Scott Sumner  

The year of thinking dangerously

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Donald Trump seems to have the ability to get otherwise sensible people to adopt some of the most bizarre positions imaginable. Here's Jonah Goldberg, describing two recent victims of Trumpism:


Consider Larry Kudlow and Stephen Moore. In August, the two legendarily libertarian-minded economists attacked Trump, focusing on what they called Trump's "Fortress America platform." His trade policies threaten the global economic order, they warned. "We can't help wondering whether the recent panic in world financial markets is in part a result of the Trump assault on free trade," they mused. As for Trump's immigration policies, they could "hardly be further from the Reagan vision of America as a 'shining city on a hill.'"

Months later, as Trump rose in the polls, Kudlow and Moore joined the ranks of Trump's biggest boosters -- and not because Trump changed his views. On the contrary, Kudlow has moved markedly in Trump's direction. He now argues that the borders must be sealed and all visas canceled. He also thinks we have to crack down on China.


Fortunately, not all conservatives have abandoned their principles:

The irony is that reform conservatives almost uniformly oppose Trump's populist deformation of conservatism, and the former purists are now calling for unity behind the Mother of all Capitulations, rationalized by Trump's promise to win, conservatism be damned.
And it's not just a phenomenon of the right; Trump's ideas are also making powerful headway among progressive intellectuals. This is from a recent blog post by the author of "Pop Internationalism":
So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don't know exactly what form it's taking.
Now in fairness, Paul Krugman goes on to say that he opposes the idea of tearing up existing trade agreements. But once you've argued that free trade is a scam, how can you expect the average voter to distinguish between not adopting more agreements, and tearing up existing agreements? I doubt that "Joe Sixpack" loses sleep over hurting the feelings of foreign diplomats. He's probably more drawn to politicians that have the courage of their convictions--is trade good for America, or not?

Opposition to free trade doesn't even make sense from a nationalistic perspective. America gains from trade. But what I find interesting is the number of progressives who seem to be turning against free trade, even though the only even halfway plausible argument against it is nationalistic. I don't think even Trump or Sanders would claim it makes Mexicans and Chinese worse off. So has the "liberal" wing of the American economics profession now become nationalistic? Is a policy that clearly benefits the world as a whole, and may or may not benefit America, now considered a "scam"? It would seem so. Do America's progressives even care that not extending free trade to Vietnam will hurt the Vietnamese poor---probably 100 times more than any (doubtful) tiny benefit from protectionism to America? Haven't we done enough to Vietnam---are we now going to also turn down the TPP?

Add in the fact that Keynesians continue to talk about fiscal stimulus even as interest rates rise above zero (and hence there is no case for it), and Democrats want a $15/hour minimum wage (which risks high unemployment), and the GOP seems to want to kick millions of highly productive workers out of the country (which would lead to huge price increases for fruits and vegetables), and I think it's fair to say that the intellectual climate today is the worst in my lifetime, and it seems to deteriorate almost daily.

Classical liberalism may be dying out in many quarters, but you can count on Econlog to keep the flame alive during the long dark night ahead.

PS. This post by David Henderson challenges one of the lines of argument used by Krugman in reaching his conclusion that free trade is a scam.

HT: TravisV.


Comments and Sharing


CATEGORIES: International Trade




COMMENTS (36 to date)
kingstu writes:

In the minds of the average American voter, the aggregate gains from trade are not as great as the aggregate losses of special interest groups. How do you make the case to voters that the $1BN saved in steel costs (spread out over 325MM Americans) is greater than the $100MM lost from the 10,000 steel workers who got laid off due to less expensive imported Chinese steel? For some reason, making a logical case for free trade doesn't work as well as "showing voters you care about them".

Paul Krugman did not say that free trade is a scam. He said 'the elite case for free trade" is a scam. Specifically, he said that Romney's claim that it would lead to depression was false. Krugman doesn't support Trumps calls for protectionism as you seem to suggest.

