This is an audio transcript of The Economics Show podcast episode: ‘The Wolf-Krugman Exchange: America vs. the world’
Martin Wolf
Paul, good to see and talk to you again.
Paul Krugman
Good to see you too, Martin.
Martin Wolf
So, according to a new national security strategy document released by the White House last week, I appear to be living on a continent that faces civilisational erasure. Must say, it doesn’t feel like that.
Paul Krugman
Yeah, the same document says that we’re going to help Europe correct its current trajectory by helping, among other things, patriotic parties, which I think basically means parties like Germany’s AFD.
Martin Wolf
Well, the help that is being offered certainly makes me nervous. So there’s no question there’s a lot to break down in our discussion today. So let’s crack on.
[MUSIC PLAYING]
Hello, I’m Martin Wolf, chief economics commentator at the Financial Times.
Paul Krugman
And I’m Paul Krugman, professor at the City University of New York and now an independent newsletter writer on Substack.
Martin Wolf
And welcome to the third episode of this series of the Wolf-Krugman Exchange here on the Economics Show where Paul and I are taking stock of the first year of Donald Trump’s second term in office and where he’s taking the economy and democracy in America, but also elsewhere in the world.
Paul Krugman
Today we’re talking about President Trump’s increasingly open hostility to Europe as set out in an extraordinary new national security strategy last week.
Martin Wolf
And we’ll also be looking at another aspect of that posture: a reframing of America’s superpower rivalry with China and what that means for the world. So Paul, there really is only one place to start, and that’s with America’s new national security strategy. Let’s start with something pretty fundamental. Does the absence of a liberal values mission in the NSS indicate the end of US exceptionalism, or at least US moral endeavours in the world as a foreign policy principle? Is this all gone?
Paul Krugman
Oh, it’s more than gone. I mean it . . . this document goes beyond sort of dropping the historic US commitment to liberal values, democracy, whatever you want to think of as being the distinctive, exceptional American contribution to the world to sort of actively opposing it. I mean, quite a lot of the document is meandering, boilerplate. Some of it reads as if it was translated from the North Korean with effusive praise for dear leader, but it is crystal clear on Europe. It basically says Europe better stop adhering to these liberal values. Better stop admitting people from other places or else.
Martin Wolf
So John Fitzgerald Kennedy’s famous “Ich bin ein Berliner” at the Berlin Wall is now absolutely ancient history.
Paul Krugman
Oh, very much. I think even Ronald Reagan, not one of my favourite presidents, but you know, Reagan said, we are a shining city upon a hill. That’s definitely not the message that we’re getting from this document.
Martin Wolf
Now one question before we get to this sort of body blow to Europe. I am quite intrigued by how this administration frames its competition with China. It clearly acknowledges the rivalry in tech, the economy and military matters, but it doesn’t stress any sort of ideological competition. It’s really just a set of interests and it also implies in other places that its main focus is regional, that what the US wants to be is the dominant power in its regional sphere of influence, which is the Americas.
It sounds as though in addition to sort of getting away from ideological competition of any kind with China, it’s sort of quite willing to hand over the rest of the world, which is pretty well all the world economically speaking outside the US. So let’s be clear about that to China. This is really a very weird way of framing an interest-based policy, isn’t it?
Paul Krugman
Yeah. I mean, Maga — Make America Great Again — was a very protean slogan. It could mean whatever you wanted it to mean, but one of the meanings was clearly that we are going to stand up against China. Trump released a national security statement during his first term that kind of put rivalry with China at the core, although the actual policies proposed were disastrous, but that’s almost disappeared from this document.
We’re really not gonna try and do anything, at least this doesn’t say anything about significantly contesting China’s technological progress, Chinese influence in the world outside the western Hemisphere. So yeah, it’s like we’re much more concerned with making sure that there aren’t too many non-white people living in Europe than we are with great power competition with China.
Martin Wolf
With the exception that of course at that time the US wasn’t at all interested in Europe except to keep it outta the continent. It reads sort of rather early 19th century as a perspective upon the world, and I’m really surprised by this because it’s only really emerged during this second Trump administration. Just briefly, what is driving that? Where is it coming from?
