louis. well on to our out of washington d.c. and here's what's coming up tonight on the big picture europe is in crisis mode the united states could be headed off a fiscal cliff at the end of the year and congress doesn't seem to know what to do or the kinds of conversations the great minds will speak with someone who does know what to do nobel prize winning economist paul krugman and later mitt romney says his private sector experience creating jobs prepares him to be president exactly how many jobs is romney really created and is being a pirate equity manager really qualified to be president of the states will tackle this issue and others in tonight's big picture and finally conservatives are

clamoring for government to be run like a business in today's daily take over lessons of history explaining why running governments like a business always leads to disaster. for the nice conversations of great minds i'm joined by nobel prize winning economist dr paul krugman has been received a ph d. from mit and has taught at several schools including yale mit and stanford he's written twenty books including several bestsellers and over two hundred papers on international trade finance currencies and several other topics he's the recipient of numerous awards including the nobel prize in economics which he won in two thousand and eight correctly he's a professor of economics and current affairs at princeton university and you can read his work every day as a columnist on the pages of the new york times after christmas new book is titled end this depression now and with the european crisis in the united states economy

still teetering on the edge he's someone we should all be looking to for ways to get our economy back on track dr paul krugman joins me now from our los angeles studio. welcome. hi there thanks thanks so much for joining us it's great to see you here first off where are we at right now your book is called end this depression now is that where we are a depression. i use the word pretty deliberately our recession is when things are heading down depression is when things are down and although at least in the united states we got out of the technical recession in the middle of two thousand and nine it doesn't seem very good out there right mean we've we've had some growth some job creation but not enough to stop a really disastrous situation. about four million people have been out of work for more than a year college students graduating and finding no jobs were no jobs anyway that that make it a use of their skills and give them any hope of paying off their debts so this is

a depressed economy it's like the great depression it's not as bad as the great depression you know that's great wonderful not as bad as the great depression but it is really terrible and we are not doing what we need to do to get out of it it would put another way of explaining be it's sort of like the great depression would have been if f.d.r. had been president in twenty nine and had responded within a few months or a year less than a year with stimulus rather than dragging us through three years or herbert hoover . well actually not quite i mean i would i would say actually is that the main reason this is not as bad as the great depression and by the way give given a chance right you know that given what's happening in europe that that comparison may not be quite as favorable as it looks right now but a couple things happened one was that the banks were not allowed to fail on nass the way they were in one thousand nine hundred thirty one the other thing is that actually big government has been our salvation here the fact that the medicare checks keep going out in the social security checks keep going out that

unemployment benefits provide a lifeline for a lot of people that food stamps provide a lifeline those are all things that conservatives hate them and they say oh look at those all that government spending those are actually things that cushion this without those we probably would have had a full on replay of the great depression. how do you explain the attack on cain. well. the book end this depression talks about that a fair bit. conservatives have always hated keynes not so much because they are actually convinced he's wrong they're not actually interested in whether it's right or wrong but because there are two things that that they don't like about it one is if you admit that the government can do anything good fight a recession or fight a depression and create jobs then the case for having the government do stuff is stronger and to pay for those things you might actually have to tax rich people and so they don't like it because it seems to be for them the opening wage for

a more expansive role for government the other thing is that conservatives and especially business types love the notion that what we need is for them to be confident business confidence is always the thing and you feel look at those the way that president obama's taxes always every time he so much as hints at a bit of concern about income inequality you're a bit of concern about runaway bankers they say oh he's hurting business confidence by attacking the business community and that will hurt the economy if you say but you know actually the government can create jobs through keynesian policies then that club is no longer hanging over the head of the government you can say if you know you're worried about jobs how do we have what we create some instead of trying to be you know trying to flatter business been and tell them how much we love them so between those two things the right has always hated keynesianism has spent forty fifty years trying to tear it down which is a real shame because right now we're in john maynard keynes this world and wouldn't

it wouldn't of fairly straightforward way to explain that to the average american be to simply say that one of the roles of government in a time of crisis is to be the employer of last resort and if so why have why have democrats and progressives been so incompetent at putting that out enough and widely enough that that's not you know just a commonly used phrase like i was in the thirty's. yeah well we've had so much demonization of governments that people are afraid to make their case i mean i guess the way i like to say that is we're in a situation right now where. basically everyone is trying to to to save and cut cut spending everybody's trying to pay down debt which doesn't work if we all try to do it at the same time if i because my spending is your income and your spending is my thumb and if everybody cuts at the same time you get a depression this is when the government needs to do something different right the government needs to be out there and it needs to be spending and employing people

