Paul Krugman hands in his economist\’s secret decoder ring

I\’m seriously having a difficult time digesting this.

Yes, I know, he\’s the Nobel Laureate in international and trade economics and I\’m just a lowly blogger.

But he seriously seems to be advocating a protectionist trade war against China.


Let me quote from a classic paper by the late Paul Samuelson, who more or less created modern economics: “With employment less than full … all the debunked mercantilistic arguments” — that is, claims that nations who subsidize their exports effectively steal jobs from other countries — “turn out to be valid.” He then went on argue that persistently misaligned exchange rates create “genuine problems for free-trade apologetics.” The best answer to these problems is getting exchange rates back to where they ought to be. But that’s exactly what China is refusing to let happen.

The bottom line is that Chinese mercantilism is a growing problem, and the victims of that mercantilism have little to lose from a trade confrontation. So I’d urge China’s government to reconsider its stubbornness. Otherwise, the very mild protectionism it’s currently complaining about will be the start of something much bigger.

And Smoot Hawley worked so well, didn\’t it?

8 thoughts on “Paul Krugman hands in his economist\’s secret decoder ring”

  1. China is an evil empire and a deadly enemy of the West. If you think they are arrogant now, think what they’ll be like when they have the world’s biggest economy.

    Anything we can do to sabotage their economy is a good thing.

  2. Brian, follower of Deornoth

    Yes, go on, start a scrap with China, Barack, and then try to find someone else to lend you the money for your new National Death Service.

  3. I cannot say I really follow the argument but if a country is subsidising exports then it is operating protectionist policies already. Krugman is not advocating starting a war he is advocating self defence and I have no problem in principle with that .

    What do you suggest Tim ,turning the other cheek ?

  4. “Paul Samuelson, who more or less created modern economics..”: that’s pretty cruel about a man not long dead.

  5. If the Chinese decided to give us free television sets, would we refuse them? I suspect not. The populace would be furious with the government if it did — and it would be obvious to all that the money saved could be put to better and more productive use.

    That they are merely subsidising our TV’s is not very different.

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