What's eating populist billionaires?

Paul Krugman's farewell column reflects on economic shifts, but key omissions and disagreements arise.

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Nobel laureate and celebrated economist Paul Krugman recently wrote his last column for The New York Times, concluding his 25 years of association with the publication. It is titled 'My Last Column: Finding Hope in an Age of Resentment'. After informing us of his departure from the publication, Dr Krugman reflects on a shift in the public mood he witnessed in this quarter of a century. Back in 1999-2000, he says, people were very optimistic. They had faith in their leaders. They even had faith in banks.

In comparison, there is widespread resentment among the masses today, and even billionaires are resentful of not being admired enough. He then points to two factors responsible for this, and it is plain that he saw both these upheavals coming and confronted them. The first was the Iraq war. People like him (and yours truly) vehemently opposed the invasion and were told the US President could not lie about WMDs (faith in leadership). After it turned out to be a lie, people lost faith in leaders. He was so far ahead of the curve on the second one (the 2008 financial crisis) that in 1999, he published a book titled The Return of Depression Economics, predicting that economic upheavals like the Asian financial crisis of the 1990s and the liquidity trap of Japan could happen in America too.

If you get any funny ideas about my retirement, given that my column-writing career is as long, if not longer than his, let me quash them. Despite a long career, I am only two years older than he was when he started that column. So, perish the thought. The way I look at it, if AI does not make my lot redundant, you will have to pry the pen from my dead hand.

I like Dr Krugman and believe that his academic analysis of Japan's liquidity trap, linking interest rate, inflation and growth bottlenecks, can help us understand Pakistan's economic woes, too. However, there are three points in his final piece that I disagree with. His views on the two significant events shaping attitudes today are correct, but the COVID response, including the shutdowns, seems a wild omission. The second disagreement is regarding the motives he ascribes to the behavioural shift among billionaires or plutocrats, as he puts it. He thinks they have changed because they found out that money can't find love. This rather simplistic notion overlooks the possibility of a well-thought-out growth strategy.

The third point of departure is his conclusion: "While resentment can put bad people in power, in the long run it can't keep them there."

The jury is still out on whether the new team is really as bad as many believe. Also, my lived experience of bad governments is slightly different. They may eventually go out of power, but their terms feel like a lifetime, and they inevitably leave devastation behind. One example is the Bush administration. It lasted eight years in power but unhinged the world order and the international financial system.

Another example is the one in our neighbourhood. I am sure the government there will also leave one day, but the world will be a dramatically different place by then. I haven't got that kind of patience left in me. That is why I keep trying to pivot away from analysing hard political news.

It is hard to say goodbye when you have admired someone's work for so long. But this, too, is a sign of times. Many liberals plan to leave America for good. Some are retiring from public life, and others, like Neil Cavuto, are being forced out.

In 2016, American liberals and their foreign allies were so shocked that they kept trying to wrap their heads around the surprise. This time, the nature of the questions is a little different. Now, they are asking what has caused such a pronounced and multidimensional rejection of the liberal project by the American people. Others ask what billionaires like Musk want out of their partnership with Trump.

Remember, this once almost all prominent billionaires (Musk, Bezos, Zuckerberg, etc) seemed eager to stay away from the Harris campaign. Naturally, now they all seem keen on benefiting from the moment.

But this last question is important because it may also explain what broke our world. Ideologically, many billionaires were already libertarian. It is hard not to when you have money and have read Ayn Rand. But why this sudden shift? In 2016, it was hard to find any billionaire besides Peter Thiel supporting Trump. And even he was ostracised. Now look at them.

Why shouldn't we conclude that these tech billionaires were unleashed by the Obama administration? One would have thought the birth and the rise of this billionaire class was just a byproduct of Obama's attempts at reviving the economy had one not seen his produced movie, Leave the World Behind, or witnessed him stabbing his most loyal ally, President Biden, in the back and destroying the Democratic ticket as a result. These billionaires played nice when they thought the system supported and subsidised their growth. Once the system wanted them to pay their fair share and regulated, they broke it and got their way.

Take the idea of the Department of Government Efficiency which is to be headed by Musk and Ramaswamy. It is not a new idea. While Musk's version might significantly improve the idea, we saw the Heritage Foundation's 'Project 2025' espousing the same goals before the elections. And that is not all. In 2017, Stephen Bannon suggested something similar: "the deconstruction of the administrative state".

But here is the question. What are the key goals of the DOGE? To cut government waste, regulations and bureaucracy. What stands in the way of their businesses? Regulations and bureaucracy.

But here is another one. Musk is the wealthiest man on earth and has over $400 billion net worth. How much more wealth could he want? From his dramatic pivot to the hard right, one can assume he has political ambitions. He cannot run for president because of the natural-born citizen clause. Of course, it can change. But why stop there? Could it be the lord supreme of the world? Only time will tell.

However, the media must ask Obama what he wants from this lot. Remember, we no longer know who the good guys are and who the bad ones are. He seems to have played a critical role in its rise. And could easily be influencing their strategies.