Confessions of a New York Times Liberal

From his perch on the New York Times op-ed page, Paul Krugman, an eminent Princeton economist and sharp-elbowed polemicist, has expanded his portfolio from fiscal policy to foreign policy and electoral politics. In the process, he has become one of the most widely read Bush bashers.

In his new book, "The Conscience of a Liberal" (Norton), Krugman delves into American history to identify how and why income inequality has expanded so rapidly in the past 30 years. While nodding to the usual suspects—free trade, the decline of unions—the economist looks first and foremost to politics. The real culprit: a Republican Party, dominated by government-loathing "movement conservatives" who have used race-based electoral strategies to build a new Southern-based majority.

Today, Krugman, who has been extremely grumpy for much of this decade, is guardedly optimistic that the shifting poll numbers and sour national mood could translate into a Democratic resurgence. The issue to watch? Health care.

NEWSWEEK's Dan Gross talked to Krugman about his recently released book, the new Gilded Age and how Bush bashing can boost a journalist's career. Excerpts:

NEWSWEEK: You say we're in a new Gilded Age. What do you mean?
Paul Krugman: We are in a Second Gilded Age. The first continued right up until the Depression. Pretax and pre-transfer-income inequality in 2005 was exactly the same as it was in the 1920s. And a lot of [the hallmarks] are the same: the giant private philanthropies (which  mitigates economic inequality by giving away fortunes), the exhibitionist display of wealth and, of course, the malefactors of great wealth insisting that they're doing great things for us all.

You look back fondly on 1950s, the period known as the Great Compression, in which economic gains were more broadly shared. But at the time, many institutions were segregated and women were excluded from many professions. Does economic progress trump social progress?
If I had to choose between the America of 1995 and the America of 2007, I'd still choose the America of 2007. But the progress we've made on diminishing racism and diminishing sexism is marred by the fact that, along the way, we lost the middle-class society. And I don't think we had to do that.