Trump may not be able to explain it, or interested in doing so, but here it is:
China manipulates its currency at levels not seen since the gold standard: https://www.bloomberg.com/news/articles/2018-01-09/china-is-said-to-shif...
This places everyone they run a current account surplus with at a painful disadvantage, most prominently the United States.
Intellectual property theft is an inadequate description; they are stealing us blind. The rest of the world isn't going to help because it's not their property being stolen, and they are stealing almost as much as China: country=USA&indicator=3377&countries=CHN,IND,BRA,EGY&viz=line_chart&years=2012,2016
None of this would really matter, except that China has stated intentions to become the dominant regional military power and their ability to set the rules for Korea, Japan, Taiwan, Vietnam, the Philippines, Australia and beyond is based on stealing, dumping, and manipulating their way to unearned prosperity.
Just because Trump's an idiot doesn't mean that China doesn't need to be brought into line.
7
Conservatives, when they are not specifically ignorant of reality, are generally at least ten years behind the times. They continually fight battles which have ended long ago. China WAS a currency manipulator - ten years ago. As Mr Krugman points out, times have changed. Illegal immigration across the southern border WAS a problem - over ten years ago. Today's trickle is the lowest in decades, obviating the need for a useless, massively expensive wall. Over-regulation WAS - oh, wait - over-regulation was NEVER a problem. Nor was raising the minimum wage, taxing the rich commensurately with their wealth and the advantages they derive from this country, allowing women to have control of their own bodies, or extending the assault weapons ban, to name a few. Sometimes conservatives just like to invent battlefields so they can throw more bombs.
14
China, Russia and other authoritarian countries invest in Trump and Kushner properties. How will the trade war and deglobalization affect that?
2
The Chinese stole our jobs. They stole our factories. They're stealing billions of dollars. No they didn't. I find it amusing the people that the President is counting on to bring all these factories and jobs back are the very same people who voluntarily moved all these jobs and factories overseas in the first place.
10
I prefer to call it the art of the fail. If Trump had a clue as to whatever realities exist beyond the fake realities that are fed him by Fox News he might might carry a bit of credibility. To be fair trying to associate his spasmodic impulses with art is doing an injustice to the term.
4
I remember when the cry was 'Buy Cars Made in America' so I bought Ford and Chevrolet auto's only to discover that the Ford was assembled in and shipped from Mexico - and Ditto the Chevvy in Canada. What's a poor boy to do? Answer: Buy a BMW because that Bavarian badged status symbol was probably made in Spartanburg S. Carolina. Subaru and Toyota are made in Indiana and Kentucky - Honda build hundreds of thousands of their auto's in Ohio (and from parts largely manufactured in the USA.) The mid-life crisis crowd should know that their Harley Davidson was merely assembled in the US from parts made in Europe, Asia and Mexico. So, would it help if POTUS and his xenophobic neophytes took a crash course in the 21st century realities of global manufacturing and trade? I very much doubt it because these are hard facts and you never let facts get in the way of a rallying cry.
16
I think Dr. Krugman gives Trump and his staff way too much credit on this. Dude has no idea what he's doing and neither do his people. I barely know anything about this and I still understand it better than the President. He is so far out of his depth - he wouldn't still be afloat if it weren't for the Congressional Republican water wings.
12
As usual, Trump has no strategic plan here. He's simply using this trade war to distract from all the scandals surrounding his administration. He thinks being "tough" on China (and on the DREAMERS) will shore up his base for the November elections. But he incapable of understanding the potential real-world ramifications of any of his policies because he is almost entirely insulated from the real world, and always has been. In fact, he prefers it that way, which is why he's just jettisoned most of the grown-ups in his administration and replaced them with those who will never tell him what he doesn't want to hear.
Unfortunately, millions of people will pay a real price unless and until this boy-king is dethroned.
5
Where is Congress in this whole trade war mess? Can Trump simply declare tariffs? Doesn't Congress have to approve any new tariffs? As with many of Trump's pronouncements, we get the impression that he can simply declare a thing like a dictator.
3
I expect dems to fail to show this mid term as in all others
I expect matters to become vastly worse
I expect - due to skullduggery - trump will be re-elected
If you can't afford to get out - I pity you
2
So, whatever happened to that "beautiful chocolate cake" experience??
4
Trumpism is constant chaos of dysfunctional incompetence, lies and misinformation. Questionable how long this can continue before a major crisis arises with devastating consequences.
6
Forget Trump. (Is that possible?)
We need to concern ourselves with real issues in international trade, not some pumped up illusion that the world is merely taking and we are losing.
China and other Asian nations have made it easier to innovate in technology and other sectors, especially for start-up companies with new ideas. One no longer needs to build a company from the ground up over 5 to 10 yrs., an idea can be turned into an actual, marketable product in a matter of months. Almost anything you want, China can either make it or assemble it.
They have won that war and the future involves around rear guard actions, not the major battle. They did it in part because American companies are not just greedy for profits, they are greedy for big profits. Small gains through hard slogs of research, development and marketing? That's so 20th century.
Look at GoPro, the company that makes extra cool handheld cameras, mainly for action sports. They didn't have to set up a manufacturing plant here to test the market, they found Asian suppliers ready and able to grind it out. They skyrocketed before old fashion companies would have even gotten started.
China is, however, robbing us of technology. Many contracts they sign require the company doing business there to turn over technology to them. Who would sign such deals? We'll do business, but send us your 1st, 2nd & 3rd born?
The U.S. has no overarching industrial policy. The rich have been too busy getting richer and don't care.
2
Krugman argues that the trade deficit is the flip side of the fact that America attracts more inward investment from foreigners than the amount Americans invest abroad.
To put it more precisely:
China is buying U.S. Treasury debt as our tax revenue is much less than government expenditures;
China is buying up the ownership of American corporations.
2
...and we are all sickened by it. Has anyone else postponed the idea of spending on a big purchase like a car in this environment of uncertainty and the feeling that the people at the top really know what they are in for? I have.
2
A vast creation of intellectual property is one of our most important achievements, and the orderly protection and dissemination of intellectual property s of great importance to our future, both as China learns form us and as we will inevitably want to learn from them.
3
And who might pick up the agriculture business lost by American farmers due to retaliatory tariffs from China?
RUSSIA! WHAT A SURPRISE!
Russia's 6th largest export in 2017--which was also its second highest-growing export--was cereals (wheat, barley, corn, etc.).
http://www.worldstopexports.com/russias-top-10-exports/
There is no collusion here, of course...
7
As usual, Trump does not have good advice or counsel. If he did, there is a big question of whether he would listen to it since Fox News appears to be his muse. Trump should be removed from the Presidency in simpler terms. He is bad for business and the United States in particular.
5
As an immigrant and a nonwhite i find it bamboozled that American's cant see the chinese scam. They have taken away your jobs, your factories cause for decades American didnt have the courage to stop the chinese. I dont understand what the author is complaining about . Stock market does not give a dime about people or jobs. The rich want to get rich by importing cheap stuff. Chinese makes cheap and poor quality products unless its an american company that has great products and great quality control. Chinese stuff is cheap stuff. Why are so many americans complaining when Trump want's a fair deal ? Germany makes great cars, Americans make great technology, Chinese devalues its currency and provides cheap labor. So its surprising that some one who is a newyork times columnist cant see that.
1
It's simple, really - the Chinese can produce stuff inexpensively and Americans love inexpensive stuff. Manufacturers, wholesalers, and retailers go to the least expensive places to get the stuff they then sell to you cheap. China currently happens to be that place just now. China did not steal those jobs from the US. US corporations handed those jobs to China on a silver platter. A silver platter provided by GOP policies, deregulations, and tax breaks. It is surprising that anyone who can read can't see that.
9
Things are more complicated than that.
When Western economies entered their industrialization phase, two decades ago, the wealthiest citizens entirely dominated the government, so decent labor laws were totally absent. That allowed them to exploit ordinary citizens, whereas colonizing Africa and the Middle East gave them cheap access to raw materials (all while destroying the local economies, and installing dictators who got protection in return for selling out their country to us).
Since a couple of decades now, ordinary citizens in the West fought back and acquired basic labor laws, whereas the wealth accumulated by the elites now allowed them to start massively investing in research and development, and hi-tech (all more profitable than manufacturing industries).
Simultaneously, vast parts of Asia and Latin-America started industrializing too, all while denying their citizens basic labor laws just like we in the West had done.
That made it cheaper for the West to buy manufacturing products from them rather than to continue to invest in them ourselves.
And that's how the US obtained a trade deficit ... together with full employment and becoming the wealthiest country on earth.
What Trump wants it making Chinese products artificially expensive for American consumers and businesses, but never explained HOW that will somehow benefit the US. And as this op-ed shows, it will probably mainly hurt ordinary US citizens.
The alternative? The TTP ...
3
@Thor: [shrug] When the stock market was rising, Trump pointed to it as a reason to disregard his many failing and focus on market prices instead. Clearly he doesn't share your (in my opinion accurate) assertion about the importance of stocks.
However, your question about Trump's "fair deal" is nonsense. Trump is almost NEVER offering or seeking a fair deal. He wants to "win," and in his small mind that means someone else must "lose."
4
Everyone knows the Government budget and Government debt is just the same as a family budget and debt. Don't we? Say otherwise; you are fake news lying.
Isn't the issue of patent infringement also an internal issue in China?
Trade deficit and budget deficit are 2 different things. And Government debt has nothing to do with trade deficits. Both Budget deficits and Government are cause and result. Reducing taxes and spending more is like a family spending more that it makes. When that family spends more on Chinese made products rather than American made ones, it creates the trade deficit.
2
Tm, I don't if you are speaking tongue in cheek or foot in mouth. The Government can print as much money as it needs out of thin air. It will run out of dollars the day after the NFL runs out of points.
What family can do that?
2
Equating the budget and debt of the Government with that of a family is simplistic at best and ignorant at worst. In reality the two are nothing alike. The government provides services for which it is not paid directly, unlike a family. The government needs to collect taxes to operate its services; a family cannot tax its neighbors to operate. That is why businessmen who try to run government always fail - their fee for service model is not, CAN NOT, be the government model. And while successful businessmen have failed at making government work, we now have a failed businessman, Trump, working at making government fail.
1
I think deep down Dr. Krugman is pro Trump. Calling him the tweeter-in-chief is not being fair to Trump. He is the liar-in-chief, much higher level of "accomplishment" than his nonsensical tweets.
I think the Donald just enjoys having such a big effect in something visible - the Dow. Makes him feel powerful to whipsaw it around. Doesn't really understand what he's doing, but it sure gets the attention he craves, like a little spoiled boy.
9
"Whenever investors suspect that Donald Trump will really go through with his threats of big tariff increases, provoking retaliation abroad, stocks plunge. Every time they decide it’s just theater, stocks recover. "
Stocks don't plunge, investors MAKE them plunge by reacting in fear. And I don't get seasick watching the market swings. I laugh at the suckers reacting in fear, shake my head at the evil investors trying to take advantage of the suckers and hope their collective actions don't impact me too much.
2
In a capitalist economy like ours, the situation on Wall Street is directly linked to the economy on Main Street.
When stock markets become instable or crash, the economy inevitably stops growing and enters into a period of recession, which means higher unemployment and lower wages (and a higher federal debt).
And stock markets become instable or plunge when everything indicates that there will be less trade, which is always the case when there's a trade war.
So you may find this funny, but in that case you probably don't understand what a stock market crash means ...
3
Notice the possibility of trade war could really hit states that voted for Trump. What will Iowa do if both its pork and its soy beans are subject to tariffs so that no one in China buys them.
6
"What will Iowa do if both its pork and its soy beans are subject to tariffs so that no one in China buys them."
Iowans will vote for Trump again.
2
So, after China implements retaliatory tariffs against US agriculture, who gets the business?
How about Russia, whose seventh largest export--and second-fastest growing export--is cereals (wheat, barley, corn, etc.--verifiable on multiple independent websites)?
No collusion here, of course...unless Putin plans to personally deliver Trump's commission check at the White House meeting.
8
How do you know Trump is lying?
His lips are moving.
Also, as Seth Meyers pointed out, how do you know when Trump knows something?
He says he doesn't know. Like Cohen paying Stormy Daniels.
Because if you ask him about almost anything, he says he knows all about it.
8
Wharton must be so proud of it's alumus in the White House. He must be doing wonders for their reputation.
6
Given all the hoops that Americans have to jump through to get into a university such as the University of
Pennsylvania, I wish I had asked their recruiter, trawling for wealthy families at our Sydney school... ‘’How did Donald get in there?’’
Unfortunately, that was 10 years ago.
2
This _is_ what governing without vision looks like. He has no organizing constructs. He understands mechanisms of governing poorly and has no inclination to learn. He's a lonely boy/man trying to see which ways of behaving get him the most attention. And he has no capacity to comprehend the potential for widespread harms his flailing about may cause.
Very sad times in America.
5
Flail, ain't this the truth.
1
What are the chances that we as a nation will learn from Trump and not repeat this nonsense of electing someone with no experience in governing or someone whose ethics are nonexistant?
I have doubts.
That Roy Moore received half of the votes cast in Alabama shows that as a country we are so divided that people would rather elect a sexual predator than a Democrat. This says a lot about the emotion driving us to make stupid choices that ultimately hurt us all.
Will we learn from these mistakes? Some might. But ignorance and bigotry will stop many.
2
Talking about intellectual property doesn't get any cheers at a rally. He needs to keep it simple so he talks about trade deficits and tariffs. There is something to be said about pursuing policies that can actually be explained to the American people. It's important to have popular support for your policies. It's also important for those citizens who choose to be informed to be able to see if policies are working or not. It would be great to see more and better reporting on the facts of trade and immigration, so more citizens could make better judgments about our leaders.
1
With a trade war,Trump is stepping on toes bigger than his own. He doesn't know the numbers.
His timing is perfect for the Republicans to lose the mid-term elections.
5
A clear and concise bit of sanity, as usual. May I offer a headline for future pieces? (It's likely to become even more relevant as the months go by). The US economy is Too Big to Flail.
4
My question is: who's profiting from this turmoil? I suspect it's large, agile institutional investors, who are preying on the slower-footed personal investor community - upshot being more wealth flowing northward to the very top.
Perhaps markets, but not all marketeers hate uncertainty? I'd be interested in thoughts on this dynamic.
9
Trump only wants to hear "All hail!"
But with his lyin' Art of the Flail,
The country is becoming frail.
Really, Trump should be in jail.
The time if long overdue
For the GOP to bail.
5
Flailing at the Flailing, a most disappointing piece. Trumps goal is to claim victory, which he will do based upon any change. Whoever benefits or loses is not relevant
Why are Republicans not squawking about this? How can they accept this moron wreaking havoc on the economies of the world without any actual strategy?
9
The GOP knows only one thing - tax cuts for the rich. Having gotten that in spades they are now adrift, bereft of ideas, incapable of governing, unwilling and unable to rein in Trump. They are failing to do their jobs and failing to represent the American people. They need to be kicked to the curb en masse in 2018. And if the market continues flailing and tanking, they will.
3
Trump predictably says something to depress stock prices -- buy! He predictably says something to restore prices -- sell! What's not to like?
4
Republicans complained incessantly about the uncertainty heaped on business by President Obama’s policies.
Now, we have the Republican's President and he starts a trade war with China. But not one mention of uncertainty from Republicans.
13
His supporters like to think that his "flailing" around makes him look cunning and unpredictable. And he does literally flail his arms around, when he is not in defensive arms folded close to his chest mode.
This flailing looks more, to my eyes, as someone trying not to fall off a cliff.
republicans must feel that their gerrymandering and voter suppression is fail proof and that there is no chance of that "blue wave" toppling them from power. If not, one would think they might try to restrain him from acting on his worst instincts. By the time the election gets here his base is going to become very tiny.
And the republicans will have shed any semblance of the conservative mantle they once wore. It will be there for all to see that they are not socially conservative or fiscally responsible or morally superior to democrats in any way, shape or form.
10
My travels in China indicated am impressively expanding nation that works on long term plans for the future. There's a five year plan, a ten year plan, etc. I read an instructive book when it was published in the latter 1990's, "One World, Ready or Not", by William Greider. He outlines the deals, aka "concessions", that American corporations arranged with China in order to gain access to all that sweet, sweet cheap labor = big profits for their companies. Technology had to be shared with the Chinese, etc.
Our corporations GAVE all of these openings to the Chinese, who folded them into their long range plans. We see it outpictured in the China that exists today. As Thomas Friedman said, "Comparing the US infrastructure to the Chinese, is like comparing the Jetsons to the Flintstones. And America is the Flintstones."
22
Calming down Trump and his supporters on trade requires re-framing the argument. They are genuinely concerned that we run a deficit of $350B per year with China. That sounds bad. The broader question is, what harm, if any, is caused by our overall international trade deficit, which runs at about $69B per month (January 2018 figure). Does this imply, in the long run, a wealth transfer abroad? What should be done about it?
Trump is being myopic by focusing on the goods deficit only with one country. The China trade issue is more about intellectual property and there not being a level playing field. If we frame the question more broadly, we can then decide what should be done in each specific instance.
Anyone care to answer the larger question: Are we doing harm by running a chronic deficit overall?
4
“…Are we doing harm by running a chronic deficit overall?...”
A current account deficit is harmful because it reduces GDP growth and employment.
China’s GDP growth in dollar terms is already higher than ours. Within a few years ours will not be the largest economy in the world.
A current account deficit tends to self-correct. When we import we supply dollars to the foreign exchange markets. When we export other countries demand dollars from the foreign exchange markets. When we import more than we export the supply of dollars exceeds the demand and the price of the dollar drops (the dollar weakens). This makes us import less and export more, correcting the deficit.
However, our current account deficit is not correcting itself, but has instead become chronic. This is due to the chronic federal budget deficit.
To eliminate the current account deficit we need to eliminate the federal budget deficit by increasing taxes and reducing unnecessary expenditures. Tariffs simply won’t do it: they not just reduce imports, they also reduce exports. Besides, tariffs are highly regressive, as they affect lower-income families proportionately more than higher-income families.
Our children and grandchildren will not pay for the deficit. We will pay for it with higher unemployment and lower wages.
2
The problems of world trade, growth, poverty, climate change and forced migration will not be solved by school-boy micturition games. Trump is driven by emotions that fluctuate by the hour. He has boasted that his election fueled the market, but what he has actually caused is volatility--in trading, in foreign policy, and in social unrest. We might find that all more tolerable were there an actual rational plan behind it. There is not.
8
Unfortunately, his idiotic fans in farmland are too uninformed to realize a trade war will hurt them bigly.
10
Same goes for their idiotic denial of global climate change.
Trump's denying base is right in the cross-hairs for the worst global climate change has to offer.
I for one have no more sympathy left for stupid people.
11
There are no "stupid" people, only misinformed, brainwashed people.
The only way to stop the anti-patriotic influence of Fox News on conservative voters in this country, is to engage in real, respectful debates with them, accepting that detaining the truth is never a character trait or something to applaud ourselves for, but rather the the result of objective investigation, result obtained no matter WHAT investigators personally believed to be true before they started their investigation.
We're in this together, and we'll only get out of it together, NOT by imagining that somehow Trump voters have some innate and incurable problem ...
In other words, the worse we can do is to start imitating the GOP when they try to make their base believe that those who disagree with you politically MUST somehow be evil people, or "inferior" human beings.
A democracy can only thrive when ordinary citizens engage in real, respectful debates about what the truth is and about philosophical disagreements that will only exist and SHOULD exist in any society that aspires to become a more perfect union, as politics is about deciding the future without having access to that future already today, so we NEED different philosophical perspectives in order to explore what could be possible.
And once you respect people's philosophical choice, you can together go through the science about climate change, for instance, and together verify what has been proven today and what not.
Unfortunately, Trump rules by fiat according to what he heard on Fox. Still adding to the confusion, his advisors whisper that Fox may have the issue wrong, so he vacillates. The following day he is back to his original concept but still lacks any knowledge to how or why that may or may not work. Trump is an ignorant fool and prefers Fox's loyal sound bytes to his daily briefing. In this Administration, the truth is damned.
