March 23rd, 2013
08:21 PM ET

On GPS this Sunday: Money matters

"Fareed Zakaria GPS," Sundays at 10 a.m. and 1 p.m. ET on CNN

Should the U.S. spend more to try to stimulate the economy? What should NASA be spending its money on? What does the rise of Asia’s economies mean for the United States? Fareed speaks with Nobel Prize winning economist Paul Krugman, astrophysicist and director of the Hayden Planetarium Neil DeGrasse Tyson, and former permanent secretary at the Singaporean Foreign Ministry, Kishore Mahbubani, for some answers.

I know you think the stimulus was not large enough, but it was fairly large. Certainly by historical standards, we went from debt to GDP of about 40 percent to about 70, 80 percent. And the argument is we're in the weakest recovery since the Great Depression. Is that proof that this kind of stimulus, Keynesian stimulus, just doesn't work in today's economy?

Krugman: No, because it's exactly what you would have expected to happen.  I mean, this was one hell of a financial crisis – the worst since the Great Depression, exactly. We've had a huge fall in private investment, the collapse of the housing bubble, coupled with a huge rise in private savings, corporations and households trying to pay down debt. Of course you have to run large budget deficits just to stay in place.  You don't expect the numbers that we've been seeing to be enough to actually produce full employment.

More Krugman on CNN

You think it's fair to say that the push to the moon, the interest in NASA, all, in some way, led to the computer and information revolution?

Tyson: There are people who would say that would have happened anyway. But there are certain facts that are undeniable. The urge to miniaturize electronics did not exist before the space program. I mean, our grandparents had radios that were furniture in the living room. Nobody, at the time, is saying, “gee, I want to carry that in my hip pocket.” That was just a non-thought. But when you launch something into space, electronics of any kind, weight matters, because it's very expensive to put every incremental ounce if you don't have to put it there to launch into orbit. And so the miniaturization of electronics got a jolt of interest by the early space age. And then, once you see that it's miniaturized, all of a sudden, a whole new world of consumer electronics opens up that was unimagined and undreamt of before.

And, by the way, the urge to find an economic justification, I think, is laudable – but that's not even the biggest reason to do this. The biggest reason is the culture that it inculcates, the innovations required to explore space on the frontier foster an innovation nation. And everybody is thinking about it. Innovation becomes just what you do. And I don't know that you can put a price tag on that.

More Tyson on GPS

One thing historically that has always happened is when you have the rise of a middle class, countries tend to become more democratic. Do you think China will become a democracy?

Mahbubani: I think China will eventually become a democracy. The destination is not in doubt. The only question is the route and timing. But China is not going to become democratic in the near future, in the next 10 to 20 years. And, by the way, one point people forget is that if you go to Chinese universities and you talk to young, bright young Chinese and ask them, would you like to get rid of the Communist Party and immediately become democratic tomorrow, most of them would say no. Because they do know that the Chinese Communist Party, over the last 30 years, has delivered the fastest growth in the standard of living.

And they do know that if you dismantle this and if China falls apart, all their dreams of becoming number one in the world will disappear. And the Chinese…the feeling is that they are almost there, the feeling that they're going to become number one very soon is a very powerful driving force that's also keeping them together.

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soundoff (29 Responses)
  1. rightospeak

    Spending money on projects may help, but unless offshored jobs return all we will be doing is whistling Dixie. Sir James Goldsmith was critical of "GLobal Free Trade" , NAFTA and showed the consequences of barking up the wrong tree which is what I see daily on TV.
    We are in a downward spiral with no recovery in sight, unless offshored jobs, border problem and lowering of wages through visa programs are addressed.

    March 23, 2013 at 9:03 pm | Reply
  2. matslats

    Can we just clarify – Krugman says the financial crisis is over, or at least, that we are past the worst? This guy's credibility is in the gutter, it was very kind of you to give him some attention.