Paul Krugman
Well, I, first of all, I’m not sure that there’s very much genuine interest in the western hemisphere. You know, we’re putting a lot of US taxpayers’ money on the line in an attempt to bail out the president of Argentina. But in terms of actual influence, it’s not clear that there’s much there going on except that the western hemisphere is a place to do things that this administration wants to do, like bomb small boats and then kill the survivors. So I very much doubt that they have a coherent strategy that says we’re going to try to establish a Monroe-style sphere of influence. I think it’s more that for various reasons, focusing on Latin America is convenient for them right now.
Martin Wolf
So I think we should come back to that when we consider China and the broader competition for influence, which is clearly there. But let’s first go a little bit deeper into what all this means for Europe. When we last spoke, you were rather optimistic on Europe, so explain why you were. And has this really changed that perspective? Because I must say that in Europe now, I sense people are really pretty shocked because it, to them, it seems that the Americans have come out essentially and said, we are your number one enemy pretty well. We absolutely despise your political arrangements. We want to replace your governments with governments like ours of the far right. And well from Europeans, that starts reminding them of the ’30s. So this is really pretty terrifying. Where do you think it leaves Europe?
Paul Krugman
The United States has much less power over Europe than it imagines it does. European exports to the United States are under 3 per cent of European GDP. It’s not that the European economy is dependent upon access to US markets. It’s not even as dependent, I think as many people think, on US technology. It has been dependent upon US national security guarantees, but that’s a choice. You know, Europe’s GDP is not very far short of America’s. Europe certainly has the resources to be self-sufficient. So in a way, this may all serve as a wake-up call saying, hey Europe, you’re on your own. It’s time to actually recognise your own strengths. I’m actually doing a bit more sort of background work and I am even more sceptical of the Europe in decline narrative than I was a few weeks ago. People should have seen this coming in Europe, but it is still kind of shocking to see it out there in black and white.
Martin Wolf
I refer to this as learned helplessness. After the war, the second world war, people obviously were very grateful for American vital assistance in winning the war and in then in creating and supporting the institutions of a new Europe. And most Europeans, not all by any means, but most Europeans have felt pretty grateful for that. They’ve also quite liked not having to make all these difficult decisions. Now suddenly, autonomy has been thrust upon them. The resources are clearly there, but it could take a few years, and these could be very, very bumpy years.
Paul Krugman
Well, yes. What are we talking about here, really? I mean the United States has complained that Europe does not spend enough on defence. Maybe we changed that now that we think that Europe is the enemy, but Europe spends a little under 2 per cent of its GDP on defence. United States it’s around 4 per cent. You know, 2 per cent of GDP is not a huge extra, 2 per cent is not a huge burden. Because Europe is, remains immensely wealthy. So the resources are there. The political cohesion has been really problematic and it’s still very much subject to being hamstrung by, you know, various kinds of blocking coalitions. Although, you know, the US government is looking less and less able to get things done as well.
But I don’t think it takes as long as people think. You know, who is the world’s largest producer of artillery shells right now? The answer is Rheinmetall in Germany, Europe has all rather quickly in some aspects of just plain, you know, raw military clout already moved into a surprisingly strong position.
Martin Wolf
So in terms of economic policy, if we were going to talk about accelerating the move towards strategic autonomy economically, what would Europe have to do? Obviously they’d have to spend somewhat more on defence. I agree. Something like a couple of percentage points of GDP. They’d have to get rid of a lot of the duplication, which they now have. So take advantage of scale. That’s quite a big issue. But they did this famously in civil aviation where Airbus has been a tremendous success, obviously, so it’s, they’re used to doing things like that. They’re going to have to mobilise more manpower. But I mean, the EU alone, leaving aside UK, has at least three to four times as many people as Russia.
So that should be manageable. And Europe is the largest world trader in aggregate, I think still. And so it will remain capable of forming worthwhile trade agreements with the rest of the world. And I suspect the rest of the world, and I’ve made this point before in other contexts, will want to minimise its complete dependence on just the US or China.
Most of the countries in the rest of the world have a degree of freedom, so they’re gonna continue to want European markets and good relations with Europe because a third poll is desirable. Taken together, this doesn’t look too bad, does it?