This has become the political policy of America in the twenty-first century. To further America's problems his Cabinet, Advisors, and Staff change daily, therefore, there is no consistency and the WH is in chaos. Trump also has a real knack for nominating individuals to positions that they lack the necessary skills and knowledge to lead. His only judgment in any nomination is their total loyalty to him.
While his base adores their crude strongman, Congress is unwilling to stop this conflagration. At what point we should decide to fight this wildfire, is either unknown or possibly too late.
7
Flailing. That's what people do when they are lost and scared...Trump has so many balls in the air it's just a matter of time before they fall and will bury him .
2
It makes me positively ill to think that I will be mailing a tax check off this week to this bozo. Given his and his administration's priorities and proclivities -- his idiot's wall, his endless flights to Mar-a-Lago, his proposed military parade, his utterly corrupt cabinet -- I might just as well flush my check down the toilet. In fact, I'm still considering it.
13
I think that Trump is expressing the emotion of many of his supporters:"I am mad as hell and I am not going to take this anymore." This may suit the Trump faithful but it is no way to conduct the complexity of trade policy in the world. At best, this is a bluff to obtain more leverage in a new trade deal with China. More likely, the Chinese will call that bluff and remain the dominant trade partner.
5
The "On again - Off again" threatened tariffs do not frighten China . . . "They" fully understand the Orangutan-n-Chief . . . a.k.a. Captain Blowhard and are fully prepared to throw it right back in "his" face.
The stock market, on the other hand, is a little less sturdy, and will continue the roller coaster ride until there is some actual law on tariffs - or not.
I must say, as a New Yorker, I am experiencing some schadenfreude when seeing most of the Red States shudder in acknowledging their savior-n-chief as they see the prospect of crops losing value.
Of course is quite the Pirate in regards to the intellectual property of others, and should be held accountable -
However, do we just look the other way at the huge profits of companies like Apple, who "play" these trade loop-holes to their advantage.
Just like Healthcare . . . World Trade "is" complicated -
"Who Knew" !
8
Trump needs Jimmy Kimmel's Shiloh to do his trade negotiations...
https://youtu.be/SmpfavT-9zI
Narcisists thrive in chaos. Res ipsa loquider.
2
Paul Krugman predicted that if Trump was elected the market would crash & never recover. Paul Krugman was a part of the dream team that gave us the Obama lost Generation which basically wiped out my 30's.......
Anyone who listens to this guy now is as stupid as he has proven to be.
Jon P,. the stock market crashed before Obama got in to office. It rose from 6000-19,000 under him and we set a record for continuous job growth for consecutive months under Obama. What are you talking about? Get your facts straight. And let's see how the economy is at the end of Trump's term whenever that may be. We are not the stupid ones and we do not use ad hominem attacks to make our points but actual facts.
11
At the rate of job creation of 2015 and 2016, 10.1 million jobs would have been created in 4 years.
At the rate of job creation of the last 15 months, only 9.1 million jobs will be created in 2017 through 2020, the tax cut and the regulatory rollbacks notwithstanding.
At that rate, by the end of this administration there will be a net loss of 1 million jobs relative to the ones that would have been created at the pace of the last two years of the previous administration.
The tax cut will further strengthen the US dollar, increasing imports and reducing exports, thereby increasing the trade deficit and reducing job creation.
If the economy had continued creating jobs at the pace of 2015-2016, 3 million 200 thousand jobs would have been created by now.
That would have been 400,000 more jobs than the 2 million 800 thousand jobs created to date during the current administration.
No president could compare—in terms of the vilest stupidity—with our very own swamp creator and carnage creator
3
Mueller's getting closer, so the traitor's wacky act increases. A direct relationship. Just wait till the word "target" comes out. Can the nukes be far behind?
PROSECUTE RUSSIAGATE!
3
Trump lives in a world of winners and losers. A winner gets ALL the marbles. If not, he’s just another loser.
1
Trump is a moron preaching to idiots. What could possibly go wrong?
He may have gotten a business degree but he certainly didn't "study" economics (fellow students say it's questionable whether he even attended classes when he wasn't back home partying in NYC) and definitely not macroeconomics. Neither did most of his followers, who zoned out during high school Econ class (assuming their high schools still required it after eliminating Civics--which also explains why so many voters are spectacularly ignorant about how government is structured and are therefore gullible and susceptible to conspiracy theories and right-wing propaganda).
5
After the DJIA crashes to sub-19000 (the level it was at when Trump was anointed), a "Dump Trump Bump" can be expected to bring it roaring back to 26000--the same irrational peak it was at when "Wall Street" realized it supported an idiot leader who shot it in the foot.
4
I remember when the US government encouraged farmers to plant wheat from bar ditch to bar ditch and then President Jimmy Carter placed an embargo on wheat to Russia. Carter did a lot of stupid things but that was one of the most stupid.
And your point is? That you can find a single economic policy decision in the last 40 years that you consider worse than Trump's myriad disasters?
3
And we know from psychology that saying or doing one thing one minute, then saying or doing the opposite the next minute is associated with provoking anxiety, neuroses, and even pathological behavior.
Sure enough, polls indicate anxiety and stress over politics have increased significantly since the Trump campaign and presidency.
http://www.oregonlive.com/health/index.ssf/2017/03/anxiety_in_america_up...
Donald Trump is not only bad for our economy, he is bad for our health.
https://www.washingtonpost.com/opinions/president-trump-actually-is-maki...
This article includes suggestions about how to cope with Trump Stress.
http://www.nydailynews.com/news/politics/cope-president-trump-stress-dis...
One article says even Trump supporters are distressed. One reason: They feel misunderstood.
Impeaching Trump or getting him to resign could be very good for stabilizing the economy as well as reducing stress, illness, and our nation's health care costs.
2
Uncertainty, CEOs advise, is poison for big business.
Yet, Republicans support this Deal Faker president whose economic m. o. Krugman charitably describes as "the art of the flail".
"Conservative" no longer describes Republicans today who are content to idly stand by watching daily shock waves applied to the US economy like Dr. Frankenstein up in the night in his dark castle.
Republicans must stop this maniac who can't get a grip on himself.
7
I seem to recall that protection of intellectual property rights were a big part of TPP. Another example of setting fires and then excoriating the firemen for not putting it out. Genius.
10
Trump has crippled America's prospect for developing new intellectual property by preventing foreign students from attending US universities, and imposing higher costs on prospective college students who are already citizens. The wars on Science and free education probably don't help, either. America will never benefit from the discoveries of thousands of talented scientists and engineers. Other countries will be glad to take our place.
8
Donald Trump is good at the Art of the Flail with six bankruptcies and 4,000 lawsuits behind him. I wonder how his supporters thought he was a success.
4
That would have required either some research, or moving the channel off of FOX.
For many, the illusion of competence and business savvy from the Apprentice was enough. I've actually gotten this from red hatters.
4
Yes, China is awful on intellectual property rights. But the United States is no angel, what with some illegitimacies all over the map. We are not in a good position to cast the first stone.
More to the point is the total incoherence of the Daily Tweets. But that is surely not news. Perhaps the cure to stock market rollercoaster rides is to ban Twitter.
1
Perhaps if Trump sought economic advice from trained economists instead of TV commentators he might understand the big picture. Of course he knows more than anyone about everything. He is a stable genius. One thing is certain - Xi will be in office longer that Trump.
4
Facts and truth and nuance, oh my. You think that the trumpists care? Fight on, professor.
3
Would our trade deficit with China decrease if China stopped buying our treasuries? (Not a rhetorical question.)
4
Trump is too stupid to realize that the only way he can reduce our trade deficit with China is by competing to see which country can dis-employ more people in the other country. And the Chinese know where to target tariffs to maximum effect in Red and Swing States--even in Red parts of California producing fruit.
Why is Trump so confident that his base will get "tired of winning" because 3 or 4 or 5 Chinese workers are dis-employed for every one American worker? Chinese workers don't vote; American farmers and workers do.
4
I would have thought that a smart person like the author of this opinion piece would have already figured out Trump’s negotiation tactics by now, the traders on Wall Street certainly have and they are fearlessly trading on the volatility. I remember that a Middle East expert once observed that Jimmy Carter failure to negotiate a resolution of the hostage crisis in the 80’s was due to his lack of understanding that Iranians typically negotiate “like rig merchants”, meaning that their opening offers are exaggerated and confrontational. They expect the same from others but eventually they settle on a price that the buyer thinks is reasonable but is higher than what the merchant was really willing to settle for. Like most Americans, who are too polite to behave this way overseas when negotiating with local merchants, we are more concerned about diplomatic propriety then with winning the negotiations. Trump is only concerned with winning and he is playing the game like a true rug merchant. Settle down and enjoy the ride.
I agree with you about Trump's motivation, but I'm not positive it will work. Trump hasn't been able to negotiate with Congress because he doesn't understand either the issues or how Congress works. I haven't seen any indication that he understands international trade or China's economy. Also, the Chinese have the reputation of the best businessmen in the world, maybe even better than a shady NY real estate guy.
2
Chinese leaders are not Iranians. Chinese leaders were making trading decisions before Germany, Trump's fatherland, became a unified country, even before Prussia became a European power. As for Wall St. trading--the "market" is not the economy, and the trading you mention is a pox on our modern civilization: it has turned investment into a casino activity.
5
Des.
I agree with you about Wall Street Traders but don’t over estimate a communist Chinese leader’s ability to negotiate against a very capitalist New York real estate deal-maker like Trump. I get that you may not like him, but give the devil his due.
Trump's trade policy may be incoherent, but I think it has two coherent motives: first, it is meant to give Republican voters, especially his blue-collar base, the impression that he is being tough on trade, in the interests of preserving their jobs. It'll be years, if ever, before they notice that it has not benefitted them. Second, Trump is staking out a bargaining position, in order to get from China more concessions than if he initially asked for more reasonable terms. This is the Art of The Deal, as Trump conceives of it: essentially a competition that one side wins and the other side loses. The problem is that the "winner" is encouraged to crow and to seek further concessions, while the "loser" is determined to get back and get even. It works best where the deal is one-time, and the two parties have nothing further to do with one another. But the U.S. and China will have an ongoing relationship, in which a mood of resentment will produce a lingering desire to get back and get even.
3
Those of us whose sole investment in "the markets" is an IRA or a 401K have little to no control over how our funds are invested, so we can only sit tight and hope that the market doesn't crash just at the moment when we hit retirement age.
But there are people who deal in stocks every day, who look for opportunities to buy low and sell high every minute of the day. Are those who are "in" with the president getting tip-offs from the White House? Is the president himself making money by causing uncertainty and creating mini-panics? I hope someone in the Justice Department is tracking the investment habits of the Trump family and their insider accomplices.
9
He publicly calls out Amazon and their stock takes a dive? Are we to think Ivanka, Jared, and the Emoluments Man himself aren't making a bundle off his tweets? This is collusion and insider trading, and it's illegal. Martha Stewart went to jail for less.
1
Some years ago I decided to try to buy made in America clothes. It's difficult, because most cheap clothes come from China or Southeast Asian countries. But I found many start-ups or storied brands that still made clothes or shoes here. They are, of course, more expensive than the clothes at Old Navy or Walmart.
My point is, Trump could be encouraging his base to support these American-based businesses. Instead, he takes the low road, blaming the foreign manufacturer while his base goes on blithely buying clothes with "Made in China" on the label. There is no "Ask not..." strategy here. The base isn't willing to sacrifice their cheap clothes, instead expecting their father figure to fix the perceived problem.
6
Encouraging "Buy American" is contrary to the rules of free trade. Trump is a free trader but pretends to be otherwise, making decisions on simple, fleeting, political calculations.
1
Your views agree with my own observations but I am afraid that these views are not having any effect on the WH and the Congress.
I base my views on the recent C-Span coverage of President Trump's rally/speech in West Virginia and the commentary of Mr. Navarro on C-Span. So far I have not seen any reporting by the printed news sources on the erroneous hyperbole of President Trump.
I think your very concise tutorial would benefit the WH but I doubt they would respond.
It seems that the trade deficit is being elevated to the same level as the Federal Deficit Issue that was so vexing to counter in the 2010 Election, in hopes of turning votes to the Republicans.
Meanwhile our and the World's future which depends on the meeting the challenging task of converting the global economy to non-fossil fuels and is probably much more difficult than meeting the challenges of competing with Germany on Nuclear Weapons and the lead of the Soviet Union in space when the signals of Sputnik began. The US met the challenge with the Manhattan Project and the Apollo program but it seems that our policy community is ignoring the huge challenge of mobilizing to create a new source of non-fossil energy.
We also seem to be ignoring opportunities to deal with the huge income inequality problem and the inefficiency of our aging transport system. Since the 1990s we have know that the Interstate Highway System was outmoded and doesn't meet the task of moving goods efficiently and safely.
12
Welcome to Kochland, owners of the GOP and patient temporary tolerators of Trump.
3
Paul has been minimizing the fallout from the decline of American manufacturing and the rise of China ever since he attacked William Greider's book of warning: "One World, Ready or Not: The Manic Logic of Global Capitalism," in 1997.
Greider didn't have the professional credentials or econometric models to make his case, just his globe trotting interviews with those immersed in world trade - and his own common sense understanding of the decline of previous economic superpowers - Spain, Holland, England - a view Greider shared with the now
silent Kevin Phillips - that said troubles follow for economies which favor finance over making things.
No mention of Chinese leadership role in reducing the price of wind turbines and solar panels and their desire to capture even more of the techno-cutting edge of IT based electrical grid management and storage...even as they are still 75% dependent on
coal.
Krugman has made major miscalculations in underestimating the social and economic pain generated by his model for globalization - the status quo - which Germany and China dominate in trade.
This underestimation of "pain" in the working class population has led to the rise and appeal of demagogues like Trump, who, as he does on most issues, flails about, but at least he has grasped the importance of the rise of China, and the decline of the US.
If Krugman wants to keep the present system, then he should move left on labor market issues. A "Rubicon" he won't cross.
2
Pain in the working class is precisely the aim of the ultra-libertarians who want to end the popular franchise.
2
"Precisely the aim" ? I don't know about that. Libertarians don't give class much weight to begin with, after all, we all can be entrepreneurs, can't we, even though in America, the nation most obsessed with entrepreneurs and small businesses, a religious attitude, really, the numbers of the blessed have never risen above 10-15% of the work force, depending on whose definition one consults.
Each of the major constituencies of the progressive forces - has a different focus: labor, feminists, black lives matter, hispanic Dreamers, greens...while the AFL-CIO uses language that betrays their wish to get everyone, as fast as possible, into the middle class...the clear implication is that it is a bad place to be in the working class and that we all can escape. They can't even deliver moving Labor Day messages anymore. Get Joe Biden.
Naomi Klein had the right perspective about the election results in 2016: Hillary Clinton (and Krugman here) said "all is well" while Trump the demagogue said "all is hell" which is an exaggeration, to be sure, for the upper middle class dominated party of professionals that the Dems have become - Krugman's voice the perfect trumpet - while the Red State residents simmer on both the cultural and economic back burners.
Time for a green New Deal, guaranteed employment, a new CCC and WPA...they form the current, the Rubicon that Krugman and many other economists, like even Dean Baker, will not cross. I'm for a Second Bill of Rights, FDR, 1944.
In order to find a new name for Trump's lies, one of his advisers told the media to call them "alternative facts". Most of the time, when he calls something "fake news", it's actually not because an information has been proven to be wrong, but because he wants to promote his "alternative facts".
Of course, the very notion of an "alternative fact" never made any sense, by definition.
So we should call them "Trumped facts" from now on, each time that we have to talk about information that has been proven to be false but is nevertheless the "official truth" we're asked to believe to be true by the president of the United States.
And as Krugman just showed here, Trump's tweets and policy ideas about trade deficits are just that, Trumped facts.
Media spreading those facts as if they're true and proven facts, rather than debunked information, can safely be called official government media, as long as Trump is president or as long as the GOP continues to fill White House cabinet positions with people who adore using Trumped facts as basis for the implementation of government laws.
All dictatorships have their official state media, which you only watch in order to know what the government wants you to believe.
Sinclair, Fox News and Breitbart clearly belong into that category too.
11
Mr. Krugman asserts that China "has pretty much thumbed its nose at international rules on intellectual property rights, grabbing foreign technology without proper payment." Further he suggests that "getting better protection of patent rights" might be a goal for US officials.
I've seen no details that back up these complaints which, to this reader, sound like Pentagon talking points. Do you have any examples of when our businesses were forced to hand over their technology? Or did the Chinese simply drive a hard bargain? Or is the Pentagon opposed to what we're selling the Chinese?
Has the US or any other developed economy raised questions about Chinese patent protection at the WTO? Have any issues about China been raised at WIPO?
We honor our captains of industry for making wheelbarrows full of money and producing gizmos useful in our weapon systems, but we second guess them when they start selling things that some Pentagon bureaucrat imagines might affect our national security. That's inevitably when we're treated to that tiresome quote usually attributed to Lenin: “When it comes time to hang the capitalists, they will sell us the rope.” In other words, free markets work except when they don't.
We have an export control regime. Isn't that the place to discuss technology controls?
Mr. Krugman usually gives us solid details, but not here.
6
Here are the details you're looking for (including a link in the article to the WTO report):
https://www.ip-watch.org/2017/01/10/15-years-wto-china-still-weak-many-i...
1
So, leave China's assembly operations untouched. Would you agree to that in exchange for a weakening of intellectual property laws, with a reduction in barriers to entry for professionals thrown in? Our workers would continue to be able to buy cheap toasters, which turns out to be pretty important, but maybe they'd also get to take their kids to the doctor from time to time.
1
Most importantly for many consumers is the fact that they don't pay much for goods made in China. In fact, the price of virtually everything from toys to clothes to electronics is way cheaper than in the past. Remember people sewing clothes because buying patterns and material was so much cheaper than buying ready-made clothing. No more. Now it is so much cheaper to buy clothes off the rack, especially in big box stores. Imagine how Walmart and Target customers will feel if Chinese goods get more expensive.
12
According to the US Census Bureau, the trade deficit is 375 billion, not 340 billion. But as the good doctor says, who's counting?
US Exports Imports Net Deficit
TOTAL 2017 130,369.5 505,597.1 -375,227.5
1
You sure you have the right source for that data? (you may not ....) And even if your number is right (it probably isn't) is still a lot different than the nonsense the corrupt draft dodger trump spouts and much closer to Krugman's number.
And by all mean, hopeless, continue nitpicking the person who won the Nobel Prize in economics - on economics. You don't look silly at all trying to do it. (you do, actually.)
3
Our President is one of the poorest people on Earth. No heart, no love, no friendship, no health, no beauty, no intelligence, no warmth, no care, no imagination. A black hole of lust and greed and loneliness. I don’t pity him, cause of his harmful impulses, but he is a pitiful creature. As are his hanger-ons.
26
Trump likely feels that if the economy tanks, then the masses in their misery will rally even more to his rantings and threats (just as in an earlier generation, in Germany, they rallied to the ravings of another leader with equally distinctive hair style).
12
Trump has such an old fashioned mercantilist view of trade perhaps he should hire privateers to raid and plunder the Chinese container ship-galleons loaded with TV's and Blu-Rays!
15
A fail, ha! I see "look presidential, Mueller's coming."
3
China's Sun Tzu's 'The Art of War' preceded Donald Trump's 'The Art of the Deal' by 2500 years.
For most of the past 2200 years China has been a socioeconomic political socioeconomic educational diplomatic military scientific technological superpower. Nearly 20% of humanity is ethnic Han Chinese. While Americans are 5% of humans.
America has the world #1 national nominal GDP. And China is #2. But on a per capita basis China is # 79 behind the Dominican Republic and Iraq. China is going to flail and fleece America in any tariff trade war.
5
As long as Donald Trump is on every front page that is all Donald Trump cares about. That said, the corporations that cough up their intellectual property as a condition of doing business in China do so of their own volition. They were not struggling before they entered the Chinese market and their value judgment to surrender said intellectual property in search of greater profits is on them. Arguably China needs them more than they need China and had they played hard to get China would have capitulated.
