Krugman Admits He Was Wrong

[whell]

...in a somewhat qualified manner.

Interesting article from Foreign Policy:

https://getpocket.com/explore/item/e...=pocket-newtab

Now Krugman has come out and admitted, offhandedly, that his own understanding of economics has been seriously deficient as well. In a recent essay titled “What Economists (Including Me) Got Wrong About Globalization,” adapted from a forthcoming book on inequality, Krugman writes that he and other mainstream economists “missed a crucial part of the story” in failing to realize that globalization would lead to “hyperglobalization” and huge economic and social upheaval, particularly of the industrial middle class in America. And many of these working-class communities have been hit hard by Chinese competition, which economists made a “major mistake” in underestimating, Krugman says.

Yes, the article takes a swipe at Trump:

The U.S. president has effectively discarded modern economics, reembraced crude protectionism, and, like the mercantilists of the pre-Adam Smith era, appears to see trade as a zero-sum game in which surpluses are in effect profits and deficits are losses. His ignorance of basic economics “is without parallel among modern American presidents,” Appelbaum writes in The Economists’ Hour.

At the same time, Trump isn't wrong about the impact of the economic conventional wisdom such as that previously embraced by the Paul Krugmans of the world. And the currently proposed solutions of the Biden camp: "we'll retrain and redeploy those workers in "green economy" jobs miss the central fact that you still have to have an underlying healthy manufacturing sector and a healthy middle class to be able to produce a tax base to afford such a shift.

Trarrifs are a policy born of economic weakness, IMHO. They demonstrate that one government may have limited control over global economic policy when its own economy has been hollowed out from within by pursuing a "free market, globalist" policy that folks like Krugman once advocted. As this article from Poltico - which is another interesting read - states:

With Trump's election, it's now acceptable to at least name the problems the U.S. has confronted on the world stage, ranging from coercive Chinese requirements over our manufacturers to corporations invoking their global supply-chain decisions as a reason we can’t fundamentally rethink U.S. trading rules. But Trump’s solutions to those problems suffer just as much from an absence of creative ambition.

I agree, as I've never thought that tariffs were a long term solutions to any problem. The threat of tariffs can be effective if there's economic force behind it. The threat of a tariff on steel can be effective if we have a thriving domestic steel industry, but we don't.

All this is to say that at least we've been able to restart the discussion on the state of the middle class and the erosion of our manufacturing base. Let's hope that in the next four years we apply appropriate economic policy and start to rebuild a manufacturing base that supports a thriving middle class.

Now, if Krugman going to give back his Nobel Prize?