« Ron Paul and Hillary Clinton Stick Out Like Sore Thumbs. | Main | Do Some of Adam Smith's Most Ardent Disciples Know What He Says about Them? »

Paul Krugman Says I “Have a Point and Deserve Some Respect!”

The New York Times editorial board has consistently advocated for "free trade agreements," even those they haven't read. Yesterday, in a full page New York Times ad, the Consumer Electronics Association asserted that opposing the Columbia Free Trade Agreement is indistinguishable from a desire to re-introduce Smoot-Hawley protectionism. In today's column, New York Times columnist and long-time trade booster, Paul Krugman, called a time out and sent both to their rooms.

Krugman made his chops as a young economist "advancing" theory about international trade, including publishing several influential papers and writing a successful textbook. He endorses a theory that trade between countries that have very different "factor endowments" can have "large effects on income distribution, and leave large groups worse off," as he explains in one of his blog posts, "Bit of background on today's column." Cutting through the jargon, this means that if a high-wage nation like the USA trades extensively with a low-wage nation like China, some large groups in the USA will have lower incomes.

In 1995 Krugman published a paper in which after looking at available data he concluded that any such effects on the US economy were only "modest." Not any more. In today's column, Krugman says, "The trouble is that these effects may no longer be as modest as they were, because imports of manufactured goods from the third world have grown dramatically—from just 2.5 percent of G.D.P. in 1990 to 6 percent in 2006." "[W]hen it comes to manufactured goods, it's at least arguable that the . . . highly educated workers who clearly benefit from growing trade with third-world economies are a minority, greatly outnumbered by those who probably lose."

I applaud Krugman for changing his views when he gets new facts. He makes clear he still believes in the benefits of "keeping world markets relatively open" (notice he doesn't say "free trade"), especially for the billions of people who don't live in America. Then he gave this good advice to his editorial board, "I am arguing for an end to the finger-wagging, the accusation either of not understanding economics or of kowtowing to special interests that tends to be the editorial response to politicians who express skepticism about the benefits of free-trade agreements." Krugman concludes his column by saying, "[T]hose who are worried about trade have a point, and deserve some respect." Hey, that includes me!

PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>