Paul Krugman
You now, there’s a lot widespread perception that Europe has fallen very behind technologically, which is not exactly wrong, but I think in many ways, misleading. Europe definitely has a much smaller footprint in information industries than the United States does. All of the big companies in that area are US or Chinese. AI is being undertaken largely in the United States and in a different version in China. So those are important things, and there’s a really strong case for some kind of European industrial policy if only to enhance autonomy. Overall the numbers say that European productivity has lagged well behind the United States since about the year 2000. I’m actually sceptical. I’m not sure that those numbers mean what they appear to mean.
And that’s a whole, that’s a way too technical discussion to have here now, but I’ve been doing some calculations on real wages. European real wages have grown about the same rate as US real wages. It’s not as if the ordinary experience of the economy has been bad for Europeans. And if we look at the application of modern technology and daily life, that’s every bit as obvious in Europe today as it is in the United States. So it’s not clear to me that Europe has, you know, it’s like there’s a segment that Europe has fallen behind in, and that’s a solvable problem if Europe has a will.
Martin Wolf
Maybe we should take a bit of a leaf out of the book of the Biden administration’s effort with targeted industrial policy, which this administration has completely scrapped. It looks a great deal, more sensible than what they’re now following. Scatter gun, unpredictable tariffs.
Paul Krugman
Yeah, we were talking about how the Trump administration has downplayed, you know, all of a sudden rivalry with China seems to have dropped off the agenda and not just in the national security document. In terms of actual policy as well. Europe has a real, I mean, I don’t know exactly what the grounds for action.
I think it’s much less legalistic than is the United States and, but you know, we have, you know, section 232 tariffs, which were designed to give a lot of flexibility in dealing with national security interests, and Europe clearly needs something like a section 232, where the national security threats are coming as much from the United States as they are from China.
Martin Wolf
But we would almost inevitably end up with conflict with both because we want to, people will want to preserve vital industries in Europe. I accept that the basic fundamental technologies have to be available in Europe. That means we have a concern with the US now and we obviously have a concern with China. We’ve just heard today the trade surplus of China is, has been 1tn. There have to be counterparties to that, and if the US doesn’t want to be the counterparty, it looks as though it’ll be Europe. And it’s pretty obvious the Europeans are not gonna have that.
Paul Krugman
Yeah, it’s, be as much of a free trader as one can be in good conscience, and yet having a trillion-dollar trade surplus all head to China because the United States is, has gone protectionist, you cannot accept that level of disruption.
Martin Wolf
So China has to change. Europe has to adapt, but the US is really something of a threat to Europe. So let’s consider just briefly the political side of that threat. There seems to be an idea that European states have to facilitate essentially the rise of, well, actually the US refers to as patriotic parties, essentially far-right parties. And a key emphasis very clearly in this document when it refers to the civilisational crisis of Europe, it’s very clearly framed as racial.
It’s absolutely astonishing to me. I suppose it’s, I’m naive that it’s got so far that the US considers the civilisation it’s defending, not as a series of values but as — let’s be brutal — skin colour and religion. What does Europe do when confronting a power that has the aim of causing racial war in this, in your continent and putting in power parties with, in at least ideologically rather similar to — no other way of putting it — the Nazis. That’s the echo we all hear when they say, we must go back to defending our civilisation. That inevitably sounds Nazi. How do you deal with this?
Paul Krugman
Well, I think you deal with it by first, you know, saying no, hell no. Expressing outrage. I’m not sure exactly how it plays in European politics, but you know, in a number of other countries, including Canada, which is far more dependent on the United States than — just because of the geography — than Europe is. Trump has been effectively a highly effective campaigner on behalf of liberal values. Also the liberal party.
Martin Wolf
I agree.
Paul Krugman
Mark Carney is prime Minister of Canada in an election that was supposed to be a devastating defeat for his party largely because Trump was on the side of his opponent and that’s turned the vote.
Something like that to some degree happened to Brazil as well. So in some ways, you know, the famous phrase from Franklin Roosevelt in 1936 about his enemies, I welcome their hatred. I think it’s probably a good idea for European politicians to say, we welcome Trump’s hatred. If there’s something he wants, this is something Europe should not want.
