00:00Paul Krugman, welcome to Euronews. Thank you for sitting down with us.
00:03So one of the main drivers of the recent social unrest across Europe is the housing costs that have soared
00:12since 2010.
00:14Yet it was only this past September that the European Commission put forward the legislative proposal for affordable property.
00:21Does acting so late and with no immediate emergency buffers mean that the economic approach somehow and the political leadership
00:30here are falling short?
00:32Well, probably. Although, you know, this is not a uniquely European problem.
00:37It's equally severe in large parts of the United States. It's a problem in Asia as well.
00:46The odd thing is the economics is easy. Just build more housing, just remove restrictions.
00:50And in the places where it has been done, it very quickly leads to a substantial fall in housing costs.
00:56But critics hold that this plan fails to limit rent spikes in the short term while waiting for supply to
01:03catch up.
01:04If second, those so-called second-generation rent stabilization models, which have an expiration date, protect tenants and preserve supply
01:15-side incentives by exempting new builds,
01:17should they be part of the solution? Not a magic fix, but at least part of the solution?
01:22I think that's the right idea. In fact, New York City, which is home, is doing exactly that.
01:28It's trying, I mean, the mayor, who is very much, by the way, a man of the left, as we
01:33say in Europe, is trying to stabilize rents for existing renters,
01:39but allow incentives and allow more construction. So sure, I'm not a purist here.
01:45So we can have a both-hand approach here.
01:47Yeah, it has to be dealt with because this is an impossible situation.
01:50Let's zoom out now and look at the broader economic picture.
01:54So with France facing mounting pressure over its public, are we seeing a return to the austerity policies?
02:02If France was on a credible path towards fiscal sustainability, they would not have to be doing short-term austerity.
02:11And in France, actually, it's a relatively simple thing.
02:14It's mostly the retirement age is just unreasonably low.
02:18I mean, and it's not a question of left versus right.
02:21I'm very concerned that France could be having a Portugal-style crisis.
02:28It's all the ingredients are there.
02:31It's catastrophic.
02:32It's such a big economy.
02:34If France has a euro crisis, then it can bring the whole euro system down.
02:40Trap between American tariffs and Chinese overcapacity.
02:44Is Europe really at risk of deindustrialization?
02:47Europe is at risk of deindustrialization to some extent.
02:53The risk is that by the time the European auto industry recovers from the mistakes it made in the past,
03:01it'll be too late because the whole industrial ecosystem will be gone.
03:05So now is a time for, unfortunately, some temporary protectionism.
03:09So now, let's talk about this.
03:11Obrigado.
