Overworked, Public, Economist – These are the 3 words Paul Krugman used to described himself as we sat back in Princeton, NJ for our interview. Add to that the titles ‘New York Times columnist’, ‘Princeton Professor of Economics’ and ‘2008 Nobel Prize laureate in Economics’ and you begin to get a sense of the man behind all of the big headlines.

In Part 2 of my conversation with Krugman, we discuss everything from the impact of the Yes We Can generation, to political nominations within the Obama administration to the small world theory.

You 2.0 meets the Yes We Can generation

An interview with Nobel Prize winning economist Paul Krugman (Part 2)
By Juliette Powell

Where do you see the biggest impact of social networking and social media in the next 4 years?
Krugman: Some of it has already happened.

There have been some proposed appointments in the national security area, or at least floated appointments, that have essentially been torpedoed because the online community said no. ‘these guys are unacceptable!’ and rightly so.

There will be other areas affected but remember that basic policy formulation won’t come out of this stuff because it’s detailed. It will always require somebody sitting at a desk with lines of access and so on… But fast critique now demands that issues be brought to the front of the table when they were no being considered in the past.

Yes, the online community is gaining in power and influence and the effects are compounded because we realize it. Yes, it will be harder for this (Obama) administration to slip!

In the later Clinton years, the administration took on more of a managerial role and wasn’t as pro-corporate as a republican administration but less of a force for democratic change than one would have hoped.  That’s partly because they had a hostile congress but it’s also that there was no effective community saying: ‘Hey this is not what we elected you for!’ I think the Obama administration will have that kind of community and a good thing too!

Now that people all over the world have seen the impact that a single person can have using social networking technology – do you think that’s going to change the way that we view our own possibility to actually take control of our own destinies?

Krugman: I think there is something like that happening and it’s not just what is happening in America. What I hear a lot, is that many countries, including very oppressive regimes –

It starts as people having Facebook profiles just for friends, then something happens. It turns out that that same technology, that same involvement is also a way of getting political action together. People can be mobilized and I think it changes a lot of things.

In the 18th century, when we lived in small towns and everybody could participate and then we moved to this world where the power became very distant and news media far away, dictated how you saw the world. Now I don’t want to romanticize it but I think that it’s going to affect a lot of the world.

Take the famous Jacques Chirac quote: “The internet is an Anglo Saxon network’, that is no longer true at all. I watch my own links for my blog posts and I can see that we really are a small world. I’m seeing Chinese links, Korean links, Russian links. It’s a world now where this involvement has spread to very many cultures and indeed it is a very small world.

I wasn’t quite sure what to expect when I arrived in Princeton, New Jersey to interview Paul Krugman. I had been reading him for years in the Times and he was one of the reasons I had studied economics yet a sense of relief washed over me when I met a slightly harried Krugman in the unmarked video conferencing room reserved for our encounter.  The bearded genius with the earnest eyes greeted me warmly and told me he only had a few minutes to spare; his wife had just called because she was making pasta, the water was boiling and she wanted to know when to throw in the pasta and he wanted to get home before heading to Stockholm to pick up the coveted 2008 Nobel Prize in Economics. Krugman won for his ‘analysis of trade patterns and location of economic activity’. When I told him I’d share our interview with you on this blog, he graciously extended our allotted time together to answer more questions. The result is a multi-part Q and A.

In part 1, Krugman and I discuss topics ranging from the impact of the democratization of American politics on the connected masses to the role of social capital on the economic recovery. The full transcript of my Krugman interview, along with his videotaped responses will be posted here in the coming days.

An interview with Nobel Prize winning economist Paul Krugman (Part 1)
By Juliette Powell

Given the current economic climate, what do you feel the role of building social and cultural capital plays in our recovery?

Krugman: We’ve gone thru an era of emphasis on individual initiative and individual rights. The “greed is good’ era, and now we’ve learned the hard way that that can go very wrong. 70 years ago Franklin D Roosevelt said: ‘We’ve always known that heedless self-interest was bad morals.’ Now we know that it’s bad economics.

We are now at a time when some of those virtues of cooperation, which is what social capital is about, have been rediscovered and with luck, this can be turned into something of lasting benefit, not just getting out of the recession.

For anybody who has followed Obama’s election and looked at the impact of his team’s online campaign, it is clear that many first time voters and people that wouldn’t have considered themselves politically inclined were empowered to self-organize and use social networking tools to help rock the vote. In your opinion, what kind of impact will people’s use of social media tools really have on the Obama administration’s decisions moving forward?

Krugman: We can’t be too romantic about this. Legislation still has to be drafted by teams of people putting every semi-colon in the right place. Economic crisis management will still be done by people sitting in government offices. Conversely, there is a democratization of the ability to express opinion and to make analysis. Here’s an example that most people wouldn’t be aware of:

We had a proposal for a financial bailout presented by Henry Paulson, the current Treasury Secretary. This was the voice of authority and most of the traditional media were highly respectful of it- not me - but most everyone else was. Yet very quickly, an enormous online discussion broke out and grew into a sense of outrage around the proposal. So the quality of the economics blogging around the economic bailout was incredible. You had a lot of smart people who knew a lot about economics but in the past wouldn’t have had any ability to get their views out quickly. They were not in official positions. The number of trained economists who also have newspaper columns is – one – me. These other people did not, but their discussion. I think it helped move the policy.

Within 3 weeks the treasury had effectively completely abandoned the original approach (to the economic bailout) because everyone who wasn’t in a position of power said: this doesn’t make sense!

We can see a lot of things like that happening in the future. Still, don’t underestimate the influence of people who can treat a congressman to luxurious dinners. Being online unfortunately is never going to do away with that entirely but there is a real democratization of access.

If you were one of the people who participated in the online discussion about the economic bailout, our healthcare system or the way to maximize the usefulness of the social tools put out by the Obama team, we want to hear your experiences or send us the name and blog of an online community member who helped you understand the issues better.

Keep checking in for Part 2 of my interview with Paul Krugman, where we discuss the impact of social media and social networking tools on everything from business to globalization to national security.

~> j*