    March 23, 2013 at 9:27 pm | Reply
    • Karen Contreras, MSN, RN

      Fareed, would you consider interviewing a non-Keynesian economist? I have read Krugman's work and do not understand how he was awarded a Nobel prize, or perhaps I do!

      March 24, 2013 at 10:36 am | Reply
  3. Christopher Doyle

    Why have there been NO major arrests? No major prosecutions? And they're still playing the same old game!

    I

    March 23, 2013 at 10:58 pm | Reply
    • zakariajoker

      Absolutely correct. No one has the guts to tackle the crooks.

      March 24, 2013 at 11:16 am | Reply
  4. Muin

    There ought to be a different conversation than spending and tax. Do U.S really need monopoly of 3 or 4 oil corporation, 3 or 4 telecommunication corporation or 2 big retailers? You can only cut so much or tax so much and I don't see any end to this discussion. It is frustrating conversation. Wealth distribution is really a bigger problem than tax or spend. It's a worldwide problem.

    March 24, 2013 at 3:02 am | Reply
  5. Nitin Tyagi

    I Like Ur Thinking.

    March 24, 2013 at 9:27 am | Reply
    • zakariajoker

      You have to be smoking dope to like zakaria's thinking.

      March 24, 2013 at 11:17 am | Reply
  6. Nitin Tyagi

    I Like Ur Thinking.beacus Ur A Best Minded

    March 24, 2013 at 9:29 am | Reply
  7. Selwyn Berg: Ph.D., J,D. (in Portugal with dual citizenship)

    Krugman correctly remarks that a fix now (of feeding the dragon) will nonetheless materialize in a problem 15 years from now.
    If I told you that your genetics indicates a high probability of serious illness in 15 years if you do not change your living habits (say it is SMOKING). WOULD YOU DO SOMETHING ABOUT YOUR ROUTINE NOW or wait 15 years to see what would happen?
    Krugman also correctly remarks that a real fix right now is not a reality because of political infighting.
    HOWEVER, YOU MISSED YOUR MARK WHEN YOU DID NOT ASK HIM THE SIMPLE QUESTION OF–
    IF WE WERE TO FIX THE PROBLEM NOW TO AVOID THE IMPASSE IN 15 YEARS, WHAT WOULD YOU DO?
    I think Krugman does have an answer to that.

    Second point– on the functioning medical system in the USA. This is a Case Fact that involves my daughter who is a doctor on the staff of an important hospital in LA County. I can give you the facts of names if you ask for them.
    A major insurance company which is very lax in paying its billed fees (which as you know is very reasonable) has threatened to refuse to renew its contract with the hospital unless the hospital cancels the outstanding debts with the insurance company. That insurance company also reminded the hospital that it is big and a major portion of its patient customers are insured by that plan and it will lose them all. The belief of the insurance company is that the patients will go to another hospital and the hospital believes that the patients are more committed to the professional ability of the hospital staff.
    I BELIEVE THE HOSPITAL DECIDED TO PUSH FOR ITS OUTSTANDING BILLING anyway.
    Historically, this is the same as what Sears-Roebuck use to do to capture supplier companies until the Government stepped in under anti-trust laws.

    Selwyn Berg. J.D., Ph.D.

    March 24, 2013 at 9:32 am | Reply
    • Karen Contreras, MSN, RN

      Yes, and we know how well Sears-Roebuck is doing. The dilemma with health care costs is so complicated and the news media doesn't begin to peel the causative layers away in discussion. If anyone believes that a national healthcare plan will lower costs, they simply do not know how our society views personal health accountability.

      March 24, 2013 at 10:32 am | Reply
  8. Selwyn Berg: Ph.D., J,D. (in Portugal with dual citizenship)

    Krugman correctly remarks that a fix now (of feeding the dragon) will nonetheless materialize in a problem 15 years from now.
    If I told you that your genetics indicates a high probability of serious illness in 15 years if you do not change your living habits (say it is SMOKING). WOULD YOU DO SOMETHING ABOUT YOUR ROUTINE NOW or wait 15 years to see what would happen?
    Krugman also correctly remarks that a real fix right now is not a reality because of political infighting.
    HOWEVER, YOU MISSED YOUR MARK WHEN YOU DID NOT ASK HIM THE SIMPLE QUESTION OF–
    IF WE WERE TO FIX THE PROBLEM NOW TO AVOID THE IMPASSE IN 15 YEARS, WHAT WOULD YOU DO?
    I think Krugman does have an answer to that.

