06 Feb 2017

Contra Krugman Twin Spin

Contra Krugman 7 Comments

Because I was on the road when Episode 71 posted, I fell behind. So I’ll give the highlights of both Episode 71 and 72 in this post.

Episode 71: On Trump Manufacturing His Own Reality When Things Get Worse

8:30 I explain that Krugman has to do a dance. Originally there was a depression under Obama, then America had to be A-OK at the end of Obama’s term to render Trump’s analysis wrong, and at some point it will have to be awful again, lest Trump not be so bad.

9:50 I explain that Trump’s use of the term “carnage” for inner cities would be par for the course if coming from someone on the left.

14:45 Tom starts listing false things that progressive believe.

23:00 I explain the connection between federal budget deficits and U.S. trade deficits.

30:45 We agree with Krugman that Trump has painted himself into a corner regarding ObamaCare.

39:25 I tackle Krugman’s slippery statistics when he tries to show job creation since 2000 has been adequate.


Episode 72: Will Trump Make Manufacturing Decline Faster?

10:55 I agree with Krugman that Trump has the wrong view of trade; he thinks it’s a zero sum game where one party has to dominate. But then I have a surprise…

17:40 I agree with Krugman that tariffs/free trade don’t destroy/create jobs but rather just rearrange employment.

22:40 I concede a sense in which talking about “job creation” from pro-growth policies is defensible.

24:10 Once again I run through the argument that Trump will unwittingly make the trade deficit “worse” by running a big budget deficit.

25:20 We agree with Krugman that Reagan was very protectionist.

26:45 I point out that Krugman actually has an Austrian-ish theory of what caused the bad recessions of the early 1980s.

7 Responses to “Contra Krugman Twin Spin”

  1. Andrew_FL says:

    No, Herbert Hoover was “very” protectionist. In terms of Republican Presidents who preceded him Reagan was a below average protectionist. He only seems protectionist now because trade policy made such strides in the nineties & oughts. This is still the President who actually educated himself about the Corn Law debates we’re talking about.

    • Bob Murphy says:

      Andrew_FL before you confidently told me how wrong I was, did you read the article I referred to (from Sheldon Richman)?

      • Andrew_FL says:

        Given that it has no bearing whatsoever on the ONE word I objected to in that sentence, I’m not sure what the relevance here is. But it is an article I’ve read before, as it happens.

        “Very” is a relative term, so I’ll ask you, Bob, which Presidents were not “very” protectionist that you are comparing Reagan too? Richman compares to none at all.

  2. Capt. J Parker says:

    The Twin Deficits discussion was excellent. A clear and succinct discussion of why those two indicators often appear to move together. I vaguely recall Samuelson’s textbook using the term Twin Deficits but, after explaining that there is not direct accounting connection he left you to think it was mostly a coincidental correlation.

  3. Capt. J Parker says:

    Regarding Episode 72: I’m inclined to think that Trump has some unhelpful mercantilist ideas rattling around in his head. BUT, I have long thought that the folks drafting trade agreements for the US are worried mostly about patent and copyright protection for Apple, Microsoft and Hollywood and never give a thought to anyone else. I’m not the only one thinking this. Here’s Larry Summers at the Davos Economic Summit complaining that our trade deals focused too much on only patent and copyright protection. In Dr. Summers case he thought the the trade deal authors should have paid more attention to limiting tax avoidance mechanisms and regulatory avoidance but, the thought that the trade deals benefiting select entities to the detriment of many other economic actors is there. Here’s the video: https://www.bloomberg.com/news/videos/2017-01-18/the-crisis-of-the-middle-class-davos-panel Summers critique starts at the 38 minute mark.

  4. khodge says:

    Episode 72:
    You pointed out that there was some agreement between Krugman and Austrians, for instance, both agree that the Fed can affect the business cycle. Krugman says that with his wise guidance the Fed can do it better, while the Austrians say the Fed should stop trying to manipulate the business cycle.The wise guidance of Krugman is only half the problem; the other half of the problem is that, even with the wisest guidance, the timing of the process cannot really be known. In other words, by the time the wise Krugman offers his guidance, it is most likely that the economy is past the (possibly) optimal point of intervention.

  5. guest says:

    (I have not listened to these episodes.)

    “I agree with Krugman that tariffs/free trade don’t destroy/create jobs but rather just rearrange employment.”

    Tariffs/free trade destroy/create jobs that don’t require the theft of other people’s wealth.

    For example, you could create jobs digging and filling ditches, but you’d have to violently prevent people from providing wealth creating jobs.

    Tariffs can employ people, but only by paying workers with stolen wealth.

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