Jeff Poor of the MRC'sBusiness and Media Institute caught Times columnist Paul Krugman on the Rachel Maddow show Wednesday night, lamenting how the Obama administration let the financial crisis go to waste by not nationalizing more of the economy.
Host Rachel Maddow: What did the Depression teach economists about how to get out of one or avoid one?
Krugman: Well, it told us a lot about how to avoid one, which is that you really have to, have to put some constraints. Roughly, banking is very useful but extremely dangerous and banks have to have all kinds of, you know, fencing put around them as a protection. They have to have some guarantees so that they, we don't have bank runs, so people know their money is safe. But then, we also have to have regulation so that bankers don't take huge risks with other people's money on a 'heads I win, tails you lose' basis.
On World War II:
Krugman: It was an enormous physical stimulus. It was, you know, we're getting all worked up about Obama who'll be spending at max about 2.5 percent of Gross Domestic Product. World War II, of course, was more than 40 percent of Gross Domestic product at its peak. So this is trivial stuff that we're doing now. Luckily, it's not confronting a Great Depression. But, um - I get depressed sometimes about the Depression because the lesson of the Depression seems to be that getting out of this sort of thing requires efforts on the scale that's outside the realm of what's politically discussible right now.
Maddow: Do you think that because there are some green shoots of economic recovery right now, that further government action is even less likely, that the worse things are, the more political possibility there is?
Krugman: Yeah, there's a certain sense. You know, there's the Rahm Emanuel line, 'Never let a crisis go to waste?' But, you know, it's starting to look like we did. And now things are not good. Unemployment is high - it's still rising. But the sense that we have got to act because otherwise the world might end is fading away and that makes it very hard to do stuff.