    Second point– on the functioning medical system in the USA. This is a Case Fact that involves my daughter who is a doctor on the staff of an important hospital in LA County. I can give you the facts of names if you ask for them.
    A major insurance company which is very lax in paying its billed fees (which as you know is very reasonable) has threatened to refuse to renew its contract with the hospital unless the hospital cancels the outstanding debts with the insurance company. That insurance company also reminded the hospital that it is big and a major portion of its patient customers are insured by that plan and it will lose them all. The belief of the insurance company is that the patients will go to another hospital and the hospital believes that the patients are more committed to the professional ability of the hospital staff.
    I BELIEVE THE HOSPITAL DECIDED TO PUSH FOR ITS OUTSTANDING BILLING anyway.
    Historically, this is the same as what Sears-Roebuck use to do to capture supplier companies until the Government stepped in under anti-trust laws.

    Selwyn Berg

    March 24, 2013 at 9:33 am | Reply
  9. larry manigo

    On of the stories today on Fareed Zakaia “GPS Sunday” was the focus on the present space program in America which featured guess Hayden Planetarium Neil DeGrasse. The subject focuses on the U.S Space program falling behind and having to fly into space on Russian rockets. Fareed quoted this as an embarrassment for the nation but what Neil or Fareed hadn’t mention is that the Nasa is working rigorously to put the united state back on the space trail as a leader with Project Orion the Space Launch Vehicle a Apollo like vehicle that will put America into deep space, Launching and testing of the capsule is on a year and a half off. Also both these gentlemen neglected to mention Space X a commercial venture to bring astronauts and supplies to the International Space station. With this kind of reporting it no wonder Americans fells doom and left behind maybe if you guys stop wasting so much time on trivial stories like Lance Armstrong or Beyonce and doom American, maybe you can see the hope through all the useless smog you report

    March 24, 2013 at 11:17 am | Reply
  10. leslie nyman

    please stop running the crawl of other news while Fareed is interviewing someone with thoughts and ideas that I'd like to listen to without distraction.

    March 24, 2013 at 11:27 am | Reply
  11. Caryl Reback

    Can some one please tell me the name of the book that Fareed suggested this morning ... Re:healthcare. Thank you.

    March 24, 2013 at 11:31 am | Reply
  12. reallynow

    Krugman talks only about spending. He was angling to be treasury secretary and that didn't work ! how he got the Nobel prize is just as mysterious as how Obama got the Nobel prize. The committee's standards are lax.
    Krugman keeps saying print more money, there is no inflation blah blah. He lives on a different planet. Ask the average person who has very limited income and knows many people who have no jobs for months now and you will know the real answer on prices.
    Krugman need not be invited. But I believe he invites himself.

    March 24, 2013 at 11:39 am | Reply
  13. c samek

    Krugman says to you "Your argument is weak" and how do you respond. You've got nothing, really?

    March 24, 2013 at 11:52 am | Reply
  14. rshowell

    The so-called stimulus mainly went to fund deficiencies in govt employee union pension funds according to what I heard. It appears that the Nobel committee feels the need to award prizes whether there are proper cantidates to receive them... consider Prof Krugman and Prof Milton Friedman in economics and Mr. Obama and Albert Schweitzer in Peace in the same moment and the contrast of qualities of life's work is evident.
    If the spending could be promised to r & d, infrastructure projects, not "pies in the sky" and funding of union pensions while the rest of us get social security with taxes taken out of that then it might be worth considering but that just won't happen.
    Asking why we aren't like Switzerland or Singapore with regard to health care is oxymoronic. We are a nation with an extremely mixed population which has no knowledge relationship to the actual costs. If we implemented something like the Swiss program of insurance for everyone with high deductibles and medical savings accounts along with serious tax reform then people might develope a sense of the actual costs.
    At the same time the health care program should apply to everyone equally including the president, the congress and all govt employees. In that way corrections of problems would be more quickly resolved.
    The military probably needs a small devoted medical corps with easy transition of patients into the civilian program for longer care issues

