SoftBank's Investment, ABC's Trump Settlement, and Guest Co-Host Paul Krugman

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Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network.
I'm Kara Swisher. Scott is off today, so to fill his shoes, his tiny shoes, I brought in someone with big shoes.
I brought in a Nobel Prize winner and a famed economist, Paul Krugman, who recently announced he was going off on his own from the New York Times after a long and illustrious career there. Hi, Paul.
How are you doing? I'm good. Can you tell us a little bit about what you're doing? Well, basically, at the moment, I'm trying to build an audience for Substack.

Okay.

And, yeah, one of the things that I couldn't do at the times was, you know, have an independent newsletter. I used to have an independent blog, but they eliminated those a long time ago.
And so now I'm off there able to weigh in on whatever seems appropriate.

And even... And so now I'm off there able to weigh in on whatever seems appropriate and even have charts and funny pictures and whatever else.

So that's what I'm doing for now.

Whatever else you feel like.

Right.

So you were 25 years a columnist there, correct?

Yeah.

How did you assess those years?

You know, you're still writing.

Your sub stack, by the way, I love the names.

Krugman wonks out.

You said it could be wonkier and snarkier.

You've got music recommendations.

Everybody wants to rue the world.

You had tears for fears this week.

So I'm going to ask you about those in a second,

but about the specific pieces that you've written,

because I'm really interested in them.

But what are you going to do different? And talk about your 25 years at the Times just briefly. I mean, what a run you've had.
Yeah, what a strange thing. I mean, I was hired at the beginning of 2000.
And literally, the Halloranians who recruited me at the time said, you know, we have five guys writing about the Middle East and nobody writing about the economy, and the Middle East just isn't interesting anymore, which turned out to be a pretty bad call, but it was also the economy, and it was just a very different time, and we were all having fun with dot-coms, and stuff looked silly, but interesting, and then turned into a much grimmer world. But, you know, there was a period, my best year, the best years of my life were the worst years for the world economy, which was the aftermath of the financial crisis when there was a perfect convergence between my job as a journalist and my own academic research.
Not only, you know, was I an economist, but I had literally spent a lot of time on the Asian financial crisis in the 90s and had warned that something like that could happen here, and it did. So when you decided to break it, why now? You said 25 years.
I quit my conference 20 years. I was like, I did a great job for 20 years.
I want to do something else. Oh, yeah.
There's a lot of stuff I think I probably shouldn't talk about. Okay.
But the one thing was exactly to be able to do this. I mean, there was no...
The Times had actually canceled my newsletter, even at the Times. And look, I'm still a walk.
I want to do stuff where I can have lots of charts, maybe even an occasional equation. And also, the flow.
Rather weirdly, I felt like I wasn't—I wanted to write more than I was able to at the time, because I was limited to two columns a week. And there's so much going on right now.
I've got subjects and topics stacked up in a holding pattern waiting for a chance to write about them. Right.
Isn't it cool? It is cool. I can do whatever I want.
I always used to say, someone asked me why I leave various places, not just the Times, because I also left the Times too, which was, I don't want Mama telling me what to do. I don't know what else to say.
It's not, nothing's wrong with Mama. But I was sort of like, I got, what if I want to do this today? I want to do that.
It makes you, it's very creative. I think you'll find it, someone like you will find it really creative to be able to wake up every morning and just decide what you want to do, which is a very different thing.
Yeah. It's, among other things, it gives me a chance to be silly, you know? Yeah.
Silly does not pop to mind when I think of Paul Krrogman. Well, but that is, you know, I was able to start, you know, the most recent, just before we recorded this, with Mike Myers as Dr.
Evil saying $1 million, you know, and I'm not sure that would have been beneath the dignity of the times, but not beneath mine. No beneath your dignity anymore.
No dignity, Paul. No dignity at all.
But first, let's talk about one of your latest posts on Substack. Oh, by the way, you're not supposed to say you're on Substack since the Substack.
You're supposed to just say it's Paul. In my own newsletter.
Yeah, your wonky Paul. But crypto is for criming.
I love this piece. Talk about this one.
And then you've talked about whether it matters. Then the next one was about whether Trump is ignorant on trade and whether it matters.
So talk about those two, those two that you just wrote. So crypto has been, you know, I've been following the crypto thing.
I've actually made money in crypto by going to conferences as a paid speaker as the designated enemy. I'm there for people to yell at, and they pay me a fee in actual money.
But it's a remarkable phenomenon. And a lot of people, what makes it remarkable, aside from the fact that they have incredible price gains, but those of us who think we know something about monetary economics have asked, does this thing look like money? Does it fulfill at all the functions it's supposed to? And not just talking about academics, but also financial industry types.
I'm part of various groups that have informal meetings. And in some of them, we've actually invited articulate crypto people.
And the question is always, what purpose does this serve? What can you do with crypto that you can't do more chiefly and more easily with conventional stuff? Bitcoin and Venmo are roughly contemporaneous in terms of their creation.

And Venmo is clearly useful.

Everybody uses it.

Why would you want to go through all the somersaults and so on?

And have never gotten an answer in terms of legitimate uses.

Yet it's on the upswing, right?

It's $107,000.

It's crazy high, but still not in use for anything legal. That's the most amazing thing, even where they've tried.
I mean, El Salvador tried to make Bitcoin legal tender and actually subsidize people's crypto wallets on their phones, and they still don't use it because it's awkward. It doesn't really, you know, dollar-linked digital payments are just a much easier tool.
But it just occurred to me after a few stories, in particular after seeing some of the latest whining from Elon Musk, that the real trick here is that we were asking the wrong question. We're asking what legitimate use case is there for this? And there still is none.
Nobody has actually come up with one. But illegitimate use cases are a pretty big deal.
And if you actually know anything about currency, you know that actually crime is big business. You know, the vast bulk of the dollars in circulation by value are $100 bills.
And nobody uses $100 bills. Most people never see one.
You can't actually go into a store with a $100 bill. But there's trillions of dollars.
There's actually about $6,000, $6,100 bills in circulation

for every man, woman, and child in the United States.