6
Fox news is running America. Figure it out.
10
Are tariffs the best way to deal with a bad faith economic actor like China, who extorts companies into providing their trade secrets in order to gain access to their domestic markets (or who simply steals the information)? Who knows. I can tell you this: Paul is good at calling out games of heads I win, tails you lose.
As much as I feel like I’m going to turn into a puff of smoke for saying this, I agree with Trump, at least on the big picture: enough with the ‘China-as-a-bad-faith-economic-actor’ in the world where they are welcome to our market, and our companies are highly coerced to gain access to theirs. Yes, Xi understands that for his Stalinism to succeed, China expects first world developing, pronto, which is the major impetus for much of China’s unfair economic behavior for the last 20 years. To their defense, the rest of us have been stupid enough to let them do it.
To Trump’s credit, he’s doing something about and forcing the issue.
To our detriment, it’s probably going to blow up in our faces because the effective answer was Obama’s TPP and trump is too much of a small minded idiot to effectively deal with anything like an adult.
7
Follow this through. Assume 2/3 of US grain harvest is exported AND global warming is turning farmland to desert as it has is Syria, Iraq, Iran, and East Africa and elsewhere. Now also assume American farmers with tariff restrictions can’t get their crops to market will stop growing as much grain. This will leave an imbalance with more demand (hunger) than supply. It’s a perfect recipe for war and refugee migration as happened in Syria. Trump is playing with fire, possibly a more deadly game of “Russian Roulette”. This must be stopped before it gets to a catastrophic level. One of Hitler’s motives for starting a war was to acquire “living space” to his east to feed his growing population.
6
Flailing is not an art form: it is the desperate action of a drowning President. A man who not only cannot think, focus, or read but also does not want to and will not.
9
Paul, NEGOTIATIONS 101 for you. You ask for more and you end up somewhere in the middle.
It's a pretty simple concept, even dark-skinned people like myself can understand.
1
Greg, I think you missed the gist of Dr. K's article here. One of the main points is, its not clear what - if anything - trump and his merry band of idiots want from China.
So, I reckon in Negotiations 101, they teach a negotiator to have a goal when entering or planning for a negotiation, not to go in and wing it. And negotiation for no reason when one need not do so is a bad idea - a.k.a., never negotiate against yourself.
Yes, I'm sure i've read that somewhere.
(And skin color has nothing to do with any of this, odd you bring it up. To be Honest, that seems like troll/bot behavior.)
3
Wall Street titans and Walmart patrons voted for Trump. That curious intersection has now become a deadly crossroad where everybody is getting hurt. Oh, and flying over the wreckage won't help you avoid the carnage. China cut the wings of Boeing with big tariffs. Everything crashes and burns under Trump.
6
So who's trading on the insider information?
6
I agree with Krugman today. We've survived the worse of this . Barely survived as far as many Americans are concerned. Many Americans did not at all. Thank you Dems & Reps. Another example of how Trump came about.
Anyway, into the present and on to the future.
“For while trade is one of Trump’s two signature issues — animus toward dark-skinned people being the other.”
Ouch! Good one.
4
We all know trump couldn't find China on a map if his life depended on it and couldn't spell "trade deficit" if you spotted him the "trade" so this trade tantrum is obviously one of stephen miller's cocaine addicted babies.
7
Stronger intellectual property protections will do nothing for employment or workers incomes, anywhere. They will increase corporate monopoly power.
Imagine if US prescription drug patent protections were extended to the entire world.
2
Right, by definition US patent protection only exists in the US. (That's the "US" part of "US patent protection.) You might be shocked to know that many other countries have robust patent systems as well. And there's the EU ... European Union.
No imagine if there were no patent protection for drugs made by pharma companies that invest billions in R&D. Then poof - the druge wouldn't be made b/c no patents a way to recoup investment.
Back to the drawing board with your comment.
1
If I buy a new car for, say, a willingly negotiated price of $35K and it works as designed and advertised, drives nicely, transports me and my family around as needed, and I keep title to the car as long as I wish, does that mean that the dealer "stole" $35,000 from me?
Just asking. Like the President, I missed Economics 101. What did they teach him at the Wharton School for Very Smart and Stable People?
12
Though much is said about the “theft” of intellectual property, it actually has been given away by outsourcing.
For example, when a multi billion dollar chip manufacturing plant is built in the Far East to take advantage of lower costs, that plant includes the training of engineers and scientists involved in running and updating that plant. The plant is a hands-on education in chip design and manufacture.
Who identifies and solves the problems of the plant and learns what has to be done to improve matters? The folks working in the plant who identify the problems, or the “managers” in the States investing their stock returns??
The only theft involved is the stealing of American jobs, from the simple assembly of parts to the high-level intellectual activity of designing the next generation of technology.
8
I'm not well versed in economics, but from my practical seat at the table, you hit the nail on the head. I would add that countries like India seem to be doing a better job of educating their work force, or maybe those folks just have better sense. When jobs dry up and schools are not up to par, those who want to get ahead move, and get the education and training and the jobs.
2
The challenge for Dr. Krugman remains (and goes unanswered): name one rich first world nation which didn't get that way by stealing intellectual property. How about us, for example, when *we* were an emerging economy?
Worse still, it's the U.S. which demands that *it*, as a representative of big Pharma and the likes of Microsoft, sets the rules. Americans can't escape that patent/monopoly/copyright tyranny, bought with compaign contributions, but why should the rest of the world be beholden to it?
4
What needs to be investigated is Trump's abuse of his power over the stock market. He can cause it to fluctuate widely with a tweet and we know that people in his orbit are trading upon their insider knowledge. See Carl Ichan.
Trump's greed is such that he too may be trading upon his remarks and we would never know because he does not release his financial information.
As regards China, no one will know what Trump is actually going to do until Trump does it. The will he, won't he keeps the game going for him - which he loves - and most likely he has no idea what his final position will be.
12
They would rather fight each other and court their donors than fight for their constituent's welfare.
2
Yes, it appears everyone recognizes the shortcomings of Trump. That said, Trump has raised an issue that he correctly states has been ignored by politicians on both sides of the aisle for decades. Why has our political class allowed the theft of intellectual property rights for decades? Why has the political class not done anything to reset the playing field regarding loss of U.S.
manufacturing jobs over the last many decades? Yes, many of those jobs would have disappeared through technology. Yet, the political class failed to act. As for a workable immigration policy, the same can be said. The political class ignored and delayed - only to allow a biased incompetent to pick up on this issue. While we all love to blame Trump, let's take a look at the hole we've dug for ourselves by allowing the political class, aided and abetted by corporations and their lobbyists, to ignore what is best for the citizenry of this country.
7
Intellectual property was a major part of the TPP, which this president pulled out of largely because it was developed under the Obama administration. He didn't have a clue what the agreement was about, just that it involved other countries and Obama was instrumental in the negotiations.
17
Yep. Not to mention that Presidents have worked on the problem since at least Reagan.
Maybe you just weren't keeping up. Obama had plenty to say about this, and as the poster below pointed out: TPP actually did something about it. I did not dig this hole. I vote Democratic and I most assuredly did not vote for Trump.
4
How many of Trumps inner circle are privy to his trade rants ahead of time. There is money to be made on this volatility and you know that there are some insiders making it.
10
I would say the real scandal now in this country is the millions of Americans who still love Donald Trump.
28
Scandal?
Only if you thought republics were good people before trump was appointed.
They are the same racist, sexist xenophobic liars now as they were before trump.
3
"Conceptual confusion," let's be honest, the man doesn't deal in concepts, he deals in mystical precepts
3
Seems to me that Trump is in full-blown re-election mode. Saying anything that comes into his head on any number of topics especially those that he ran on in 2016. Problem is that now he can actually do something instead of just spouting off.
Who knows maybe he will send the military to stop containers from being off-loaded from Chinese ships to protect our borders?
2
He never stopped being in full campaign mode, and that's all that he's interested in and does. Governing is for his cabinet and lawmakers in Congress.
By doing so, he might be on something though. After all, Obama lost the mid-term elections mainly because he was eager to do the job and try to do it well. That allowed Fox News and the Huffington Post to take over all "messaging" - Fox News inventing fake news and attacking him on a daily basis, while the Huffington Post constantly wrote big headlines that "he's not into you" each time that he accomplished something big and as a consequence had managed to negotiate a compromise between the different factions in Congress.
So with one progressive media standing at the sidelines and yelling "not enough" each time Obama, struggling in the mud, made an important step forward, and with all conservative media shamelessly turning him into an Evil Person, you had to almost be a policy wonk to still understand that Obama the president was exactly the same person as Obama the candidate.
(and then we're not even talking yet about the fact that in America, yelling and screaming is perfectly fine, even for a president, if you're a white male, but would have been considered to be absolutely horrible if the first black president would have done so).
Conclusion: yes, supported by FN, Trump's "messaging" works, as most Republicans continue to support him even though he accomplished nothing. So his job is campaigning, and that's it...
2
What? You expected Trump to be rational and actually think through the consequences of his policies before acting? You expected a man with no empathy for others to actually care about the pain he inflicts on them? No, of course not.
Trump ignores altogether the untoward consequences of his actions, refusing to accept responsibility for them. In the alternate reality in which he exists, all issues are black and white, rather than shades of grey, where most Americans live. In economic terms, Trump has no indifference curve, because personally he doesn't have to be indifferent. To him, everything is a simple zero-sum game, even though it isn't to most Americans. The pain he inflicts on others is irrelevant to him, because he has no empathy.
Trump, above almost all else, is a disrupter. Always has been. He thrives emotionally by shaking up the established order, and his emotional state is what drives him more than anything else. The fault is always someone else's rather than his own, and he lives from tantrum to tantrum.
In Trump's case, the flail is not an art. It is simply an inartful, incoherent, pervasive, spasmodic, uninformed and reckless lack of self-control by a small man with small hands and an even smaller frame of reference, and there is only one letter separating flail from fail.
11
Incoherence and flailing about are hallmarks of Trump's character, and character does matter. This has been his M.O. since he first flailed and failed when he entered the Manhattan real estate market. He needed Daddy to bail him out of his first foray and set things straight.
Trump's older brother Freddie was supposed to be the heir apparent to the Trump Organization, but he didn't have the cutthroat qualities Daddy did. He marched to a different drummer, went his own way, and sadly, drank himself to death at the age of 42.
It was then Daddy turned to Donnie, who adored his father, and brought to Manhattan the family's nefarious ways practiced in Queens. In New York, Trump has been a brand of some dubious distinction for eons, schlock plus.
Trump hasn't changed, the country has. The American Electorate voted for an incompetent demagogue, and that is what they're getting. The Flailer-in-Chief is the fault of the American people. Feeling great, again?
DD
Manhattan
12
He's like the neighbor who offers to change your oil and you come home to find your engine dismantled on the driveway. I'm sure corporations are delighted that their stock prices are so volatile, and that their business relations with China are being manipulated so that Trump can look tough. And if Trump is really concerned with protecting America's intellectual property advantage, he could think about improving access to a good education in this country to help maintain our workforce edge in innovation.
9
Agree on all points.
Reflecting on the issues while cleaning out my garden, I realized that Mr Trump is not so much the Manchurian President as he is the Molotov Cocktail President. He’s throwing his hastily improvised bombs at every sector of American life, commerce, resources, institutions, philosophical underpinnings, virtues, freedoms, safety regulations, treasures, and future. Singlehandedly lobbing blows with a posse of thieves supplying him targets he might otherwise miss.
Further, Mr Trump disdains his citizenry so thoroughly that he throws crumbs their way in the form of “tax reform” netting them what I call Trump Change - not enough to half fill a small pot and too small for him to bother to hold onto.
All of these issues, actions, and political trends are both obscured and highlighted by his twist on the truth of factual reporting via the Press. Given his preference, he’d sign an Executive Order banning all but the Trumped Up Press.
11
Well thank goodness Trump has put his assets in a blind trust and released all of his tax forms. Otherwise we might have to worry whether, after discovering his ability to affect the market with just a tweet, he might be manipulating stocks for personal gain.
14
Ancient Sparta did not teach rhetoric in its schools. Montaigne said it was the means of playing to the rabble as opposed to using reason. How far we have fallen when the world hangs on this President's next tweet. We have progressed in the means of communication but fallen terribly short in its content and the leader of this fall from grace is the last person who should do so, your President.
7
They actually did teach rhetoric (to the minority that had access to schools), even though school programs indeed focused more on military training rather than on "humanities", compared to Athens.
But Sparta wasn't a democracy, it was an oligarchy, where only those who had been admitted in those schools and successfully finished the program, could then become citizens (and you had to be living there for generations before a child could enter such a school).
Rhetoric is the art of using words in order to make people approve of what you're saying and make them passionately support you.
If you look at their impact, Trump's tweets seem to be a wonderful example of how to use rhetoric in a 21th Western democracy.
That he doesn't need to use reason a lot is merely because those who vote weren't taught to use it a lot, so for them, rhetoric is all that they want in a president.
And that's how we may soon end up being an oligarchy again, because IF you have a democracy but then don't educate citizens seriously, they'll vote not for the best qualified candidate, but, as Michelle Obama just remembered, for the one that "makes you feel good" (and if none makes you feel goo, they stay home). And THAT is precisely the purpose of rhetoric ...
3
Trump knows what he wants...full control over America (especially the money) as he had over his organization. If he were curious, educated, or READ beyond tweets, he might be even more dangerous. As it is we have the Trump Train running off the tracks with an engineer who is not only unqualified, uneducated, but has serious mental deviations as well. Hold on, and either try to survive the journey, or use your vote to remove him from office. THIS Congress is too busy feeding their own agendas and filling their pockets to worry about the devastation the devastation that is sure to come.
6
The only aspect of Krugman's argument that is missing is that the flailing isn't limited to trade/economics. It is pervasive across all aspect of his Administration, including personnel.
One day we are going to build a big beautiful wall and the next day we are just filling in the gaps and then the next day we have National Guard troops taking up positions. He pushes for bipartisan legislation on DACA and then denigrates the proposed legislation. One day we are told a Cabinet secretary has the presiden't full support and the next day the person is terminated.
If the stock market hates uncertainty, then investors are in for an emotion-filled ride with Trump in the White House. After all, we've all read and heard that Trump is finally "coming into his own." Antacid purveyors look like great investment opportunities to me.
9
"We've been robbed"…this is the basic message that Trump Tweets and he quickly adds ," by China" ! His base loves this and it feeds the emotions of his base, just as a wall between Mexico and the US also feeds the emotions of his base.
Trump tries to rationalize his proposed tariffs as a remedy that will restore America to its greatness , which is also an emtional narrative intended to appease his base. In effect Trump is treating the world stage as just another campaign site from which to deliver a stump speech however this is unconscionable , it disorients our allies and increases uncertainties which investors around the globe detest.
The Trump approach may satisfy his base that views globalization as a dirty word but working people and farmers deserve much better economic leadership than emotional rants that are doomed to be ineffective and which could precipitate painful retaliations.
5
This analysis of Trump and his base is spot on. It is amazing how virtually every one of the conservative, Trump-supporting posters here demonstrate this short circuit between truth and lies, substance and propaganda, reality and fantasy. Even the well-spoken and apparently thoughtful Trump advocates just cannot see beyond the hype; they simply cannot separate fact from fiction.
2
God help us. We’re circling the drain with no way out. I wish I could move to Mars.
3
In addition to the usual concerns about weather--too hot, too wet, too cold--Midwest farmers with acres of corn and soybeans now must worry about a loss of a market for their products in China, the most populous country on the planet. And serious Republican planners worry when they see the overlap between these farming regions and their base.
Surely, the farmers now chatting over coffee in their local diners did not think this was what #MAGA intended.
7
Oh, you forgot the part where Eric and Don Jr are shorting the stock market with their advanced knowledge of the collapses.
3
James: Correction, China did not destroy the American businesses who used to manufacture our goods. Good old fashioned American greed and a complicit American population did. Tell me James, do you shop at Walmart, Kmart, or any other price slashing big box retailer? If you do, take a look in the mirror, point your finger and behold one of the millions who made this possible.
7
I would think that the Chinese have outguessed Trump
long ago....and so has the UK and all other thinking
industrialized nations....Trump has no clue as to how to
run our economy...isn't that fairly evident by now.
3
If Trump flails about crashing the economy and irritating allies so he can impress his base -- and they believe him -- where is the principled effort to educate his base? Is it too much work for Democrats, reasonable Republicans, and remaining leaders to keep up with the lies? Why is he not confronted with the truth of the consequences of his behavior? Some will answer this question to say that Trump is just Trump, or that he has always lied, or that he is uninformed, or that he asserts these threats knowingly to maintain the illusion of his promises to his base, or that he is incompetent. Regardless, any one of those speculations is evidence enough that he is unequipped i and unqualified to be President. Reasonable, respectable people in the Congress and civic organizations with a stake in a stable, informed citizenry could speak publicly and more directly to the facts of the matter as one way to mitigate the actions of this incompetent and dangerous administration. One can agree to disagree on policy, but there has to be a rational platform to start from. We are veering quite far from that location.
3
Neither of the parties is especially enthused about infra-structure when it comes to put up or shut up.
The bidding process stifles sliding contracts to party supporters in exchange for campaign donations.
Highways, airports, bridges and trains do not put election cash in their pockets. Therefore nada.
3
"Oh, and a trade war would also devastate much of pro-Trump rural America, since a large share of our agricultural production — including almost two-thirds of food grains — is exported."
Good. Elections have consequences and his voters deserve everything they get.
5
I suspect Trump is manipulating the markets to advantage himself and his friends through insider trading. His simple pronouncements can raise or lower the value of a stock over night, and in that fluctuation there is money to be made. Trump is a greedy man, as are his friends. I see no other rational explanation for his actions. He's just making money.
3
People have been bamboozled, conned, flim-flammed since modern times began. We should not be angry with that part of Trump’s base that has been bamboozled, conned or flim-flammed by him. Sure part of his base are regular consistent republicans who just held their noses and voted republican as they always do. Those are unlikely to change. But some of the flim-flammed may change this year and in 2020. There is no advantage in democrats alienating them here or elsewhere. We must be patient and try to gently steer them to our party and politicians who will work in their best overall interest.
PS. To the GOP folks who did not vote for Trump thank you.
2
Meanwhile, the Chinese are being much more calculating in their tit-for-tat tariff response to Mr. Trump's tariffs. They _are_ specifically targeting the products from the constituencies that voted for Mr. Trump, including agricultural products like food grains.
Mr. Trump might be flailing around, but Mr. Xi definitely is not.
2
"In general, trying to explain stock fluctuations is a mug’s game" - so why do you continue to play?
you and John Harwood have both tried to explain the market going down as displeasure with the GOP tax plan. You've both written that since the tax plan passed the market is down 4% +/-. (+/- added by me to be kind).
it's pathetic that you continue with this line of reasoning, or lack of reasoning.
Donald J. Trump. Successful businessman. Brilliant negotiator. How's all of that working out for you?
But, Congressional Republicans remain silent and fully complicit in Trump's incompetence and corruption. Voters, however, won't be silent in November.
3
I would like to know why he calls it unfair retaliation when China announces tariffs that will protect its own economy. Other countries think they are being treated unfairly by the US when they aren’t paid enough for their products. Trump is not a leader or a business man. He was in real estate which only affected neighborhoods when he did this kind of thing. He may have gone to a business school but he evidently skipped some classes to play golf. We will soon be a country locked in a war of products with the military being positioned by the whims of a dictator. US farms do not protest too much or he may send in troops to stop the flood of protests. Oh he only wants whats good for “the US” (him). Vote him out!
2
But you don't understand. I want to earn $30/hour at my factory job here at home and then take that money to Walmart and buy inexpensive products made in China ( or elsewhere). This is called the good life.