Martin Wolf
I think actually it is possible, and the next few years are gonna tell us that exactly what you described will happen if it continues in this way with this sort of rhetoric, and I’ll come to another aspect of it, of action, then I think the hostility to anybody who’s clearly puts himself or herself forward, as it were, as Trump’s avatar in Europe, is going to be very substantial.
It’s going to be really a huge crucial moment in European history. And this other aspect, which you covered in a recent comment of yours, is the role of Big Tech. I mean, this is quite extraordinary to me. Ten years ago, 15 years ago, I thought of Big Tech as predominantly liberal. Well that’s certainly gone. And they’re basically claiming that they are entitled to complete free rein. There should be no controls whatsoever on what they produce, because free speech. And they seem to be utterly in control of US foreign policy. That’s really quite extraordinary. Is that going to continue? Should we reckon that as a feature, not a bug, in US foreign policy now?
Paul Krugman
Well, what we do need to say is that it’s very much a partisan thing. Big Tech used to have, to some extent, probably still does, but used to have a lot of power in both parties. A lot of of the tech guys were major contributors to Democrats. They have very much tied themselves now to Trump’s wagon and the attempt to use US government power on their behalf. I mean, they, the part of the conflict, aside from the, you know, how dare you allow non-white people into your countries, but part of the conflict is how dare you try to have some prudential regulation of social media.
Martin Wolf
Indeed.
Paul Krugman
And the people who are gone crazy about that. Elon Musk calling European bureaucrats ‘woke Stasi commissars’, I think.
Martin Wolf
That’s right.
Paul Krugman
They have very much identified themselves now with Maga, with Trump. And if the United States is able to turn this around, if we are able to shake off this malign movement, then US foreign policy will also change. So hopefully it’s not a permanent feature of US-EU relations, but you should behave as if it might be a permanent feature. And it’s wild. I mean we have our commerce secretary threatening to keep steel tariffs high on Europe if Europe doesn’t stop attempting to prevent the psychological and social harm caused by untrammeled social media.
The tech bros want the US government to act in their, on their behalf in Europe, the way that United Fruit Company used to expect the US government to do its bidding in the banana republics of Central America.
Martin Wolf
Yes, I noted that and I think it’s a very good parallel. And just before we move on, the other policy that Europe follows that they want to salvage is anything to do with climate change. This is of course seen by, increasingly, by the world as essentially a war of the US on the world.
Paul Krugman
That’s right.
Martin Wolf
Because most people recognise the importance of doing something about this.
Paul Krugman
It’s important to do something. I mean, that’s the most important thing. And, you know, Europe, it’s a little bit like some of the other things, the worst about it is not simply that Europe is encouraging wind and solar power, but that, you know, it’s working, not great, prices are a little high, there are some questions, but you know, Britain relying very, very heavily now on wind power. Some of the European continental economies relying very heavily on solar power. The demonstration that you can actually do this is something that really, really annoys the American right as much as anything else.
But to add to that, if Europe is going to, were to say, OK, nevermind the wind and the sun, we’re gonna go back to fossil fuels, you know, where are those fossil fuels going to come from? And the biggest answer is actually natural gas from the United States. So just on national security grounds, Europe should be pushing for renewable energy. I mean, you know, they were getting gas from Russia and that has, that has turned out to be a really bad idea. Being dependent on liquefied natural gas from the United States is almost equally bad as . . .
Martin Wolf
Yes and one of the attractive aspects of clean tech is that even Donald Trump can’t stop the sun shining or the wind blowing.
Paul Krugman
He’ll try. But yeah . . .
Martin Wolf
I think that’s still beyond him. So it’s time for a short break and when we come back we’ll be talking about the battle for supremacy between the US and China, particularly economic supremacy, and whether China has already won.
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So let’s talk about China and the US. You’ve argued that China isn’t the world’s number two economy, but is in fact already the world’s number one economy. Can you explain that view?
