Speaking to an audience at Erasmus University Rotterdam, Nobel Prize-winning economist Paul Krugman delivered a wide-ranging and candid lecture on Friday 2 May, 2025, that sounded the alarm on rising global economic inequality, the erosion of democratic norms, and the dangerous flirtation of Western societies with populist economic fantasies.
Economic calm hides deeper instability
In his address at the invitation of Erasmus Happiness Economics Research Organisation (EHERO), Krugman drew from both historical and contemporary examples to argue that while the economic situation in many advanced economies may appear stable on the surface, deep underlying problems - such as stagnant wages, the monopolisation of power by elites, and the manipulation of public discourse - are fueling discontent and threatening liberal democracy.
‘The global economy is not in immediate crisis,’ Krugman noted. ‘But that doesn’t mean all is well. Complacency is the enemy. We are in a moment eerily similar to the years before the financial crisis, and before that, the rise of authoritarianism in the 1930s.’
The populist threat: old patterns, new packaging
Krugman discussed at length the rise of authoritarian populism, highlighting how economic insecurity, disinformation, and political polarisation have paved the way for the resurgence of far-right ideologies. Citing examples from both the United States and Europe, he warned that historical lessons are being forgotten.
‘People often assume fascism arrives with goose-stepping soldiers. More often, it arrives with a smile, economic promises, and the scapegoating of outsiders,’ Krugman said.
The economist’s role in a political age
A central theme of the lecture was the role of economics in preserving democracy. Krugman emphasised that economists must not merely interpret data but also engage with public policy and help societies steer away from dangerous narratives. He was especially critical of what he called the “myth of the balanced budget,” arguing that rigid fiscal orthodoxy can be weaponised by right-wing forces to undermine public welfare.
Krugman, whose work on trade theory and economic geography earned him the Nobel Prize in 2008, also commented on the European Union’s economic policies, calling for more solidarity among member states. He praised the EU's post-COVID recovery efforts but cautioned against a return to austerity measures, which he argued could intensify nationalist sentiment in struggling regions.
In a particularly personal moment, Krugman reflected on the responsibilities of economists and academics in this turbulent era: ‘We no longer have the luxury of being dispassionate. When truth is under siege, silence is complicity.’
The lecture concluded with a Q&A session, where Krugman addressed questions on climate economics, artificial intelligence, and wealth taxation. He remained hopeful but realistic, reminding the audience that while economic trends are powerful, human agency, through policy and public engagement, remains decisive.
About Paul Krugman
Paul Krugman is an influential American economist, author, and columnist, best known for his groundbreaking work in international trade and economic geography. He earned his PhD in economics from the Massachusetts Institute of Technology (MIT) in 1977. Over the course of his academic career, he held positions at several prestigious institutions, including MIT, Stanford, and Princeton University. He currently serves as a Distinguished Professor of Economics at the Graduate Center of the City University of New York.
In 2008, Krugman was awarded the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography, which helped explain global trade patterns and the concentration of economic activity in cities.
Beyond academia, Krugman is widely recognised as a public intellectual. From 2000 to 2024, he wrote a regular column for The New York Times, where he discussed economic policy, politics, and global issues with clarity and insight. His progressive viewpoints and critiques of economic inequality, austerity, and conservative fiscal policy have made him a prominent voice in public discourse.
Krugman is also the author of several best-selling books aimed at both economists and general readers, including “The Conscience of a Liberal”, End this depression now!”, and “Arguing with zombies”.
- More information
Paul Krugman was invited by the Erasmus Happiness Economics Research Organisation to speak on the relationship between global trade, spatial economics, and human welfare. His lecture formed the centerpiece of “The New Wellbeing Society (NWS): A Dialogue,” an engaging afternoon of discussions and exchange, with the cooperation of many prominent people.
Several media have interviewed Paul Krugman, including NRC Handelsblad, De Volkskrant, Het Financieele Dagblad and ESB. For more information, please contact Ronald de Groot, Media & Public Relations Officer at Erasmus School of Economics: rdegroot@ese.eur.nl, mobile +31 6 53 641 846.
