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Transcript

Paul Krugman and Noah Smith have a chat

In which we talk about Paul's departure from the NYT, Substack writing, Trump, the 1980s, the future of manufacturing, and more!

This was a fun chat! It was great to reconnect with Paul, who of course I’m a huge fan of. If you aren’t already subscribed to his Substack, check it out.

Anyway, if you like to read discussions instead of listening to them, there’s a pretty good AI-generated transcript embedded in the video. Just click the little notepad icon in the bottom right of the video, next to the “CC” button, and the transcript will pop up on the right. There’s also a “Transcript” button at the top of this post.

Thanks to everyone who submitted questions! We didn’t get to nearly all the things people requested (or that I wanted to get to), but I guess that just means we’ll have to do it again sometime. My key takeaways from this discussion were:

  • Paul left the NYT because of too many layers of editing. This basically fits with my thesis that op-ed writers need a lot less editing than journalists do, and that good op-ed writers function best with no editing at all.

  • I’m starting to suspect that the best thing for the print media is to unbundle journalism/reporting from analysis/op-eds — basically, to have news services like the AP and opinion publications like The Atlantic. I’ll think more about that in a future post.

  • To succeed on Substack, writing very frequently is the best approach. (Note: This was the advice Ben Thompson and Byrne Hobart gave me when I first started out on Substack, and they were right.) This system favors people like Paul and myself who naturally have a lot to say and who usually don’t bother making things too polished.

  • Paul is absolutely right that the legacy media is in big trouble. The New York Times and other big newspapers could always rely on being seen as the voice of authority in previous decades, but they no longer are. Most people explain this by saying that the legacy media forfeited the public trust by making a series of big mistakes, but my own preferred explanation (as usual) is technoloical: For a long time that was just because they had a natural monopoly on things like classified ads and physical paper delivery. When those natural monopolies went away due to the internet, there was still a long lag where people considered the NYT the voice of authority because they always had before. But eventually, new entrants challenged the authority of legacy media on the substance, and often won — getting better scoops in the journalistic space, or doing better, more in-depth analysis in the op-ed space.

  • The vibe of the second Trump term is shaping up to be “The world is going to hell but let’s try to have fun with it.” This is in stark contrast to the vibe of the first Trump term, which was all about “resistance” and grim dire struggle. The shift is not necessarily because Trump’s opponents (including both Paul and myself) are less concerned now than before, but because they realized that the old “resistance” strategy didn’t really work. Trumpism and all its attendant dysfunctions and screw-ups will be here for a long time to come.

  • I’ve often made analogies between the 2020s and the 1970s, but Paul — who actually worked in the Reagan administration — thinks they’re much different. In particular, Trump’s people are much more contemptuous of rules and norms than Reagan’s were. Paul also thinks Trump’s people are much less competent, though I argue that this is mostly at the top level, and that the people at the subcabinet level are actually looking a lot more competent than in Trump’s first term, mostly because of the influx of tech and tech-adjacent talent.

  • Trump’s mass deportation of illegal immigrant workers in the agriculture industry could raise food prices, making Americans angry.

  • I’m pleasantly surprised by how well Javier Milei seems to be doing in Argentina. Paul thinks Milei will screw up by trying to peg Argentina’s currency to the dollar.

  • Paul is confident about the underlying strength of the American economy, especially our productivity and dynamism. This will help to mitigate whatever inflationary shenanigans Trump does. I agree.

  • On trade balances, Paul doesn’t buy the common theory that the U.S.’ ownership of the reserve currency is a big reason for our trade deficit. He points out that Britain runs a trade deficit, even though they don’t have the reserve currency. Paul isn’t quite sure why we seem to have structurally unbalanced trade, but he thinks that it’s probably not going to change unless the world goes back to capital controls.

  • On manufacturing, Paul agrees with me that strategic/military/geopolitical concerns are the main reason we need industrial policy and reindustrialization. Neither of us expects manufacturing to go back to 30% of the U.S. economy, or to provide huge amounts of good blue-collar assembly-line jobs to the American working class. But it’s still very important.

  • In terms of policies to promote reindustrialization, Paul favors subsidies over tariffs, for a simple reason — tariffs are basically just subsidies plus sales taxes. He’s right. I still think targeted tariffs are important in order to quickly block Chinese attempts to forcibly destroy certain Western industries with floods of subsidized exports. But I agree that subsidies — and other industrial policies — should be the main tool of reindustrialization.

  • In the past, Paul has declared that the U.S. is “an insurance company with an army”, although it turns out he didn’t invent that line. But now, he agrees with me that we’re really just an insurance company. Defense spending has collapsed as a percentage of government spending, and of the economy, since the mid-20th century when Eisenhower warned of a military-industrial complex, and it’s far lower even than during the late Cold War. Progressive thinking on defense spending is really evolving fast, and this is a good thing.

Anyway, I really enjoyed this chat. Next time I promise to mount my phone on a stand so it doesn’t move around so much!


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