Paul Krugman
OK. So in terms of the dollar value of GDP, China is still number two, but the overall price level is lower in China, which is a well known thing. China is still per capita it’s a middle-income country, not a high-income country, and there’s a well-established relationship. It is in fact, pretty much uniformly the case. The countries at a sort of middling stage of development tend to have cheaper non-traded services than countries at a more advanced level, and therefore the true quantity of goods and services they produce is larger than you might infer from just looking at the dollar value of their GDP and China on a purchasing power basis, the economy is already substantially larger than the economy of the United States. The United States is still ahead cutting-edge technologies, although that’s a surprisingly fragile lead, and the Chinese have shown an awesome ability to catch up technologically or at least catch up most of the way technologically in areas that they consider a priority. So I think there’s really no serious question that at this point, China has the bigger economy for investors. It’s not as big a market because the dollar value of its GDP is smaller, but it’s everything that’s happening on the ground in terms of support for science and technology in terms of having any kind of coherent industrial strategy says that the gap between China and the United States is gonna get wider.
Martin Wolf
One of the factors obviously is the rate at which countries invest. We know that quite a bit of Chinese investment is inefficient, but quantity is quality to some degree. And if you look at annual dollar savings, they’re actually as big as US and Europe together. Quite a lot of that is wasted in buying really pretty poor assets because of this huge trade surplus of theirs. But nonetheless, their capacity to mobilise resources in pretty well any sector they’re interested in, as they’ve shown with clean tech, is pretty daunting. And the US has got nothing to compete with that because there just aren’t these flows of savings or investment.
Paul Krugman
Yeah, I mean I’ve, there’s been nothing like the situation of China before and in the past, the world’s biggest economies have also been its richest per capita. And this is for the first time that the biggest economy is in fact not also at the top in terms of per capita GDP. And China is so big, has so much deployable investment, industrial policy can sometimes go very badly wrong. But if there’s a sector that the Chinese think is really important for them to dominate the world in, they pretty much can do that. And the United States has no ability to counter it, certainly has no desire to counter that in any systematic way now. So sure, this is a world where, yeah, the United States is still richer. Our standard of living is still higher. But if it’s head to head between the US and China, my money would be all on China.
Martin Wolf
So if you look at this, imagine you were sitting in Beijing and you were looking at the way America has behaved since Trump was inaugurated. Look at the trade war. Look at what they’re doing in domestic policy, particularly as you said, science and technology. Now, this national security strategy comes along with its very strange ideas about spheres of influence and no real indication of a desire to challenge China as far as one can see. Would you sort of conclude, well, basically, it’s all done? We are going to be the top power. We are gonna be a more reliable trading partner for most countries in the world, including even Europe. The Chinese must just feel that everything’s falling into their lap.
Paul Krugman
Yeah, I mean, I don’t know whether the Chinese officials, what they do when they’re feeling triumphant, whether they rub their hands with glee or they giggle or what, but whatever it is they do, they must be doing it. It’s funny, I was just reading some posts on history in Substack and that someone who was amazed to discover that the Roman empire, you know, how did Rome conquer the world? And yeah, the Romans had good armies and good soldiers, but not that much better than anybody else. Ancient Rome’s real strength was its ability to cultivate and assimilate allies.
It was the strength at building alliances that made the Roman empire. The United States used to be really good at that. We were the leader of the free world. And it’s still true that the former free world collectively is still a much bigger economic power than China. But the United States has just declared that large parts of what we used to call the free world are actually our enemies. And we are, on our own, without allies, are not a match for China. So the Chinese must be feeling, hey the second cold war is over and we won.
Martin Wolf
But the US had this vast alliance and lots of friends and lots of countries, which at least lent towards it. India is an obviously incredibly important example because of its scale. And it’s just burnt them all. What’s astonishing to me is there doesn’t seem to be any serious debate about the implications of that. I’m really astonished at how few people have been arguing that the US is just burning all its major assets in this competition. Maybe the explanation is ultimately these people don’t care about the competition with China. They just care about the sort of societies they create at home.
Paul Krugman
It’s definitely true of the Trumpists. Competition with China. Great power. That was always an excuse. It was always a reason to do what they wanted to do domestically. In many ways, this had been prefigured. This explicit downgrading of international competition in the national security strategy is prefigured by everything else that’s been going on.