2
I have to slightly disagree with Krugman about China. It's still a very bad actor - it's less obivous now. The US should not be running deficits; it is doing so because of the Triffen Dilemma in economics - not because we have great "investable" opportunities in America. On balance, there is more to gain from investing in a poor country than in a rich one. Most of the inflows into the US creates debt. China sending cash over to the US (despite having an SDR currency by the IMF) indicates more manipulation of global trade flows. As for Japan and Korea - when it comes to trade, they're not better than China. These surpluses would go away if they paid their workers better, who can buy more goods (or are too expensive to produce, that poor nations like Vietnam gets employments).
You still refuse to get it. This isn't about a trade war. This is about preserving our ability to make steel and aluminum. The Chinese started this economic war over two decades ago, and the 1% happily sold out our manufacting capability.
Now, though, that we're mad at the orange one, it's good to let the Chinese win, because anyting the orange one does must, by religious dictate, be evil.
Oh. My. God. A Krugman article that makes sense! Mark the date! I’m stupified. Good job, Krugman!
You're missing one thing, Paul. While blind flailing describes just about everything Trump does, you also have to factor in Trump's modus operandi vis a vis his base: The bait-and-switch. Trump makes a lot of noise on an issue like trade and his followers are satisfied that "Trump gonna git them Chinese good, Cleetus!" Since his capitulation to Wall Street never makes it to the Fox News headlines, his base never becomes aware that Trump has yet again reversed course from his most extreme proposals. Heat and noise to fire up the base, backpedaling on actual policy to satisfy Wall Street.
2
It is interesting to listen to Trump supporters. Trump lies so often that even his supporters believe that all this is just a bluff to get a good deal from China. Strangely, his supporters do not take into account the idea that the Chinese might notice he lies all the time too and might continue to call Trump's bluff until he flusters into a recession to save his own face.
2
We need to consistently fact check and call out LOUDLY this illegitimate president’s mistakes and lies, publish it, sear it in people’s memory and use these lies as one of the issues in midterm and in 2020 showing he is unfit as president.
If this odious person uses the power of reinforcement, why not well informed and educated persons like us?
When we call out the mistakes, we should provide a statement how the lies will destroy his base. Only then will his base, hopefully, understand what this odious person is doing them.
1
According to Ms. Goldberg's opinion piece Trump voters seem to think that flailing around is a sign of Trump's genius. So it is impossible to convince them that sanity is a good thing. Trump supporters will never hear your message as you represent this sanity and sanity it not what they want even if their insanity destroys them and us completely.
3
Must be disconcerting to know that you're writing a column suffused with facts and hard truths, sprinkled with the wisdom of experience, all the while knowing that 40 percent of the electorate doesn't give a rip about facts, truth, or wisdom. I know reading columns with that in mind is very disconcerting.
4
Trump will be gone somewhere between tomorrow (hopefully) and a little less than 7 years from now, a thought that generates ample dread.
But that 40% of the electorate will persist, a thought that generates dread to some nth power. It will take decades (if not a century) to reverse the closing of the American Mind; after all, it took decades to close it, and efforts to keep it closed (think Fox and dozens of Right Wing 'Foundations') are mighty and well-funded.
3
to Rima,
After reading your 'what the Trump administration did this week' blog, I continue to realize just how much rollbacks will cost this nation in at least the future decade.
The president's tirades flung out at his 'tax break roundtable session' yesterday will continue, effectively letting us know that his 2020 election campaign is in full swing. It's not only bad TV but a signal of American exit from the world. Trade war? check. Deportation increases? check. New pollution? check. Education improvements? Nah. Infrastructure? fuggedaboutit.
1
It is possible that Trump’s strategy is to start a skirmish to open negotiations where he can seek concessions from China’s on their rampant intellectual property theft; both legal and illegal including all those PC’s running US written pirated software.
Still one has to worry that he seems to be going on his gut instinct - the same way he has made and lost billions in the past - but in this case the loser could be the entire country instead of some rich investors
2
Patent/IP protection? Hello TPP - oops, too late.
3
There are some points we may need to consider: American corporations made the agreement with China to share technologies as a provision of doing business—they brought the intellectual property with them and China outsmarted them.
The “Stock Market” is beginning to take on the character of Smith’s “invisible hand”—Is there an actual human intelligence issuing buy/sell commands or are pre-Trump algorithms still trying to function on rules that now are no longer operable?
Do “flash traders” need to reboot? These extreme minute-by-minute market fluctuations look like an old DOS-driven PC whose keyboard has just suffered a coffee-spill.
Dr. Krugman, you are dealing with things an economist would consider, but is Wall Street’s invisible hand really being driven by the tweets of a real-estate developer wearing a wig?
2
A one-quarter of a cent transaction tax kills flash trading. Implement it now!
1
didn't Trump build his hotels with Chinese steel? Clinton mentioned that in one of the debates.
1
My concerns about China are geopolitical not about Trade.
It is that they are now the worlds leading economy and they are also a kleptocracy and totalitarian.
That is what scares me.
So I wish there had been targeted Tariffs 20 years ago. The type Krugman only now espouses.
The US and democracy will be a victim of the one sided free trade pundits of the last 20 years. History will view them very badly (that is the truth will be allowed to be written).
China's surplus account was a smaller fraction of its GDP only because its GDP is now so much bigger. It got that much bigger by running that surplus at our expense.
First, we do have more unemployment than Krugman admits here.
Second, as we merge into a global economy, the relevant unemployment is not just inside our borders, but all the labor pool on which our economy draws by its offshoring of work to import it back.
Third, normal trade imbalances don't really do harm, but these are very artificial imbalances created by imbalance of terms of trade, in which they do things we are not allowed to do.
Trump's "fix" is not a fix. But it is a real problem all the same, and something needs to be done.
"Something" is not just any thrashing around by Trump, but utter denial of any problem at all such as this column actually serves Trump's purpose. It leaves him as the only guy even admitting a problem that voters can see.
5
A major component of Trump's simplistic worldview is that he thinks - or at least seems to think, to the degree to which he thinks at all - that the stock market IS the economy. Which it, of course, isn't.
7
A lot of what Trump does is to shape the media agenda. The last few weeks, his affair with Stormy Daniels made most of the headlines. That was bad for Trump and the relationship with his wife. So, he needed to create news that would grab headlines and shift focus away from his irresponsible personal behavior. So, he came up with sending the military to the US-Mexican border, withdrawing from Syria, and escalating the trade dispute with China. Indeed, very sophisticated thinking behind these serious measures.
7
In March of 2017 China granted preliminary approval for 38 patents for trump to do business in China. trump fought for 10 years for a patent on construction services in China. That legal battle turned to his favor as soon as he announced his candidacy and that patent was granted in February 2017. What did trump promise Xi Jinping? I guess since that was a year ago everyone has just forgotten about it. No one seems to be asking any questions. Since trump lives for his companies and his money would he really cause China any distress and jeopardize those patents? Maybe trump is a genius after all. I'm betting the fix is in.
2
for a second I thought this was a shades of grey thing...
If something like the laws of physics existed in Econ the only thing we would be talking about is Stocks dropping (fast) of their own weight. It would be a simple law that stocks rise, with some slight variation, in conjunction with the rise of the GDP. Like: GDP up 5% maybe stocks top out at plus 8% then tarry or correct back. But the situation since T elected is stocks rose 10X GDP growth (and, importantly, there is recursive affect in stock rise to increase of GDP).
But stocks run on laws of Psychology, what people want to believe becomes the "real", and the matrix machine is set up, because the touts' commissions rise as the corp mgrs. who hire them reap more stock options as stocks rise. Then of course the top 10th per cent of the top 1% of rentiers own half, or more...
The little guy, jockeying a 100K IRA fund should see the writing on the wall, and get safe now. Retirement fund managers need to see the game of selling off inflated stocks to meet 7% returns will end. This game of musical chairs on the Titanic crashes when the music stops with all chairs on the lifeboats gone.
T doesn't matter much, except as pin to a bubble that can not be eliminated except by a burst.
(Trade balance matters only at the simple bottom line, is the total red or black. If the bleed out is second, third order- China, to Japan, to Malay- the $$$ still are gone, and the tariffs actually hit the real winners, even if aimed at China.)
Exceptionally low interest rates for a decade have shifted the allocation of investments away from bonds and into stocks.
1
ok, another tilt factor at the pinball machine.
A mature economy like the US can cover up a multitude of sins, inefficiencies and corruption. Pockets of poverty and structural unemployment, community health issues, environmental destruction, and gridlock are covered up by counter narratives that wave the flag and ridicule the dangers of injustice and inequality, the growing expense and lost ground of bad policies, the waste that creates.
America buys the narratives of blame: Muslims, the Chinese, cheap labor, science, race, women, student survivors, major corporations have been targets, but blame is not a solution. Punishment is not progress. In contrast to the economy, the popular and political narratives are really immature. The stories of blame are really stories of omitted details and hyperbole, of tough talk that forsakes the future. So what if America wins the fight? What's the way forward? Winning a fight isn;t building a future!
10
You have brought up what I feel is the real reason for the anxious uncertainly, fear and anger that plagues us: There is no vision for this country. Where are we going? Will things get better for the common man? Waging trade wars is not leadership.
3
SOME Americans buy that narrative.
They're the same wizards who believe we faked the Moon landing, that bigfoot is real and that President Barak Obama was born in Kenya.
You know, morons.
2
So Dr.K. If China stiffs America’s former factory workers that’s O.K., or inevitable in Capitalism, yet when it comes to “ intellectual property rights” that’s not, why do the college grads deserve protection when the working class don’t? Let’s set up Army Recruiters on Princeton’s Campus rather than in run down American areas, at the very least those dying for this country should be the ones benefiting from its direction, why should those “ deplorables”, left behind be the ones to lay down their lives for a nation that has written them off? BTW Trump is just pandering to the folks left behind he has no more intention of actually helping them than did Clinton, as far as the overvalued Mr. Market, it’s aware of the game and thrives on it, so why the
Long faced pictures of traders, volatility allows for profit taking by Wall Street Professionals on the upside as well as the downside, not so much for the rest of us who will continue to be fleeced one way or the other.
2
The trade deficit is possible because China and other exporters let us pay for their goods in dollars rather than demand payment in their own currency, which would require us to earn it by exporting to them. They are willing to accept and hold dollars, in the form of Treasury bonds or other dollar-denominated assets, because the dollar's status as the global currency makes it almost universally accepted around the world. When the Chinese and other governments buy Treasuries or other U.S. assets, those dollars come back into the U.S. and circulate through our economy. The situation is sustainable, but only as long as the U.S. keeps the world secure for trade and as long as the dollar remains the universal currency.
6
When can we get rid of this guy and his cast of clowns before he destroys my retirement and puts me, and many other people, in the poorhouse?
11
Sadly, Trump will never read this or any other informative material about international trade markets. Even sadder, if he did, he would not comprehend it. Flail is an extremely appropriate term for his approach to issues and managing our government.
13
Trump is the reason for the current economy, Obama and "smart" guys like Krugman were responsible for the last economy...... the one that wiped out an entire generation of growth for most of us. It cost me my entire 30's while the country was stuck in 1.25% growth cycles,..... the ones Paul called the "New norm".
As a fellow economist I must say that your views on things economic are almost completely congruent with my own. So I rarely take issue with your analysis nor your policy conclusions. The thing that inspires my awe of you is your ability, in column after column, to keep your cool. I cannot recall in my long career (I’m older than you, been on SS for 8 years) a time when economic policy formulation in the government has been more frustrating than now. Right wing ideology has almost always been at odds with the fact, but Trump takes it to a new level.
36
If karmic retribution could be limited to those parts of the country that were (and are still) all in for Donald Trump, then I would be in favor of a shakeup in globalization. However, the pain will be felt everywhere. It will hurt us all.
7
Like a child, trump enjoys seeing the power he has in a tweet. The markets so far have kept him amused with the help of the media who dwell on his tweets. America is doing quite well economically now. Those businesses that abandoned our shores for China are raking in billions. They knew exactly what they were doing and intellectual property was the price they had to pay. I am no fan of China, but given what we have allowed to happen, they have become a formidable economy that has the ability to not bend to someone like trump and his mindless tweets.
2
While it is certainly true that massive trade deficits do not subtract from our growth, they do pose enormous burdens on many of our workers. See, for example, http://ddorn.net/papers/Autor-Dorn-Hanson-ChinaShock.pdf.
There does not need to be "mass unemployment" for this to be true. And saying that trade deficits are just the flip side of foreign investment surpluses, swaps correlation for causality.
As long as liberal economists continue to insist that all international trade is a good thing, the people who have been harmed by it will continue to vote for charlatans who promise to fix it.
2
I hope someone is analyzing trades for short-sellers in sync with these announcements. These loud, targeted, threats seem well positioned to potentially benefit administration cronies. I wonder what Carl Icahn is up to these days...
29
That is up to the SEC I think. Are they and chairman Jay Clayton doing their job? Who knows. But right now they and compliance areas of brokerage firms should be working overtime.
1
I had the exact same thought about trump's tirades against Amazon.
Carl is busy sending Pruitt to Morrocco to sell them LNG for a company he owns. Pruitt is Carls water boy and since he feeds so well at the public trough, one wonders why he needs whatever stipend Carl is paying.
The real story is not Chinese theft of US technology, it is the changes to US patent laws that allow established US corporations to steal newly developed technologies from US inventors and small businesses. In the past, enforcement of US patent rights favored the large over the small. Now, the patent system further favors the large by making it extremely difficult and expensive for the small to secure patent rights. So the small have two barriers to entry, first the inability to often secure patent rights and second the challenge of enforcing patent rights when granted. The end result is less US domestic innovation as shown by fewer and fewer US patent applications originating in the US even though the total number of applications filed in the US increases yearly. This may not seem important, but it will have profound effects on US competitiveness in the future.
12
A "Letters Patent" is nothing more than a cause of action to file a lawsuit against an alleged infringer. Lawsuits are typically won or lost by financial exhaustion.
1
"...the tweeter in chief and his aides either don’t know what they want or they want things that our trading partners can’t deliver. Not won’t — can’t."
Trump and his supporters believe that failures to get what they want are due to lack of compliance that can be resolved by tough talk and threats.
The Trump opposition knows that even if he could get compliance it would not solve the stated problem. Trump just fundamentally misunderstands how the inputs and outputs of public policy are connected.
Unfortunately making that point to his voters involves explaining how complicated systems actually work... and they're gone.
13
Perhaps only the IRS and Robert Mueller’s team know if Trump owns any shares in the market but it seems that he doesn’t care about the gyrations of billions in equities as he threatens new trade sanctions. But at least some of his followers have 401k’s and other kinds of pensions and maybe in November they will determine that their representative in Congress is supporting an autocrat willing to take down our economy through a trade war with much of the world.
17
Remember when it was Obamacare that was going to cause volatility due to the uncertainty businesses would face?
24
But the trade deficit does mean that China is "buying up our country" when we attract all that foreign investment. If trade deficits were such a great thing, surely Germany would be running them.
6
Huh? Why would Germany's policy be particularly wise? Or even pertinent? Germany is in the unique position of being the largest economy in a currency union. Quite different from the United States.
1
You think that Germany, a country roughly the size of Montana, is a good comparison to The United States AND China?
Ah, the poorly educated.
What would cadet bone spurs do without them?
2
Krugman didn’t say that deficits are “great;” but they are not nation-destroying at the levels we have in the US.
1
The man is a bevy of uninformed opinions. You know that as soon as he opens his mouth. There are two ways to go with this: one is that he is really as uniformed as he sounds; and two, he is lying. In either case, he impresses as not knowing what he is doing. This man is so unfit to be President, but yet there are people with whom his message resonates, what ever that message might be, much in the same way that dogs respond to a whistle. There are so many issues at stake, but we get to hear over and over about the Big, Beautiful Wall, over which his supporters swoon. I don't mean to go off subject, but it is inconceivable to me that the content of this article is at all understood by his supporters, and it seems that the only explanation is that at some level Trump and his supporters want to destroy anything that they don't understand.
25
Many American voters wanted to elect a President with zero government experience. They got their wish in Donald Trump, a pompous self-promoting reality show host with a trail of failed businesses and bankruptcies, plus no moral shame about lying and adultery. He is the darling of Evangelical Christians too. Coherency is not the quality what Trump's supporters demand. They are mesmerized by entertaining chest-thumping and hot-air. Their tribal hatred for the ideological enemies is palpable. But the show can't last forever. Wait till they get hit in the wallet if the trade war tariffs kick in.
33
Trump comes to government with the experience of a real estate developer. Real estate developers and their lawyers run most state governments in the US.
1
As they do in Canada, Mr. Bolger.
Must be why all the fox newsies whine all day about how bad things are.
I think Trump's trade and race policies are two sides of the same coin. Trump abhors people who are non-white, and Chinese people are definitely non-white. That's why he's concentrating so much on U.S. trade with China. Sure, trade with the Chinese generates the largest portion of our country's trade deficit, but I think what really galls Trump is that the country enjoying that advantage is not white. For him, a country run by brown/yellow people "beating" the U.S. in trade is intolerable and that, in turn, compels him to do something about it. It flows naturally from what he is.
So after China, Mexico will be next. And then maybe Japan, and so on until he's checked off all the non-white nations that are "cheating" the U.S. when it comes to trade.
One thing I can guarantee though, is that Germany, the rest of the EU and Russia won't catch much heat. After all, all the pale skin folks have to stick together.
12
There are many brand new luxury buildings in New York with price-tags on apartments the locals can't afford. If Chinese buyers are repelled from the market, there could be a financial bloodbath.
3
In order to negotiate Trump first has to settle on exactly what it is he wants to accomplish. But just like on DACA, he has no idea what that is. So it's shoot first and ask questions later. And besides, crisis and chaos are good for the ratings of the realty TV show that the Presidency has become. Like watching a slow motion train wreck, viewers can't look away.
11
The absolute first thing to keep in mind when dealing with all of this uncertainty is that is how this President has dealt his whole life regarding his financials.
He has leveraged banks, shareholders and states to come out of bankruptcy ( THREE times ) all the while parachuting out it with hundreds of millions. ( if not a billion or two, since we don't really know because he has not released his tax returns )
He and his daughter/son and law have numerous deals with China ( and other states ). They have made deals since this administration began.
Who knows what fluctuations behind the scenes that are benefiting them all while all of us lose our shirts.
I suppose that is the whole point - to get us to buy #maga shirts ( made in China )
9
Wonder what would happen if China repealed the Trumps’s trademarks & taxed their factories for making products to be sold in US? Those maga hats would be too expensive for the Trump base to buy...he would have to give them away.
Trump hats are already too expensive. Emoluments Man sell his "USA" hats on his website for $40 per, without a whimper from a Republican congress. Anyone who doubts he is padding his own stock portfolio via his tweets is just not paying attention.
Speaking of which, if Twitter were shut down tomorrow, wouldn't the country be way better off?
Move than that, he spouts off to the base telling them what he wants and will do and they remember that so he's their guy. Then it seems that it won't happen but the faithful don't hear that, mainly because it doesn't issue from his lips. So, he wins with the faithful and doesn't most of what was promised. Then he repeats of enlarges the bogus statements, gets support from the base again, no action again, keeps the base energized again, and so on.
Another favorite ploy he uses is stating some far fetched action or plan "in the near future", and once aging, lots of points from his posse, no action from him.
Can it continue before the base sees the emperor lacks any clothing? We'll see.
1
Flailing is being too kind. More like lurching. Interestingly enough the markets were supposedly calmed when Larry Kudlow was run out to speak. If you are calmed by a flimflam man like Kudlow then you have more problems than just plain overvaluation. This will not end well for anyone, except maybe Trump, who clearly cares little about what wreckage he leaves behind.
13
The absolute first thing to keep in mind when dealing with all of this uncertainty is that is how this President has dealt his whole life regarding his financials.
He has leveraged banks, shareholders and states to come out of bankruptcy ( THREE times ) all the while parachuting out it with hundreds of millions. ( if not a billion or two, since we don't really know because he has not released his tax returns )
He and his daughter/son and law have numerous deals with China ( and other states ). They have made deals since this administration began.
Who knows what fluctuations behind the scenes that are benefiting them all while all of us lose our shirts.