    March 24, 2013 at 12:01 pm | Reply
  15. CTMaloney

    Both Krugman and the former Singapore minister n GPS today IGNORED THE REAL ISSUE OF OUR TIME– ENVIRONMENT AND EARTH WARMING AND OCEAN ACIDIFICATION ETC. Growth and spend, growth and spend will NOT continue. The optimism about the hugely growing middle class is Asia will NOT continue as there is not enough water or other resources to support the US "standard of waste" which so many aspire to. Fareed Z is also very negligent about environment, as most economists are. The correct valuaton is 1) earth and sustainability, 2) human welfare, and 3) professional economics.

    March 24, 2013 at 12:10 pm | Reply
    • whenelsethen

      Zakaria is a substandard journalist and is motivated by self promotion and nothing else. he acts knowledgeable but is a mediocre "thinker"

      March 24, 2013 at 12:28 pm | Reply
  16. j. von hettlingen

    Mr. Mahbubani, let's hope that the state authorities in China reach out to their citizens. Let's hope also that ordianary citizens are docile and happy that they have no grievances to complain about. In this state of complete harmony, the nation moves forward to become the world's number one.

    March 24, 2013 at 12:29 pm | Reply
  17. Cheryl Berger

    The most thought-provoking program on TV! Thank you, thank you, thank you.

    March 24, 2013 at 2:14 pm | Reply
  18. R.Nykyforuk

    Please do all of us a favor. Keep Krugman off the air as he has lost common sense. His thinking is myopic and clouded by a liberal and destructive mentality. The Nobel group made a huge mistake in giving this buffoon their prize.
    No one knows what will transpire in 10 years yet alone next month. Today's volatility can turn very destructive to the entire Western world and Krugman's comments have no credibility.

    March 24, 2013 at 2:37 pm | Reply
  19. venusa55

    Fareed, I appreciate the opportunity to hear economist Paul Krugman position on our current debt. While I understand this has been the worst financial crisis since the Great Depression, I still cannot fathom the idea that we don’t have to worry for 30 more years. Really? While I do believe we need to invest in programs that will continue to place our country in a position of innovation and progress, we need to do it within a balanced approach -one that’s comprised of painful cuts and tax increases.-

    Would you consider inviting to your show the former Comptroller General of the United States under President Clinton, Mr. David Walker; the author of the book “Come Back America”?

    March 24, 2013 at 3:04 pm | Reply
  20. sand

    soon usa will be pulverized into nothingness by a chinese nuke after that china is going to nuke ireland dublin killing the irish children then they are going to drop a nuke on ghana accre burn the kofi annan family to ashes.

    March 24, 2013 at 4:41 pm | Reply
  21. JAL

    I pray for wars obsolescence.

    March 24, 2013 at 7:36 pm | Reply
  22. noumenon

    Come on, Fareed. Must you always favor those that belive government is the solution? Please don't bring Krugman back on. He's an idiot and the Nobel comittee apparently was trying to make a political statement....by giving him the honor. Good grief.

    March 24, 2013 at 9:35 pm | Reply
  23. Karl-Heinz

    Money does matter for America. The main problem the US faces, is the unbalanced trade deficit, meaning that US did not produce enough, imported unnecessarily many products especialy from Asia, not exported enough, and Americans enjoy non-justified high salaries, we doubt America can pay. We in EU will definitely NOT pay for failing US politics. But, in case, Prince and the New Power Generation, with its 'money don't matter tonight' song is right – then America will not fail, this time.

    March 25, 2013 at 11:47 am | Reply

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