"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.
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.
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.