I suppose that is the whole point - to get us to buy #maga shirts ( made in China )
As I watch the gyrations of the current stock market, I’m reminded of a “market truism” from years ago:
The market loves good news.
The market can even deal with bad news,.
The market however abhors uncertainty.
And wow, do we have the great uncertainty generator in office right now.
Chalrie
3
Trump does not govern - he is loose cannon spewing nonsense. His bullying of the international community has done nothing except raise construction costs 20%, with threats of greater loss to farmers and manufacturing and cost increases to consumers. He’s bored - so makes up lies to capture headlines. His rants are not worth reading - or listening to - I would not be surprised if he paid people to attend his speeches.
5
No one has mentioned this as far as I know, so I’m going to say it. I think one possibility for the wild market gyrations is state level insider trading. What I mean, is that Trump and his friends know well that if he tweets “x” words out, the market will respond with “y” reactionary moves. It’s very easy to do this kind of market manipulation if you’re in Trump’s position and very, very easy to profit (or tell a relative or business friend in advance so they can profit as a favor or proxy agent on your behalf). This kind of state-level high manipulation has been happening with bitcoin and certain Asian countries I think. They will “ban” bitcoin suddenly. Bitcoin price crashes. Then three weeks later they “unban” or “clarify” their earlier remarks (effectively reversing the ban) and bitcoin sharply rises. This has happened many times - because it works beautifully. Many state-level croonies can make countless millions very easily with such easy manipulation. I hope Trump and friends are not doing this, but honestly, there is to me, a strong possibility they are - and America suffers profoundly for it, if true. So this “trade war” talk may simply be Trump and friends plying with the markets. May some brilliant journalist find this out, if true.
14
We were saying this last night. It has already been borne out in the actions of some of his high-roller supporters.
6
Derivatives are side bets on market moves. They have about the same effect on traders as sports betting has on professional athletes.
I don’t understand your point. I’m not talking about derivatives. I’m talking about the leader of a nation making calculated, disingenuous public statements in orchestrated, effective moves to profit from them. This would be profoundly immoral, illegal and hurtful to hundreds of millions of people. It’s pretty clear what I said. I pray investigative people are dedicatedly looking into this possibility as I think it a very real present scenario.
Maybe it simply is insider trading.
Trump blabbers something having learned or instructed how the market will react.
He and his buddies place their bets in advance and all is well.
Just saying.
One can expect anything from his sort.
5
If Trump were smarter, I would be convinced that he is manipulating the stock markets for his own profit. However, he is just a mean old cuss who gets pleasure out of being a mean old cuss.
1
"Flail" is a good word. Three others are erratic, untethered, and incoherent. Volatility in the White House leads to volatility in the financial markets. Epic chaos in the White House leads to "the art of the flail." And best of all? "Nobody knew it would be so hard."
2
Trump has no idea what he is doing. Lies constantly
and does not listen to anyone
He will wreck things because everything he touches
will turn to cap.
2
The sad thing is that Trump's base eats this stuff up. Painting China as the bogeyman who caused massive losses of jobs and livelihoods is easy; thinking about what really caused it, and how to fix it, is hard. Trump is the master of misdirection, and as long as his supporters fall for the illusion, he will continue doing. Won't matter if millions lose in the process; he is 'winning'.
3
What Dr. Krugman refers to as the art of the flail is perhaps more akin to the art of the fail. Ignorant chest beating defines Trump's approach to virtually every aspect of this "administration." And the results are not attractive.
At this point, simply assailing Trump for a lack of coherent approach to politics, life or policy is not going to be productive. Nor do his enablers or supporters care. Once again, the emphasis must be on turning out the mid-term vote so the Republican party understands that the price to be paid for allowing an incompetent to run for president is not worth it. That is the basic economic principle that needs to be put into play.
5
I think Trump and friends are manipulating the market for their own profit. I'll bet his friends can short certain stocks in advance of his tweets and others will wait until after a tweet storm to buy. Who else in the world can guarantee a 400 point drop just by sending an incoherent text message full of threats?
5
The stock market appears to be run by a bunch of hysterics--I take it very seriously when the President's idiotic tweets directly affect my retirement account. I don't have a pension or a rich daddy to count on when I am old so this constant stock market turmoil is really wearing on me. I wish someone in the WH would set up a fake internet for Trump so when he is thumbing his dyspeptic tweets they don't actually go anywhere.
4
The Trump AI Algorithm:
1) Ensure Trump empire debt is not being called (by Russians or other foreign $$$.) i.e. He's still meeting loan covenants.
2) See if Mueller is getting HOT, HOTTER, HOTTEST this day
3a) If HOT, continue inciting his "base" with "Wall," "MAGA," "law and order" babble.
3b) If HOTTER, distract by doing something embarrassing i.e. putting himself in the middle of spectacles such as the Stormy titillations, firing someone, conflicts of interest stories by his cabinet or himself, or sending out Huckabee-Sanders to do what she does, or insulting someone online
3c) If HOTTEST, roll out the daily/weekly bad policy even if it hurts the U.S. i.e. immigration rules, tariffs, etc. If it's really bad, the policy can even upend his donors. The policy is not the goal; the goal is to keep shaking things up to annoy people, and occasionally hand out goodies.
4) Identify capital SWAMP opportunities to gorge on while he's still in office
5) On the side, torment his "generals" to prove his toughness
6) Get positive feedback from his FOX echo chamber to refuel the machine and get more bad ideas for 3a-3c
7) Wash and repeat.
It's genius.
4
So basically the markets are saying we have an incompetent fool for a president, but when the supposed adults in the room speak things calm down until the fool again raises his voice, got it. Problem is in this case the incompetent fool has veto power over everyone.
3
Trump's aggression towards China is just a bromide for the masses. A deflection from his porno-Russia problems. Unfortunately the IP property issue is all too, real.
My daughter a chemist had five potential patents stolen by an alleged ph. d from China. The potential is staggering in terms of money jobs and new science. Invention leads to invention.
Backstabbing excellent American engineers out of their jobs is another way. Difficult to describe. Almost happened to me. Happened to my close friend.
It's not just the corporations that are injured it can be an entire community.
3
As a "little fish", I am resigned to being "flailed" about. The news coming out daily, non-stop, from Trump administration and our Congress is infuriating and depressing.
Worst, and still, it is so unbelievable and unfathomable that there are Americans who today love this president and everything he is doing.
These Americans I think are the ultimate "scandals" we don't talk about.
4
These so called Americans are the most disgusting sort: racist, pretend evangelicals and in general are pathetic and can be lead around by anyone who will stoke their fires of ignorance. It really is too bad that we contributors can’t just keep our tax dollars away from them and let them fend for themselves.
1
Is it possible that DT is shorting stocks just before one of his trade war threats? I know, sounds like another wacky conspiracy theory but it's at least a " what if".
Maybe DT does not have a large stock portfolio. If so, maybe this trading idea is silly. Does anyone know what DT owns? Is it a material amount?
2
The question is whether or not Wall Street thinks there’s gold in that flailing. You’re right about Trump’s animus towards brown skinned peoples so perhaps he wants to punish global markets to show that he can. If the market fails because of Trump’s flailing, they will abandon him as a plague of locusts fall glutted from the ravaged lands. No matter what, this twittering, getter-tottering tyrannical toddler needs to be given time out....for GOOD!
What if Trump was just betting against the stock market everytime he rants against China or another country? How much could this net him and his family? The mother of all insider trading schemes?
3
Very good point. I wouldn't put it past him at all. Fortunately the SEC has ways of detecting preternaturally successful transactions. Unless Trump has gutted their enforcement. Wouldn't put that past him either.
2
Trump has an incredible number of balls in the air, some of which could have big effects: A trade war with China, NAFTA, Russia, the wall, the National Guard at the border, his spending plan, on and on. The problem is Trump knows nothing about consequences and the interconnected world. He is completely Zen, meaning he is in the moment and no where else. I am not sure he or his people (whose main qualifications seem to be the ability to say "Boss, you're wonderful. Its a pleasure to serve you), can manage all of this.
It might be time to think about being defensive.
1
Trump is just manufacturing chaos to distract from his Stormy affair and to show off for Putin.
2
I hope someone is watching Trump's inner circle for a pattern of stock sales before the negative tweet and buys shortly after.
1
Who is Dr. Krugman to opine on matters of US-China trade policy facts and fictions? What was his Nobel Prize for in 2008? Oh, right--- sole recipient "for his analysis of trade patterns and location of economic activity" [Nobelprize.org citation]
1
Every day in every way (and trade is no exception) Donald Trump is biggest "Know Nothing" since Millard Fillmore was elected president in 1856. And we know how well his presidency worked out - and what it led to.
One thing has become desperately clear since January, 2017: Trump adores the idea of being president; he just doesn't like the job of president - or the amount of work, study and thought being president requires.
What a dolt! Shame on America and the white Christain nationalists for sort-of electing him.
3
A trade war is bad for the free world and all parties will suffer from the consequence. That said, China's trade surplus of $500 billion is considerable no matter how you dice and slice it. On its own accord, China will not come to the table to negotiate any trade issues with the U.S. As far as China is concerned, its trade relations are fine. Trade dispute is dumb and trade war is dumber; it will hurt everyone in the process. But how else can Trump get China's attention to and cooperation for a trade talk?
Krugman - in this article - maybe you missed it? - explains the size of the trade surplus and corrects it to "actually less than $340 billion".
I am pretty heavily invested in the stock market. In fact, my eventual retirement depends on the stock market not completely tanking. Yet, I have never once felt seasick or any kind of sick over the volatility in the stock market under Donald Trump. Why? Well, if a Democrat were president, Krugman would be explaining that these fluctuations are meaningless. I do not check the markets or my 401K daily. Checking the daily fluctuations of the stock market to gauge the economy is as stupid as checking the weather daily to gauge climate change.
I will stipulate that at any given moment on any given subject Donald Trump probably does not have any idea what he is talking about or doing. Yet, I do not worry. Democrats and liberal "intelligentsia" have been predicting Armageddon in some shape or form since the moment they realized that all their absolute certainty regarding the election was wrong. Nevertheless, the economy is fundamentally strong. Tax reform made our corporate tax rate much more competitive. All of our alliances are in tact and in some cases stronger (Israel, Saudi Arabia, etc.) We are not experiencing colossal environmental disasters. Nobody is being jailed for criticizing the president. The courts (and even congress) have resisted this president's overreach more than any of his recent predecessors. America is a great (not again) country, despite Trump.
16
A woman was recently fired from her private sector employment precisely because she criticized Trump, on her own time and off company property.
33
I think the people of Puerto Rico and Houston might disagree with you about environmental disasters. Did you know we might have just as bad a hurricane season as last year?
32
By what criteria?
At the rate of job creation of the weak recovery of the last two years of the previous administration, 2015 and 2016, 10.1 million jobs would have been created in 4 years.
At the rate of job creation of the last 14 months, only 9.4 million jobs will be created in 2017 through 2020, the tax cut and the regulatory rollbacks notwithstanding.
“…Democrats and liberal "intelligentsia" have been predicting Armageddon…”
Would the potential loss of 700,000 jobs in 4 years qualify as “Armageddon”?
If not, how many jobs not created would qualify?
“…I am pretty heavily invested in the stock market…”
How heavily? A $1 million stock portfolio has lost some $100,000 (i.e., significantly more than the capital gains tax) during the first quarter. Shouldn’t you be in cash instead?
“…Checking the daily fluctuations of the stock market to gauge the economy is … stupid…”
What successful investor does that?
22
There are lots of Americans with a poor education or without the mental capacity to perform modern jobs. Those people need something steady and nearly a living wage. While it make economic sense to outsource those jobs, trade manipulation could address that situation
1
One response would be education and job training. General high level versatile education number one, and then specific job training in areas needed. Incentives to companies to support this.
1
Krugman says: ” In particular, it has pretty much thumbed its nose at international rules on intellectual property rights, grabbing foreign technology without proper payment.”
This is a very strange argument. China is a member of WTO. It is a signatory to the TRIPS Agreement. Its patent (and other intellectual property) laws are consistent with the TRIPS Agreement. If not then why does the US not take China to Dispute settlement at WTO?
Does US companies take patents in China. Does Chinese companies infringe these patents without payment of any royalties to the US company owners of these patents? If so why do these companies not take these firms to courts? The court system in China is too opaque? Then why do these companies take patents in China, invest in China and trade with China?
Why do companies engage with China despite given bad terms they'd never accept in other nations?
Because it opens a market of unbelievable size to them. Analogy: Why do vendors accept usurious credit card fees? Because people buy stuff they could not afford otherwise. Better a sale at a lower profit than no sale and no profit.
Would it be illegal for Trump to personally profit off making statements that move the markets and buying and selling or buying positions in advance of those statements? I'm not sure anyone ever thought we could be in a position like this.
5
Very illegal.
It's true that many US corps give away technology, but they can maybe get away with this because they are in fields where you must be constantly pushing forward and staying on the leading edge. They are betting on their ability to stay ahead of China in the leading edge tech that matters, and THAT they aren't sharing. However, there are many small and medium size companies that are having their designs just plain stolen by China, and if you don't have deep pockets that really hurts.
1
It is clear that Krugman has never been in Walmart or bought auto parts or shopped on Amazon, because had he ever done those things, he might realize that China is controlling the products he is buying and has destroyed any American business who used to make the products. They did this not with quality ( mainly their products are absolute junk) , but with currency manipulation. Nothing was done until Trump stepped in and started trying to level the playing field. I support his efforts 100% because American workers can produce quality products that compete on a global basis if other countries do not artificially hold down the value of their currency making products look cheaper.
11
Wow!! Good arguments representing Trump supporters. Tremendous and beautiful. This is the type that made Mr. T the Greatest President in decades for them.
Sigh.
12
So your iPhone ('designed in California, assembled in China') is "absolute junk". Glad I know that now.
17
You're saying the Chinese created cheap, junk products that ruined the markets for quality US goods? And that's the reason Americans no longer produce them?
Forgive me, but what role did the owners of US factories play in that? Did not every American factory owner, in the '80s and '90s, send their factory to China for a) the cheap labor and b) to destroy our trade unions? China merely jumped at the chance to provide for its people.
What you might ask is why America did not move on to the OBVIOUS next big thing, the huge new industries that our skilled workers were ideally suited for: alternative energy and climate change mitigating technology.
It was the oil industry, the airlines and automakers and all their accomplices, who blocked that nascent industry, that the Chinese now also now happen to own. We should have been first on the block with that, if it weren't for the frankly evil oil barons, like Exxon and the Kochs. There's no reason the Chinese shouldn't be making those cheap products. But you should ask your Texas tycoons why they've been lying about climate change for 50 years, and destroying America and the world in the bargain.
30
The intellectual property justifications for a trade dispute are confusing to me. Doing business in (or with) China is not mandated. Companies that do are free to walk away. Their IP has a value and so if they choose to sell or license their IP and have done the costing vs the benefits, they go along. If the costs of licensing IP in China (which would include pricing the risks from IP theft or abuse) are less than the profits received, what's the problem? If the costs are too high, then walk away. Trust the market.
10
JFR, You are 100% on target. Many decisions to license or sell American IP are decided on the premise that lower transfer prices from Chinese partners will improve the or American companies. American companies who sold or licensed IP failed to realize that confidentiality and safekeeping of IP in China is a new concept. Plagiarism and outright copying technology is accepted behavior in not only China but also many other countries.
1
Yes, this is exactly what I've been thinking. Since American companies keep moving their manufacturing to China, the cheap cost of assembly in China has to outweigh the risk of losing one's patents.
1
Delusions and illusions guide these desperate actions. Global value chains are part and parcel of the modus operandi of transnational corporations that only obey the law of value. That is they produce average value at lower prices (value is different from price) thus increasing profits for themselves. They have no allegiance to national boundaries as we saw them parking profits in no tax islands. Navarro and his delusions will provide the group in power some short term political gain, but long term misery to those who depend on cheap imports (including labor)
2
If his many lies, distortions, exaggerations tell us anything about Trump, it is that he does not have a clear, rational view of events and conditions that require the careful attention of a president. It is, therefore, clear that whatever he says and does is problematic and potentially dangerous. To put it bluntly, he doesn't know what the hell he is doing. The best remark I have heard regarding the tariff controversy (sorry, that I can't give it proper credit) is that Trump will make impossible claims on other countries which are resisted. However, since most countries cannot afford to get in a economic fight with the United States, they will relent by giving in on some slight, insignificant matter, thus allowing Trump to claim that he made a better deal. So, we just have to wait until the charade is over.
16
As an economist it's almost sacrilegious to support actions that may hurt the GDP, and as a liberal to support actions by Trump. But it's not hard to read your hesitation between the lines to come down hard on Trump's tariffs against China.
If US and other manufacturers can produce at ultra low cost in a country with horrible wages and working conditions (remember the anti-suicide netting around Foxconn facilities?), they will and they have. Instead of levelling the playing field downwards by attacking our unions, deregulating, denying healthcare, etc. just to keep some manufacturing here competitive, doesn't it make more sense to impose tariffs so goods made in China don't outcompete those of American companies who pay their workers decent salaries?
My question is this: American workers have not benefitted from GDP growth over the last decades in the sense that their real disposable income has stagnated, benefits from automatising and relocation of labor have gone largely to the 1%. Is it wrong to assume that this logic works both ways (i.e. that American workers would not be affected by the lower profit fallout of the tariffs)?
7
I've wondered the exact same thing. The less that rising GDP benefits everyone, the less that GDP should matter at all. So who cares if it drops? I can't answer that, but I have a hunch that once free trade establishes new ownership, labor, etc. frameworks, dismantling or damaging those frameworks through protectionism could be very chaotic. It's not like everything just goes back to the way it was, or does it?
4
I really don't know either. I would imagine that more companies would come back to produce locally, which would add much needed low education jobs, at least that's something. However, it wouldn't change that workers today are no longer organised in unions, so how does it all play out?
That tariffs lead to higher prices for some products is 100% certain, so any benefits from those tariffs would have to minimally offset that impact. But... If the positive effects of these tariffs go to workers and the downsides (lower output etc.) mainly to the 1%, it could still be a win for America even if overall GDP growth is lower. Would love to see some analysis on this.
This might make sense if factory production in the US had actually decreased drastically. Instead, productivity has increased--because of technology and automation, fewer people are needed in the process. This includes manufacturing, agriculture, even retail and services like banking and customer support. No tariff is ever going to bring these jobs back.
6
The man who tells the world that he is a genius - and a very stable one to boot -, complained that in New York City the majority of all cars are either Mercedes or BMW., while the mean Germans do not reciprocate and importing more US made cars.
The best retort came form the CEO of Mercedes, who said that should US automakers make better cars Germany would gladly import them.
As to the battle with China over intellectual property, how in the word can this Administration complain about that, while the man at the top is unable to define what the word intellectual means in the first place.
29
It only appears as flailing if you interpret him literally. In fact, he's being consistent. He's using economic terms and tools improperly to reiterate to his base this narrative: "China is taking American jobs and money, and I am doing something to fight them." His supporters respond, "Good, why should we be paying them for stuff we should be making here." It's rather simple political theater.
15
It’s flailing because he has to eat his lying words all the time
Trump is struggling to get traction in his sophomore year at being president. Turns out his self proclaimed expertise at building stuff doesn’t extend to walls, and trade wars might not be as easy to win as he declared. He’s recognized that his party might lose their majority in both the senate and the house, giving Chuck and Nancy the opportunity to McConnell him for the following two years. His friends and family have all failed to live up to his expectations and his cabinet appointees seem to miss no chance to embarrass him. Investors are looking back at how well they did during the Obama years and are wondering how much more damage Trump will do to their retirement accounts. All this winning he promised is turning into non stop twitter whining.
35
I am not an economist. So I wonder if Dr. Krugman would explain what appears to me to be an inconsistency in Trump's economic "policies." First he withdraws the U.S. from the Trans Pacific Partnership, which drove our allies and trading partners into economic agreements with China and thus benefiting China. And then he seeks to implement tariffs against China, supposedly disadvantaging China to benefit sectors of the American economy. Is there a consistency here which I'm missing?
