DEBATING POLITICS, ECONOMICS AND OTHER TIMELY TOPICS WITH PAUL KRUGMAN OF THE NEW YORK TIMES

FRIDAY, JANUARY 22, 2016

PAUL KRUGMAN

Irrational Arguments About the Coal Industry

The Wall Street Journal recently
published a remarkable editorial titled The Carnage in Coal Country,
which accused President Obama of
destroying jobs by implementing
terrible, horrible, no-good regulations on coal: According to the
National Mining Association, 40,000
coal jobs have been lost in the U.S.
since 2008, the editorial said.
Thats a bigger number than the
figure from the U.S. Bureau of Labor
Statistics, but never mind. You might
want to put that number in perspective by remembering that the American economy has added 14 million
private sector jobs since 2010. You
might also want to note that coal has
been declining for a long time.
But what really struck me about
the editorial were two things. First,
The Journal sneers that were still
waiting for all those new green jobs
Mr. Obama has been promising
since he arrived in Washington.
Well, look at the chart.
Yes, the solar numbers are from the
Solar Foundation, a private group,
but The Journals figure on mining
jobs also comes from a private group.
And while you might want to quibble
over specific data points, the boom
in renewable energy in the United
States is very real, as is the surging
number of jobs in occupations like
solar panel installation. I cant imagine any calculation under which the
number of green jobs added doesnt
exceed the loss of jobs in coal mining an industry that was already a
shadow of its former self before Mr.
Obama took office.
The other striking thing about the
editorial is that it takes as a given the
notion that any regulation is bad, including regulations on mercury and
coal ash (which itself is also loaded
with mercury and other heavy metals like lead). Lets see: Mercury
is a neurotoxin, which can impair
intelligence, and other heavy metals
can cause cancer and poison people
in a variety of ways. In what moral
or even economic universe is it obviously wrong to limit emissions of
neurotoxins?
I know that this article wasnt

BACKSTORY

A Long
Demise

JIM WILSON/THE NEW YORK TIMES

Rail cars outside a coal loading terminal in Wyoming. President Obama has made reducing emissions from coal a focus of his second term.
a criminal or anyone else who seeks
to do us harm. Millions of Americans
feel that way.
Back when I was a new assistant
professor at Yale, one of the universitys grad students got mugged
New Haven was a rough place at
the time. Another student started
boasting that he would have stood
up to the muggers and was rightly
greeted with jeers: And strangled
them with your eyeglasses.
Adults are supposed to realize that
they arent characters in a Bruce Willis movie. But Republican presidential
candidates not only have such fantasies, they are actively proud of them.
Awesome.

intended as any kind of rational

argument that it was just an AntiObama Two Minutes of Hate piece.
But this sort of thing is still amazing
to see in a paper that sometimes pretends to be a cut above the conservative commentator Erick Erickson.
Die-Hard Conservatives
Oh my. Heres Marco Rubio during
a recent interview on CBS Face the
Nation: I have a right to protect my
family if someone were to come after
us. In fact, if ISIS were to visit us or
our communities at any moment,
the last line of defense between ISIS
and my family is the ability I have to
protect my family from them or from

READER COMMENTS FROM NYTIMES.COM

Consumers Want a Greener Future

I recently retired from a power
and water company.
Before I left, my former employer
announced that solar is more economical than coal, so the company is
building a solar farm.
Additionally, the company installed a new system to capture
mercury from its coal plants, and
one of the coal-fire units is scheduled
to be converted to use natural gas.
The rest of the power is generated by
combustion turbines, gas turbines
and nuclear facilities.
The company has a long-term plan

to become a greener business. This

is what customers want, and its the
most economical path.
STEPHEN, FLORIDA

Im about as sad to see the coal

industry decline as I am to see
Joaqun El Chapo Guzmn get
recaptured. Both the coal industry
and El Chapo are in the business of
poisoning Americans.
The air pollution that results from
burning fossil fuels (not exclusively
coal) is estimated to have caused
hundreds of thousands of premature

deaths in the United States over the

years. And if you want a reminder
of what can happen when you dont
regulate coal, reflect on the death
cloud of smog that hung over Beijing
this past December.
I look forward to the day when the
last coal job is lost.
BILL, NEW YORK

