babysitting hours. If all of the parents simultaneously decide to save their vouchers, the system will grind to a halt. "My spending is your income, and your spending is my income. If both of us try to slash our spending at the same time, then we are also slashing our incomes, so we don't actually end up saving more." We could issue more vouchers to everyone, to make them feel "richer" and encourage them to spend – which would be the circle's equivalent of quantitative easing. But if everyone is determined to save, the parents will hold on to the extra vouchers, and the circle still won't work. This is what's called a liquidity trap, "and it's essentially where we are now".

The same principles apply to the "paradox of deleverage". Debt in itself is not a terrible thing, he says. "Debt is one person's liability, but another person's asset. So it doesn't impoverish us necessarily. The real danger with debt is what happens if lots of people decide, or are forced, to pay it off at the same time. High debt levels make us vulnerable to a crisis – and this is when you get the self-destructive spiral of debt deflation. If both of us are trying to pay down our debt at the same time, we end up with lower incomes, so the ratio of our debt to our income goes up."

Crucially, Krugman continues, "what's true for an individual is not true for society as a whole". The analogy between a household budget and a national economy is "seductive, because it's very easy for people to relate to", and it makes some sense when we're not in the grip of a macro-economic crisis. "But when we are, then individually rational behaviour adds up to a collectively disastrous result. It ends up that each individual trying to improve his or her position has the collective effect of making everybody worse off. And that's the story of our times."

At these moments someone has to start spending – and, Krugman argues, it is the government. But we're endlessly being told by the coalition that it has to pay off its debts because servicing the interest is ruinous, and the bond markets will destroy us unless we're seen to be tackling the deficit.
"Well, now. We know that advanced economies with stable governments that borrow in their own currency are capable of running up very high levels of debt without crisis. And we know it, actually, best of all from the history of the UK – which spent much of the 20th century, including the 30s, with debt levels much higher than it has now."

But what about bond markets? Invoked as global bogeymen, we're warned that they punish governments who fail to cut spending – even if cuts don't reduce the deficit. I've never understood why the markets should care how and when we reduce the deficit, as long as we can pay our way. According to Krugman, they don't.
だが、国債市場に関してはどうか? それは国際的なオバケになっていて、その連中が支出の削減に失敗した政府――その支出の削減が財政赤字を減らさなくても――に罰を与えると警告を受けている。我々には金利を支払う能力があるのに、どうして国債市場の人々が我々と一緒になって、財政赤字を減らす時期や手法について心配しないといけないのか私にはまったく分からない。クルーグマンによると、彼らはそんな心配をしてないと言う。

"That's the interesting thing. The actual verdict of the markets, for countries that have their own currencies, has been that they don't really care at all in terms of what you're doing in short-run policy." Likewise, the danger of being downgraded by a credit rating agency has been wildly overstated. "We saw it in Japan in 2002; they had the downgrade, and nothing happened. Which led us to predict that would happen for the US," whose credit rating was downgraded by one agency last year. "And it was exactly right. Nothing happened."

A breadline in the US in 1930. According to Krugman, our governments have failed to learn the lessons of the Great Depression. Photograph: American Stock Archive/Getty Images

Thus far, Krugman has essentially restated the case for Keynesianism. "And these are not hard concepts, actually. It's not hard to get it across to an audience. But it doesn't seem to play in the political sphere." What's fascinating is his historical analysis of why policy-makers, who once understood these principles, collectively decided to forget them.
In the years following the Great Depression, governments imposed regulatory rules upon the banking system to ensure that we could never again become indebted enough to make us vulnerable to a crisis. "But if it's been a long time since the last major economic crisis, people get careless about debt; they forget the risks. Bankers go to politicians and say: 'We don't need these pesky regulations,' and the politicians say: 'You're right – nothing bad has happened for a while.'"

That process began in earnest in 1980, under President Reagan. One by one the regulations on banking were lifted, until "we lost the safeguards, and it meant there was an increasingly wild and woolly financial system willing to lend lots of money". Politicians were in part persuaded to deregulate by the argument that it would make us all richer. And to this day, "there's this very widespread belief that there was, in fact, a great acceleration in growth. But this really isn't hard. You sit down for a minute with the national account statistics, and you see it ain't so."

If we divide the period between the second world war and 2008 into two halves, "the first half is a really dramatic improvement to living standards, and the second half is not." It was certainly dramatic for the top 0.01%, who saw a seven-fold increase in income; in 2006, for example, the 25 highest-paid hedge fund managers in America earned $14bn, three times the combined salaries of New York City's 80,000 school teachers. But between 1980 and the crash, the median US household income went up by only roughly 20%. "So it's a total disconnect."

