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MICHELE NORRIS, host: From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

ROBERT SIEGEL, host: And I'm Robert Siegel. Here's Paul Krugman's take on two trends of recent years: the rise in economic inequality, the number of wealthy Americans and also the increased political polarization of America. The economist and New York Times columnist says this. The political development drove and enabled the economic change. Movement conservatives took over the Republican Party, they won elections, and they began rolling back the power of unions, federal welfare programs and, above all, taxes. The result, Paul Krugman says, is a class of very rich Americans, whose size is unprecedented and whose good fortune is not shared by the vast majority of their countrymen. Paul Krugman writes about this in his new book, "The Conscience of a Liberal." Welcome to the program.

Mr. PAUL KRUGMAN (Columnist, New York Times; Economist): Hello there.

SIEGEL: And first, the rise of the very rich. I want you to give some of the various measures you cite in the book to make the case that we have never had so many people making so much more money than the rest of us.

Mr. KRUGMAN: Okay. Let's start with just, you know, how well off is the top 1 percents of the population. If you go back to the America I grew up in, this kind of generation after World War II where we're talking about seven or 8 percent of total income going to the top 1 percent, we're now talking about numbers more or like 17 percent of income going to the top 1 percent, there's more than doubling of the share. If you go to the, you know, top 100th of a percent, which is the really very, very, rich, they were negligible. They were something that just didn't matter in the economy in 1970. Now, they're 3, 4 percent of income. You know, the super rich are really a force in the economy.

SIEGEL: Mm-hmm.

Mr. KRUGMAN: And the other main thing is, look, we're a much richer country than we were 35 years ago. You know, there's technological progress. There's all kinds of stuff. Try to look at whether the income of the typical family has gone up or down. Well, they're different measures. But the fact they're even arguing about that is incredible.

SIEGEL: Mm-hmm.

Mr. KRUGMAN: It's telling you that all of the gains have gone to a very few people at the very top.

SIEGEL: Now, a couple of questions about that. I grew up in the same America you did, just a couple of years earlier. And one could argue that we grew up in the great exceptional period, that is the Depression had suggested to people that anybody could become poor regardless of how smart you were, how hard you worked, or how much money you had in the beginning, and then the war united the country. And that exceptional moment in our history has passed.

Mr. KRUGMAN: Well, that is actually right. If you look the broad sweep, America was a very unequal sort of royalist society in the gilded age, which in economic turns kept up right through the 1920s. And it's a very unequal royalist society now. And it was an interregnum of about 30, 35 years when we were a middle class society. But, you know, other advanced countries are still living in that interregnum if that's what it was. We still have middle class societies in Western Europe. We still have a broadly middle class society in Canada. It's only the United States where the gilded age has come back.

SIEGEL: There's another argument you hear from time to time, which is that, yes, a middle class American today may be farther away in wealth from the very rich, but the middle class American has a television set in every room, a car that's three times the size of what his father was driving way back when, and the various cheap goods from China that he buys at Wal-Mart that nobody could possess back in the 1950s.

Mr. KRUGMAN: Well, you know, to the extent, we have numbers. They don't say that we're a wildly better off. Particularly, if you'd think about someone trying to live the way people did in 1973 with a single male breadwinner, it turns out that actually the purchasing power of that single male breadwinner is lower than it was in 1973. But also, there are things - yeah, you can get a TV set, you can get a digital video recorder. On the other hand, you're much more likely to be without health insurance now.

SIEGEL: Hmm.

Mr. KRUGMAN: So in some crucial ways, things have not made progress. And above all, we haven't had the kind of progress we should have had. People aren't nearly as much better off as they would be if the gains from economic growth had been broadly distributed.

SIEGEL: The point that you make here is that the inequality that we now experience is the direct intended result of the program that Republicans brought to government, really starting with Ronald Reagan's election in 1980, but then very much confirmed by developments in the '90s and in this decade.

Mr. KRUGMAN: Yeah. Now, you don't want to say, you know, that there were no deep underlying global (unintelligible), as we say, forces that also push for inequality. But the fact of the matter is that since the 1970s, the conservative movement that took over the Republican Party has systematically set out as far they can to dismantle all the institutions that were created by FDR and the New Deal to make this a more equal society. They range from unions to progressive taxation to - the minimum wage was allowed to drop to almost nothing. And they tried to dismantle Social Security, didn't can't get away with that. But it's a systematic assault on all of the equalizing institutions that created the America you and I grew up in.

SIEGEL: Hmm. To write a book called "The Conscience of a Liberal" and to make the case that you do to try to address the gap in wealth, you have to address a key question, which is how is it that people will, in very large numbers, vote for policies that are against their own economic self-interest? In one argument, there is we're really not only voting about our economic self- interest, there are lots of things we vote about and sometimes they may be in conflict within this.

Mr. KRUGMAN: Yeah, that's true. And so I sat down to find out what it was that was motivating people. And what comes out of that is actually kind of startling. There are all of these things we talk about national security, values, as people said, I used to say, that Bush ran in 2004 on a platform defeating gay, married terrorists. But if you actually ask what is the crucial thing that has motivated people to vote for politicians who are, in reality, favoring interests of a narrow economic elite over everybody else, the answer is race. You can sum up the political history of the United States when almost frightening degree by five words. Southern whites started voting Republican, some Northern whites as well. And race is really at the heart of what happened to American politics, and of why we're so different from other Western countries.

SIEGEL: The title of your book rings to mind the 1960 book by Barry Goldwater, "The Conscience of a Conservative," which, as you recount, is really - Goldwater is the beginning of movement conservatives based on political failure, but he inspires a great many young people to work for Ronald Reagan not too many years later.

Mr. KRUGMAN: Right.

SIEGEL: Is there space here for movement liberalism? I mean, do you feel it around you and do you see people getting active in the way that Republicans have supported movement conservatives?

Mr. KRUGMAN: Oh, very much so. I mean the preferred word is progressive rather than liberal.

SIEGEL: Mm-hmm.

Mr. KRUGMAN: And the way I parse that is liberal is a philosophy. Progressive is being part of the political action. And there is a progressive movement in the United States that really wasn't there 10 years ago. And it's quite distinct. It's quite strong. I can see it being a pointy-headed intellectual myself, I can see it in the world of intellectuals and think tanks that there just is a cohesion, a sense of shared values people working together that wasn't there. Politically, you can really see it. Look, one of the things people like myself always obsess about is how did the Clinton years failed to accomplish so much, how did it fall so far short of what we hope would happen. And part of the answer was that there wasn't a movement, there wasn't a real set of people defining what it was we were trying to do. And now, there is.

SIEGEL: Well, Paul Krugman, thank you very much for talking with us.

Mr. KRUGMAN: Well, thank you.

SIEGEL: Paul Krugman is a columnist for the New York Times. His latest book is called "The Conscience of a Liberal." And you can read more about his belief in the need for a new New Deal at our Web site, npr.org.

Originally broadcast, 10.9.07