10
The consistency is that Trump is ignorant and has no desire to learn.
1
TPP did not just "benefit China". It benefitted all signatories on some front. That is why they signed it. Only conservatives sign things, like ballots for GOP candidates, for which they only pay and receive nothing in return.
1
President Trump will never really hurt the economic powerful (the Masters of the World as Adam Smith called them). He may be allowed many eccentricities, but not that. His crazy demeanor is in fact an asset for the real rulers as long as it keeps the main media flow away from the important political issues that really affect peoples lives.
We have seen this in history before: economic power paving the way for a right-wing populist in the anticipation that the dangerous adversary (those representing the real interest of the working people) be kept away from policy-making. So, this is not just a US problem.
Dr. Krugman may be rather lonely as a rational voice in corporate media in the US, but not in the vibrant, almost boiling, cosmopolitan cyberspace. What's left to be done is organizing. Not a small task, but very much possible.
Progressives are the future! Conservatives are the ones who eagerly defends what past generation of conservatives could give their lives to avert.
20
I don’t normally go full on tin foil hat, but Trump’s announcements are so directionally provocative to the market, that they seem designed to elicit specific predictable short term market responses (/fluctuations).
It would be interesting to track the market activity for Kushner, Trump and other ally portfolios before/during/after these announcements.
I mean to say, if someone — a close relative— knew of a major announcement, and if that person could position themselves in the market accordingly, in advance, it could be very lucrative.
54
And ILLEGAL
1
There are almost too many negative describitive words that apply to Trump. By their silence we must assume the GOP agrees with Trump’s attitude and views. Therefore the party and president are complicit in their destruction of our environment and the economic lives of many.
Fortunately, Trump does care about 2 groups: his base and his wealthy friends. He will not implement many if not most of the tariffs because they would hurt his base (especially farmers/rural America) and his investor friends (read Mar-a-Lago crowd type of people). Yes, our president flails around with little direction. He understands nothing of the consequences of his preliminary decisions until certain voices speak up. His recommendations which are often not acted upon remain detrimental to the life of America and world. Trump and his party are dangerous to the well-being of country and the planet,
17
Two points and one "nit" to pick.
First the "nit." In a previous column you said not to worry about imbalances with China because the trade imbalances were offset by Capital inflows and surpluses. Besides they are loaning us shiploads of cash for our deficits. I am not an economist but does that mean they cash in on trade and, to use simplistic examples, come in buy up apartments by the block and companies?
Other points: It is possible to stop some parts of intellectual theft or an unwillingness to pay for it. Stop the physical and digital goods from entering the U.S. until they pay up. I know it can be done, I have seen it done. The Western countries can join in.
Stealing IP over the web. Seriously...what are our companies with IP doing to secure their intellectual property? If the "digital door" is open, someone will come in and take whatever they want. This is laziness on our part.
I know there are more complex cases but these proactive steps on our part might set the tone.
To hit below the belt, maybe Trump should ask Ivanka not to manufacture in China, how about making it here? You know, create jobs.
15
Take a resentful group of low-information voters, throw in some white supremacy, a shallow celebrity, bake with heavy doses of fear and loathing, sprinkle with Russian spices and serve 63 million morons a delicious moron stew.
Or as one special needs Trump supporter famously said:
“We know his goal is to make America great again. It's on his hat."
“In politics, stupidity is not a handicap.” – Napoleon Bonaparte.
The Art of The Collapsed American IQ...by Donald Trump
255
On day one of Trump's new job I expected this. The fact that it took over a year for things to totally fall apart tells us just what a great job Obama did. Wasn't it nice to have a competent man running the executive branch.
213
including almost two-thirds of food grains — is exported...."
.......................
The problem for the consumer is that while farmers get more for their exported grain, (I assume, otherwise why bother), the cost to the local market is such that bread, cereal and such costs more for us. When breakfast cereal is 4 bucks for a 12 ounce box that probably serves 1 time for a family of 4, that adds up to be quite a lot at the end of the year. If I can buy a jar of good cherry jam from Poland for a buck, surely America can make something similar rather that 4 bucks for a similar jar. There is something wrong, but I don't understand all there is to make a real assessment.
I'm sure that the Tariff of Rottingham is making things worse for all of us but in some ways, I hope China hangs tough.
1
No. When the price of U.S. exported grain goes up, the importing countries (China) look to competing markets in different countries such as Brazil for soybeans. U.S. farmers are competing with the rest of the world to sell their products. Countries are just like consumers in that they shop for the lowest price.
The price of the grain in a $4.00 box of cereal is about $.25-.50. Most of the price is manufacturing and marketing.
35
then the consumer is still getting hosed.
Manufacturing costs SHOULD be low because this is NOT new technology. Machines are better, printing is better, everything is digital, paper is recycled so the 4 buck box should be 1 buck then. Marketing is overblown , I buy what tastes good, not what looks good.
Maybe less CEO pay, more cheaper consumer products. Greed needs to run its course.
re cereal: half of the milk poured over cereal (aka sugar coated carbs) is wasted. If saving money were a concern one could use less milk and by off brand instead of hyped brand name stuff.
According to Peter Navarro - PBS Newshour interview, April 4, 2018, 15:17, https://tinyurl.com/ycw4ssp2 - the $520 billion trade deficit results in a loss of 3 million jobs.
The premises are that (a) imposing tariffs reduces the trade deficit, and (b) reducing the trade deficit results in job creation.
Imposing tariffs reduces imports, but it also reduces exports when other countries retaliate. Also tariffs are highly regressive, and affect lower-income families proportionately more than higher-income families.
The current administration has some 34 months left. To eliminate the trade deficit it would have to be reduced by an average of $15 billion per year.
At the rate of job creation of 2015 and 2016, 10.1 million jobs would have been created in 4 years.
On the other hand, at the rate of job creation of the last 14 months, only 9.4 million jobs will be created in 2017 through 2020, the tax cut and the regulatory roll backs notwithstanding.
In order to have created 13.1 million jobs by the end of this administration, an average of 317,000 jobs will need to be created from here on each month.
Note, however, that reducing the trade deficit strengthens the dollar at least temporarily, which tends to increase the trade deficit.
The best way to permanently reduce the trade deficit would be to increase taxes. This would reduce the federal budget deficit and weaken the dollar, which would make imports less attractive and incentivize exports.
8
The question, as always with Trump, is not about the facts, as Krugman piously likes to quotes them, but the perception.
Trump's is always and only a political calculation—an alternate universe, some might call it—but who’s to say he’s wrong? It all depends on your criteria.
If your criteria revolve around pundit power—eyeballs per hour—that’s one thing. If they depend on gaining and keeping political power, well, that's quite another.
In that, Krugman is not in the same league.
4
this is a dispute between a weak, uninformed and impulsive megalomaniac with bravado, who can’t think beyond the immediate, and an intelligent megalomaniac who can strategize beyond the superficial with the wind seemingly at his back. no contest.
9
....and yet they all play along..... I today switched my on-board radio from NPR to a random country music station. I'm sick of this surreal pretense of a government! Really?
12
Is it unfair or off message to point out that not one person from the main stream media has bothered to explain (let alone apologize for) coverage of emails in 2016 ?
24
The art of the flail will be next month's art of the fail. A HUGE fail. Sad!
8
" when it comes to making actual demands on other countries,"
After this phrase, you need to add 'except for Russia'.
12
Some major components of world trade are in the hands of a man with no understanding of the most basic tenets of economics. Additionally, he has bents towards vindictiveness and self-delusion. Why do we have remain trapped in this insanity? Why is there no one home in Congress?
27
I've come to the conclusion that even Congress is terrified by the prospect of a President Pence.
1
"Why is there no one home in Congress?"
Oh, congress is "home," Barbara. They are just very busy hiding their ill-gotten gains (i.e. payoffs, bribes, kickbacks, "donations," ) under their mattresses, so they have no time for people like you and me. They are madly, furiously, desperately hoarding boatloads of money that they get from their oligarch/corporatist cronies, for disenfranchising/harming millions of Americans. And trump is helping them do it.
1
Call it the art of the flail? Better yet call it pathological behavior. It is as if the emperor is imposing his mental illness on the entire globe and NO ONE with any significant power to do stop him has the guts to do anything.
47
Mr. Krugman, I believe you could have done with one less 'l' in the title. The Art of the Fail.
8
The professor needs to get to work. He needs to go on tour to all the Trumpster communities and explain things. They need to understand cheer Trump's trade trash talk.
A film crew will broadcast the Professor's message as he throws money into the crowd and the high point will be when he jumps the over the crowd astride a Harley.
2
Hahaha. Good visual image. And you’re spot on for what works with these people.
Why does any person, sane or otherwise, well-meaning or otherwise, have this much power? Perhaps we need to rethink this situation.
The Presidency is supposed to be kept in check by Congress and the courts. Unfortunately Congress is MIA; meanwhile, Flailer in Chief terrorizes the planet.
Heaven knows what will come of this. And that's a problem. Seven billions of people and our environment shouldn't be dependent upon the whims of an unhinged uncontrolled talking yam.
93
Trump must go!
21
The problem is that Trump thinks he is way smarter than anyone else and the Chinese are going to play him like a fiddle, The problem with that he is going to the USA and the world economy down with him. There is really no helping someone who doesn't want to learn. Maybe he can be sent to do a good will tour of Greenland for an extended period.
13
What do you have against Greenland?
One element of political economies are narratives—Trump has turned these into noise, empty of substance/overflowing with politics. His narratives are loaded with purpose-filled fantasies. Mature economies like the US easily conceal dreams and pain; the pain scattered by statistics: who feels Vermont's opiate tragedies, Flint's poisoned waters, the Gulf's oil spill, the TVA's coal ash spill, NC's Dan River fish kill? The morning traffic incident has more impact.
Mature economies also hide diminishing returns: more is not cheaper or easier; it is harder, more demanding, more consuming for smaller rewards. To work around this principle, American corporations used waste to create wealth; waste kept marginal returns high by limiting production. The effects were out-of-date facilities, reduced efficiencies—greater waste.
Trump blames this waste on outsiders, but it is an internal failure; his noise drowns out the truth. Trade is fluid/changing, a balance sheet doesn't create grow or progress. Tariffs close off markets and fix prices. It works politically not because of the economics, but only because of the noise and the scattered pain.
12
This article is quite academic, however, my question is, who is buying stock for Trump. As he makes a threat the market goes down, then when he says he may reconsider on his threat, the market goes back up. Someone is profiting well, and the only one who knows what Trump will say next is Trump.
160
I often wonder if someone is shorting Amazon for him just before he makes a blast on Twitter. :-(
45
And whoever he tells.
1
"and the only one who knows what [covfefe] will say next is [covfefe]."
...and his friend, longtime job killer Carl Icahn. https://www.npr.org/2018/03/03/590583598/before-trump-announced-tariffs-...
4
You point out the benefits of free trade that have lifted many out of poverty in Asia. However, you never address the fact that the wages of American workers have not risen in 40 years. Nor do you discuss the destruction of the planet that world wide capitalism has wrought. Maybe it would be better if oil tankers and t-shirts were not continually crossing the Pacific.
12
In reality, Krugman talks a lot about these things, AND also proposed some common sense, evidence-based solutions.
Just google "Krugman wages", and you'll see.
28
If people in these red-state farm areas of the US consistently vote against their economic interest regarding health care, etc., why would anyone think that they would vote against their economic self-interest vis-a-vis their basic industries? Seems to me they vote with a tribe rather than their livelihood.
33
yes indeed. no nonsense midwestern farmers? either they are dumber than a house or are being duped and lovin' it. either way, when their economic ships sinks, this city boy ain't paying to keep them afloat.
you asked for him you got him Now live (or not) with the consequences like real men do.
12
I hope those people will start feeling the pinch even more.... without pain they will not wake up. Ms. Clinton should not have uttered the d word, but she was right about it.
1
Seems their best interests are in maintaining their so-called superiority over non-whites. As long as non-whites don't get anything (healthcare, etc), their happy to not to get anything either.
1
All Paul really is left with is China for trade tariff analysis and the real potential for a trade war – Trump already has granted exemptions for Europe, Canada, Argentina, Australia, Mexico and others (and yet others, such as for Brazil and South Korea, are under discussion), while making it plain that we intend to re-negotiate bilateral trade agreements for which the exemptions – which can be revoked – were leverage.
Paul can call Trump’s brinksmanship “the art of the flail” because he’s tired of the word “brinkmanship”, but it comes to the same thing. This is how Trump operates: it’s always BEEN how he’s operated. It usually delivers results, although it’s too soon in the process yet to know if re-negotiated bilateral trade agreements will deliver enough benefits to us to have been worth all the agita. We’ll see.
As to China, we have more bones to pick with them than just trade and the wholesale filching of intellectual capital – including military issues, North Korea and general hacking and cybernetic intrusions that have affected government institutions and private espionage – directed, among many other entities, at the New York Times itself. There’s no rule stipulating that we may not seek non-economic concessions in considering the grant to China of yet more exemptions.
2
China has at least as much interest as we in avoiding a trade war with us, particularly as Xi Jinping, apparently now China’s forever-president, seeks to move his country to a new phase of economic and political development. Leaving our requirements open initially could well be a way of seeing what they’re willing to offer to avoid that trade war. In cutting deals, I willing to leave it to Trump rather than an Econ. Nobelist.
Paul is a linear thinker while Trump is not, and he obviously doesn’t like brinkmanship. But Trump wasn’t elected as president-of-making-nice-with-trading-partners-at-our-expense, he was elected president of the United States and charged with defending OUR interests. If Paul doesn’t like how Trump does that, then he should have worked harder to get Hillary elected.
2
"It usually delivers results"
Please provide examples.
Where is the infrastructure spending?
ACA is still there?
DACA?
No results from Trump unless you count NDA's. He has many of those.
36
Trump is incompetent. His incompetence is dangerous to us and the rest of the world. His flip flops are not conducive to stability or future planning. If Trump wants to play hardball with China he'd better do some serious thinking and so far he hasn't demonstrated any abilities along those lines.
43
Most of what we buy from China is American branded goods, built by contract manufacturers in China. Of the $340 billion, I doubt the profit to Chinese companies is $50 billion, the overwhelming majority of the profit is made by retailers and brands owners.
We have no one to blame but profit seekers at home.
44
Exactly - The Chinese didn't come over here and take our jobs away. US companies took the jobs to China. Just walk through Home Depot, Walmart, Target or any other large retailer and read the labels carefully. You will find US name brand products that are made in China. And why do our companies do that - to reduce their costs so that they can provide better returns to their shareholders.
30
At one time purchasing an imported car was a joke (think early 1970's).
Then companies like Honda got their acts together (after years of focus) and made real inroads with an excellent product (think early 1980's). Around this time the union wing of the Democratic Party could get away with calling you traitors and nasty Republicans for purchasing an imported product that was in your economic self-interest. Soon these products caught on with liberals and progressives and globalism became a plank in the Democratic Party.
The current state of manufacturing as well its impact on the economic welfare of workers in this country is due to consumer demand. Not Reagan, not W., not Obama, it's due to consumer actions.
And who marches through Walmart, Home Depot, Target and all the other retail and wholesale outlets and BUYS that Chinese product? WE DO!
Professor Krugman, Can you please explain the statement, "Over all, the U.S. trade deficit is just the flip side of the fact that America attracts more inward investment from foreigners than the amount Americans invest abroad. " I thought investments were part of the current account and that they do not go into the calculation of the trade deficit, which I thought took into account only the flow of goods and services.
5
The goods sold by China to the US has to (roughly) equal the goods sold by the US to China, otherwise the currencies would revalue until they did. BUT...one of the "goods" being sold by the US is investment opportunities in US companies and real estate. The US buys iPhones assembled in China, while China buys US grain *and* some shares in Apple. Or rather people in the US and people in China, but you get the idea.
3
“…I thought investments were part of the current account…”
Investments in US Treasuries, real estate, US stocks and bonds, etc., are part of the capital account.
What is part of the current account are dividends, interest, rents, etc.
“…the U.S. trade deficit is just the flip side of the fact that America attracts more inward investment from foreigners than the amount Americans invest abroad…”
When the US runs a trade deficit foreigners end up with more dollars than they need to pay from goods and services imported from the USA. They can keep those dollars in cash or invest them in US Treasuries and bonds of US companies, and earn interest, or purchase US real estate or stocks of US companies and receive dividends or capital appreciation. No dollars from trade deficit = no dollars for investment.
1
Paul, come out and say it instead of dancing around it. Trump is incompetent as president. He's not very much of a businessman. He is a great liar and bully and quite ignorant about how government works. And what he's doing is damaging the lives of all working Americans while enriching the economic elites.
The bottom line here is that Trump and the GOP do not care at all about working Americans. if we get hurt because of their policies it won't hurt them personally. They have enough money and good contacts to insulate themselves from the poison they are spreading.
625
If only Trump were simply incompetent as a president.
Trump's presidency is unlike Wilson's second term, when he failed (because of a stroke) and his wife ran the country. It is unlike Nixon's failure that cost him his job but did minimal damage to the country and its institutions.
Trump is breathtakingly bad at President. Vast ignorance, plus vast arrogance, plus a very distant relationship to the truth, plus apparent ownership by an adversary, plus uniquely poor employee selection, plus vast corruption, plus nepotism with "nepots" of negligible to non-existent skill and morals, plus extreme bravado, plus well justified fear of being found to be a fraud, plus delegating actual decisions and actions to those who are utterly misguided on the purpose of government. Trump puts the country at risk in ways that will not be easy to recover--and, even if he manages to avoid a major war, possibly push the planet into a climate that supports far fewer of our species.
Trump has his enablers--an entire party convinced that their oath of office should be taken to the NRA and Grover Norquist. These enablers take great delight in demonstrating their power by deliberately keeping the most incompetent and corrupt president ever in power because it so antagonizes those "others".
It is not a game.
484
"Government is not reason, it is not eloquence, it is force; like fire, a troublesome servant and a fearful master. Never for a moment should it be left to irresponsible action." --- George Washington
He nd the Republican Party are not totally ignorant of how the government works. They simply do not believe in government. Thus you have every Cabinet member firing, incapacitating or otherwise dismembering all agencies as quickly as possible. But Scott Pruitt takes the cake for corruption simultaneously with increasing the planet’s demise through pollution!
19
"Meanwhile, the U.S. ran a current account deficit of 2.4 percent of G.D.P., a bit bigger, but also much smaller than the imbalances of the mid-2000s."
This is supposed to reassure me? That less money is flowing out of the country than during a period which led to a disaster?
Color me skeptical.
3
Our money is not "flowing out of the country." As the professor explains:
"As many people have pointed out, this is junk economics. Except at times of mass unemployment, trade deficits aren’t a subtraction from the economies that run them, nor are trade surpluses an addition to the economies on the other side of the imbalance. Over all, the U.S. trade deficit is just the flip side of the fact that America attracts more inward investment from foreigners than the amount Americans invest abroad. Trade policy has nothing to do with it."
The US has had an uninterrupted trade deficit for more than 40 years. Yet here we are, a hugely wealthy country with the highest per capita GDP ($60,000) of any large country in the world (the US is ranked no. 20, Germany is 27, UK is 40). Our economy is the world's largest and drives the world economy, the US dollar reigns supreme, our military is the world's most powerful, and our cultural power is unparalleled.
China has run a trade surplus for several decades now but it's per capita GDP is only $16,000, a quarter of that with United States. China's military (in particular its navy) is a joke, without a single genuine aircraft carrier. It's cities are filthy and polluted. The upper classes park their money in the US and Europe and send their children to the US for college and/or to live permanently.
What's so great about trade surpluses?
10
Andew, you entirely miss the point. What you quote from Krugman talks about the TRADE DEFICT. What i wrote about concerns the CURRENT ACCOUNT DEFICIT which includes investment income.
Sure we have had a current account deficit for a long time, but that is O.K. when the federal government replaces the money doing out of the country with deficit spending, i.e. the federal deficit must be at least as large as the current account deficit.