Most of them, we think, and this is all inferential,

are outside the country,

but we also are reasonably sure,

although this is inherently impossible to prove,

that they're mostly for illegal purposes.

So when they say to you,

well, it's up in a hundred and some, Trump's going to create a Bitcoin currency for everybody, it's still going up like crazy. And that's what they'll point to.
Krugman's an idiot, like Kara's an idiot. Well, I mean, we've been through that before.
Now, this is a longer run than most, but I've been around long enough to remember the dot-com bubble when lots of people thought it would be just stupid for thinking that this is a bubble. I remember the housing bubble where people got extremely furious if you said the housing prices circa 2006 did not make sense.
so you know it's the old line the market can uh the market can stay irrational longer than you can

stay Posing prices circa 2006 did not make sense. So, you know, it's the old line.

The market can stay irrational longer than you can stay solvent. Plus, there's also, and this is something I did write about in my last newsletter, there's a strong element of kind of, it's not just speculation, it's gambling.
We ask, you know, who, you know, a lot of crypto is clearly being used by Putin and by drug lords. But a lot of small players buying crypto are basically young men.
And at this, you know, contemporaneous with this big rise in crypto prices has been an explosion of sports gambling. Also meme stocks like GameStop is also, so that's probably a general phenomenon of people, you know, they probably would say, oh, I'm being a forward-looking investor, but the psychology is really that of gambling or, and so, you know, put all these things together, it's still kind of astonishing that it's gone this high, but then, you know, the National Bitcoin Reserve amounts to a huge government bailout, which is, you know, for a libertarian invention, it's...
Very fair point. That is actually, it is.
Well, they talk about free speech, and then they try to censor everybody. But that's another issue.
So one of the other ones you wrote about today was about trade as as we take two things. One is is your piece about trade and whether Trump knows what he's doing around tariffs, which you basically conclude no.
But then at the same time, as we take this news just broke, the Trump and SoftBank CEO Masayoshi Son will announce a hundred billion dollar investment in the U.S. over the next four years, which they say will create 100,000 jobs based on AI and related infrastructure.
It's very thin on information. As you know, Masayoshi Son has had his share of failures and wins.
He's sort of one of these, you know, there's a book coming out about him, basically, you know, that he just goes up and down. Like, it's just, he's really quite a risk taker.
So talk a little bit about this idea of Trump pushing the trade issues and at the same time saying, I'm going to bring, I'm going to give free, anyone who invests more than a billion dollars in this country is going to get like right through the regulatory thicket without a problem. Yeah.
So first of all, the fact that somebody's bringing money to the United States, the regulations are there for a reason. Now, if you want to fix the regulations, fine.
But to say, well, bring a billion dollars to the US, I'm not sure what. We won't care if you're polluting the air.
We won't care if you're poisoning the water. But what's really funny for somebody, certainly with my background, is there's a—I'm trying to figure out if there's a way to say this, and that it doesn't totally put people off.
But it is a fact, it's an accounting identity, that the trade balance plus net capital flows into the United States equals zero. The balance of payments always balances.
And so if we can persuade foreigners to invest more in the United States, then arithmetic says that we have to have a bigger trade deficit. So you have Trump on the one hand saying, you know, we're subsidizing Canada and Mexico because we run trade deficits with them.
And the other hand saying, it's great, I'm bringing in all this foreign money, which guarantees one way or another, an even bigger trade deficit. And I have no question in my mind that he has no idea that that's how it works.
People say they're going to try to stop him in this or move him off of him, but they don't seem to be able to. There's a lot of people saying he's going to do a more lukewarm version of it that has a lot of jazz hands and not a lot of push behind it.
And that you were noting that other countries have a lot of things at their disposal to make it hurt here. I mean, I have no way of reading Trump's mind, but lots of stuff he makes, you know, on crypto, he was, it's total nonsense.
Oh, and also I'm going to throw hundreds of billions of taxpayer money at it. So he changes his minds on lots of things.
But tariffs have been a session of his for a very, very long time and long before he really entered politics. Trade deficits are bad, is a long obsession of his.
So I would be surprised if he's willing to water it down too much. But if he doesn't, then he has a very kind of 19th century, if you like, view, which kind of makes sense, given he loves William McKinley, but of trade as countries trade food and manufactured goods for each other, and that's kind of the end of the story.
That's not the world we live in now. We live in a world of these highly interdependent economies and supply chains.
Trump thinks that because we run a trade deficit, because we buy more from other

countries than they buy from us, that we have all the leverage. But the fact of the matter is that some of the most effective forms of retaliation that other countries can do are not levying tariffs on U.S.
exports, but putting taxes or restrictions on things that we import. and I thought it was striking to see that

even the Canadians are talking about putting export taxes on oil to get the Canadians mad and seeking revenge takes special talent. But the fact of the matter is that we could be very much in a world of mutual punishment over trade, escalating trade war.
And the trade war will not look the way I think Trump imagines. He imagines the U.S.
puts on tariffs. Everybody says, oh, my God, we need access to the U.S.
market. What can we do? And they surrender, although it's not even clear what they surrender, because I'm not sure he has coherent demands.
But what would actually happen is a mixture of retaliatory tariffs, but also retaliatory export restrictions and just a big global economic mess. Is there any way that what he's saying is that he's going to, he sort of sees it as a boxing match or something.
It seems like that. That's right.
He thinks of it as a zero sum, that basically if we sell more to foreigners than they buy from us, then we buy from them that we win. And if we buy more than we sell, then we lose.
And that's never made any sense as a story. And it's pretty clear.
I mean, even I was shocked when he said, I'm going to have 25% tariffs on Canada and Mexico.