I'm not sure why you blurred these points like you did.

Scott Sumner writes:

kingstu, You said:

"In the minds of the average American voter, the aggregate gains from trade are not as great as the aggregate losses of special interest groups."

Your comment is off topic, but I'll answer anyway. Your claim that voters oppose trade is not clear to me, for several reasons.

1. Some polls suggest the public supports trade, other polls don't.

2. Most people I talk to that oppose trade think it hurts the US economy in aggregate, not just one sector.

Don't forget that in both parties (Dem and GOP) the candidates more in favor of trade are getting more votes in the primaries than those opposed (Sanders and Trump.)

maledicti writes:

The biases that drive people toward favoring employment (in the purely nominal sense of having a job contract) as an end itself are strong, along with the perception of international trade as a war zone. Most economists are marginalists, yet most laymen seem to buy in to a labor theory of value.

But, there does appear to be a political strategy for a counterbalance to the neomercantilism of Friedrich List, Nicholas Kaldor and Donald Trump. That is to emphasize the interest groups who benefit from protection. Shift the debate from the benevolent state levying tariffs to save jobs to the corrupt state helping Big Business pocket monopoly profits from tariffs.

The populist tide can be just as forceful from either direction. Unfortunately you have a credibility problem in that such a provocation will quickly get you labeled a part of the "Kochtopus" or whatever. Anti-market bias in action.

In addition, "Cui bono?" analysis is considered to be juvenile and "conspiratorial" by Very Serious People.

(Ironically enough, a lot of arguments made by heterodox economists end up implicitly defeating the case for protection. For instance, if you assert that firms price according to markup and always exhibit monopolistic tendencies by contracting output rather than price in the face of a demand shock, you're admitting that a tariff can in fact reduce employment by incentivizing production cuts and layoffs while pocketing the tariff gain from reduction in competition and contestability.)

RobertD writes:
Classical liberalism may be dying out in many quarters, but you can count on Econlog to keep the flame alive during the long dark night ahead.

For some reason that reminded me of Wyatt's Torch from Atlas Shrugged, and that wasn't a comforting thought.

Jesse C writes:

Scott Sumner says:

Don't forget that in both parties (Dem and GOP) the candidates more in favor of trade are getting more votes in the primaries than those opposed (Sanders and Trump.)

No candidate holds the banner of free trade as high as Trump and Sanders hold the protectionist banner, because their constituency is not a mirror image of Trump/Sanders supporters on the issue of free trade.

It's easy to imagine a Cruz/Clinton/etc supporter who is not passionately against about free trade, yet they don't quite believe in its merits. It's hard to imagine a Sanders/Trump supporter that does not passionately believe free trade is bad. (Sure, some Trump supporters fashion themselves as "pro free market", but they don't believe it works across borders.)

If you randomly sampled 10 likely voters and explain comparative advantage (for example), I bet you'll find that none of them will even understand how it even relates to free trade.

robert writes:

With regard to trade, my impression of what Trump has actually stated is that he would like to negotiate to open up the Chinese market so that they reduce their trade barriers. The way he would open up their markets is to threaten to close our market. If they reduce their trade restrictions, aren’t we helping both the China and the U.S.? It seems that there are those that cannot differentiate between the tactical approach to the strategic outcome. Taking a position in order to get concessions is a standard mechanism in a market economy. I guess another issue with free trade in the mind of a factory worker is similar to the issue with monopolists charging below market prices. Once the infrastructure is gone, it may not be feasible to rebuild it once the monopolist has driven their competitors out of business. I guess that would be illegal, but legal and illegal are very different once one is outside of their own nation state. There are other pressures such as automation; however, the near zero interest rates have encouraged that investment in automation as well as the increased costs on legal labor.