Let’s not forget that all of Trump’s tariffs are flat violations of past agreements. US tariffs were not set in isolation. They were set through global negotiations. We promised Europe, we promised Canada, you know, we promised the world a lot. And then Trump not only just ripped all of that up, but did so without even explaining why.
No sense that US promises are something that should be honoured. Or if you’re not gonna honour them, you owe the world an explanation. So what authority, diplomatic, moral, however you measure it, what authority do we have in this world now?
Martin Wolf
Well, of course the excuse they gave, but they’ve never justified it with anything rigorous, of course, is that the rest of the world was ripping us off. Europe, of course, was presented as being the arch ripper-offer, and that is obviously part of what justifies the view, which seems to be very clear now that Europe, which always has considered itself sharing values with the US and objectives and aims, is actually the enemy. That’s what seems to be going on in part, and we discussed that in previous episodes, this very, very strong sense of this incredibly powerful and, on the whole, successful country that it’s been ripped off. Again, that’s a psychological problem, isn’t it? I mean, you can’t really interpret that coming from this country of all countries as a sort of credible position.
Paul Krugman
Yeah, especially, you know, even if you buy the bad economics of Trumpism, the belief that bilateral trade imbalances mean that you’re being ripped off by the other guy and if they sell more to you than you sell to them, that that means that somehow or other that you’re subsidising their economy, it makes no sense. But that is what Trump has often said.
But the European Union, if you include exports of services as well as goods, EU-US trade is almost balanced. We don’t even actually have a big trade deficit with Europe. Even on Trumpian economics, it makes no sense at all. But the facts have a well-known liberal bias, I guess, or something. It’s, I think, ultimately the sense of being ripped off here comes more from, we don’t like the fact that the Europeans still have the values that we used to have, and then we’re gonna make up some other story to justify our hostility.
Martin Wolf
Now in this world that we are envisaging, you have the US behaving the way it has been. You’ve got China, you’ve got Europe. If you were a rational ruler of a Latin American country, of a south or east Asian country, which isn’t itself a superpower as it were, how would you navigate this? Presumably, you don’t really want to choose China.
There are problems there. You want to manage and contain your risks vis-a-vis the US. You probably don’t want to close your economy up. It seems to me part of what you would want to do is to get really quite close to Europe, but how do you think this will play out? And a particular issue there since we started with this is this whole Monroe doctrine revived attitude of the US, the sphere of influence.
Many of the South American countries, because they’re commodity exports, their biggest market is China. America’s a competitor, not a natural market. They’re gonna want to continue to trade with Europe and China. Is the US somehow proposing to blockade them? Are they envisaging that somehow the South American countries will be invaded or in some other way forced? I mean, I feel the same about Canada. Where’s the beef here? What is actually underneath all this insane rhetoric? What in concrete terms might it mean for US policy and the rest of the world? What choices might we be faced with?
Paul Krugman
Yeah, I mean, the idea of, certainly of South America as a US sphere of influence, and even on just raw geography, Brazil is as close to Europe as it is to the United States.
Martin Wolf
Exactly, of course.
Paul Krugman
And in economic terms, they’re roughly, you know, equidistant in some kind of economic distance from the US, China and Europe, and in many cases do more trade with China and Europe than they do with the United States.
Martin Wolf
Indeed they do.
Paul Krugman
So if you ask the question, why single out Latin America, again, maximum cynicism, I mean, we can go out there and sink small boats in the Caribbean. I don’t think we could get away with doing the same thing in the Mediterranean. If you wanna go out there and kill people, Latin Americans are kind of the targets of opportunity regardless of whether there’s any real motivation for it.
It’s hard to talk about this stuff without sounding crazy, but this is kind of where we are. But I don’t think this a coherent doctrine. I think if you look for a coherent geopolitical doctrine in that national security strategy, you won’t find it. The only thing that is really coherent is we hate Europe.
It does talk about, yes, well, western hemisphere is ours. But, you know, we tried invading a country to produce regime change 20 years ago, and it did not go well.
Martin Wolf
I would be really surprised if they’re willing to actually apply serious force towards regime change in South America. I mean, the conclusion I’m reaching from this discussion essentially from the European perspective is something like this. We seem to have a superpower that we trusted, respected and in many ways profoundly admired. It has become more or less across the board, economic policy, domestic policy, foreign policy, sort of at best senile.
