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In July 2002, with the nation once again facing deficits as far as the eye could see, he turned it back on.

There's much more to recent American history than the way the federal government declared victory in its long struggle against deficits, only to see the red ink quickly return. But as the budget went, so went many other indicators of our national well-being. In the early 1990s we were a depressed nation, economically, socially, and politically: a best-selling book of the era was titled America: What Went Wrong. By the end of the decade we had, it seemed, pulled ourselves together. The economy was booming, jobs were plentiful, and millions of people were getting rich. Budget deficits had given way to record surpluses. The long crime wave that began in the 1960s came to an end; major cities were suddenly, amazingly, safer than they had been for many decades. The future seemed almost incredibly bright.

Then the good times stopped rolling. By 2003, the fabric of our economy—and, perhaps, of our political system and our society—seemed once again to be unraveling. The nation was gripped by anxiety, with polls showing a majority of the public feeling that the country was headed in the wrong direction.

This book is, first of all, a chronicle of the years when it all went wrong, again—when the heady optimism of the late 1990s gave way to renewed gloom. It's also an attempt to explain the how and why: how it was possible for a country with so much going for it to go downhill so fast, and why our leaders made such bad decisions. For this is, in large part, a story about leadership— incredibly bad leadership, in the private sector and in the corridors of power. And yes, it is in particular an indictment of George W. Bush. Helen Thomas, the veteran White House correspondent, has called Mr. Bush "the worst president in all of American history." I'm not sure about that—he has some stiff competition. But the really terrible presidents of the past led a nation in which presidential incompetence and malfeasance mattered far less either to the nation or to the world than it does today.

Most of this book consists of columns that I wrote for The New York Times between January 2000 and January 2003. I hope that readers will find that the sum is more than the whole of its parts—that taken together these columns tell a coherent story. I'll talk shortly about how I came to write those columns. But first, let's recall the background.



The dreary years

During the late 1990s, as everything seemed to be going right— as jobs proliferated, stocks soared, budgets moved into surplus, and even the crime rate plunged—the dreary mood of the decade's early years faded from memory. By 2000, few people remembered the national funk that prevailed in 1992. Yet that funk is essential background to what came later.

If you are one of those people who thinks that national greatness is defined by military success (and such people are running the country right now), the nation's foul mood in 1992 may seem puzzling. Militarily, America was on top of the world. Communism had collapsed. A war in the Persian Gulf that many had feared would become another Vietnam turned instead into a spectacular demonstration of American military prowess. We had already become what we remain today, the world's one and only superpower.

But glory doesn't pay the bills. A tag line of the time—drawing attention to the contrast between American stagnation and the seemingly relentless rise of Japan—said, "The Cold War is over. Japan won." Whether or not you bought the thesis that America was the victim of unfair Japanese competition (it wasn't), it was a time of national disillusionment.

Though Japan wasn't the villain some people imagined—and it was soon to experience economic setbacks that are a cautionary tale for all of us—America's economic woes were real enough. True, by 1992 statisticians had declared the recession of 1990-91 over. But in 1991-92 it was still a "jobless recovery"— that is, a period in which GDP grows but unemployment continues to rise. As far as ordinary Americans were concerned, it was a continuing recession. Nor were things all that great for workers who managed to keep their jobs: the real wage of the typical worker had been stagnant or falling for almost 20 years. Traditional industries like autos and steel, in which ordinary workers could earn good wages, seemed to be in steady decline. Poverty was rising, not falling—more than 20 percent of children were living below the poverty line, the highest percentage since 1964.

From The Great Unraveling: Losing Our Way in the New Century by Paul Krugman. Copyright Paul Krugman. All rights reserved. No part of this book may be reproduced without written permission from the publisher.