As far as immigration, the issue comes down to voting rights dilution. What is the value of a common share right before and right after 10% of the outstanding shares have been given to a third party? Is it corrupt for politicians to not listen to their customers but instead try to change the demographics of the population to their own benefit?

On aggregate, GDP will increase; however, is the effect of per capita GDP clear? Isn’t the per capita GDP the correct measure, similar to using the adjusted R squared in regression analysis?

With respect to productive workers, have the costs been accurately measured, such public schools, housing, medical, enforcement, etc.? It was funny, I heard an economist on the radio say that the U.S. needs the immigrant labor because of the low labor participation rate.

My impression of this election cycle is that people are frustrated by politicians that spend the public’s money on project that make them appear virtuous, increase their social status, feel good about themselves, increase their power and influence through money given back to them by the people they benefit with public funds, while getting rich by investing in companies and projects that are directly influenced by their power and influence. I guess the factory workers are thinking at least let me try to hire someone who will negotiate on my behalf instead of some amorphous global benefit that is giving the politicians the opportunities to become exceedingly wealthy to the tune of $200 million while selling Uranium miles to the Russian government. Just a thought. Frankly, I’m just not voting since any of them will be better than Commodus.

khodge writes:

Bob Murphy speculates that Krugman is positioning himself for an appointment with a Democrat president. It would make just as much sense for economists to position themselves in a Trump presidency (or even advisers in the Trump candidacy).

Jeff writes:

I think what many people want is to be popular. If that means changing their supposedly deeply-held beliefs then so be it. You might think we all grew out of this after high school, but it doesn't seem like it.

Larry Kudlow is not an economist. Unless he's actually lying on his show, he apparently thinks his guests can predict stock prices. Even the "technical" analysts! Now you can be a fine human being without understanding the EMH, but you can't be an economist. So why are you surprised he doesn't really understand comparative advantage?

And Krugman, though he understands economics, has shown himself more than willing to put that understanding aside in almost every column to make partisan arguments. I don't know why, at this point, you expect anything better from him.

Dave Smith writes:

Krugman states that the "conventional" case for free trade relied on a redistributionist government.

Really? I don't have a copy of his textbook, but is that what it teaches?

Andrew_FL writes:
The irony is that reform conservatives almost uniformly oppose Trump's populist deformation of conservatism, and the former purists are now calling for unity behind the Mother of all Capitulations, rationalized by Trump's promise to win, conservatism be damned.

Totally false self congratulatory self back patting by the "reformicons"

A) There are a number of "purists" opposed to Trump, and it is the purists who seem to actually be serious about it, backing the only candidate-who is the embodiment of purism-who has even a slim chance of beating Trump at this point. It was the purists who started #NeverTrump and it was the "reformicons" who hi-jacked it into defacto #NeverCruz by making it all about getting Rubio through a brokered convention.

B) Trump's base is not made up of purist conservatives but exactly the kind of people "reformicons" have been endlessly blathering on about the need to attract to the Republican party. The Trump is a menace of their own making.

Mark writes:

"In the minds of the average American voter"
If this election is proving anything, it's CHurchill's axiom that 'the best argument against democracy is a five minute conversation with the average voter.'

Scott Sumner writes:

Erik, You said:

"Krugman doesn't support Trumps calls for protectionism as you seem to suggest."

I specifically said he did not agree with the call for tearing up old trade agreements. My point was that calling the arguments for free trade a scam is playing into the hands of those who oppose free trade. So does citing the claims of trade skeptics with approval, and dismissing the defenses of free trade as fraudulent. I'd suggest you read his post in its entirety, Krugman is clearly implying that trade may hurt the US.

Also note that I provided an exact quote of what he said, so no one can claim I misrepresented his views.

Here's the paragraph that came right before the one I quoted:

"Furthermore, as Mark Kleiman sagely observes, the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins — but we now have an ideology utterly opposed to such redistribution in full control of one party, and with blocking power against anything but a minor move in that direction by the other."