I mean, if you know anything about modern manufacturing, you know, there is no U.S. manufacturing sector.
There's a North American manufacturing complex in which things like auto parts may cross the border six or eight times in the course of putting a car together. And so that's completely crazy, but he doesn't know that.
And who's going to tell him? No, he lives back in the McKinley times. You're absolutely right, where we used to have all these big factories.
Speaking of retaliatory, OpenAI has fired back in its ongoing lawsuit with co-founder Elon Musk, who had left the company in a blog post. OpenAI said, you can't sue your way to AGI and said Musk wanted to transform the company into a for-profit six years ago.
The Post also claims Musk demanded majority equity, which I think he has said he had. And he said he needed $80 billion to, he needed that because he needed $80 billion to build a city on Mars.
Now, Meta, of course, no surprise, is siding with Musk. The company is urging California's AG to block OpenAI's planned conversion to a for-profit company.
They're trying to slow this company down, which doesn't seem to be slowing. Talk to me about this, because one of the things that's really astonishing, and you were talking about this, is people that talk about competition really just want to stop each other using all kinds of regulatory or legal means.
Oh, yeah. I mean, this is, we have a remarkably, the tech sector is remarkably oligarchic.
There are, you know, a handful of players that have strong market positions. It's called a broligarch.
Well, I like the broligarch too. And that's good.
But it's a, and they do their best to prevent competition. They do, the nature to some extent of tech is that once you've sort of committed to a platform, it's very hard to get out of it, which gives them a lot.
And this is, you know, there are things that, again, it's something I'm sure I would never be able to write for the Times, but I'm a big fan of Cory Doctorow's inshittification. Inshittification.
You can do that. You build a platform that could get a lot of people locked in through network externalities and then degrade the experience step by step to extract the maximum amount of money from it.
So these guys, and of course, they're using the courts as well to try and prevent competition. So, but really, is anybody surprised?

What does that look like?

Do you think that it'll work?

Or when people do this, what stage are we at with tech when they're doing this?

Because this is obviously the next great race is to dominate AI.

And open AI is way ahead by a lot compared to, even despite the money being spent, $30

billion at Meta, $80 billion at, I think, Microsoft, and $50 billion at Google. These are, and of course, whatever Elon's spending at Grok in trying to keep up by both, you know, these kind of things or any other means he can to get ahead.
Yeah. I mean, I don't know where we are on this.
First of all, the ultimate value of AI is very much up in the air. We still don't know what it's worth.
I mean, I actually had someone who works with us on the textbook. I have a textbook.
but he also teaches students and they're all totally into

AI and he fed

one of my Substack posts into

ChatGPT for a

summary and my god and they're all totally into AI. And he said one of my Substack posts into ChatGPT for a summary.
And my God, it bore no resemblance at all to what I said. And it fantasized.
It somehow had me talking about Brexit, which wasn't in there at all. So, I mean, that's just an example.
And they say there are some things that it's really useful for, but we don't know. There's a real question whether the amount of money that's being thrown at it will ever make sense.
Right. It's a little like the beginning of the internet, may I point out.
Remember, it was like we didn't know, and then, of course, it would have been good to have been there with the right players, right? With the right players, although it's a little bit what we used to call the Sierra Madre effect, where somebody said the reason gold costs so much is because of all the people who went out looking for it and didn't find it uh the and that's all tech is a lot like that um it's the um uh but yeah and um the question is are we it turns out that a lot of established tech has turned into kind of you know one of the old days we would have called natural monopolies. It settles into a handful of big players.
And that happens really fast, actually, with internet-based stuff. I suspect it may happen with AI.
Now, whether it's, I mean, open AI does look like it's got a big lead, but maybe there's still room for somebody to jostle the side. But I very much doubt that we're going to have 10 years from now, multiple competing LLMs.
It's commodification of them. That seems unlikely.
What's more likely is that we'll have a kind of network effect where everybody is using something. I mean, the general LLMs, the big ones, they can't all be competing at once.
What's really interesting is, you know, OpenAI could have become like Netscape, if you remember. Netscape had the far and away, or maybe it's Google, right? That's the issue, is which one it, which one.
That's right. And we have no idea, really.
Right. Or what it's going to be.
And I think further, we can say that nobody has any idea. We just don't know how it plays out.
What do you say to students who are like, I got to get into AI? How do you advise them? You know, just generally, you know, how about learning a lot of basics, you know, particularly grad students. They actually also, they want to learn a lot of tools for analysis.
And if you start using AI for every question, first of all, you're not going to get those other skills. And secondly, it's, you know, apparently, again, there are some things it does, but on anything I happen to work on, the Monkau is an effect.
It fabulates. It just makes up stuff.
I think it's improved. Having used it since the beginning, it's certainly improved and you can see how it's doing that.
But you're right. It's hard to figure out what the best use cases are.
And eventually, someone will. Who would have thought of Uber back when the iPhone was created, right? Or even before that, right? Actually, it was funny.
I was ahead of the curve because they already had digital ride-hailing for taxis in the U.K. years before it came to the U.S.
Oh, yeah. So I was spending time over there, and I got accustomed to it.
But it's true. And something, look, something that actually is useful to me, and it's fundamentally the same kind of big data thing, is translation.
I remember when translation or speech recognition were both total jokes.

And they're completely usable now.

Have you looked at their Sora?

I haven't looked at it.

Yeah, what I'm getting a lot recently is a bunch of CEOs going,

I'm going from 6,000 engineers to 2,000.

That's my goal.

