The Conscience of a Liberal: Reclaiming America from the Right
By Paul Krugman
Allen Lane £20, 304 pages
FT bookshop price: £16

Whoever coined the joke that an economist was someone who was good with numbers but lacked the personality to become an accountant had obviously never encountered Paul Krugman. The Princeton economist’s often irascible polemics earned him fame beyond his profession long before he took up his bi-weekly column for The New York Times.

Some of the more puritanical members of Krugman’s profession view him as an apostate, since he clearly spends as much time writing for the layman as he does for fellow academics. Krugman has also been criticised for jumbling up his brilliant skills as an economist with his more partisan instincts as a liberal and irate citizen.

One recent example is Krugman’s criticisms of Barack Obama, who stands accused both of misunderstanding healthcare economics (Obama’s alleged error was to fail to grasp the need to make health insurance compulsory), and for peddling bipartisanship.

Both these qualities – the incisive scholar and angry partisan – are on display in Krugman’s latest book, The Conscience of a Liberal. The title deliberately echoes Barry Goldwater’s The Conscience of a Conservative, which, in spite of being written almost half a century ago, remains a bible of the American right.

Krugman’s thesis is characteristically bold. A combination of Franklin Roosevelt and the second world war rescued America from the Gatsbyian disparities of the Gilded Age to create the more progressive society of postwar America. But the golden era of the Great Compression has been replaced since the 1970s by a Great Divergence, in which income inequality has returned to the level last seen in the pre-Depression era.

In contrast to most economists, Krugman attributes the sharp rise in income inequality – and the corresponding stagnation in median wages – to non-economic factors, such as the destruction of trade union power and the assault by Ronald Reagan and his heirs on fiscal redistribution. It is the politically motivated weakening of US public institutions rather than the effects of technology or globalisation that has rendered America what it is today, Krugman argues.

It follows that the cure is political and can only be brought about, he argues, through Democratic control of the White House and both houses of Congress: “Achieving that kind of preponderance will require leadership that makes opponents of the progressive agenda pay a price for their obstructionism – leadership that, like FDR, welcomes the hatred of the interest groups trying to prevent us from making our society better.’’

There will be much in this forcefully argued book for Krugman’s critics to react to – not least by those who see bipartisanship as an end in itself rather than as a means to an end. But there is a case to be made for partisanship and Krugman does so eloquently.

For example, a clear majority of America’s voters, including Republicans, desire universal and affordable healthcare. Splitting the difference with the insurance and drug lobbies, both of which derive outsized profits from America’s woefully inefficient status quo, would compromise that outcome.

Agreeing only to partial reform of America’s healthcare system may be an acceptable price to pay to achieve bipartisanship. But it is not self-evident why the second, an abstract political goal, should take priority over the first, a bread-and- butter issue for most Americans and an increasingly important drag on US competitiveness.

What is clear is that the gains made by “movement conservatism’’ over the past generation – the virtual abolition of inheritance taxes, the starvation of public research funding and the weakening of labour’s bargaining power – have been achieved not by building consensus but through tactics that owe as much to Leninism as to public persuasion.

Krugman’s understanding of how America’s political system works is less convincing than the policies for which he argues. The US presidency is a much weaker institution than many suppose and it may take a Democrat with the communications skills of a Ronald Reagan – someone like Obama perhaps – to achieve anything like what he hopes to see.

But the case Krugman makes for a revitalisation of US public institutions is worth reading. That it is also partisan is no vice.

Edward Luce is the FT’s Washington bureau chief