We said good-bye to an old friend in late May when Fior D’Italia closed. It seemed to be extra poignant that our Luncheon Society conversation with Nobel Laureate Paul Krugman on the current economic troubles also coincided with the final day that the oldest continuously run Italian restaurant west of the Mississippi.
After our luncheon, the staff prepared for their final dinner before the locks were placed on the front door. We hope that they will return under new ownership. If we were going to have a last bash with Fior, the Paul Krugman would be a grand way to bid farewell to a long time San Francisco favorite.
We were pleased that Paul Krugman joined us to discuss his new book End This Recession Now. In the largest Luncheon Society gathering to date, we all managed to huddle together for a great conversational “back and forth” that took the better part of two hours.
As the nation’s most elegant Keynesian economist, what frustrates Paul Krugman most was that during the Collapse of 2008 and its aftermath, the lessons learned from The Great Depressions are equally applicable to the Great Recession but policymakers (especially those on the far right) aimed for an austerity program, even if it does more harm than good.
Krugman makes the case that the United States would find full employment within a 2 year period and fund it with an inflationary rate in the 3-4% range. Runaway inflation is a scary matter for those who went through the 1970’s and now worry that any savings might be wiped away, but to those who worry about their 401K retirement programs, the lack of progress from the global economy upward has more of a financial drag.
Instead of supporting an austerity budgetary plan that fires teachers, firefighters and other civil servants, Krugman argues that policymakers should double-down on investing in people and projects. He felt that Obama’s actions amounted to half-measures when he arrived in office as the wheels were coming off the economy were too little, almost too late. Krugman argues that Obama lost an opportunity to be truly bold on the economic front and that made things far worse.
While there was some early optimism on “green shoots” that emerged as early as 2009, they have been tempered by events elsewhere. For the first time in anybody’s life the American economic system is directly impacted by what is taking place in Europe and Asia more so than anytime n our nation’s history. Manufacturing jobs focused on exports can take a quick nosedive if the economies in those regions falter and this has been the case.
Unwinding a financial panic that began with the faulty securitization of home mortgages soon infected a number of banks, investment houses, and insurance groups, soon led to a colossal bailout without putting in place the necessary safeguards to keep this from happening again. For Krugman, that means that Wall Street will soon get back to doing what it does best, short-term thinking as the expense of longer-term financial stability. The $3 Billion in losses at JP MorganChase only underscores the fear that nothing has changed. Even the highly publicized resignation of Greg Smith from Goldman Sachs was widely ridiculed after the conservative press made an issue of the author’s lack of stature within the brokerage house.
In the end Krugman states, the real job creators are the middle class. With disposable income, their demand for products is what drives the consumer manufacturing sector. There are only so many members so many members of the 1% super-rich—and they have all of the gadgets they need. Krugman pointed to Apple as a good example of a companywide transformation that came on the heels of a middle class demand. All of those iPads and iPhones ended up with so many families that apple went from a company that was only weeks away from bankruptcy in 1997 to becoming the richest and most successful consumer goods company in the world.
Until we focus the financial aid on middle class families, we will miss the mark and it will take far longer to untangle ourselves from this mess.
is a series of private luncheons and dinners that take place in San Francisco, Los Angeles, Manhattan, and Boston. We essentially split the costs of gathering and we meet in groups of 20-25 people. Discussions center on politics, art, science, film, culture, and whatever else is on our mind. Think of us as “Adult Drop in Daycare.” We’ve been around since 1997 and we’re purposely understated. These gatherings takes place around a large table, where you interact with the main guest and conversation becomes end result. There are no rules, very little structure, and the gatherings happen when they happen. Join us when you can.