All they're looking for is efficiencies. And I think that's where I see a lot of the opportunity, efficiency.
By the way, in terms of giving students advice, it's not very long ago, like maybe two years ago, that you would have been telling your students, learn to code. Right.
And that turns out that's exactly one of the jobs that... Learn to do plumbing.
Plumbing is a big thing. Plumbing is going to be a long time before we have robot plumbers.
No, yeah, there's not going to be digital plumbing anytime soon. All right, Paul, let's go on a quick break.
We come back. ABC settles with Trump and Apple's votable vision for the future.
Today Explained here with Eric Levitt, senior correspondent at Vox.com to talk about the 2024 election. That can't be right.
Eric, I thought we were done with that. I feel like I'm Pacino in three.
Just when I thought I was out, they pull me back in. Why are we talking about the 2024 election again? The reason why we're still looking back is that it takes a while after an election to get all of the most high quality data on what exactly happened.
So the full picture is starting to just come into view now. And you wrote a piece about the full picture for Vox recently, and it did bonkers business on the internet.
What did it say? What struck a chord? Yeah, so this was my interview with David Shore of Blue Rose Research. He's one of the biggest sort of democratic data gurus in the party.
And basically, the big picture headline takeaways are... On Today Explained.
You'll have to go listen to them there. Find the show wherever you listen to shows, bro.
Paul, we're back with more news to discuss.

Let's start with TikTok is facing it.

And I want to get into China because it's looking like you've written extensively about China over the years.

But let me go through a couple of things.

They're facing this legal setback after D.C. Court of Appeals rejected a temporary freeze on the upcoming law requiring the parent company ByteDance to divest or face a ban.

TikTok is expected to ask the Supreme Court to take the case, though it's unclear if anything will happen before the law goes into effect next month, which means they've got to act. The leaders of the House China Committee sent letters to Google and Apple on Friday telling them to be ready to remove TikTok from their app stores on January 19th, a day before Donald Trump goes into office.
Donald Trump was against TikTok before he was for it, especially because one of his big funders, Jeff Yass, was a bite dance for people who don't know, is owned by a lot of big U.S. billionaires, just so you know.
It's running out of time and options. And let me just say, you've written extensively about China.
What do you see as their move? Because China's economy continues to struggle. It's in a period of deflation with prices falling in six consecutive quarters.

And of course, these Trump tariffs we just discussed.

So what do you see as their move and repercussions here?

I'd love your thought.

Do you want to go backwards any way you want to go through it?

Yeah, on TikTok, that is one social media platform that I have never visited in my life

and don't really expect to.

But we know that in many ways, the social media are media. And we wouldn't want a largely current controlled entity to own the New York Times.
We wouldn't want to own one of our major cable news networks. And the same logic really does apply to social media.
So I'm fine with the idea that we really need to force divestiture. Now, I mean, you could say the general principle is you shouldn't have people who are fundamentally hostile to American values owning social media platforms.
So of course, Elon Musk did divest Twitter. But anyway, the China story, let me talk about stuff I actually know something about.

China, it's a really interesting case because China has moved very quickly from incredible,

