SYNOPSIS: Krugman and Lou Dobbs discuss whether airport security should be the government's responsibility

DOBBS: A bill designed to strengthen airport security is tonight stalled in Congress. The argument centers around airport screeners and whether they should be private employees or whether they should work for the government. "New York Times" columnist Paul Krugman prefers the latter idea. Paul, good to have you with us.

PAUL KRUGMAN, "THE NEW YORK TIMES": Good to be on.

DOBBS: This is an extraordinarily story that Argenbright, held up by the Attorney General for its violations since September 11. I mean, this is incredible.

KRUGMAN: Well, I think what it demonstrates, for those of us who think this would be federalized, it demonstrates just how screwed up the incentives are. If you're going to make what is really a national security function, something like what the Coast Guard should be policing, if you're going to make a private enterprise, the incentives are all to, you know, pinch the pennies. And so strong are those incentives, they're doing it even now.

DOBBS: The -- in fairness as we look at experiences across the globe in Europe, most screeners are by comparison to the firm -- the employees of firms such as Argenbright, are far better paid, far better trained. Is it really an issue of public versus private employees or the kind commitment, both financial and in terms of training that is given to the importance of these airport screeners?

KRUGMAN: Well, I think that the point is that as long as it's really left in the hands of the airlines, which is the way we do it, the competitive pressure on the airlines is to keep the cost to a minimum. Now there are some private screeners in other countries, but by and large, they aren't really private. They're what the Brits call quangos, the airport authority which is really almost part of the public sector. It may be a private corporation legally, but it acts like the public sector. And we're the ones who really do it, you know, as for profit screening, in effect.

DOBBS: Well, for profit, but certainly with these violations by Argenbright, do you think this bolsters the idea and do you think that that bill in Congress will be shaken loose as a result of developments?

KRUGMAN: I've been a little startled. I would've thought that this stuff would breeze through. You know, in Fairness, it's not clear that better screeners would have stopped September 11, but it just shows how deep are the ideological divisions in Congress, that in fact, this still doesn't want to happen.

DOBBS: I want to tell our viewers here, Paul, if I may interrupt just for a moment. We have just received word from Pakistan that the attacks over Kabul have resumed. That is, the U.S. military is once again, striking targets in Afghanistan, attacking the targets of the al Qaeda terrorist network and the Taliban. Those targets are being hit just within the last few moments. And we just wanted to bring you up-to-date on that. And as we learn more, of course, we'll bringing that to you. Paul, I want to return, if I may, to your point on airport security as an issue of private and public. Is it your judgment that those who are posing federalized airport security at this point, have simply lost the basis for any argument going forward?

KRUGMAN: Well, you know, I'm biased. But I can't see it. I can't see how you can possibly argue that this is not a federal responsibility.

DOBBS: Especially with National Guard troops now in the airports.

KRUGMAN: That's right. I was in an airport recently. Yes, it's extraordinarily. But you know, remember that we had a political agenda. And it's still going on.

DOBBS: It's quite a different world. Whether one is biased as you suggest, the political viewpoint or an ideological viewpoint, it's quite a different world after September 11.

KRUGMAN: Yes and no. I mean, in a lot of ways, it's still the same world it was. You know, the markets are roughly back where they were before. Consumer confidence is more or less back. In some ways, what's interesting, is how much.

DOBBS: Right, I was speaking, Paul, in terms of the issues.

KRUGMAN: Oh, that...

DOBBS: Of national security, personal safety and public safety.

KRUGMAN: No, that's utterly different. We were probably in this world before September 11. We just didn't know it.

DOBBS: Paul Krugman, good to have you with us.

KRUGMAN: Thanks.

DOBBS: Thank you.

As we've reported to you, a fourth confirmed case of exposure to anthrax, this time in New York City.

Originally broadcast, 10.12.01