I think most of Krugman's readers would interpret that as being hostile to free trade.

Of course Krugman is much more sophisticated than Trump,and more careful with his language, but that doesn't mean he isn't playing right into the hands of the protectionists.

maledicti, Good points.

Robert, I haven't read that book.

Jesse, Polls on free trade are mixed, and as with other policy polls they are pretty useless. It's all in the framing. I can write a poll question to get whatever result I want.

Robert, You said:

"I guess another issue with free trade in the mind of a factory worker is similar to the issue with monopolists charging below market prices. Once the infrastructure is gone, it may not be feasible to rebuild it once the monopolist has driven their competitors out of business."

This is the "predatory pricing" argument, which most economists don't take seriously. It certainly would not be possible in the sort of industries that China specializes in, which tend to be highly competitive.

I don't understand your point about immigration. US population growth is the slowest since the Great Depression. Even if too many people were a problem, why raise the issue now?

Trump has said he wants to put a 45% tariff on Chinese goods. I doubt that has anything to do with their closed market, otherwise the tariff would apply to all countries with closed markets. China actually imports lots of goods, so while they have trade barriers, they are far from the worst example.

Floccina writes:
So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don't know exactly what form it's taking.

I was shocked when I read the above. And this:

that is less than 5 percent of world GDP over a generation); and I think I’ve never assumed away the income distribution effects.

What is up with Krugman?

If my understanding is correct, there never were all that many Americans with those great high paid blue collar jobs and if they were not great jobs why save them? I think it is like people's feelings about farmers people just like to think that those high paid manufacturing jobs exist.

So again what is up with Krugman? It is alarming that he writes these things, or am I daft?

Charlie writes:

You are really biting down hard on Dani Rodrik's critique. He argued that economists accept arguments in the public sphere around free trade that they wouldn't accept in the class room. We are so afraid of giving any perceived support for anti-trade arguments that we cease being honest brokers. Of course, in the long run, that undermines the legitimacy of economics and economists role in policy discussions.

"My point was that calling the arguments for free trade a scam is playing into the hands of those who oppose free trade."

So support scammy arguments for free-trade? That makes economists the scammers.

"So does citing the claims of trade skeptics with approval, and dismissing the defenses of free trade as fraudulent."

Even if the claims are in fact truthful and the defenses are fraudulent. You aren't even arguing about the relative merits of the claims. You are arguing that Krugman isn't a sufficient free trade lobbyist. Is that our job as economists? To present the best free trade marketing campaign?

"I think most of Krugman's readers would interpret that as being hostile to free trade."

Even though it's entirely true? Even though as you observed about the Autor et al. paper, we have known for hundreds of years trade creates winners and losers and Kleiman points out that without redistribution, there is no guarantee that everyone is made better off? We should ignore or hide or obfuscate that truth to better act as free trade lobbyists?

I always thought Rodrik had created a little bit of a straw man, but I guess I was wrong.

Bedarz Iliaci writes:

The conventional (progressive) case for free trade is obviously a scam:

the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins

This is not the conservative case for free trade.
It is good that Krugman exposes the phony progressive argument for the free trade.

Rob in Brisbane, Aus writes:

Great posts over the last few days Scott.

It does seem like since 2009 the economic profession in the US has shifted towards nationalism and edged towards the luddites, which implicitly puts them in opposition to a number of fundamental economic theories (free trade, de-regulated labour market etc).

It's disappointing because the US economic profession at least kept the flame going for somewhat libertarian / free market ideals over the past few decades.

The UK and Europe economic professions have been nationalistic / mercantilist for quite some time and it is difficult not to get shouted down mid conversation if you come out in support of free trade. As they say, a red flag still flies above The London School of Economics.

Keep up the good fight.

