The Economics Show The Wolf-Krugman Exchange: America vs the world
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Dec 10, 2025 
Paul Krugman, a Nobel laureate economist and Substack writer, joins FT's Martin Wolf to dissect the implications of the recent U.S. national security strategy. They discuss how the U.S. criticized Europe while downplaying threats from Russia, pushing 'patriotic' far-right politics. Krugman questions whether the U.S. truly prioritizes Latin America and explores whether Europe can achieve military and industrial independence. They also tackle the competitive landscape with China and how the U.S. inadvertently strengthens its rival.
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U.S. Drops Promotion Of Liberal Values
- The new US national security strategy actively opposes promoting liberal democratic values abroad instead of just dropping them.
- Paul Krugman warns the document goes beyond omission to opposing Europe's political arrangements and immigration policies.
China Rivalry Is Deprioritized
- The NSS reframes US strategic priorities toward the Western Hemisphere and de-emphasizes ideological competition with China.
- Martin Wolf says it implies the US will largely hand economic influence outside the Americas to China.
Europe Can Afford Strategic Autonomy
- Europe is less economically dependent on the US than commonly thought and can pursue strategic autonomy.
- Martin Wolf argues Europe has resources and capability to be self-sufficient if it chooses to mobilize them.