From 1996 to 2008 (except for a brief period in 2003), the trade deficit was larger than the federal deficit. Thus money still flowed out of the private sector even when we had deficits under Bush. When this happens, people and businesses turn to banks to get money and private debt explodes, i.e. too little public debt causes too much private debt. In 2007, the large banks had 27 or 28 times the amount outstanding in loans as they had in reserves. Again, as in the previous 6 cases when a significant amount of money left the private sector, the banking system cannot survive in this situation. Only the fact that this time we were off of the gold standard so we had a FED that could create TRILLIONS to pump into the banking system saved us from a 1929 type depression, but it wasn't pretty.
You can see the charts that give all the data on this at:
http://www.slideshare. net/MitchGreen/mmt-basics-you- cannot-consider-the- deficit-in-isolation .
5
My point stands. Whether one is discussing the trade deficit or the current account deficit (which includes services, investment income, etc. in addition to goods), the fact is that for decades the US has been running deficits while China has been in surplus mode. Yet it's not like China has become richer and the US poorer; rather, both countries have become wealthier. As noted, US GDPPC is nearly $60,000 (ranked 20), almost 4 times China's ($16,000, ranked 106). Despite decades of surpluses, China is still poorer than Costa Rica (101), Botswana (96) and Mexico (90).
While China has grown at a much faster rate over the last 40 years, that's because its economy was so much smaller. As China's economy has grown, its rate of growth has slowed (and will likely slow further as it falls into the middle income trap). While the US growth rate has averaged 2-3%, the country started out so much wealthier that the actual GDPPC has probably grown by roughly the same dollar amount.
The point is that even after decades of deficits, the US has still continued to grow its wealth and to maintain an astronomical lead in wealth per capital over the Chinese. Meantime, the Chinese after decades of surpluses are still poorer on average than citizens of the Dominican Republic.
In other words, our wealth has not been "flowing out of the country" but rather continues to grow.
2
Trump has no clue about the consequences of the trade facts that you mention here, Paul. Neither do his advisors, since no person with either pride or intelligence would be able to even endure a conversation with him.
The decision to protect our steel industry was likely driven by Dan DiMicco, former Nucor Steel CEO, who was a major Trump supporter during the election. Oddly, Nucor survived Chinese competition, because recycled steel competes well globally. Dan should have focused instead on limiting our steel scrap exports, which supply minimills all over Asia. We would then be a much more serious global steel competitor, and reduce emissions, too. Steel made from scrap can be produced far more cheaply than that made from coal fired iron ore.
The current trade crisis is likely to play out with a quiet return to the status quo, just as The Wall did. We will be back where we started, with a dunce still in charge, as we hope that the damage from the next presidential brain burp can be contained.
The trade war will recede just as the nuclear war with North Korea did. Trump will eventually get bored and gin up another crisis, but at least we now know what we are dealing with, and even the Republicans might learn to contain him. They won't speak out, because their funders from the fossil fuel and weapons sectors mean too much to them.
It's up to the Democrats to take advantage. They could start with a new House leader.
20
Who knew demagoguery could be so complicated?
66
How many different ways can you say that Trump is a fraud before people pay attention?
125
This " stable genius " actually lost Money running a Casino. That is the nearest (legal) means of a license to print money, as possible. Think about the sheer determination and willpower required to accomplish that. Just when you think he's scrapping the bottom of the barrel, you realize that his particular barrel is bottomless. Seriously.
328
I would not call it the art of the flail.. It is the art of the unintelligent, uninformed, and totally incoherent.
42
“No one starts a war - or rather, no one in his sense ought to do so - without first being clear in his mind what he intends to achieve by the war and how he intends to conduct it.” Carl von Clausewitz
24
It was the 17th century that John Molton wrote about intellectual property in his Areopagitica 1644.
Over 70% of Silicon Valley is foreign born. The world has paid a heavy price for educating and raising the best and brightest to serve the economy of the richest most powerful nation on Earth.
It is time to discuss what is a fair price for the transfer of intellectual property from the citizens of the world who pay their taxes to produce the men and women who produce the wealth that lines the pockets of America's financiers.
One outstanding example might be Elon Musk whose Queen's University education was large paid for by Canadian taxpayers. Musk's intellectual property clearly belongs to Mr Musk but what should be the return to Canadian taxpayers for their investment in Mr Musk.
I know America only wants to understand what is in it for themselves but the world wants only a fair share for their investment. I don't understand the need to disconnect the would be economic refugees from Honduras from the Magna cum laude engineers from Beijing and Bangalore.
8
Trump doesn't need to worry he LOOKS weak, he IS weak. The Chinese must be having a field day now. They know Trump has no idea what he is doing regarding trade or any other governing policy.
43
If China is the Great Assembler does that make Trump the Great Dissembler or Disassembler? (Marriages, norms, institutions, truths, economies, etc.?)
26
One has to wonder the real value of Wall Street, if any idiotic phrase by trump is causing such roller coasting.
13
When people don’t know what they are talking about but insist on talking anyway, they make no sense.
8
Yet another face-palm caused by 45's administration. I'm depressed, frustrated, and incredulous that our elected leaders, the supposed experts, the guys with the right stuff, can't understand the basic macroeconomic facts of this case. Even I get it, and I made a D in my only college economics course.
"Never rely on anything or anyone too much, for even your shadow abandons you in times of darkness."
-- Some guy with a name no one can spell
16
Regarding intellectual property theft by he Chinese. It is an issue, however, we're talking about the intellectual property of corporations who themselves give it up in exchange for being able to establish themselves in China. It's their choice, too... it's not just the Chinese and I think corporations should step up and take the responsibility that is theirs and be accountable. A bad deal is a bad deal is a bad deal. I don't like to hear corporations whining to the government ( American people) because they, the corporations couldn't say no and made a bad choice for the wrong reasons.
23
Prof. Krugman asks, why is “bilateral” trade between the U.S. and China so unbalanced?
Actually, it's not unbalanced any more than my buying more from the grocery than I sell to them is unbalanced.
Specialization means that some of any entity's bilateral commerce will be with entities it buys from, and some will be with entities it sells to. There will be a net cash flow, in one direction or the other, with each. This is not a big deal.
6
The professor wasn’t asking. He answered his question, “The answer is that it’s largely a kind of statistical illusion.”
1
I think Krugs is missing the point. This is not about the money. This is about saying, "We ain't gonna take it. No, we ain't gonna take it. We ain't gonna take it, no more.". We have been buying junk from China since I was a child. Let's make our own junk once again.
1
Oh yes let’s , all go to work for Chinese wage levels, that will show them.
8
We buy their junk, because American industries make more money than if we'd made it here.
6
And pay five times the price for something not as good.
Trump* is simply saying what he thinks his audience wants to hear and can't - literally CAN'T - understand any of the consequences of his speech. In his other life, he could blather all he wanted and nothing happened. But as POTUS, his words have weight and people need to know if he will follow thru.
He's the dog who finally caught the car he was chasing and doesn't know what to do with it now.
36
Trump apparent power trip action on trade looks like it will cause more harm than good for the American people.
Once again Donald Trump seems to be defying the experts to satisfy his bizarre ego.
9
Do you ever consider there is a simpler explanation. Maybe Trump calls Don Jr and Eric and tells them he is going to tweet out on tariffs. Then they short the market and make big bucks when it goes down. Or he calls them up to tell them he is going to trash talk Amazon. They then short Amazon and make a fortune. Maybe it is that simple.
145
please these clowns aren't THAT smart
in fact they are not smart at all.
the genes in that family are truly poor.
7
I doubt it. I don’t think any of them is bright enough to come up with such a strategy.
5
Appearances matter. The possibility of market manipulation is there and it doesn't look good.
12
Trump family businesses make many items (clothes, souvenirs) in China. Do they plan to continue to make them in China?
30
We should look at Trump and take at face value what he does. His actions are consistent with a goal to destroy the stock market. We should assume that is what he is doing.
The tarriffs paid by exporters to the US go into the Treasury. Taxation without representation making a comeback?
5
Fact base argument is useless in Trump-land. There will be some "negotiations", an "agreement will be reached" and he will declare a glorious victory which will be echoed by Navarro, Kudlow and Hannity and things will remain about the same if not worse.
23
Stocks plunge. Then they recover. Does he have a direct or indirect way to trade (buy, sell, short stocks) on his own words/threats/“promises”? I’ve long suspected that Vlad and his oligarchs do that as he reveals decisions (invasions) that move the stock market.
12
Dismissing the suffering of tens of millions of Americans who were victimized by globalization by casually referring to a "bad actor" is reprehensible.
"Here’s a raw fact few people" — and, as far as I can tell, no economists — "seem to appreciate":
Globalization failed.
And there are a lot more "losers" than the economists said there would be.
And they're not at all happy with the way things have turned out.
Another interesting thing to add to the list of things that economists got wrong is that, in democracies, "negative externalities" get to vote.
And that's why the US, Great Britain, Italy, Germany, France, and oh heck let's just make it "all of Europe" are experiencing political turmoil, which is a precursor for social unrest.
Got any cute demand curves that will show the rapid growth for riot-control police and the National Guard to contain anti-globalization and anti-junk-economics protests in the coming decade that will make the Seattle WTO protests in1999 look like a picnic?
1
Many people in the West are hurting, that is a fact.
What Krugman and so many others, including a majority of American voters, believe, however, is that the story told by "demagogues" such as Trump is based on lies and already debunked by proven facts. But it's his story-telling that is being rejected, NOT the misery of people hurting.
Part of that story was that the reason why so many people in the West are hurting is "globalization", which then stands for the fact that Western companies operating in a capitalist environment prefer to outsource as much as possible to countries were labor laws are less strict and wages lower.
In real life, though, "globalization" merely refers to the fact that local economies today are more than ever linked to the world economy, where developed economies are excelling in R&D and poorer countries excel in producing raw materials.
And that in itself isn't necessarily a bad thing for ordinary citizens in the West, as Western countries continue to be the wealthiest on earth (with the US being THE wealthiest country).
So then the question becomes: why is it that in the West most of the wealth is concentrated in the hands of VERY few elites?
Answer: because local governments time and again pass laws that make the wealthy even wealthier, to the detriment of the 99%.
And THAT is exactly what Trump and the GOP are doing.
That's why the GOP is the problem, not globalization itself, you see?
42
@Ana Luisa
I said nothing in defense of Trump. Or the GOP. Nothing.
Yes, it was a self-inflicted wound by greedy capitalists offshoring labor to boost profits.
No, developed countries are not excelling in R & D. You're uninformed. China has phenomenal entrepreneurs that are more innovative than Silicon Valley, and its government has a vision for the future that puts America to shame, and is funding some extraordinary R & D.
And Europe is an order of magnitude worse than the US where AI ecosystems and R & D are concerned.
Sorry. You have absolutely no chance in the 21st century. All the "Happy Talk" in the world about how wealthy you are won't assuage the anger of the lost generation of the millennials of Europe.
California, a rather blue state, has the highest poverty rate in the country. Number one. In the country. What have their local governments been up to, I wonder?
Bill Clinton, a Democrat, was instrumental in China's entry into the WTO, which was one of the most pivotal events in economic history.
And the ratio of CEO pay to the average worker grew the most, by far, during the Clinton Presidency. Did I mention he was a Democrat?
And China's ascent went exponential during President Obama's (D) tenure. He did nothing, absolutely nothing, about it.
That's why the GOP is indeed a tremendous problem, but blind partisanship can be dangerous, because the Democrats are just as bad.
And the solution is actually more globalization, not less.
You see?
@Ana Luisa: I might agree with you, were it not for the troubling appearance of Bitcoin and other currencies that are not tethered to any nation. Blockchain technology makes it easy for virtual money (which is all that money has become, anyway) to be offshored anywhere in cyberspace, bypassing the tax authorities of every nation on the planet.
This robs governments of a large amount of the tax revenue they need to sustain the services they provide. Over the long run, it increases the power of unscrupulous individuals and weakens the nation-state's power to provide its citizens with services and protection.
Being able to tax and collect revenue is what supports a nation's ability to redistribute income fairly among all of its citizens, in the form of education, healthcare, transportation, and other infrastructure.
The Guardian published a long article on the collapse of the nation-state, which is slowly being replaced by a cabal of oligarchs who are shifting capital around the globe, keeping it out of the hands of all governments, and by extension, preventing it from serving the general populations of every country in the world.
These global capitalists have no loyalty to any nation or to anyone, really, except for themselves, and they move themselves and their money freely all over the world, without the pesky obligation of having to share it in the form of taxes. Here is where the GOP comes in: they have thrown their lot in with the global capitalists.
1
The way Trump is dealing with China is similar to how he's treating Amazon.
Both can rightly be criticized for the way they're doing business, and some pressure by a US president to solve these problems is more then welcome, but unfortunately, Trump criticizes them for problems that don't exist, all while ignoring real problems out there.
Amazon is known for exploiting its own employees. The only way to stop this is to pass new labor laws making this kind of exploitation totally illegal. Instead of doing so, however, Trump simply sends some mean tweets, which lower Amazon stocks for a couple of days, and that's it. Amazon will soon become the first trillion dollar company on earth, so of course a couple of days with lower stocks won't hurt it at all. At the same time, Trump attacked Amazon referring to a non existing problem, instead of attacking its labor conditions. So in the end, his attacks won't have any serious effect.
The same goes for China, as Krugman is showing here.
Did we EVER have such an ignorant and incompetent president ... ?
He's certainly good at "messaging" (= giving your base the impression that you care about what they care about, and are doing something about it), but that's it.
Our only hope to MAGA now is to (1) start engaging in real, respectful debates with Trump voters, so that they can discover the truth, and (2) start engaging in real, respectful debates with progressives still waiting for the ideal candidate before they'll go voting.
5
My background--indeed, entire career--is in high technology and IP. I wonder if anyone has tried to calculate the cost of China having stolen the IP of every nation in the world, including the US, and capitalizing on it? I don't think most people know that besides the commercial aspect, they've also stolen military and defense technology; in fact, given the huge number of engineers and scientists in this country who have devoted their lives to the defense sector (and that includes me, for about half of my career), this is perhaps of greater financial impact than the commercial side. On the margin, stealing defense technology is much more profitable than commercial. Dr. Krugman, I invite you to expand on that topic--you're the economist, I'm just the scientist.
11
The frustration the middle class feels is real. The prescription Trump wants to fill won’t work or help. China is stealing intellectual property. Raise your hands if you feel sorry for the 1%.
Since Reagan shut down the air traffic control union the 1% has won at everyone else’s expense.
Let’s go back to making buybacks illegal (which they were until 1982, thanks Reagan) and for real companies to spend on R&D which does increase jobs and wages. Maybe we can cut CEO pay to 100-1 instead of 400-1. Right now they are spending ~80% on buybacks and 14% on wages.
All hail the 1% ;-)
27
"Let’s go back to making buybacks illegal (which they were until 1982, thanks Reagan) and for real companies to spend on R&D which does increase jobs and wages. Maybe we can cut CEO pay to 100-1 instead of 400-1. Right now they are spending ~80% on buybacks and 14% on wages."
Continue to let anyone buy the stocks of their choice. If you're willing to let government dictate CEO pay, you won't mind if the government dictates your pay as well.
Did the government dictate pay prior to making stock buy backs legal in 1982? Buy backs were considered a form of stock manipulation and corporate CEOs could increase their earnings by running profitable, competitive, and innovative industries selling products and services customers wanted to buy. They didn't falsely inflate their worth.
You'd be making a great point if there was a control on Corporate Greed. There isn't. OTOH there are very good brakes on middle class earnings.
The 1% rigged the game and the rest of us are left holding a half empty bag from which they stole half the contents.
So if Trump can make markets plunge or recover with various vacuous threats, is anyone (other than the watchdog federal agencies, which he controls) tracking the investments his many complex financial holdings are making? Seems like a situation ripe for corrupt profiteering.
7
We have no idea of what his investment positions are. Unfortunately, he does.
"... trade is one of Trump’s two signature issues — animus toward dark-skinned people being the other"
As long as he delivers on animus, his base will not hold him accountable on trade. Or employment. Or misogyny. Or character. Or treason ...
Trump could build a wall on the border made out of American worker pink slips and forclosure notices, pornstar non-disclosure agreements, and Mueller issued indictments, and his base would cheer.
Animus is simple. Trade is complicated. The base doesn't do complicated. And neither does Trump.
43
"Animus is simple. Trade is complicated. The base doesn't do complicated. And neither does Trump."
Animus is so simple the Left is just as proficient at it as the Right. Trade could be really simple but no one actually wants free trade.
1
Trump isn't running the government. He's running for re-election.
His driving agenda is simple: the half-dozen or so campaign punchlines that got the loudest roars at his rallies: Mexican wall, kill Obamacare, cut taxes, no free trade, drain the swamp, white America first.
Trump has uninformed opinions about everything, and tends to chase shiny objects he sees on Fox. But his interests are very narrow. He only cares about checking the box for every wrong he told his base he'd make right. Nothing else matters.
Trump didn't want a tax bill as much as he wanted a win, a prop he could wave around at campaign rallies as evidence he kept his promise.
Unfortunately for Trump there isn't a comparable prop he can use to claim a win on free trade.
Like his phone call with President Nieto of Mexico, when Trump pleaded with him to stop saying Mexico wasn't paying for the wall because it was making Trump look bad with his base, I can imagine his phone call with President Xi saying he's just bashing China for show and doesn't really plan to put tariffs on anything.
I don't think Trump's trade policy is any more complicated than candidate Trump needing to feed his followers red meat. The only complication is Xi won't play along.
At a distance the trade war fiasco may look like Trump flailing but up close it's just a page out of The Art of Chaos (ghost-written by Putin).
51
In 'America according to Trump', you come home from your job as a cleric in an investment bank and have a simple dinner in front of the T.V., turning to Channel TRUMP, where he is the host of the evening episode, lasting for about thirty minutes.
Tonight, it's Trump in Virginia, tomorrow it's Trump off to Korea, and you are sitting there like a carp, remembering that this is not a trumped-up popular program but real, where you are one of the participants.
In other words you are hooked. Occasionally, you have plans to meet a friend after work, or go on a late errand before returning home and it's a break, while you are feeling slightly uneasy about what has happened to The World.
Life seemed more real when watching The News followed by Jeopardy, but now you have become addicted to 'Confusion' and are checking to see if the Entertainment Media is planning a second Season.
Apparently it is debating the issue, and the Nation is giving 'Confusion' serious consideration for muggles like myself who are dormice.
The confusion of Trump is the confusion of All, while we now trade comments of the possibility and odds of an escalating Trade War with China.
If I had to sum it up, 'Austria' got it right by saying we don't know what is happening. This is of some solace but I miss the good old days when America had a President-in Office, and the safety and well-being of Our Nation did not hinge on Trump's latest tweet.
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Thank you, Miss Ley, for your thoughts.
I feel that Trump's attitude towards trade and tariffs is
incoherent political posturing and would be destructive to American prosperity and the stock market if enacted.
It will make it impossible to address with any nuance problems in our economic relationship with China.
In short it is typical Trump- a poorly thought out series of rants and tweets full of sound and fury signifying nothing but absurdity and stupidity. When is this unqualified embarrassing imposter going to be impeached?
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Beyond Trump's obvious lack of basic knowledge about almost every subject pertinent to the presidency, even economics which belies his claim to be a brilliant businessman, his actions of late in many arenas do not remotely indicate a "new confidence", but rather a new manic episode exaggerated by his other pathological conditions, such as reflexive lying, malignant narcissism and the inability to see anything in the world through any filter other than his own humongous but fragile ego.
In a phrase, he appears to be going through some sort of disintegration, which might be less alarming if the leaders of the party he latched onto like an opportunistic virus, infecting them one and all in ways I suspect they will come to regret, were not completely abdicating any responsibility for the havoc he is wreaking.