Don Boudreaux writes:

I jump in here in support of Scott's interpretation of Krugman on trade. Erik Brynjolfsson's defense of Krugman fails, I believe, because it relies solely on one word - namely, Krugman's use of "elite." Here's the full context from Krugman's post:

Furthermore, as Mark Kleiman sagely observes, the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins — but we now have an ideology utterly opposed to such redistribution in full control of one party, and with blocking power against anything but a minor move in that direction by the other.

So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don’t know exactly what form it’s taking.

On every fair reading of the above, Krugman takes for granted - or implies - that the elite case for trade liberalization fails because of Uncle Sam's GOP-inspired unwillingness to redistribute income from trade's 'winners' to trade's 'losers.' Put differently, Krugman implies that the "elite" case for trade liberalization rests on the "conventional" case for trade liberalization - a case that Krugman says (without justification) "relies" on government's ability to redistribute income.

Krugman is nothing if not a clever writer. But in this instance his switch, in the above quotation, from the phrase "conventional case" to "elite case" does not protect him from being correctly and rightly criticized for misrepresenting economists' long-standing case for a policy of free trade (or trade liberalization) and for thereby being interpreted as being opposed to free trade when government's efforts at income redistribution are not to his liking.

In short, Krugman's use of the word "elite" in the second part of the quoted passage adds only verbal confusion rather than substance to his argument - an argument that quite clearly is meant to convey to his readers that the economic case for free trade falls apart absent sufficient government redistribution of income.

LukeWarmonTPP writes:

Scott - let me give you an argument on why TPP could hurt Vietnam. TPP is a huge milestone on intellectual property. (Which many libertarians now oppose).

So if you are a teenager in Vietnam pirating Metallica songs, perhaps you end up in jail because of TPP.

Are you buying it?

William Minshew writes:

If you want to understand Trump's rise, I highly recommend Scott Adams' blog.

Those you notice changing their opinions are the rule, not the exception. It's only just beginning.

Scott Sumner writes:

Charlie, You completely misunderstood my point. I'm claiming free trade is good. I say that in public, and I believe it in private. I've never run across the phenomenon described by Rodrik.

I'm claiming that Krugman is doing a lot of harm in his posts that cast doubt on the benefits from free trade, and in his opposition to TPP.

I'm claiming that Krugman is wrong in his claim that arguments being presented for free trade are scams. The arguments are basically correct, even if some of the details are wrong. In any area, including the policies that Krugman loves, some of the arguments used by some people will get the nuances wrong. But do you deny that protectionism makes countries poorer?

Why isn't Krugman attacking all the "scammy" arguments for fiscal stimulus, like the arguments that it works at positive interest rates?

I may be wrong, but there is nothing deceptive about my arguments. I'm telling you exactly what I believe.

His blogging style has always been two-faced, presenting one strong impression to average readers, while preserving his credibility within the profession by inserting a bit of fine print into the posts.

Luke, I think that's very unlikely, and the net effect on Vietnam is almost certainly highly beneficial. Do you disagree?

William, I agree that Trump is good at conning a certain type of person.

Charlie writes:

Don,

Not only is your reading is flat out wrong. How did you end up completely ignoring the paragraph before where Krugman defines "elite defense of globalization."

Directly from Krugman:

"But it’s also true that much of the elite defense of globalization is basically dishonest: false claims of inevitability, scare tactics (protectionism causes depressions!), vastly exaggerated claims for the benefits of trade liberalization and the costs of protection, hand-waving away the large distributional effects that are what standard models actually predict."

He also links to an elite, Romney, claiming protectionism causes depressions. Maybe that's a view you share with Romney, but I'm a market monetarist. He also provides a back of the envelope calculation of the gains of trade liberalization.

It seems to me you can argue 3 things:

1) Agree with Romney tariffs cause depressions
2) Argue elites don't exaggerate gains from trade
3) Argue economists don't hand wave away large distributional effects.