Why would economists claim ordinary people were getting much richer if they weren't? "The answer, I think, has to be that you need to ask: 'Well who are the people who say these things hanging out with? What is their social circle?' And if you're a finance professor at the University of Chicago, the people that you're likely to meet from the alleged real world are going to be people from Wall Street – for whom the past 30 years have, in fact, been wonderful. If you're a mover and shaker in the UK, you're probably hanging out with people from the City. I think that is the story of the disconnect."
なぜ経済学者は、実際にはそうじゃないのに、普通の人々がずっと豊かになっていると主張するのか? 「その答えは、あなたが尋ねないといけないことです:こういったことを主張している人々はどんな人と親しくしているのか? 彼らはどんな社会サークルに属しているのか? そして、あなたがシカゴ大学のファイナンスの教授なら、不確かな現実世界の中から出会うことになるのはウォール街の人々になるでしょう――実際、過去30年間は彼らにとって素晴らしいものだったんですから。もしあなたがイギリスの有力者なら、親しくするのはおそらくシティの人々になるでしょう。私は、それがその現実との乖離を物語っていると思う。

But the influence of the top 0.01%'s mindboggling wealth didn't stop at finance professors. Their mansions and yachts and luxury lifestyles created "expenditure cascades", whereby, "if you're a little bit down the income distribution from there, you're going to feel some compulsion to match some of that too. And then, in turn, the people below you can feel some compulsion too."

There were early warning signs, such as the savings and loans crisis of the late 80s, that should have alerted politicians to the dangers of financial deregulation, moral hazard and subsequent spiralling debt. But by then Wall Street's influence over policy-makers had rendered them deaf to alarm bells – in part because bankers were financing so many politicians' campaigns. Krugman quotes Upton Sinclair's famous observation: "It's difficult to get a man to understand something, when his salary depends on his not understanding it" – but more than that, he suspects the sheer glamour of wealthy bankers had a powerful influence over politicians.

"My impression is that old style captains of industry can be rather boring. I'm not sure how much thrill there is in hanging out with someone like that. But Wall Street people are in fact very smart; they're funny, they're not company men who work their way up the chain. They're impressive."

Even Obama is not immune to their charms, says Krugman. Early into the administration he met the president and his economics team, "and it was just clear that rumpled professors with beards just didn't come across as being so impressive. Yeah," he chuckles. "I had that definite sense." But even many of the rumpled professors had been seduced by the promise of a new world economic order, in which Keynesianism was not just redundant but faintly ridiculous.

By 1970, Krugman writes, "discussion of investor irrationality, of bubbles, of destructive speculation had virtually disappeared from academic discourse. The field was dominated by the 'efficient-markets hypothesis'," which persuaded economists that: "We should put the capital development of the nation in the hands of what Keynes called a 'casino'." The death of Keynesianism was "triumphantly" announced, largely by Republican economists whose work had become "infected by partisanship and political orientation". Now, as they are faced with the catastrophic collapse of their theories, Krugman thinks political bias and professional pride are what's stopping them admitting they were wrong.

Those economists cite the woefully limited impact of Obama's almost $800bn stimulus package as proof that they are still right. According to Krugman, the only thing wrong was it wasn't enough. Almost half went on tax cuts, and most of the remaining $500bn went on unemployment benefits, food stamps and so on. "Actual infrastructure spending – that's more like just $100bn. So if your image of the stimulus programme is: 'We're going out there and building lots of bridges' – that never happened."

In an economy that produces $15tn worth of goods and services each year, $500m "is just not a big number". Back in 2009, Krugman had warned: "By going with a half-baked stimulus, you're going to discredit the idea of stimulus without saving the economy." And that, he sighs, "is exactly what happened. Unfortunately it was one of those predictions that I wish I'd been wrong about. But it was dead on."

Since the crash Krugman has become the undisputed Cassandra of academia, but he jokes: "I'm kind of sick of being Cassandra. I'd like to actually win for once, instead of being vindicated by the disaster coming – as predicted. I'd like to see my arguments about preventing the disaster taken into account instead."

The likelihood of that is a fascinating question. Krugman is not the most clubbable of fellows. In person he's quite offhand, an odd mixture of shy and intensely self-assured, and with his stocky build and salt-and-pepper beard he conveys the impression of a very clever badger, burrowing away in the undergrowth of economic detail, ready to give quite a sharp bite if you get in his way. His public criticisms of the Obama administration have upset many Democrats in the US, while his more vociferous criticisms of George Bush used to earn him death threats from angry rightwingers.

I hope none of that gets in the way of his argument. What we need to do, Krugman says, is simple: ditch austerity, kickstart the economy with ambitious government spending, and bring down the deficit when we're back above water again. Most importantly of all, we need to do it now.
"Five years of very high unemployment do vastly more than five times as much damage as one year of high unemployment. To say: 'Yes, it's painful, but time does heal these things … " He breaks off and sighs in despair. "Well, no. Time may not heal it."