and providing that that base of the so the rest of us can in fact pay down our debts that's hard to explain part because people tend to not think about how things add up they say oh i'm tightening my belt the government should tighten its belt too and unfortunately people who should know better including the president has said things like that. it's also got this forty years of demonization the government is always the problem never the solutions try to say actually right now the government is the solution takes take some persuasion and take some courage and i have to say we have not been seeing a whole lot of courage. from very many people in this crisis and you know a lot of democrats seem to run at the first hint that they might be accused of being big government types on the other hand you've been outspoken from talking about the confidence fairy to all of you know all the. praising my that's my contribution to the english language and i think this will stay i stalk to about

people who believe in the confidence fairy they believe if you slash government spending and and layoff hundreds of thousands of school teachers everything will be fine because the confidence fairy will come in and rescue us and guess what she has failed to make an appearance first time i read that you writing that i laughed out loud after that. it's a serious i mean it's brilliant it was a brilliant metaphor we have been doing this for thirty years i mean thirty thirty one years since the reagan presidency began and if my math is right and and you know started right out boston patco who we had previously made a deal with they were they supported him in the election and then a god then went all downhill from there i mean he was just catcher ism on steroids . this has been so completely discredited now reaganomics after thirty years or it's taking rational perspective isn't it time to to just come right out and say that this this is not a legitimate economic theory it never really was it was

a voodoo economics like george herbert walker bush said and it's just a cover up for those who want to redistribute wealth to the very rich. yet it needs to be says some of us are trying to say it it has turned out i've been astonished and not not happy to see the resilience of this voodoo economics despite its failure you would have thought that this crisis which is you know according to their theory could not have happened would discredit it but a friend that by the australian economist john quiggin calls that it's zombie economics you keep on think you've killed it but it keeps on shambling forwards so we're looking for for silver bullets or whatever it is to make it stop but yeah this is been the perfect demonstration that keynes was right and reagan was wrong well and could get clearer than that and another piece of this of this whole. voodoo conspiracy theory i guess is that or maybe not i mean you've maybe maybe you would agree with it i'm curious your take on it is that the fed played

a role in this that we never should have established a central bank that we never should have gone off the gold standard that you know the solution to all of our problems in the kind of ron paul world is is just for the government to to create coins made out of gold and thats it. yeah that's that's another one of those things that is just amazing that people would be believing that i mean look at it this way part of in a way what's going on when they created the euro when they created a single currency for europe without a single government what they did was to create something that's quite a lot like the gold standard think of europe as being the modern version of the gold standard where it is these pieces of paper with bridges and doors on them that are like gold just like you know if you're the government of portugal or the government of greece like a country on the gold standard you can't print currency it is not under your control so what we're watching in europe is basically the replay of the collapse of the gold standard with all of the same disasters happening in europe that happened

to countries that tried to stay on gold in the one nine hundred thirty s. so what would you say specifically to someone who is promoting the gold standard or calling for the abolition of the. or you know maybe in states to produce their own money wow so i mean i've tried that even even debating ron paul which turns out to be hopeless because you're just talking to a wall but the what you just said to a young person who's trying to understand you need to tell them that this is not about you think you think that the people who talk about like this or are on the side of the little guy and against the banks but they're not they're actually supporting a policy that rich people billionaires i've always liked the reason the gold standard that gold bug is a survives and in this modern world is because it's a doctrine that has always been subsidized heavily by billionaires who who like the idea that nobody can print money and nobody can and can inflate away any of their

assets even if a little bit of inflation is what it takes to rescue the nation from mass unemployment so it's a scam. of course it's a scam i mean yes and it's. again he called the gold in the economy a barbarous relic i mean there's lots of problems with our cup but why should this medal this not especially useful medal be the the the gold standard of value this is we have an economic problem that needs to be managed to need to be managed through human intelligence not by appealing to something that may have made sense back in the first century b.c. . more with nobel prize winning economist dr paul krugman right after this for. a client of american power continue. on things that are.

might actually be time for a revolution. and it turns out that a procurer drink at starbucks reza surprises him. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else or see some other part of it and realize that everything. is a big issue. here even with. the loan itself you know get the real headline which none of them are the problem with the mainstream media today is that they're completely disconnected from the viewers and from what actually matters so that's why young people just

don't watch t.v. anymore if they want news they go online and read it but we're trying to take those stories that people actually care about. and transfer them back in t.v. . back to conversations with great so i'm speaking with. nobel prize winning