But it has one coherent idea. It hates us. That is to say Europeans. Because with the last major liberal democracies left in the world, my reaction to this is that it’s a combination or pity and fear, as it were. But the pity is not just for America, it’s also for all its former friends. Can you give us one ray of hope before we go? That this will not last, that this sort of doctrine that we are now seeing emerging at home and abroad, that this will be a temporary phenomenon and we will get back something like the US we knew and loved.
Paul Krugman
Well, you know, if there’s a ray of hope, it would be how Latinos voted in the New Jersey election last month. I mean, it’s kind of seriously, it, the Trump’s ascent to a second term in the White House does not now look like it was a fundamental structural change in US politics. It was a lot of relatively low information. US voters who actually believed Trump could bring down prices and have been very rapidly disillusioned. So assuming that the attack on democracy at home hasn’t gone too far, it’s very, very likely that Maga will at least be set back seriously politically in the midterm elections. And, you know, 2028 is a long ways away, but I would say there’s better than even odds that we do not have this kind of regime in the United States a few years from now.
Now that’s not the same thing as saying that America will be back. I don’t expect in my lifetime to see us repair the damage to our reputation, to our credibility that we’ve just done. But meanwhile, Europe needs to put on its big boy pants or whatever is the appropriate metaphor these days and say, hey, we’re a superpower too. We may not be quite as big an economy as America, but we have a lot of strengths that America is throwing away. So, time for us to take charge of our own destiny.
Martin Wolf
I very much agree with that conclusion. It’s very much what I have been and will be arguing, and I hope that Europe does respond because the alternative is really pretty horrible.
Next week we’re going to be answering your questions. We’ve had plenty of comments on YouTube and Spotify as well as the FT website, so if you’ve got a question you want us to answer, do comment on this whenever you are listening or watching, or email us at economics.show@FT.com and we’ll do our best to answer your questions.
Paul Krugman
The question and answer is always the most fun of any kind of presentation. So this should be the most interesting part.
Martin Wolf
And we have certainly plenty of big issues to discuss. What’s your cultural coda this week, Paul?
Paul Krugman
OK. It is funny. I had, I was searching for something and then discovered as I often do that I had already used it for the Substack, but I’ll bring it back and for once I’m gonna do classical music. There was a magnificent performance of Beethoven’s Ode to Joy in a vast public square in Maastricht. A few years ago André Rieu conducting. And there are people weeping as they should be.
[CHORAL GROUP SINGING]
Let’s try to remember all the great things that actual Western civilisation, not the caricature of it that the Trumpists want, has done and reclaim and move it forward.
Martin Wolf
Well, that’s a, a wonderful coincidence. ‘cause I was going to suggest exactly the same passage, but it occurred to me that just after the fall of the Berlin Wall, Leonard Bernstein performed it, I think in Berlin, and they changed the word. The first word in the German is Freuder, which is joy. But I think he did a performance in which the first word was Freiheit, freedom.
[CHORAL GROUP SINGING]
And in a way that is even more appropriate to this moment because he was symbolising the freedom that the fall of the Berlin Wall meant. And which was to me, as I wrote at the time, the most exciting political event of my life, watching the division of Europe end. Of course another little point, that choral song that based on the Schiller poem is the anthem of the European Union, and therefore could not be more appropriate at this moment when the European Union, which was such a magnificent idea of co-operation and peaceful relations in a continent that had been destroyed by war over the centuries, but particularly in the first half of the 20th century. This is so symbolically powerful, the connection with European history, one of its greatest geniuses, and of course the hopes of contemporary Europe.
Paul Krugman
Yeah, it’s easy to get annoyed at all of the pettifogging, bureaucracy and all of that. But the reality is given in the past few centuries of European history, what a magnificent thing it is for Europe to have got to where it is today.
Martin Wolf
The longest period of peace in European history since the fall of the Roman empire. So thank you, Paul, for joining me today. We’ll meet again here next week. And thanks too to our audience for listening and watching.
[MUSIC PLAYING]