roaring economic success story towards something that looks a lot like Japan circa 1990. And of course, Japan was a huge...
I'm old enough to remember when airport stores were full of books with samurai warriors on their covers promising to teach you the secrets of Japanese management. But what's happened with China is we go to the fundamentals.
Their working age population has been declining now for almost decade.. So they're in a kind of a real, you know, Japanese style demographic slowdown.
It's interesting, they are still doing really impressive stuff on some advanced technologies, but as best we can measure the overall technological level of the economy. You know, what economic jargon calls total factor productivity.
But anyway, the overall efficiency of the Chinese economy is not growing very fast. The big convergence on Western economies that they were experiencing in the 80s, 90s, even the first decade of the 21st century appears to have largely stalled, which means that China has gone from an economy that's capable of doing 8% growth not that long ago to something where 3% or 4% would be really a lot.
But their whole economy is set up to be an 8% growth economy. They have very, very low consumption relative to income.
The government kind of suppresses distribution of income that comes from production to the public. It's a complicated story, but basically lots of their growth does not filter down to consumers.
And they maintain investment of 40% of GDP, which is like triple what we do. And there's no place for that money to go.
So they were able to mask it for about a decade with a gigantic housing bubble with all those ghost cities and all of that. But they run out of room.
They can't do that really anymore. But they seem to be weirdly incapable of accepting that they need to kind of grow up and accept that they are going to be a middle-income, moderate growth economy from here on in.
Right. So what do they do with these bans coming, with this TikTok thing, with the tariffs? That just adds to the pressure.
Because one way that you can temporarily try to deal with that kind of stagnation is to run, you have this productive capacity and not enough domestic demand, so you want to export stuff. And I'm not sure exactly how TikTok plays into that, but the reality is the world is not going to accept all those exports.
The world is not going to see BYD destroy their auto industry. BYD, for people who don't know, is their car, which is quite a good car, but they're not going to let it in this country.
There's no way. Yeah, it's just not.
I mean, even if you can make an intellectual argument that we should accept it, it's not going to happen. I used to spend a lot of time in and studying Japan.
So I was one of the relative handful of Western economists who looked at Japan's problems in the 90s. And instead of saying, oh, those stupid Japanese said, gee, this is a big, advanced country with policymakers who are not ideal, but are not idiots.
If this could happen to them, it could happen to us. And sure enough, it did.
But a lot of us were very, very critical of the Japanese for not being more forceful. And I've often argued that those of us who were critical of the group that included, among other people, Ben Bernanke, that we should all go to Tokyo and apologize to the emperor.
Because they actually did a better job. First of all, they did a better job of dealing with their financial crisis than we did.
But also that they, in the end, handled it pretty gracefully. Japan is no longer going to rule the world, but they never had mass unemployment.
They haven't had mass social unrest. There's every indication is that the Chinese are not managing that kind of graceful downshifting in their growth rate.
And so that could be really ugly. How can they with the population? Would they've got the expectations? Oh, but they just need to let more income get through to consumers.
They need to shift from 40% of GDP invested to 25% and then 20%, which means increasing the consumption share by the same amount. And now it's true.
They took the Japanese about 15 years to make that kind of shift. And the Chinese have delayed this so long that it's a much more violent thing.
But still. They don't have a choice.
Basically live it up. Yeah.
What will the tariffs do if these tariffs go into place? At one point it's 100%, I guess, on those cars. Yeah.
Well, and it's, I mean, during the campaign, Trump was saying 60% on China. That may now escalate.
And yeah, this is rough. I mean, particularly, you could say, well, all right, they can just export to someplace else, but where? A fair bit of stuff was probably, in effect, rerouted through Vietnam, but that will be cracked down on.
So is Trump putting the squeeze on them a good thing for the United States? No, because we do not want the world's biggest country, by some measure, the world's biggest economy, we do not want to see them descend into chaos. Other things, autocracies that are failing at economic management have this habit of trying to distract people by launching wars.
You know, I found myself thinking about the Argentine Junta and the Falkland Islands. Yeah.
They've been around for a long time here. Taiwan's going to be a little different than the Falkland Islands, I suspect.
Yeah, a lot tougher, although that didn't work out too well. No.
But still. And that would be disastrous for all of us.
Right, right. Because of our chips and everything else.
Speaking of that, I'm just curious with Apple. Apple is looking to kickstart sales growth with a series of major design changes.
They have a big market in China, by the way. They would love to see China put more money in the hands of consumers because that's one of their – same thing with Elon Musk, by the way, with Tesla.
The company plans to reduce an iPhone next year that will be thinner and cheaper than current models, according to the Wall Street Journal. Apple is working on two foldable devices.
Foldable devices are very hot now. They're going to do a smaller one and a giant iPad-like one.
They're pushing for quick release. Now, you've been skeptical and somewhat contrarian about tech product hype in the past.
Talk a little bit about that because iPhone sales, which account for about half of Apple's overall revenue, are in the slump with fiscal 2024 revenue growing less than 1%. They were on a bit of a tear in the last few years, but people don't upgrade anymore.
And you've talked about this. So talk a little bit about it because China is a critical part of their business, right? Where they make stuff and they also sell stuff.
Yeah. So a trade war would be bad for just about everybody, but it would be especially bad for Apple.
And Tesla. And testing.
But the, you know, one of the things that is extremely, makes me very unpopular when I do talk to tech types is saying that, you know, for practical purposes, in terms of the lived experience, technology has really slowed down a lot. I remember when people were enormously excited at the latest iPhone, or, you know, I remember when smartphones first became available, and now it's okay, it's going to be thinner and foldable.
Well, that's fine. I had nothing against that.
In fact, I'm pretty much in the Apple ecosystem in terms of my own phone and computing and all of that, but it's not world-changing by a long shot. And so, yeah, they're going to, in a way, Apple is kind of in the position that China's in, you know, a very high growth past and a kind of, if they do it right, then okay, but not spectacular future.
Could they fix that by some spectacular, you know, Jobs did that many times. He was in one business and then suddenly the iPhone, then suddenly the blank.
Yeah, maybe there's something out there that will do it. Although at this point, everybody's into AI, and that's where all this tension comes from.
But hard to know. I mean, new technologies are, by their nature, really hard to predict what might be coming down the pike, what might be transformational.
But as they are, Stan, no, it's hard to see. Like China.
Apple's like China. That's a really interesting insight, that they've got to sort of manage their decline.
That's on my, not even decline, it's just downshifting. It's sort of, you've been driving along the highway at 70 miles an hour and now you're on local streets where you really shouldn't be going above 30.
And how do you, can you make the adjustment to driving safely under these conditions? No, Paul, foldable phones. Foldable phones.
Foldable phones. Will you get one? I wait until the last, you know, I only have my current phone because my last one was viciously attacked by a tiled floor.
Okay. I'm getting one right away.
You know that. I'm getting a phone.
Yeah, well, that's a different business. I have wanted a Fodable for a long time.
I've been bugging them about it. My whole, when I saw Cook recently, I was like, you know, the app economy's over.
You get that, right? Because it's all going to be... And by the way, they're getting, to be fair, they're getting very good reviews for their integration of ChatGPT into the iPhone right now.
So some of the things will be services which have been growing like crazy at Apple comparatively. I've actually invested in one of those poor pay search engines that doesn't do AI.
Oh, okay. Because anything I actually really need to research, I have a much better idea than ChatGPT of what's actually a relevant result.
For now, Paul. And it just gets in the way.
For now. No, eventually.
I'm teasing. Lots of things can be replaced.
And then me as well. Would you put all your stuff up and become, you know, I was talking to Martha Stewart.
She was going to do Martha AI. She has so much content she's created and has been affiliated with.
She was going to load it all up and find out what happens.

Let's just say, watch this space.

Oh, oh, Paul Krugman is AI.

Robotic Paul Krugman.

Robot me, yeah.

Robot you.

So, I love when you keep saying, watch this space.

I love it.

Well, you know, first of all, I'm talking with various people about various things.

And I also have some constraints because, you know, and just in general, I'm still on the payroll at the time through the end of this month. And also, I don't want to be one of those people who trashes their place on the way out.
Yeah, yeah, that's for later. But no, I'm kidding.
But you're going to do merch, obviously, Paul Krugman merch. There's going to be t-shirts.
Well, let's try. I don't know.
I haven't quite figured that one out yet. You're going to do a deal with Kim Kardashian for skims or something like that? Look, I'm 72.
I'm fighting it, but I don't think fashion is going to be my thing. Paul, the world is your oyster now.
So speaking of lack of oysters, ABC News has agreed to pay $15 million to settle a defamation lawsuit brought by Donald Trump. The suit centered around comments that ABC's George Stephanopoulos made in a civil suit against Trump brought by E.
Jean Carroll. He said he was found liable for rape when he actually had been found liable for sexually assaulting and defaming Carroll.
The judge had mentioned that it was in most terms that would be considered that, and that's, I think, why he said it. But in fact, the jury had found him liable for

sexual assault and defamation. Under the terms of the settlement, ABC News will donate the money, $15 million, to a future presidential foundation and museum, and Stephanopoulos and ABC also issued a statement of regret for the mistake.
Many experts thought, I've talked to a dozen lawyers, They thought ABC would have won.

