If you like rollercoasters:
(A) Read this, then skim this.
(B) After that warmup, read this, then skim this.
Be civil in the comments, kids. Maybe we can win them back.
It’s fascinating how many people doing this 1990s/2000s Krugman contrast apparently seem to think his essay was titled “Kaldor-Hicks’s Dangerous Idea”.
Daniel find for me in that essay the part where Krugman says, “Now, to make sure my defense of free trade in this essay is honest, I should stress that we need the government to redistribute income in order to ensure that everyone gains from trade liberalization.”
Maybe I’m being unclear.
There’s nothing wrong with the Ricardo essay. But Ricardo isn’t Kaldor-Hicks and there’s nothing wrong with Krugman pointing to this particular optimality condition as being key for justifying trade liberalization nor is there anything in the Ricardo essay that says that’s not an important optimality condition for evaluating trade.
“The recent arguments in favor of free trade are badly made” is not the same as “all arguments in favor of free trade are badly made”.
Kaldor-Hicks requires that redistribution *could* be done, not that it has to be done (and that’s what Krugman writes here too), IIRC.
Hang on Daniel, let me make sure I understand: Suppose Mitt Romney read, verbatim, Krugman’s “Ricardo” essay in his denunciation of the trade wars that Trump might unleash. Are you saying Krugman would then not have been able to write about how recent defenses of free trade were basically dishonest?
I think he would be gleeful if Romney did that. Is it still unclear why?
Whenever I feel like defending Dr. Krugman I know I should lie down until the feeling goes away but, here goes:
I really don’t think Dr. Krugman himself is saying that he now believes trade in a net negative for at least one trading partner. I think it’s more like:
1)Trade is good. 2) Never waste a good redistributional crisis. 3)Republicans are wrong no matter what. 4) And by the way most the recent trade deals aren’t about trade at all, there about protecting Disney’s copyrights.
1 and 4 I think are factually correct. While I tend not to agree with 2 and 3 I do think they are mostly matters of worldview.
You’re overcomplicating this Capt. J Parker. Not only is he not “really” saying that, he’s not saying it at all. Nothing like that appears in the post as far as I can tell. I’ve read it twice now to confirm. One literally has to make up that claim before they refute it.
Daniel, who’s paying you to ignore all of Krugman’s most blatant intellectual flaws? Is it The Economist (don’t you write there?)?
Daniel Kuehn you said ” One literally has to make up that claim before they refute it.”
So, if one were to make note of the following points Dr. Krugman makes:
1)Trade is only 5% of world GDP.
2)The elite case for trade is a scam that grossly exaggerates trade’s benefits.
3)Trade is only good if there is Government redistribution to the losers.
4)The case for TTP is very, very weak.
And then one concludes that Dr. Krugman seems to be building a case Against trade, that would be a total misinterpretation? One would be “making up” the idea that Dr. Krugman is saying something other than trade is a net benefit?
Oh, I agree, Krugman did not come right out and say Ricardo had it wrong. But Krugman does not say very much that would prompt one to conclude Ricardo was right.
To Daniel and Capt. Parker (and Gene when he shows up): My main point in this is that the current views of our esteemed writers say that the people with whom they disagree are either idiots or liars (or evil in some other way). And yet these writers were doing exactly that, 10 – 15 years ago. So it’s weird.
When were you an atheist?
Disagreement is different from hurling pejoratives, but I wouldn’t expect you or LK to understand that.
Especially when that is what LK and Ken B. do best.
What pejorative? You think I mean atheist as a pejorative? Murphy often says he used to be an atheist. I am just wondering if this was sometime in the past.
For some reason, after I said that I liked the insults, you two have become kind of boring.
I think what they mean is that you two used to shake things up, more.
Booo. Bring back Cool Ken B and LK.
Bob, I think Krugman would still agree with every single word of that essay. He just thinks that some people are overselling the benefits of free trade, like thinking they claiming they have large macroeconomic effects or claiming that they have no undesirable distributional impacts. And I think the Krugman of the 90’s would have thought the exact same thing if you asked him.
Concerning Gene, he’s been quite open about the fact that he used to be an anarcho-capitalist. I’ve seen many posts where he’s said things like “I’m writing these posts as penance for what I used to say.”
I think Gene just understands that there’s such a thing as objective morality, and he thinks that people have a right to the benefits of, and duty to uphold, that morality, and he thinks that since the government is coercive enough to be able to enforce moral behavior at times, then it’s necessary.
The problem with this line of reasoning is that he is defending government, per se, rather than the moral policies that government can be powerful enough to enforce.
What’s the difference? The difference is that when you defend government, per se, you risk all the power you give to government going into the hands of those you disagree with.
Government is dangerous. America’s Founding Fathers understood this, which is why they at least argued that it should be constrained by a constitution.
Now, the Founders argued that it was a necessary evil because men aren’t angels, so at least they understood that it was evil.
Unfortunately, in arguing for the necessity of government force to uphold what they knew to be good, they unwittingly abandoned the very basis for belief that good policies *should* be enforced.
If you have to reject people’s natural rights to “defend them”, you’ve defeated the point of your preferred government (if you’re like Gene).
“Thomas More: …And when the last law was down, and the Devil turned around on you–where would you hide, Roper, the laws all being flat? This country’s planted thick with laws from coast to coast–man’s laws, not God’s–and if you cut them down…d’you really think you could stand upright in the winds that would blow then? Yes, I’d give the Devil benefit of law, for my own safety’s sake.”