economist new york times columnist and author of the new book this depression now. dr i'm curious as a young man. what excited you or drew you into the field of economics and is that was that your right out of high school kind of choice of career path or did you come about it by a circuitous route. well it's a little embarrassing actually i i was a science fiction fan when i was a teenager and i loved isaac asimov particularly has a set of novels the foundation novels which involve social scientists who save galactic civilization through their understanding of the mathematics of human behavior i wanted to be one of those guys and this is as close as i could get so that's actually a little bit if i took a lot of history when i was in college i actually took more history than economics but i wanted something with more structure something that maybe could actually

change the world instead of just looking at it and and so i had a great mentor so that's our became an economist that's fascinating how do you think that somebody who who went into the same field at the same time as you and had maybe the same teachers might end up saying that you know von misses and. others you know the these so-called conservative economists are the right way to go were as you were following more of the keynes route what what is that bifurcation where does that happen how does that have ok. so by the way the phonies all the stuff that's that's never been even of right wing economists in this country serious ones of have never done that stuff that's the alleged importance of those people is that that's a myth created by by american right wingers in the one thousand nine hundred in milton friedman to have never happened in real life but there is a huge bifurcation in views within macroeconomics and i think it came down to me in

the ninety seven when i was in graduate school you had two kinds of of ways that people were trying to approach the problem of recessions one was the one that came from keynes which is a little bit there a few loose ends there are some things where we said we can't totally explain why people behave in certain ways but they do and that's what the facts say and so we're going to go with that and the other was to say let's let's have this modeling with let's think about things in terms. what perfectly rational people would do and if the world doesn't actually look like what those models of perfectly rational people say should be happening then we must be seeing the facts wrong so we're going to let the beautiful the beautiful math and the beautiful models dictate the way we see the world and that's a personality type if you long if you want everything to be perfect and complete and and don't really like the messiness of the real world he went off in one direction off to the right he became what we call freshwater economist and in the jargon never long story if you said you know i i just i look at what goes on out

there and it turns out there really are recessions and there really is involuntary unemployment and the great depression really did happen then you went the other direction and obviously you know which way i went on on all of this yeah clearly. where do you think that we're living in a revolutionary time in america and i don't mean seven hundred seventy six more like nine hundred thirty two was arguably a revolution we've had a number of them or if you want to define the term. well i'm not sure. i mean we are living through a time that is where we faced enormous economic challenge we're facing the worst challenge obviously in eighty years and we are totally mucking up the response we're doing a terrible job we're we're failing to deal with it all of the people the respectable people the serious people have made a total hash of this. that is a recipe for radicalism it's a recipe for breakdown not necessarily in ways you want if you look at some of you

can see it's more advanced in parts of europe take a look at some of those rallies going on in places like greece or hungary and you wonder did i just step through a time portal back to one nine hundred thirty two there is there are a lot of ugly forces being on least in our societies both sides of the atlantic because our economic policy has been such a dismal failure because we're refusing to listen to the lessons of history and you know we may look back at this thirty years from now and say that's when it all fell apart and by all i don't just mean the economy the strauss and how wrote a book called the fourth turning back in the late ninety's and in a they suggested that there is this eighty year cycle to history roughly every eighty years we have a great depression followed by a war and then we kind of come out of it in a new state eighty years ago was the last great depression eighty years before that was the civil war eighty years before that was the american revolution they take it all the way back to the war of the roses i mean they take it back to to the

sixteenth seventeenth century. what do you think about that notion that larger notion that maybe there are these cycles in that and that it might be just driven by something as simple as the fact that it takes about eighty years for the people who remembered the idiotic mistakes we made last time who would otherwise warn us about making those mistakes to die off. well i've got a i'm a little less cosmic a lot less cosmic on that but i am a like a lot of people i think. i believe in what the late high minsky economists said which is that certainly in terms of finance and economics what happens is the people when when a sufficient time has passed since the last serious depression people get careless they get sloppy they forget the dangers of piling up leverage they forget the dangers of an unregulated banking system they start to let things slide and then that a certain point they suddenly say oh my god there's all this private sector debt all the banks have have almost no capital and then you get

a great crash and that that cycle of financial instability that's real that's very clear and it runs partly through the political process we would not have repealed glass steagall we had not would not have allowed shadow banking banks that are basically completely unregulated to become such a large part of our financial system if there is still been a lot of people around who remember what happened in the thirty's do you think that we need to fundamentally rethink the way that we do corporate capitalism in america . i think we actually had a reasonably workable solution i guess i'm not that much of a radical on these things i think that that the capitalist system we had in the fifty's and sixty's and even some ways into the seventy's didn't work that badly it wasn't wasn't perfect by a long shot but perfection doesn't happen in human life i think if you look at at strong social insurance states in europe they. some of them the ones that didn't go