And Trump typically does this a lot. And so does, speaking of Elon Musk, we just talked about him, they use legal threats as a means of having people acquiesce.
So talk a little bit about this. I mean, from a business point of view, again, it's using censorship, it's using legal means, it's using anything but actual

competition or just like things work out. It's more than that.
What we're seeing is that, I mean, some of us had warned that a second Trump administration would be one in which the coercive power of the government against business would become huge. I mean, We're in a mixed economy.

The government plays a big role.

Private sector plays a big role. Lots of things in the private sector depend upon government decisions that are reasonably favorable.
As long as you have rules, nor rule of law, then that kind of works okay. But if you start to have arbitrary exercise, and one of the things we worry about on tariffs, it happens to be the case that the way that our trade laws are written, the president has enormous discretion in tariff setting.
And in some ways, one of the worst things about Trump tariffs will be not the tariffs he applies, but the ones he doesn't because he can play favorites with who gets to get exempted from a tariff. There is some evidence he did even on the relatively small tariffs he imposed in the first term.
So if you were ABC and you're looking at all the ways that Trump can hurt you if he wants to. Then you pay protection money.

That's what just happened.

And this is a much bigger thing than just competition. This is basically big business already acknowledging that we've become a protection racket.
Pay for play. Pay for play.
And that's scarier than anything. I mean, it's one of those reasons to wonder whether 2024 was maybe the last real election.
So talk a little bit about, because from a business, from an economy point of view, you can have a very robust economy even with this cooperation, or does it ultimately end this oligarchy? and in lack of innovation, which has been the hallmark of the U.S., really.

Dominance and innovation and new, fresh ideas. It's really been a remarkable run for the United States over the last 40 years.
Yeah, for the last 25 years, you know, in 2000, roughly all advanced countries seemed to be about on the same level technologically. The U.S.
has now pulled well ahead. And one of the pieces I've written recently

says a lot of that is actually just geography.

There's probably room for only one Silicon Valley

anywhere in the world.

But a lot of it is also, yeah, openness,

rule of law, success depends upon actually producing stuff

that people want and can use,

on being able to attract the best and brightest from around the world to work. And all of that is at risk.
You're in a situation where we know that there are people with influence on Trump who think of tech jobs as being goodies to be handed out. And don't let foreigners have those.
We know that we may well be heading for a situation in which success in business depends upon pull with the administration, depends on whether you're in or out of favor. And we even have, I mean, for what it's worth, regimes like that, according to an IMF study, it subtracts about 1% from growth.
How do you look at with all these billionaires around him? And they certainly are just one. It's mostly tech that's going there, but Disney just did this, right? This is Bob Iger doing this.
He had had to approve of this settlement. And he is not, you haven't seen him at Mar-a-Lago, but this is his version of that, right? What is that? Were you surprised that it's been the tech people who had mostly stayed out of government, right? And until they realized there was an interview that Marc Andreessen did, who I've known for a long time, I find him largely a despicable character.
But one of the things he said, he was terrified by what Biden was going to do. And he was scared.
And that's what drove him into Trump's arm, which I think is unlikely on some level. I mean, I am actually not surprised because I'm a cynic.

And the thing about tech, by the way, is these are no longer upstart innovators that we're talking about now. We're talking about people who made their billions very, very young, but they're now middle-aged.
And they're sitting in many ways on these monopoly positions created by their past efforts. And of course, they're going to try and curry favor with the government.
The libertarian ideology was never more than skin deep. But I also think that some of the backing Trump, you know, this is the classic error.
Oligarchs, it's funny, in a democratic rule of law nation, great wealth brings a lot of power with it. And it's natural to think, well, if I help elect an autocrat who is sympathetic to my interests, that I'll have even more power.
But you very quickly find out that actually all of the power is on the other side. I don't think analogies with Putin, I mean, I'm hoping that we're not going to go full Putin, but the analogies are really clearly there.
And the oligarchs who helped put Putin in power thought that they had bought themselves a government, and they found out that they were working for him, not the other way around. And if they didn't work for him, their fortunes can disappear quite quickly.
Yes, windows started to look. Well, falling out of windows.
I hope we don't get to the falling out of windows stage, but it could. And so, no, this is a, and that's going to happen very, very fast.
I mean, I'm, I think there's a reasonably strong case to that, that Elon Musk and Trump will have a falling out and Musk will not be the winner. And I don't know that for sure, but I'm actually kind of looking forward to it, to be honest.
I'm not a saint.

Okay. What's the counter to that? Where does that break? Because a bunch of people have always been quietly running the country, right? The whole idea of whoever it happens to you.

Count degrees and degrees.

Yes, but is this unprecedented? I don't think so, right?

It's totally presented.

Right. So talk about the precedent.
This is the story of Putin's Russia. This is the story of- Right.
What about in our country? That there have been wealthy people behind the scenes. They just aren't as performative.
They don't jump down at a rally and show off their belly and stuff like that. How is this different? I actually have been wondering about that.
I'm not a historian, but I think it really is an interesting question. We had a gilded age in which there were enormous fortunes and a lot of raw corruption, and yet democratic institutions were not corrupted too much.
I mean, a lot of purchased votes and all of that. But in the end, when people

voted for something different, those votes were honored. We didn't lose, in some ways, the essence of what America's about, despite all of that.
And it's an interesting question to ask, why didn't the the J.D. Rockfellas and the J.P.
Morgans,

you know, go to the limit.

Why were they willing to allow...