― Robert Bolt, A Man for All Seasons
And for my own safety from government tyranny, I would give the Devil benefit of individual rights.
“When statesmen forsake their own private conscience for the sake of their public duties, they lead their country by a short route to chaos.”
― Robert Bolt, A Man for All Seasons
Btw, this is noting new from Krugman – he makes the same points about protectionism back in 2010 (and before that – see links in this post):
“Bear in mind that what protectionism does, according to textbook economics, is to cause a misallocation of resources, reducing the economy’s efficiency. It does not cause mass unemployment of resources — which is what the Depression was about.
But, you say, protectionism led to falling exports! Indeed. Also falling imports. It’s not at all clear what effect all this had on overall demand. Insofar as it did, it was because tariffs were a form of tax increase — but in that case you should be focusing on the whole range of fiscal actions, not just the tariff hikes…
More broadly, I’ve written before that the attempt to place blame for the Depression on protectionism is a sort of Noble Lie, an attempt to scare people into trade policy that’s good for other reasons.”
“It does not cause mass unemployment of resources — which is what the Depression was about”
-This is not true, at least, in the short run.
I thought that Krugman’s Nobel prize was based on his work with international trade.
I don’t understand how he got it.
As opposed to the real Nobel prize which is awarded to non-Republican presidents or presidential contenders because, well, they’re non-Republican.
Vertigo is a movie about an obsessed, deluded man.
That is funny Murphy, thanks.
Last one, mostly for Daniel (since I think you are earnest): Yes, there are some ways in which Krugman has been consistent all these years. For example, all along Krugman has said the case for free trade doesn’t depend on “job creation” and he also has said protectionism didn’t cause the Great Depression.
However, a good free-market economist doesn’t say that free trade creates jobs or that Smoot-Hawley caused the Great Depression. Rather, a good free-market economist says that free trade is a big deal (worth explaining to the public) and never says you need income redistribution in order to justify reduction of tariff barriers.
In his latest pieces, Krugman says that people making these types of (standard) arguments are being dishonest and that their stance is a scam. Yet this was exactly how Krugman talked about free trade in the 1990s.
re: “Krugman says that people making these types of (standard) arguments are being dishonest and that their stance is a scam.”
No he doesn’t say this Bob. Where does he say this? He says that people saying it will cause a recession. He says that people overstate the pluses and and understate the costs. He says they ignore the conditions of the Kaldor-Hicks optimality that free trade does meet (it does not of course meet other more stringent optimality conditions).
And all of this is right and none of it conflicts with his much earlier griping that Ricardo is hard for people to understand.
If you really think this quote him. I will – he says “the elite case for ever-freer trade is a scam”. He does not say “the case that Bob and Daniel and other economists make for freer trade online is a scam”.
“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,”
No, the conventional case absolutely does not rely on that assertion. I spent 2 hours the other night reading both popular and JEP article Krugman on this topic, and he never once said that.
Or to be more precise, Daniel, if it “relies” on it, it means in the sense that gains outweigh losses. It doesn’t rely on the government actually redistributing. So the fact that Republicans are opposed to redistribution is a red herring.
Krugman wrote “”could redistribute” which is precisely the standard for Kaldor-Hicks which is precisely the optimality condition that trade meets – not would redistribute.
Given that the distributive consequences of trade are precisely what weakens the optimality condition we can invoke I don’t see how discussing redistributive politics is irrelevant here. It’s hugely relevant and has been through the history of trade policy where liberalization has often moved forward due to redistribution guarantees.
You can say that Republican opposition to redistribution does not change the optimality condition. I’d fully agree and Krugman doesn’t say anywhere tat it does.
You CAN’T say that it’s a red herring or irrelevant to the discussion. It’s very relevant. The whole reason for bringing it up is that the optimality is heavily impacted by the distributional effects.
Oh Daniel, I forgot how much fun it was to argue about Krugman with you… Sometimes we get busy with life and forget the important things…
Heh – I was thinking “wow he’s gotten a lot more absurd after starting this serial Krugman Komplaints podcast”
It’s one thing to change your mind, but St. Paul ought to be nicer to the folks at the Sanhedrin. After all, he used to be one of them!
You show me Josiah where Krugman or Gene says, “Mises came into the world to save economists–of which I am the worst,” and then I’ll cross out this blog post.
Slightly off topic, but related to protectionism:
Walter Williams gets the issue of Trade Deficits right (HT2 Robert Wenzel):
On the Trade Deficit Donald Trump is So Concerned About
“There cannot be a trade deficit in a true economic sense. Let’s examine this.
“I buy more from my grocer than he buys from me. That means I have a trade deficit with my grocer. My grocer buys more from his wholesaler than his wholesaler buys from him. But there is really no trade imbalance, whether my grocer is down the street, in Canada or, God forbid, in China. …”
“… The uninformed buys into the mercantilist creed that trade deficits are bad and trade surpluses are good….”
This is the one area where I’ve noticed that Peter Schiff is not an Austrian.
The only reason trade deficits are “bad” when the US is running one is because we’re not really paying for our imports – we “pay” with printed money.
Sciff does recognize that we rip off other countries with our printed money, by the way – see the videos, “Why the Meltdown Should Have Surprised No One”, and “What About Money Causes Economic Crises with Peter Schiff – Ron Paul Money Lecture Series Pt 3/3”
(That money eventually makes its way back into the US and raises prices, acting as kind of a cosmic payback for our fraud toward the Chinese. And I’m not saying Communism is good or that I don’t recognize that the Chinese would like to see Capitalism fall completely.)
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