I think its a safe bet that none

of the people who write editorials
for The Wall Street Journal would
want to live so close to a coal mine
that the quality of their air or wa-

250
200

U.S. Employment, Solar and Coal Mining

Jobs (in thousands)

150

Solar

100
50

Coal mining

1985

1990

1995

2000

2005

2010

ter suffered from the effects of

the extraction process.
JAMES LEE, TEXAS

2015
THE NEW YORK TIMES

Sources: Bureau of Labor Statistics, Solar Foundation

global warming or by the markets

taking advantage of cheaper natural
gas.
DAVID APPELL, OREGON

In the 1980s, I watched my dad,

uncle and other good men lose
their jobs at steel mills around
Pittsburgh. Most of them never recovered financially, and their families suffered as a result.
I think most Americans understand that coal has to go. But I would
like to see the Obama administration
launch a massive jobs and retraining
program, and Id like to see our next
president focus that program on coal
miners and other people who work in
the fossil fuel industries.
It is not the fault of these workers
that theyre getting chewed up by
the governments efforts to reduce

Oh, Mr. Krugman, you should

have learned long ago that for
the editors of The Wall Street
Journals editorial page or for
most conservatives, for that matter liberty means being able
to sprinkle neurotoxins on ones
cereal. Otherwise, it just wouldnt
be morning in America!
R. WILLIAMS, GEORGIA

ONLINE: COMMENTS
Comments have been edited for clarity and
length. For Paul Krugmans latest thoughts
and to join the debate online, visit his blog at
krugman.blogs.nytimes.com.

In recent years, the American

coal industry has been marked
by bankruptcies and a significant
drop in output, leading many analysts to suggest that it could be
stuck in a terminal decline. And
while these trends predate President Obamas tenure, many Republican politicians have placed
responsibility for the coal industrys losses squarely at his feet.
Mr. Obama has made reducing
greenhouse gas emissions from
coal a central focus of his second
term, and his administration has
implemented regulations that impose new costs on the industry.
Republicans have furiously opposed these measures, often characterizing Mr. Obamas actions as
a war on coal that is responsible
for massive job losses.
However, while some analysts believe that the new regulations have played a role in coals
downfall, others believe that the
bulk of its decline is due to falling international demand from
countries like China, as well as a
massive boom in domestic natural gas production which has
quickly displaced coal as the
United States largest energy
source.
But while the coal industry is
facing tough times, another energy sector, the solar industry, is
growing rapidly. According to a
recent report from the nonprofit
Solar Foundation, 209,000 Americans worked in solar-related jobs
in 2015, about 35,000 more than
in 2014.
Julian Spector, a commentator
at The Atlantics CityLab, argued
earlier this month that the growing base of workers in solar could
signal a sea change in the nations
energy politics. The population
of workers with a direct economic stake in the success of solar energy has reached the hundreds of
thousands, and that size carries
with it great political potential,
Mr. Spector wrote. Each of those
new employees, not to mention
their families and friends, now
are more likely to vote for politicians who favor the expansion of
renewable energy. The U.S. has
steered clear of strong renewable
energy policies for years thanks
to the political influence of the
fossil fuel industries; now theres
a new kid on the block to fight for
pro-solar governance.

PAUL KRUGMAN

The Global Downside of the Oil Price Plunge

BLEIBEL/CARTOON ARTS INTERNATIONAL/NEW YORK TIMES SYNDICATE

Canada has become overly dependent on oil exports in recent

years. As a result, we have been hit
especially hard by the fall in crude
prices, especially in Alberta.
On the upside, low oil prices have
led to a less valuable Canadian dollar, and this has made our exports
more competitive abroad. A lower
dollar also means that Canadians
are more likely to plan vacations
here at home, and they will likely engage in less cross-border shopping.
So more money will stay here, and
local businesses will benefit.
G., CANADA

I would imagine that Im not

alone in celebrating any turn of
events that forces a certain government in the Arabian Peninsula

When oil prices began their big

plunge, it was widely assumed that
the economic effects would be positive. Some of us were a bit skeptical.
But maybe not skeptical enough:
Taking a global view, theres a pretty
good case to be made that the oil
plunge is having a distinctly negative impact. Why?
Well, think about why we used to
believe that oil price declines were
expansionary. They reduced inflation, freeing central banks to loosen
monetary policy but thats not a
relevant issue at a time when inflation is already below target almost
everywhere.