Now, Teddy... the J.D.
Rockefellers and the J.P. Morgans, you know, go to the limit? Why were they willing to allow Teddy Roosevelt to be elected? Right, often a wealthy person.
FDR, wealthy person, JFK wealthy. Well, FDR brought us closer to a coup than we like to think, but yeah.
But how did the progressive movement manage to flourish in a time when the wealthy also had that? And I don't quite know the answer. Although it's possible, hard to believe, but it's possible that people actually had at least some values and ideals.
Enough to say that, okay, I will go this far but not beyond that point. I'm not so sure with this crew.
I'm not so sure either. We'll see.
I know them. I'm certain they will go as far as they take because they are perpetually aggrieved.
They're aggrieved, Paul, because they're the victims, just so you know. Oh, yeah.
It's one thing, I mean, you would know better than me, but my really strong sense is that particularly the tech bros, I mean, everybody loved and admired them 10, 15 years ago. And now they're not loved and admired universally.
And I think that really, you know, I do spend enough time in meetings with people of various, people at the top of multiple status hierarchies, and everybody wants to be what they aren't. And these are people who can buy anything except love and adulation.

That's correct.

It was funny you say that because one of them was in touch with me and they're like, see, we won.

And I said, you're still an asshole.

I still think you're an asshole.

I'm sorry, can I say this?

I said apparently somebody used Grok to search for the word most used to characterize Elon Musk.

And it was asshole. Yeah, yeah.
Well, that wasn't the one who called me. But nonetheless, same difference.
I want to say the same thing. I often say to many of them, you're so poor, all you have is money.
Anyway, we're going to go on a quick break when we will be back for wins and fails. Okay, Paul, let's hear some wins and fails.
Would you like me to go first or would you like to go first? Why don't you go first? Okay, I think a fail is HBO is no longer airing episodes of Sesame Street on Max. They've opted not to renew the output deal, which brought new episodes.
The library, the existing Sesame Street library, which my kids watch a lot, I have two younger kids, remain on the platform till at least 2027. And they will, the new season will be there, but they're moving on.
And so I just, I don't know, they're wonderful. It's not like some things get old and you shouldn't keep airing them.
But Sesame Street remains fantastic. It had been in

a five-year deal. And it's sad.
I mean, they're trying to save costs. It probably doesn't do very well for them.
But to me, Sesame Street's been around since 1969, if you can believe it. They're often at the whim of politicians and defunding and everything else.
But But so I just, you can see them until 2027, but the control over something like this is really sad to me by people who are just looking for, you know, obviously David Sasloff just did a whole machination about spinning things into pieces at the company. And I, by the way, I have a contract scene.
Nonetheless, I think it's horrible, David, bad job. And my plus is I

just did a whole on with Kara Swisher about books that I had two amazing book critics come on, Dwight Garner from the New York Times, who's amazing, and Becca Rothfeld, who writes for the Washington Post. And we had a great time talking about books that will be appearing, I think next week.
But she did a review of Jordan Peterson's new book, We Who Wrestled With God. And I recommend that you read this review.
I think Jordan Peterson is just a dimwit, which she writes about. And she says, let me just read this.
It takes a special kind of spiritual dimwit to cast a text as fierce and mysterious as the Old Testament as a banal and scolding escortation to make your bed. But Peterson, as it happens, is just this kind.
I just loved her writing. I think she's a wonderful writer.
I laughed and cackled throughout the review. And it's a wonderful review of a terrible book, and that's always a pleasure for me.
You know, I think it's just, I just love, I love really, as you said, there's no Paul Krogman, there's no, you can't replace any of this with anybody else but the person writing it. So I just love, Becca, what a great review you did.
And I'm excited for people to listen to her thoughts on books along with Dwight's. All you, Paul.
Okay. Wow.
So fails. You know, I live in New York, although it's not where I am at the moment.
But, and I have to say this whole business with congestion pricing, which was on and then off and is now down on. And, you know, this is completely insane.
Driving into lower Manhattan, the cost you impose on everybody else by making that, you know, this is insane. If there was ever, and not only was it something that we should be doing just plain to discourage people from doing this, but it was also a revenue source for really badly needed.
So that has been a, I thought we've finally gotten to the point of doing the right thing there. And it's just, and it's, you know, I mostly take the subway, but this does get at the quality of my life.
So you think there should be congestion pricing to limit people? If you try to estimate, you know, what the true cost that you impose on other people by driving into lower Manhattan

during the workday, it's on the order of $100 just by slowing up other people.

So the congestion pricing should be really strong.

And that's a big fail.

And New York is still my, you know, I sometimes, even when I'm elsewhere, I say something,

well, I'll be in the city tomorrow.

The city means New York.

There's only one city. There's only one city.
But this is really, anyway. Wins.
So I have lots of questions about Apple and Tim Cook. But Apple TV, I'm a science fiction fan.
and the first of all