too deep into this euro thing have have handled it pretty well sweden is weathering the crisis fine so i actually don't think it's what we need mostly to do i think is to remember old truths is a friend of mine said that you know turns out that new economic thinking consists in large part of rereading old books because we went through a great forgetting and if we had remembered what our grandfathers learned we would not be in the mess we're in you know. i'm curious your take given the. with or without actually the presidential election that's that's coming up your take on what i call pirate acrid people called private equity with the industry they used to call the l.b.o. industry leveraged buyout industry. takeover artists m n a r us all these these things what are your thoughts on. well it's trying to find identifiable real benefits of this stuff and they are hard to find. in the imaginary story where productivity took off in american business became more competitive it's not in the

data at all the fact of the matter is none of that actually happened and a lot of what goes on in these private equity or you are like the pirate equity i like that a lot of that goes on actually does seem to be that it's a way of basically reneging on contracts usually without literally breaking the law but there's a lot of understanding business life workers make workers make long term commitments to a company because they believe that they have a deal that their pensions will be guaranteed that there are certain their seniority will be respected and then along comes bain capital or something takes it over welches on the deal among other things that shifts a lot of the obligations on the taxpayer because we do have federally guaranteed pensions to a certain extent and and they come out making a lot of money but that money is not for making the economy more productive it's from a basically expropriating property from other people and so that's certainly a lot of what we're seeing here the idea that that these people that private equity

are the heroes of our prosperity first of all what prosperity but secondly the idea that they've done wonderful things for the economy is just not borne out by the facts other than their own personal economies i suppose what it what do you think what do you see as the roles they say they've done very well no denying that what do you see as the role of labor unions in the united states where we're down now to a level of private unionization it's not that different than it was in the one nine hundred eighteen i think we're at six point seven percent. yeah you know labor unions. when they were strong they could often be annoying. to remember when there were strong labor unions and sometimes the work rules would be a pain and sometimes it but. don't know what you got till it's gone turns out that unions play a really critical role in a couple of ways they they give workers bargaining power and they spread the benefits of productivity gains much more widely so that workers share in them and particularly low paid workers tend to share in them pretty well unions are

a powerful equalizing force and they're also a political counterweight you know with with out with a weak union movement then big money is pretty much all there is and it turns out that that that society that fairly decent middle class society that we had forty years ago was sustained to an important extent by the fact that we had a strong union movement and the crushing of the union movement has had all kinds of consequences that have hurt lots of people who would never have been in a union how do we bring them back. should we try to well partly by stopping the legal discrimination against unions i mean it's it doesn't take a whole lot is that the collapse of private sector unions in america took place quite quickly didn't happen and a long slow slide a lot of it happened in a relatively short period in the one nine hundred eighty s. and it was because the reagan administration both legally and its some extent just by disregarding the law tilted the balance heavily against organizing tilt that balance back get back to the national labor relations board doing the job it's

supposed to do which is to protect the rights of workers to organize you might be surprised at how quickly at least a significant amount of unionization would come back to this country i'm curious your thoughts on coal worker on cooperate is there more people working on worker on cooperate in the united states now than there are union members is that a direction that we should be pushing hard if it works i mean that there are. that's a long discussion it's not a universal solution you don't want to you know work around co-operative owning an oil refinery would be a bit of a problem because that's an awful lot of capital and by only a few people but sure i mean i think we actually what we need we actually need is an economy that has multiple bottles we need to have unionized firms that we can see what that we can we need to have right now we've become a kind of a monoculture ruthless ruthless corporations as the only way we do business and by all means let's let a thousand flowers bloom here and in terms of how we organize our economy dr paul

krugman thank you so much for being with us tonight. thank you. to see this or other conversations of great minds go to our website and conversations and great minds dot com. coming up after the break mitt romney says he'll lower the unemployment rate just six per cent by the end of his first term in office if he's elected president so why then is he endorsing a budget that will kill more than four million american jobs all that and more and tonight's big picture on the. line of american power continues. things that are so bad. might actually be time for a revolution. and it turns out that a popular drink of starbucks reza surprises him radio.

you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear see some other part of it and realized everything you saw. i'm sorry is a big issue. would you. welcome the alona so they'll get the real headlines with none of them are the problem with the mainstream media today is that they're completely disconnected from the viewers and what actually matters for those viewers and so that's why young people just don't watch t.v. anymore if they want news they go online and read it but we're trying to take those stories that people actually care about and transfer them back to t.v. .

are you ready to rumble joining me for tonight's big picture chris ouma conservative commentator and activist sam sacks progressive writer and strategist marc harrold libertarian commentator and attorney and great to have you all with us thank you so much for joining us let's start with mitt romney this week rob making .