B12 Solipsism

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Archive for the ‘Paul_Krugman’ tag

The Mitt-Hawley Fallacy and Trade Wars

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F Trade
F Trade…

Since we discussed tariffs earlier, it is only fair to note that Dr. Paul Krugman disagrees with the premise that the Smoot-Hawley tariff act was a cause of the Great Depression, and with the idea that tariffs are by themselves a bad thing…

protectionism in general should reduce efficiency, and hence the economy’s potential output. But that’s not at all the same as saying that it causes recessions.

But didn’t the Smoot-Hawley tariff cause the Great Depression? No. There’s no evidence at all that it did. Yes, trade fell a lot between 1929 and 1933, but that was almost entirely a consequence of the Depression, not a cause. (Trade actually fell faster during the early stages of the 2008 Great Recession than it did after 1929.) And while trade barriers were higher in the 1930s than before, this was partly a response to the Depression, partly a consequence of deflation, which made specific tariffs (i.e., tariffs that are stated in dollars per unit, not as a percentage of value) loom larger.

(click here to continue reading The Mitt-Hawley Fallacy – The New York Times.)

The Trade Union Vow
The Trade Union Vow

…and on the Lord Little Hands Dotardo’s tariff threats in general:

 So what will happen when the Trump tariffs come?

 There will be retaliation, big time. When it comes to trade, America is not that much of a superpower — China is also a huge player, and the European Union is bigger still. They will respond in kind, targeting vulnerable U.S. sectors like aircraft and agriculture.

And retaliation isn’t the whole story; there’s also emulation. Once America decides that the rules don’t apply, world trade will become a free-for-all.

Will this cause a global recession? Probably not — those risks are, I think, exaggerated. No, protectionism didn’t cause the Great Depression.

What the coming trade war will do, however, is cause a lot of disruption. Today’s world economy is built around “value chains” that spread across borders: your car or your smartphone contain components manufactured in many countries, then assembled or modified in many more. A trade war would force a drastic shortening of those chains, and quite a few U.S. manufacturing operations would end up being big losers, just as happened when global trade surged in the past.

An old joke tells of a motorist who runs over a pedestrian, then tries to fix the damage by backing up — and runs over the victim a second time. Well, the effects of the Trumpist trade war on U.S. workers will be a lot like that.

 

(click here to continue reading And the Trade War Came – The New York Times.)

Emphasis mine.

Hmmm, so maybe I shouldn’t lay awake worrying about the upcoming conflagration? That Trump is not trying to sabotage the world economy so that totalitarian governments will rise around the world? I suppose we’ll see for ourselves, if Trump even follows through with his trade threats.

One Chromosome Too Many
One Chromosome Too Many

 

Trump has threatened to withdraw NAFTA pact since the 2016 campaign, saying the 24-year-old deal allowed manufacturers to relocate to Mexico and take advantage of cheaper labor. Even a number of Democrats have said NAFTA should be reworked, but Canada and Mexico have resisted Trump’s strong-arm tactics.

 

And a number of GOP lawmakers are apoplectic about what would happen if Trump withdrew from NAFTA, warning it could devastate the U.S. agriculture industry.

 

Tying NAFTA to the steel and aluminum tariffs shows that Trump is trying to use his new trade gambit as leverage, though it’s unclear if it will work.

 

Trump on Thursday surprised much of Washington — and his own staff — by announcing that he would impose a 25 percent tariff on steel and a 10 percent tariff on aluminum. A formal announcement is expected this week or next. Commerce Secretary Wilbur Ross and top trade adviser Peter Navarro are both supportive of the tariffs, but even they were hard pressed to explain how the new restrictions would work.

 

 

(click here to continue reading Trump says Canada and Mexico will only escape new tariffs after NAFTA concessions – The Washington Post.)

Written by Seth Anderson

March 5th, 2018 at 8:53 am

Posted in Business,politics

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Republicans Rally Against Reality

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Ask For More, Settle For Less
Ask For More, Settle For Less

Dr. Krugman wonders if the Republicans will ever stop being cowards when faced with the realities of governing a pluralistic nation. I’m skeptical.

What’s happening now is that the G.O.P. is trying to convert Mr. Ryan’s big talk into actual legislation — and is finding, unsurprisingly, that it can’t be done. Yet Republicans aren’t willing to face up to that reality. Instead, they’re just running away.

When it comes to fiscal policy, then, Republicans have fallen victim to their own con game. And I would argue that something similar explains how the party lost its way, not just on fiscal policy, but on everything.

Think of it this way: For a long time the Republican establishment got its way by playing a con game with the party’s base. Voters would be mobilized as soldiers in an ideological crusade, fired up by warnings that liberals were going to turn the country over to gay married terrorists, not to mention taking your hard-earned dollars and giving them to Those People. Then, once the election was over, the establishment would get on with its real priorities — deregulation and lower taxes on the wealthy.

At this point, however, the establishment has lost control. Meanwhile, base voters actually believe the stories they were told — for example, that the government is spending vast sums on things that are a complete waste or at any rate don’t do anything for people like them. (Don’t let the government get its hands on Medicare!) And the party establishment can’t get the base to accept fiscal or political reality without, in effect, admitting to those base voters that they were lied to.

The result is what we see now in the House: a party that, as I said, seems unable to participate in even the most basic processes of governing.

(click here to continue reading Republicans Against Reality – NYTimes.com.)

Written by Seth Anderson

August 5th, 2013 at 10:02 pm

Posted in politics

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Because Paul Krugman Can Argue

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QR Code on NYT Magazine cover
QR Code on NYT Magazine cover

Paul Krugman is one of the top reasons I subscribe to the NYT 1

Jonathan Chait makes a good point:

Before Paul Krugman joined the New York Times op-ed page, it was a genteel place. The classic pattern was to promote distinguished reporters to cushy sinecures as columnists. Because they were trained as reporters, not polemicists, they tended to avoid the work of argumentation and simply tell readers what to think.… Krugman, by contrast, came from academia, where the arguments are fierce, and you either bring the data or you go home. As one of the most acclaimed economists of his generation, he arrived at his Times post in 1999 boasting stronger credentials to hold forth on his chosen topic than possibly any other op-ed columnist in history. But Krugman does not rely on his authority. He crafts arguments.

The most remarkable attribute Krugman has brought to the Times is rudeness. The social niceties that accompany his exalted position are utterly lost on him. He does not seek out the company of famous politicians and cannot be courted with flattery or access. He understands that you can’t arrive at truth without explaining why mistaken beliefs are wrong.

Krugman makes a mockery of the prohibition against arguing with his fellow columnists, larding his columns with rebuttals to unnamed subjects who happen to believe things that were advocated on the Times op-ed page earlier in the week. Thomas Friedman writes a column complaining, “Does anyone know what President Obama’s preferred outcome is? Exactly which taxes does he want raised, and which spending does he want cut?” And the next day, Krugman writes: “Oh, and let me give a special shout-out to ‘centrist’ pundits who won’t admit that President Obama has already given them what they want. The dialogue seems to go like this. Pundit: ‘Why won’t the president come out for a mix of spending cuts and tax hikes?’ Mr. Obama: ‘I support a mix of spending cuts and tax hikes.’ Pundit: ‘Why won’t the president come out for a mix of spending cuts and tax hikes?’ ”

(click here to continue reading Because Paul Krugman Didn’t Keep His Calm – Reasons to Love New York 2011 — New York Magazine.)

 

Footnotes:
  1. weekend edition, but still counts []

Written by Seth Anderson

December 14th, 2011 at 9:54 am

Posted in Business,politics

Tagged with , ,