just in general

film science fiction

we are in a golden age for that. The two Dune movies, I grew up with that book.
And that, my God, Villeneuve was incredible. And now I just saw, just about an hour before we got online with each other, that Tim Cook has extended Silo for two seasons.
And I'm a total, both a total Silo freak and a total Rebecca Ferguson fan. So two more seasons of Silo, that's a significant improvement in the quality of life.
Oh, good. Severance is coming.
Did you like that one? Yeah, I found, it's funny, I have good friends on Wall Street who are absolutely into severance. And I, not quite, maybe because I've never actually worked in a cubicle.
I don't, it doesn't quite work the same way for me, but I sort of see it. Have you tried Dark Matter? What about Dark Matter? Dark Matter, I've been working through.
It's stressful for some reason. It's a little too stressful for these times.
You would think that Sil that Silo with everybody buried underground would be worse. It's a great show.
I have a cluster of civilized Wall Street friends. They were constantly going, but I was the one that turned them on.
This is already old stuff, but Orphan Black once upon a time. Amazing.
Anyway I think my, I'm reading a little bit less news now because it is painful and some better streaming entertainment. Good.
That's a great, Silo's wonderful. I think you should watch Nobody Wants This on Netflix.
Oh, I should look at it. It's very delightful.
It's not sci-fi at all. It's about a hot rabbi, Paul.
Oh, gosh. All right.
Well, yeah. I don't think you seem like the hot rabbi type.
Anyway, Silo is wonderful. You're right.
Rebecca Ferguson, who was also in Mission Impossible, a whole bunch of things. And she was also in Dune.
Astonishing, astonishing person. Is there any movie you like right now? Is there any movie that is your favorite? I mean, still absorbing Dune 2.
And not a real, nothing has really, really grabbed me since then. You don't seem like a wicked kind of guy.
You and Scott don't. I should go to it.
Although I did actually see Oppenheimer, was actually a little bit back, but it was. Wonk.
Wonk. Wonk.
Wonk. Wonk.
Wonk. Wonk.
But that's the name of your crowd, Wonk Seth. And if I might say, I thought I caught it in a historical error there, and it's too much to explain, but then I checked it.
It wasn't. I.I.
Rob, I was actually at the Trinity test. I thought it couldn't have been because he was working at the MIT's radiation lab, but he was there for that.
Oh, amazing. Wow, that's amazing.
That is a great film. That's a good film to go back and watch.
He's working, Chris, the director, Nolan is working on a couple of new things that I think you'll like. Oh, and I actually, by the way, I'm always a little bit shocked in general in pop culture at what I like.
I've been totally, the musical stuff that's showing up now again at the end of my newsletter. But I'm absolutely shocked to find out I really enjoyed Full Out.
Who knew? The new Paul Krugman! Not really. And he's the same Paul Krugman, now unleashed.
Unleashed. Unbound, yeah.
Unbound. Paul Krugman Unbound, which I love.
I'm really enjoying this episode. We want to hear from you, by the way, listeners.
Send us your questions about business, tech, or whatever's on your mind. Go to nymag.com slash pivot.
Just send a question for the show or call 855-51-PIVOT. I also want to mention that I recently sat down with Democratic Congressman Ro Khanna for On with Kara Swisher.
Speaking, Paul, he talked about how billionaires funding the left are just as problematic as Elon and his minions on the right.

Let's listen. Our side will say, well, Elon's a problem.
Yeah, sure. It's a problem that he's pouring in hundreds of millions.
But how about the billionaires on our side? I mean, how about the fact that Kamala Harris had more billionaire money than Trump did and more wealthy money? that Larry Lessig and I had an op-ed on that,

that I think that was part of the reason

we weren't talking about transformative change on Medicare for all or standing up for unions. How often did Kamala Harris talk about inequality? And so, yes, let's get the super PAC funding out.
Let's be a party that says no super PAC funding in primaries. But, you know, voters respected more.
It's not that I'm not going to call out Elon. I just did.
It's terrible to have that kind of spending. But voters respect you more if you're also willing to call out your own side so it doesn't just come off as hypocrisy.
What do you think about that, Paul? I thought it was a little two sides of his mouth. I think that's a little bit, you know, it's certainly a little distressing that billionaires are so important to the finances of both parties.
But, you know, I mean, I watched the campaign a lot and I didn't see any real evidence that Harris was being more centrist than would have been warranted by the politics. and in general I think there are times when it's clearly billionaires are buying their interests but

I didn't see a lot of that in this campaign. And, you know, Medicare, that's probably, I'm going to have a newsletter on that very quite soon about, you know, given the assassination in New York, about healthcare.
But the reason we can't have Medicare for all just now is not because billionaires are in the way. It's actually much more just that most people are reasonably happy with their private insurance.
And even if you tell them, look, this government providing insurance will be better, and people who have Medicare actually are happier than you are, that's just not a, people won't believe it. And that, you know, so it's not the billionaires that are stopping this.
Yeah, they're in a rage and the polls also show they like it. It's a really weird situation.
I think it's all these cases of denials. Well, the polls actually show us that people really like their private insurance unless they get sick.
That was exactly, unless they get sick. One of the things that I will note that Elon invested $250 million in the Trump campaign, and he is now $200 billion richer.
What an investment. Best investment of all time, I think, correct? Oh, yeah.
Buying political influence is still an incredible bargain. And look how much richer he is, despite the fact that Tesla's share of the market is down considerably.
Just amazing. Well, and as a New Yorker, watching the current mayor and the scandal of the bribes that he was receiving from the Turks, it's tiny.
It's like two days in a luxury hotel in Istanbul. My God.
That you can buy the mayor of New York for that little money? I know. Who should we buy, Paul? No, I'm kidding.
Let's not do that. Anyway.
Anyway, Paul, you're wonderful. I'm so excited that you're out and about.
I love these columns. And everybody should go to his sub stack, Krugman Wonks Out, for all of your analysis and musings.
It's very varied, and you have the musical thing at the end. I like Slightly Unleashed, and I look forward to all the different things you're going to write about in the economy and more and more.
Thank you so much. We'll be back on Friday for more, and I'll read this out, but Paul, again, really, I'm a huge fan, and I'm thrilled that you're doing this.
You'll have so much fun. You will not regret it.
I'm definitely going to have a good time. Good.
You deserve it. Today's show was produced by Lara Neyman, Zoe Marcus, and Taylor Griffin.
Ernie Enderdot engineered this episode. Thanks also to Drew Burrows, Mia Silverio, and Dan Shulon.
Nishat Kirwa is Vox Media's executive producer of audio. Make sure you subscribe to the show wherever you listen to podcasts.
Thanks for listening to Pivot from New York Magazine and Vox Media.

You can subscribe to the magazine at nymag.com slash pod.

We'll be back later this week for another breakdown of all things tech and business.

Scott, I hope you're having a great time in Africa.