But I already found an example of 3. Here is Don Boudreaux:

"the conventional case for trade liberalization relies on the reality that, even in the short run, the gains from trade liberalization exceed the losses and, over the long run, trade liberalization improves the material well-being of nearly everyone"

Can you get more hand wavy than that?

Don Boudreaux writes:

Charlie:

My point, which I perhaps made with less clarity than I should have, is simply this: the case for a policy of free trade has never, ever had as a necessary condition the requirement that government redistribute income from 'winners' to 'losers.' But by saying (contrary to fact) that this case does have such redistribution as a necessary condition, Krugman misleadingly undermines the case for free trade.

My objection might also be stated this way: if one is to be skeptical of free trade because of its distributional effects, then one must be skeptical of far more than free trade. One must be skeptical of all economics change. One must be skeptical of all innovation. Of all changes in consumer tastes. Of economic competition itself.

Therefore, when economists defend free trade without diving into detailed discussion of its distributional effects - that is, by what I assume you would classify as "hand waving" - economists do nothing more than treat changes in trade patterns that cross political boundaries as being no different economically than any other changes in trade patterns.

One can - one should, at some level - keep an eye on the distributional effects of economic change. But there is no economic justification whatsoever for the man-in-the-street practice (which Krugman now slips into) of treating, either explicitly or implicitly, international trade as some unique or uniquely important source of economic change.

Jose Romeu Robazzi writes:

PK is very smart with words. He wrote:
"So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don't know exactly what form it's taking."

Replace "voters" with "progressives" or "progressive voters", it does not matter, progressives were never completely in favor of free trade. They believe in something else ...

Charlie writes:

"I'm claiming free trade is good. I say that in public, and I believe it in private. I've never run across the phenomenon described by Rodrik."

The argument by Rodrik isn't that economists believe different things in public vs. private. It's that economists will accept or use weak arguments in public, that they wouldn't accept in private.

"I'm claiming that Krugman is wrong in his claim that arguments being presented for free trade are scams."

You didn't even engage with his arguments. You argued his post wasn't sufficiently in favor of free trade. He ended up saying three sensible things.

1. Tariffs don't cause depressions
2. Gains from globalization are often exaggerated
3. Free trade advocate often ignore distributional consequences
4. Trade creates winners and losers, without redistribution, there is no guarantee trade makes everyone better off.

Those aren't shocking heterodox views.


"Why isn't Krugman attacking all the "scammy" arguments for fiscal stimulus, like the arguments that it works at positive interest rates?"

The old two wrongs make a right defense? Of course, he should do this. You've criticized him for this. I've criticized him for this. We should strive to be honest brokers all the time.

"But do you deny that protectionism makes countries poorer?"

No, of course not, but I don't just care about countries. I care about the people within countries. Even still, I support freer international trade. But importantly, that doesn't mean I attack economically sensible and honest arguments, because they don't sufficiently defend the orthodoxy. I'm not a free trade lobbyist, and I don't want to act like one.

Charlie writes:

Don:

"My objection might also be stated this way: if one is to be skeptical of free trade because of its distributional effects, then one must be skeptical of far more than free trade."

Yes, I agree. The difference is that I think that economic growth and changes more generally are also defended on the grounds that the gains can be redistributed. I think you are actually delving into an area where you are actually way out of the mainstream.

Most economists still defend traditional arguments for growth and free trade on a grounds of pareto optimality (which if I'm not mistaken, is a concept/argument you dislike). That is most economists would say, if the size of the pie gets bigger everyone can be made better off. And then argue we should in fact make everyone better off or at least as well off. [We might also use empirical arguments that all people are, in fact, made better off.]

If we presupposed we can't or won't make everyone better off, then there is no clear economic case for growth or trade. We require some social welfare function or some moral argument like utilitarianism to decide whether non-pareto optimal policies are better or worse.

So Krugman is basically saying, trade creates winners and losers. If gains aren't redistributed to make the losers whole, trade isn't pareto optimal. If trade isn't pareto optimal, it's a value judgement whether it leads to a better world.

