Lunch Money with Paul Krugman and Heather Cox Richardson

**Heather Cox Richardson** (0:03)
Hey, everybody from, oh, we have France and Maryland and Pennsylvania and Michigan. Two from France, or no, you just misspelled it before. The Berkshires, which I bet are beautiful right now.
And while we wait for Facebook, Dr. Krugman, hello. And you know the Berkshires yourself, don't you?

**Paul Krugman** (0:26)
Indeed, not to give too much away, but we spend, Robin and I spend a fair part of each summer there when we can. And yeah, lots of stuff. My parents retired there. Anyway, great area.

**Heather Cox Richardson** (0:40)
So if I recall correctly, and it's entirely likely I don't, the Berkshires became a summer resort for people from Boston in like the late 19th century, when you could buy up old farm houses for like nothing, because the people who had lived out there went out west. Is that right?

**Paul Krugman** (0:58)
Yeah, it was land was very cheap. The, you know, basically most people left either for city jobs or places where the soil wasn't full of rocks.
And the, and then they built, there's a fair number. I mean, Edith Wharton's house is, is there, you know, there are the great mansions, which mostly now are museums, but it's, look, it's lovely. And of course it's shifted now either at this point, it's a little, if you ask, what is it? What does the area do for a living? It basically provides services to rich New Yorkers with second homes, but all right, that's not a bad thing either.

**Heather Cox Richardson** (1:39)
And part of the old New England tradition actually, is I'm sitting here on the coast of Maine. We do a lot of that as well and did a lot of that all along.
Those rocks do make it difficult to pull a living out of the soil, but that's a nice segue to what we're going to talk about today. You've been writing so much interesting stuff about AI and about crypto and wondering about the rise of this financial elite. What do you want to talk about today?

**Paul Krugman** (2:08)
I wanted to talk to a genuine historian as opposed to an econ-hermit who reads a bit of history on the side.
That's me, obviously.
I've been partly inspired by the Elon Musk, the first trillionaire, but just generally this incredible rise of extreme wealth and extreme political influence. A lot of harking back to the Gilded Age. I still find people saying, are we going to have a second Gilded Age? My God, we actually passed the Gilded Age levels of wealth concentration about 25 years ago. But now we are way beyond that. But still, my question is actually a funny one. I think, I don't know who else I could ask better than yourself. How is it that American, who aren't exactly a democracy, but something democratic-ish and constitutional, how is it that America survived the era of the Robert Barons? I mean, it seems to be in so much trouble now. And I think that's kind of a starting point for a whole discussion about what has changed. At some level, what's wrong with us now?

**Heather Cox Richardson** (3:17)
You know, I think there are a lot of things that are different now than were then, but there are some similarities. One of the things that happens is that if you remember the Republican Party, which forms in the 1860s, really, I'm sorry, the late 1850s, early 1860s, and really starts to put its policies in place during the Civil War during the 1860s, that becomes really tightly associated with the United States of America, with the government.
What you do is you get a number of the original founders of the Republican Party who end up, many of them becoming industrialists or supporting the policies of the robber barons, but then you have the next generation, and it's coming to age in the 1880s, and the next generation comes of age, and this is going to be people like Bob LaFollette in Wisconsin, and Theodore Roosevelt in New York, and Henry Cabot Lodge in Massachusetts, and Albert Beverage in Indiana. And those are all people who can't be a Democrat because they see that as the party of the South, they see that as the party of rebellion. They're gonna stay in the Republican Party.
Even when a lot of people in 1884 jumped ship and become mugwumps and Republicans vote for Democrats, they stay in the Republican Party, but they are staunchly committed to the principles for which the Republicans fought during the Civil War, for which the North fought during the Civil War. So as they watch the country becoming more and more corrupt, they start to rise and to take power based on the idea that they're going to return the country to that earlier system. And they manage to make common cause with the populists, the Alliance members and the Democrats who have been standing against the robber barons all along and to take over the system in the late 1890s. And of course, they're dramatically helped by the, I hate to talk about assassinations for many reasons, but by the assassination of William McKinley in 1901, which puts Teddy Roosevelt into the White House, a source of power for that reformist coalition that might not otherwise have happened. But you saw that groundswell beginning in 1884 and really this change in the Republican Party toward reform the same way the Democrats were. One of the things that really jumps out to me in this moment is that the Republican Party has just rolled over and played dead. It's just gone for Trumpism. That was a surprise to me all along.