# Wall Street sees political risk in Washington more clearly than tech

Markdown copy of https://realalpha.app/s/wall-street-sees-political-risk-in-washington-more-clearly/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Paul Krugman](https://realalpha.app/people/paul-krugman/) · Paul Krugman is a Nobel Prize-winning economist and distinguished professor of economics at CUNY.
- Host: [Ed Elson](https://realalpha.app/people/ed-elson/)
- Host: [Scott Galloway](https://realalpha.app/people/scott-galloway/)
- Show: Prof G Markets
- Episode: [The Economic Risks Keeping Paul Krugman Up at Night | Prof G Markets](https://realalpha.app/v/DQFkezP6qSg/), Dec 5, 2025
- Moment: 29:51 to 34:48 of the episode (5 min), playing on https://realalpha.app/s/wall-street-sees-political-risk-in-washington-more-clearly/; the episode from there: https://realalpha.app/v/DQFkezP6qSg/?t=1791

## Quote

> “Silicon Valley used to think that it was a libertarian paradise and **didn't need government**”
> — [Paul Krugman](https://realalpha.app/people/paul-krugman/) at [33:10](https://realalpha.app/v/DQFkezP6qSg/?t=1990) · Prof G Markets

## Takeaways

1. Krugman says the White House lacks a clear AI or economic policy.
2. He describes tech companies' access to the administration as crony capitalism.
3. Wall Street's longer government experience makes it more alert to political risk.

## About this segment

Paul Krugman says Silicon Valley's new White House ties are crony capitalism, not coherent AI policy. He argues Wall Street is more alert to political risks because it has longer experience with government.

From “The Economic Risks Keeping Paul Krugman Up at Night | Prof G Markets”, Dec 5, 2025. [Watch the full episode](https://realalpha.app/v/DQFkezP6qSg/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[30:04](https://realalpha.app/v/DQFkezP6qSg/?t=1804) When you talk about the politics of AI, when you look at the way that this administration has been handling AI, I'm really thinking about, you know, these dinners where you've got Zuckerberg and Tim Cook showing up to the White House offering gifts. It's, I mean, it's, you said out there that these campaign decisions, it's not just in the hands of a few companies. It's really in the hands of a very, very small set of people.

[30:30](https://realalpha.app/v/DQFkezP6qSg/?t=1830) What do you make of how the White House is handling AI, handling AI policy right now? How do you think it will shake out politically? And where does this land in the economic story of America? Well, it's not clear to me that we really have an AI policy. It's actually, in general, it's not clear to me that we have an economic policy at all. I mean, one of the things that is really, you know, for those of us who've spent decades interacting with the policy wall community, what's really remarkable about this administration is there's nobody to talk to.

[31:07](https://realalpha.app/v/DQFkezP6qSg/?t=1867) There's nobody in there. You ask, you know, who in the White House is thinking hard about AI and how it's going to affect the economy? Yes, there's nobody. There just is nothing there. And what's happening, this is more, the dinners is these are all basically big corporate types, but especially, it turns out, the tech sector, although there are some others, who are trying to butter up the White House and look for, you know, so this isn't really policy, it's crony capitalism.

[31:41](https://realalpha.app/v/DQFkezP6qSg/?t=1901) And, you know, they're doing what they have to do, or they think they have to do. Although, actually, I find it interesting that Wall Street, which is another source, you know, there's another big pile of money and influential people over there, they've been actually much less visible in all of this. Not zero, but much less. And I thought it was really interesting that Jamie Dimon was asked why, you know, we have the people who are helping the.

[32:08](https://realalpha.app/v/DQFkezP6qSg/?t=1928) destruction of the White House and its replacement with a grotesque ballroom. Jamie Dimon was asked why JPMorgan Chase isn't part of it, and he said, well, we need to think about what future DOJs will do, which was an amazing thing actually to say, although couched in deliberately bland language, but he basically thinks that a lot of people, there's a real possibility that a lot of people involved in policymaking right now are going to end up going to jail so um it's uh it's it's a very strange situation but there there is no policy i mean if you ask you know who's who's the point man on actual hard thinking about this um well i mean maybe david sacks part-time employee yeah the policy and the personal interest are so enmeshed that it's you know it's not really policy as we knew it why do you think we've seen this divide

[32:59](https://realalpha.app/v/DQFkezP6qSg/?t=1979) between Wall Street and Silicon Valley. It's an interesting point that you make. Silicon Valley has really grown its ties to this administration in a way that, you're right, it seems Wall Street hasn't done, or at least not in the same way, or not as openly and outwardly. Why do you think that is? The Wall Street people in time in particular, but in general, they've been dealing with government for a long time.

[33:23](https://realalpha.app/v/DQFkezP6qSg/?t=2003) I mean, Silicon Valley used to think that it was a libertarian paradise and didn't need government, and now all of a sudden they're throwing cash at the first family. But they're not sophisticated in this stuff, and they probably don't have much sense of where the risks lie, whereas Wall Street does. And there's also a personal thing. I mean, one of the things I find interesting about this whole tech story right now is that it is being led in the large—I'm going to get in trouble for saying this— but it's being led in the large part by billionaires whose best days are behind them.

[34:04](https://realalpha.app/v/DQFkezP6qSg/?t=2044) Ten years ago, everybody loved Silicon Valley. Everybody loved tech. We thought it was a tool of liberation. We even had biopics made about Mark Zuckerberg. And now everybody thinks of them as greedy monopolists. The word of the year, I guess, two years ago was Cory Doctorow's shitification. So part of what's driving all this stuff is I think these are people who are sort of looking for something really big.

[34:35](https://realalpha.app/v/DQFkezP6qSg/?t=2075) to bring back the glory days of 2015 or so.