I completely understand you reject this line of reasoning, but you have to understand this is the "mainstream." Your proud rejection of this reasoning is one thing that puts you very far outside of the mainstream. It doesn't mean you're wrong, but it means you should be a lot more careful when you talk about the "conventional case" for free trade.

Jeff writes:

The case for free trade can be made much more simply: You don't prevent consenting adults from engaging in voluntary transactions, or force them to do things they otherwise wouldn't do without a really good reason.

The burden of proof has to be on those who would restrict freedom. Sometimes it's pretty easy to make the case: national defense, for example. But that's not the case for trade restrictions, just as it's not the case for limiting immigration.

There is also recent history to reckon with. I remember the crappy cars of the 1970's, and I'm pretty sure that huge improvements in quality and reliability we've seen since then would not have happened were it not for competition from imported cars. I think the same is true for electronics. The RCA's and Zenith's of my childhood were crap compared to the imported Sony models. The Sony's were more expensive, not less, but the quality was so much better that the American brands got hammered. The consumer was the winner.

We see this dynamic played out again and again. There have been numerous studies showing that countries who drop trade barriers prosper compared to protectionist countries. Why would that work everywhere but here? I don't really care about theoretical models when we now have many decades of history that shows us that protectionism is a really bad idea.

Why does anyone ever bother to improve their products? Isn't it obvious that competition between producers is the reason? Have we forgotten the wisdom of Schumpeter and Adam Smith? Limiting competition not only limits freedom, it also limits innovation. Is this really so hard to understand? How can this, the most salient aspect of our economy, not inform anyone's views on economic issues?

Larry Kudlow has responded, and says Jonah Goldberg has it all wrong:

First, Steve Moore and I continue to oppose Donald Trump’s trade policies. Even if his 45 percent tariff threat on China is simply a negotiating card, as Trump told me in recent interviews, we still think that’s the wrong way to go.
Speaking for myself, I believe China is a major trade violator. The Chinese break all the rules. They counterfeit our goods, steal our international property rights, and cyber-hack our industries and government. Something must be done about it.
But a 45 percent tariff would be a major tax on American consumers and businesses. It would probably do more damage to the US economy than to China’s.

MikeDC writes:
So has the "liberal" wing of the American economics profession now become nationalistic? Is a policy that clearly benefits the world as a whole, and may or may not benefit America, now considered a "scam"? It would seem so. Do America's progressives even care that not extending free trade to Vietnam will hurt the Vietnamese poor---probably 100 times more than any (doubtful) tiny benefit from protectionism to America?

In this paragraph, even you, Scott, are conceding the possibility that protectionism might be beneficial to the USA.

This is a big problem, because 1) It's not true and 2) These concessions play into the very real belief held many Americans that the "top men" and their elected officials are working against them.

We aren't electing a government for the benefit of Vietnam. Just like a lawyer or a financial adviser has a fiduciary responsibility to his client, so do the politicians we elect to govern this country.

Now, maybe I'm outdated on the empirical evidence since I'm not an academic economist, but last time I checked is that free trade requires mutually beneficial exchange. Ergo, Americans are benefiting from their trades with foreigners.

That needs to be the beginning of the conversation, not a meek concession that free trade is a "scam" or "potentially harmful", followed by scolding folks that the leaders they elect to protect their interests are morally right to ignore those interests to promote those of the poor in some foreign country.

Michael Rulle writes:

Who doesn't think free trade is good? We are better off even if our trading partners prohibit all imports. But....having said that---as Robert points out above-----why do we negotiate any trade agreements unless some trade agreements are better than others?

Why not announce to the world beginning today that we are willing to drop all tariffs in exchange for being prohibited from selling goods and services to any other country. (For all I know that may be the best practical thing we can achieve in trade.)