Beyond that, however, the typical

view was that falling oil prices tended to redistribute income away from
agents with low marginal propensities to spend toward agents with high
marginal propensities to spend. For
instance, oil-rich Middle Eastern
nations and Texas billionaires, the
story went, were sitting on huge piles
of wealth, were therefore unlikely to
face liquidity constraints and could
(and would) smooth out fluctuations
in their income. Meanwhile, the
benefits of lower oil prices would be
spread widely, including to many
consumers who were living paycheck to paycheck and who would

READER COMMENTS FROM NYTIMES.COM

Crudes Problems Leak Into Other Markets

to tighten its belt.
Those of us of a certain age have
vivid memories of the oil embargo in
the early 1970s, and of our Saudi Arabian allies stepping on our throats,
hoping that the United States would
abandon its support for Israel.
Since then, the Paleolithic behavior of Saudi Arabias religious government has harmed people around
the world.
What Im saying is: It couldnt
have happened to a nicer bunch of
guys.
J.M., MAINE

As a budget-constrained senior
citizen, I find that spending less
on gasoline these days means that
I have more to spend on my perpetually increasing rent.

who will be hurt, not the workers.

That is, of course, if governments
dont rescue the banks after the
bubble bursts.
H.M., NEW YORK

RICHARD, CALIFORNIA

Stock markets around the

world are not dealing well with
the plunge in oil prices, yet the
real economy is doing fine. Its no
wonder why capitalists moods have
soured.
Also, if there is a bubble in the
fracking industry, it is the capitalists

probably spend all that extra cash.

Now, part of the reason this logic
doesnt work the way it used to is that
the rise of hydraulic fracturing, or
fracking, means that theres a lot of
investment spending thats closely
tied to oil prices investment spending that has relatively short lead
times and will therefore fall quickly.
But I believe theres something
else going on: an important nonlinearity in the effects of oil fluctuations. A 10 or 20 percent decline in
the price might work in the conventional way, but a 70 percent decline
has really drastic effects on producers they become more likely, not

to fall, and the drilling industry

stopped ordering anything new. So
now many of Singapores yards are
sitting nearly idle, and workers have
been laid off.
Sure, Singapore is a city of about
five million people, but when you
consider that the oil industry has
stopped making capital investments
on a global scale, a lot of manufacturers could be in trouble.
M.G., SINGAPORE

I live in Singapore, which produces a fairly large proportion of

the worlds oil rigs, drilling ships
and production platforms.
Years ago the drop in oil prices
had little effect on industrial yards
here because companies normally
had a couple years worth of orders
on the books. But prices continued

High oil prices in the past have

created the current glut in supply.
So it would be logical to assume that
todays low prices will mean that no
new wells will be drilled until supply and demand are balanced once
again.
CHRIS, AUSTRALIA

less, to be liquidity-constrained as
compared to consumers. Saudi Arabia, for example, has been forced to
institute severe austerity policies,
and highly indebted fracking companies are finding themselves faced
with balance sheet crises.
Or to put it differently: Small oil
price declines may be expansionary
through the usual channels, but really big declines set in motion a process of forced deleveraging among
producers that can be a significant
drag on the world economy, especially when the entire advanced world is
still in or near a liquidity trap.
Oh, and a belated happy new year.

Paul Krugman
joined The New
York Times in 1999
as a columnist on
the Op-Ed page
and continues
as a professor of
economics and
international
affairs at Princeton
University. He was awarded the
Nobel in economic science in 2008.
Mr. Krugman is the author or editor
of 21 books and more than 200
papers in professional journals and
edited volumes. His latest book is
End This Depression Now!