So why are you pretending that Trump is against free trade? Because he said some things that imply our trade negotiators are suckers? Maybe they are or maybe they are not. But it is a valid economic point to make---even if politics is just for morons.

Anonymous writes:

@Charlie

4. Trade creates winners and losers, without redistribution, there is no guarantee trade makes everyone better off.

A guarantee that trade will make everyone better off is too strong a requirement. The argument for free trade, as for economic freedom in general, is that you can expect it to make almost everyone better off to varying degrees - with this expectation based on a number of empirical claims, such as "most people can do a fairly wide range of jobs".

Also, "do whatever is pareto optimal" is itself a value judgement. You can't escape value judgements when you're making normative statements.

Also, I don't think pareto optimality is as great, or as popular, as you seem to think it is. If a change can make almost everyone much better off and make a few people very slightly worse off, I think that is better than making a few people very slightly better off and nobody worse off, and I think many people would agree.

J Mann writes:

Erik and Charlie, I went back and read Krugman's article, and I think Scott's characterization is closer than yours.

1) Krugman says the "elite case" for free trade is "largely a scam";

2) the case he offers for not rolling back existing trade agreements is that there would be "diplomatic, foreign policy costs" and that it would be a "mess", and that

3) the case for more trade agreements is "very very weak," so weak in fact that the next President should devote "no political capital whatsoever" to freeing trade further.

I think any normal reader would think that this article is essentially anti-free trade. The elite arguments for trade are largely a scam, the only argument offered for the exist agreements is that there would be a cost in unwinding them, and the case for new agreements, whatever that is, is so weak that it doesn't justify any effort on their behalf.

Scott Sumner writes:

Charlie, We will have to agree to disagree. I believe that 99.9% of Krugman readers interpret the following:

"So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don't know exactly what form it's taking."

. . . as Krugman saying that voters should ignore the fact that Ivy League professors usually favor freer trade, and that Krugman is implicitly saying their case for free trade is a scam. In fact, the case made by elite professors for free trade is largely correct. Krugman opposes the TPP for instance, while most elite professors probably favor it.

I would add that Krugman has it exactly backwards. It is the voter's instincts on trade that are usually wrong. The voters think imports hurt the US economy, whereas they actually help the economy. That's what Krugman should be talking about, instead he's promoting policies (opposition to TPP) that would to make many of the world's poorest people even poorer.

Patrick, I don't see how that contradicts Jonah's post. He never said they agreed with all of Trump's views. But they have clearly changed their mind, as they were previously extremely negative about Trump.

MikeDC, It's clearly POSSIBLE that free trade might not benefit the US. That's not the issue. In economics we always deal with probabilities. It's extremely likely that free trade does benefit the US, that's the point we should be making.

And I do not believe it's the job of the US government to protect the American people. Yes, that's one of their jobs. But their primary job is to do the right thing. That was my point about Vietnam. I strongly oppose all forms of nationalism.

MikeDC writes:
It's extremely likely that free trade does benefit the US, that's the point we should be making.

Yes, better!

And I do not believe it's the job of the US government to protect the American people.

This is a nearly perfect elitist response, and well explains the rise of purposeful economic illiteracy on both the left and right. It's rising because folks like you simply abandon the field.

And, yes, it's patently immoral. I strongly oppose all forms of murder, but those accused of murder still deserve the best representation they can get. Without it, we're throwing legitimacy out the window and leaving the floor open for the Sanders and Trumps of the world.

George writes:

I think Krugman does support free trade; he has a lot of praise for Ricardo and comparative advantage. However, I also think he is appealing to his base, and even if he is in support of free trade, he is unwilling to emphasize his support to his readers (I believe he may think that the gains from additional free trade are not that much in comparison to the gains he believes will be made by putting Democrats in office). And I think in the back of his mind he knows that his average New York Times blog reader will likely misinterpret him. It's unfortunate to see this kind of purposeful vagueness from someone like Krugman.

UtilityMaximiser writes:

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