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It really doesn’t matter if the guy contradicts himself in a single sentence, let alone the wild daily excursions. I have an acquaintance who has a bit of deficiency, right at the edge of retardation, and a similar defensive personality. Change the subject if questioned, claim proficiency where there is none, and other Trumpish modes. My friend, however, is pretty well convinced that the president is evil.
The flailing doesn’t matter to the markets, which act like panicked lemmings over the tiniest stimuli, as all the players imagine that they can get ahead of each other even while all are rushing in the same direction. They hardly even need a fraction of Trump’s transient dicta to work themselves into a froth.
Unfortunately, economic reality is connected with what the markets do, and we stand a good chance of paralyzing business and progress for long enough to destroy whatever lead we had in technology and global influence. There are some contests where taking a break on the side of the road is definitely not a good thing.
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Trump's attacks on individual businesses(Amazon, Boeing, etc.) and incoherence regarding a so-called trade war (will we or won't we?; Just China or everyone?) drives the stock market crazy. If these were the shenanigans of an individual broker, the SEC would be on him in a heartbeat.
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There's a thought. Since Congress won't act and nobody will sit on the electric twitter machine maybe the SEC will arrest him.
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As you know, there is a psychological aspect to economic behavior (aka behavioral economics). With Donald Trump it's all a reflection of his psychological state of mind. "The Art of the Flail" describes behavior, but not Trump's state of mind. He's flailing because he's unstable and more and more unhinged by the scandals swirling around him and closing in from Stormy Daniels and the issues surrounding the $130,000 hush money payment to the Mueller investigation of his obstruction of justice and collusion and possible conspiracy with Russia. Since Trump, for reasons we can only guess at, has never tweeted about or attacked Ms. Daniels or Vladimir Putin, his anger, his narcissism demanding retaliation as well as his desperate need for praise have been displaced onto others like Rex Tillerson, H. R. McMaster, Hispanic immigrants in a "caravan" about to overrun our borders and demanding a military response, and, of course, the current attack on China via a potential trade war. So, Mr. Trump is in full 'flail" mode, but it comes from the inner darkness of all narcissists--the fear of rejection and the need to attack or put down others so as to raise yourself up. It's an illness that is consuming Mr. Trump and his destructive flailing hurts all around him.
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" it’s where components from other countries, like Japan and South Korea, are put together into consumer products for the U.S. market."
The final assembly is the top of the manufacturing food chain. In general the components that go into the product are commodities.
But you knew that Krugman. Didn't you?
Nobody knew that trade wars could be so complicated.
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Trump majors in "incoherence", hence the six bankruptcies and thousands(!) of lawsuits in his personal business.This is only going to get worse because he has slowly driven out the "second class" team of advisers and replaced them with third class "yes men" (and women). He now has, essentially, free rein to bounce around like a ping pong ball on policy with no check or balance. You can forget Congress...they are just the "peanut gallery" to Trump's circus.
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Give how the market bounces up and down on trump's word, I would really, really like to know if he or his family or his friends are buying certain stocks. Is the president of the united states manipulating the stock market for personal gain?
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It does seem to be a common error to assume that Trump's behavior is about some policy agenda that he cares about, or that his failure to sustain a coherent policy agenda is a sign of irrationality or similar. This is possible, but it seems more likely that personal motives are at work - how he looks in the media, how his wealth is affected, and, most importantly, how he can fire up his base to the point that they hold most Republicans in Congress at risk (in part to scuttle investigations).
If this was true, it would imply that Fox News really does have the keys to the castle - the loyalty and turn-out from his base - and that they may not be the only ones. This might explain why the president watches it religiously.
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The first thing to recognize is Rump's behavior is irrational. It looks like what we used to call schizophrenia, a split personality or even several of them.
With most people in political office when they say one thing and do another we call it hypocrisy, but with him it is a mental illness, he is not being hypocritical, he is mentally confused, does not know truth from fiction, a symptom of sociopathy. At the moment he is fixated on China, The Mexican border, and always HRC. he is obsessive and compulsive and is good at demagoguery. Like all demagogues he has a need for those he can look down on, so he creates them to fulfill his fragile ego.
He and the Trumpanistas are ignorant of the mechanics of international trade and finance, the Chinese are not. True they have used American patents and trade secrets without paying for them, the purpose of the TPP was to ameliorate this. Because of his hatred of Obama he pulled us out of it.
See how quickly he backtracked on the trade levies when China showed it will not be cowed, you can bet he heard from those Midwest farm groups Tuesday morning.
China has become more efficient and profitable taking over industries that the U.S. had until the late 1900s, now it is losing to other countries like India. It is the history of international trade, money goes where the best profits are.
Even more so, if those industries can not sell here, they will find new markets elsewhere. Brazil is one place that is under served.
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China catches the blame for lost American blue collar jobs, and Trump plays this for all he can. Nevermind that most of the jobs have been lost to automation, let's not split hairs, right? Those who haven't adapted to a changing world have to blame somebody for their problems.
Technology is making the world into a single social and economic entity. Soon, nations will be as states are now; mere political entities with meaningless borders.
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i want my coal mining job back! No fair!!
They shut down the fax machine factory in 2004 and life has never been the same.
Boo hoo...
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I am very confused by this insistence of Krugman's that China's alleged violations of IP rights are a bad thing. When a lot of industrial production moved to China in the late nineties and early two thousands we were told that while a few unfortunate individuals losing their jobs or towns losing their major employers were suffering, most of us gained - because getting much cheaper labour in China to produce stuff for us lowered prices and we could now purchase things very cheaply at Walmart etc. I fail to see how the same doesn't apply to patents. Violating those may cost the tiny minority of individuals who own IP (a much smaller class than the millions of industrial workers whose livelihoods were pulled from under them in the great outsourcing) some money - but for the rest of us it is a huge boon, with stuff (electronics, cars, …) becoming much cheaper as a result of China's acquisition of technology allowing them to imitate products otherwise very expensive due to IP costs.
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There is no incentive to innovate if ideas are stolen before one can profit from them.
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I don't know that China passes any substantial savings on to U. S. consumers, and they rob U. S. corporations of profits that they would otherwise obtain from sales outside the U. S. Also, it gives Chinese companies an unfair competitive advantage by allowing them to avoid paying either licensing fees or the R&D expenses required to develop Chinese IP. Also, it stealing.
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The problem, as far as I know, is that there's something called international IP law, which allows all countries to protect their own inventions for a couple of years, before others can imitate them.
This in turn increases incentives for investing in R&D, which then increases the possibility of new inventions.
When one country starts to unilaterally disrespect the current IP laws in place, however, not only are they distorting the market, but if it's a dictatorship doing so, they want to reap the benefits of free scientific research all while restricting it in their own country. And THAT is unfair.
Ideally, of course, all governments on this planet invest massively in R&D, and then patents are no longer necessary to "reward" big inventions (= big investments) as governments understood that they benefit society and the planet as a whole anyhow. But as you probably know, we're not there yet ...
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If Trump doesn't cause a disaster it will be purely accidental. We have a president who is impulsive, easily distracted, bored, gullible, and has a simplistic understanding of very complex issues. He has no real interest in learning and believes that whatever the subject he knows better than any expert.
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A national, make that international, disaster may be taking place under our noses and we will be the last to know.
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He can easily be distracted, bored and absent of any critical thought when he has Fox News as his "advisors". He is turning out to be a puppet of Fox and Friends.
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Amazing that this comment is so true here and yet you could post it in response to opinion pieces on any number of topics and it would be equally true there as well.
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Since Trump essentially controls the market at will, and seems to have no problem with using his office to make money, isn't it plausible that he has functionaries who he is alerting about his upcoming moves so they can profit from large-scale swing trading?
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And what do we propose to do about this?
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Just what I have been thinking.
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We need to rethink our system of checks and balances. it isn't working. The President should never be able to run amok like this.
Trump is without subtlety and his approach to every problem is overkill. If he were tasked with controlling rats in a city, he’d use nuclear weapons.
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Political economy aside, this country has no business letting the serial King of Bankruptcy - who couldn't borrow a farthing from U.S. bankers, and who's never had to answer to public shareholders - expound on actual, real economics and international trade, much less hold forth on an actual budget for the U.S. government.
The guy is a blow-hard bully who will throw anything and everything up in the air to distract from his own bad press, or just to see himself on TeeVee.
As Dr. K. has previously said, we're being led by an ignoramus of appalling malevolence, wrapped in equally appalling incuriosity.
"The state of the Union is lawless" - Rep. Eric Swalwell (D-Ca.) 1/30/18
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When watching the presidential debates and listening to Trump declare it was time to Take Back America, the Nominee was stout and staunch about restoring 'Law and Order' to the Nation (on his terms apparently).
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He took Russian money when he couldn't borrow here. That's why we can't see the tax returns. That's what Mueller needs to track down.
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I am by no means a Trump supporter, but I for one think the world would benefit from a spate of de-globalization brought about by somewhat higher tariffs (call it a trade war if you like.) As Dr. Krugman himself pointed out in his stranded assets article, the dirty secret in economics is that tariffs were not the cause of the Great Depression and that the costs of protectionism are not "earthshaking" in regards to GDP. Tariffs reduce absolute economic efficiency, but how important is peak economic efficiency anyway? U.S. corporations have greatly increased their efficiency thanks to the ability to globalize supply chains, but the productivity gains are trapped in corporate profits while U.S. workers wages largely stagnate. And in our day and age, what is efficiency and competitive advantage? It largely weak labor and environmental laws. The globalized economy looks efficient largely because externalities, like the full carbon footprint of goods, are not included in the price. Countries can impose all the carbon taxes and worker protections they want, but without tariffs, there is no way to force global corporations to respect them.
So I am all for protectionism via carbon tariffs and the like for a more sustainable future, and, in theory, I could get behind Trump in that kind of trade war. The problem is Trump has no plan beyond these short term threats, which would have no lasting impact, (even if he followed through... a big if.)
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thank you very much. I've been struggling with having to take a stand for globalization, that is to say against Trump. It's a weird thing to root for the WTO when something worse comes along, but your reasoning helps put things in their place.
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The problem is PR that the world is now set up to have a worldwide component chain. If you mess that up, it hurts all manufacturing everywhere.
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The profit mantra is similar to the lottery attraction. People will stop thinking about the system, dreaming of the profits, forgetting they probably will be the losers.
As with all things Trump, the problem is cosmetic. It's all those "Made in China" labels, like on his ties and other products. But shutting down the flow of Chinese-made clothing, for example, will not restore the garment industries in the South any more than in Lowell, Mass, from which they fled south last century. Commodity production will chase the cheapest labor around the world. But in the interim, you have to wonder how Trump's voters will like having to pay $90.00 for Old Navy khakis, or $300.00 for winter boots at Wal-Mart.
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Does mean that shopping at Walmart is now a progressive act?
Globalism, Krugman and Walmart - the perfect progressive axis.
Listen. It's all well and good to be on the high horse about Walmart; but millions and millions of poor and working class people depend upon outlets like Walmart for the things they need.
Put them out of business, which Trump's tariffs may well do, and it will harm countless American families.
So Walmart deserves all the criticism leveled at it - but people don't have much money to spend and need the low prices.
Trump may well cause an absolute catastrophe.
No, jp. Everything is relative — as you know, especially if you are a Trump relative.
Paul, please explain how, if dollars are the international currency, and our ability to "print" them is not tied to keeping an equivalent in gold that other countries could demand in exchange, how can a deficit even be considered more than an illusion let alone, a threat to national solvency?
I believe U.S. currency was essentially doubled via quantitative easing after the crash of 2008, and as you've often stated, this did not create a commensurate level of inflation or a drop in the dollar's value internationally.
It appears to me that China toils and pollutes their land water and soil to manufacture things we need and love in exchange for paper symbols that we can print at will.
Seems like the Chinese are the rubes in this relationship and that Trump doesn't know a great deal when he sees one.
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Dollars are not exchangeable for gold. They are fiat money.
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Z, yes I know- guaranteed by our government, like most other modern currency, but because the dollar is the international currency it is too big to fail and other nations can't afford its value to deteriorate quickly.
No other government can just double their currency out of thin air and not suffer the consequences of severe inflation- at least that is my take and someday I'd like Krugman to give us his.
I believe this domination of currency is unique in the history of great powers, even though it is only temporary and is dependent on international faith in the dollar.
Every thing you say is true alan, BUT some way must be found to get the dollars we can print at will to the people who need them and will spend them to make then useful. Trump ain't doing it.
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What our country really needs is massive investment in education and infrastructure. I can't figure out why the Democratic party isn't hammering home this message every day, several times of day. Being the anti-Trump party only gets you so far. It's time for the Democrats to start projecting positive leadership on a scale that penetrates all of the Trumpian noise. Failure to do so could mean 3 more years of Donald Trump, instead of 1. I don't think we can survive 3 more years of this man in the White House.
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You mean that Democratic politicians aren't sending out tweets on a daily basis that are so ill-written and provocative and irrational that MSM cannot but focus on them ... ?
Because apart from that, all that you have to do in order to know that the Democrats are the party of education and infrastructure, is to take a look at what they've concretely achieved each time they control DC.
Especially in the Trump era it's time to STOP focusing on "message" and to start studying who's doing what in DC.
THAT's how people will not only discover that Trump and the GOP are all smoke and mirrors, and what the Democrats truly stand for.
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Education? Infrastructure? Is there anything red state voters want from Democrats at all?
Look how many red states turned down the opportunity to create jobs and better the health of their citizens by rejecting the Affordable Care Act aka "Obama Care." And the GOP cried fowl when "Obama" saved the U.S. auto industry in 2008. How many of those workers who's jobs were saved voted for Trump? My guess is a lot. And how many GOP voters want to return to the U.S. economy of 2008 as compared to eight years with Obama? Probably not many. But they voted for Trump. So is there anything the Democrats can sell to Republicans? Or has the tribalism gone too far?
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How would any of us know what the Democrats are saying since the media (including the Times) has stopped covering policy?
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“As many people have pointed out, this is junk economics. Except at times of mass unemployment, trade deficits aren’t a subtraction from the economies that run them, nor are trade surpluses an addition to the economies on the other side of the imbalance.”
I see Krugman is still pretending the USA isn’t suffering from sever unemployment. He has no idea how and why Trump won.
This type of repeated distraction from big economic suffering in the USA is unhelpful–well unhelpful to anyone but corporate Democrats like Chuck Schumer and Hillary Clinton. Now, Krugman is helping to improve Trump’s chance at winning re-election in 2020 with this kind of invention. But I don’t think that’s what Krugman intends.
5
Just checked and the US unemployment rate is 4.1%. How is that "sever"(e)??
9
Krugman looks at the employment numbers that built up during the Obama administration and that's all he needs to know.
Under-employment? No such animal.
The gig economy? What are you talking about?
Structural unemployment? "Humbug" ... Krugman
3
Unemployment rate currently 4.1%.
Nice try-facts matter to us more than yourself.
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Is this all really a response to Trump's incoherence? Or are Wall Street insiders making hay while there's no oversight or scrutiny into their behavior?
When stocks crash and rebound like this, it feels like someone's consolidating wealth, or at least shuffling it around. Who is buying when we get these mini-tanks? It's not the little guy, who largely sits pat; we're not in panic mode.
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Incoherence characterizes everything Trump and Republicans do.
One month they passed massive tax cuts on unearned investment income, a true cause for celebration among foreign elites since it will share trillions of largesse with them; then, a few months later, Trump announces tariffs that cause massive sell-offs and uncertainty in markets. As Professor Krugman notes, huge amounts of investment capital will be stranded until heads of multinational companies and investors figure out how to respond to disruptions in supply chains, a problem compounded by such grossly incompetent American leadership.
I made largely the same comment yesterday, and got a reply that Bush, Clinton and Obama had equal contempt for working people. They certainly were no choir boys, as nearly all gains went to the rich under Bush, and Clinton signed legislation that dismantled Glass-Steagall. Their monumental screw-ups notwithstanding, Clinton at least raised taxes modestly on the top, and considering the obstructionism he faced, Obama deserves a pass.
Can the billionaire oligarchy just admit that they screwed themselves as well as the rest of us by funding today's Republican Party? Who gains, after all, from electing a party with no predictability at all, except for their remarkable consistency in adopting policies of bigotry, and for alienating one group after another, including businesses and allies?
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President Obama actually deserves a lot better than “a pass” - I only meant that he deserved a pass from the baseless assertion made by someone in reply to my comment yesterday that he was also contemptuous of the working class. ACA alone was a huge gain on behalf of ordinary Americans, even as it is, a badly watered down compromise with Republicans, and also hindered by states that refused billions of dollars in federal subsidies for expansion of Medicaid, money that most other states gladly accepted.
My own job is teaching EFL in several Japanese universities, and I need to prepare for it, but I wanted to state clearly that Obama accomplished far more than anyone had any right to expect of him, especially considering the obstructionism he faced, although I think the vast majority of Paul Krugman's readers understand that.
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RE: Correction on repeal of Glass-Steagall.
The repeal of the Glass-Steagall Act:
At that time the House and Senate of the Congress were both controlled by the GOP.
The final repeal bill was titled the Gramm-Leach-Bliley Act.
It hit the desk of President Clinton with a VETO PROOF majority.
A few concessions had been wrung from the GOP throughout the entire dismal process.
The repeal bill was initially put forward by 3 GOP Senators led by Phil Gramm from Texas. (Gramm was ALSO involved in the legalization of derivatives.)
At that initial time all Democrats voted against this legislative tragedy.
It is all history and documented - if anyone cares to do so.
Make an effort to review the legislative history in the legislation archives of the Congress.
Dispel the total ignorance regarding this matter and lay blame at the proper doorstep.
19
Please get off the Glass-Steagall kick. First of all, Bill Clinton did NOT repeal Glass-Steagall. The name of the bill that DID repeal it was The Gramm–Leach–Bliley Act, good Republicans all. On Nov 4 1999 that bill was passed by the Senate 90–8, and by the House 362–57. A veto would have been fruitless.
But more importantly, The original purpose of GS was to prevent banks from buying insurance companies. By 1999 so many exemptions had been granted, it was a dead letter,
But even more importantly, It would have done nothing to prevent the crisis of 2008. 95% of subprime mortgages were not sold by the banks to which Glass - Steagall applied. These bad mortgages were bundled into dodgy derivative securities and sold by investment banks again to which Glass - Steagall did not apply. Then credit default swaps (bets on these securities) were sold by reinsurance companies (like AIG) to which again Glass - Steagall did not apply.
BTW this is one area where Hillary was more knowledgeable than Bernie. She had a number of proposals to control what she called "shadow banking" which included derivatives.
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"It’s not clear why we should demand that China stop playing that role."
There is this persistent belief that those assembly jobs could, and should, come back to the United States. There is this belief that you could just plop iPhone assembly plants in the US, and the Americans working in them will enjoy a middle class living.
I'm sure Dr. Krugman can explain this better than me, but such views are based on a lot of iffy assumptions and rose-tinted recollections of mid-20th century America. Besides ignoring increasing automation (which is one reason China trying to adapt to a future as something other than the Great Assembler,) it also assumes everything else will remain the same as labor costs for assembling things increase 8-10 fold just to get to $15/hr with no benefits.
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citybumpkin:
There are other things to build besides iPhones.
MayTag built a modern factory in its headquarters town of Newton Iowa in 2005.
Then the W administration allowed Whirlpool to take over MayTag.
Whirlpool didn't take over that factory and make washing machines there, Whirlpool moved jobs out of the country, no not to China.
Ironically some of the most important parts of the iPhone are most certainly engineered by huge companies in the USA, no not Apple.
23
Yes, I am aware that there are other things to build besides iPhones. I use and own some of them, even. I am also aware some are assembled in the US (like my car.)
However, your Maytag story omits a rather important detail. Prior to its sale, Maytag announced it was running at a loss. Hence the sale. If Whirlpool ran things just like Maytag did, then the operation would have kept running at a loss.
There might have been multiple factors behind Maytag's unprofitability, and maybe there were ways Whirlpool could have kept operating that North Iowa factory. But clearly, things had to change because of real problems, not just some evil scheme by Whirlpool.
Yes, 21st century American manufacturing is clearly possible. But it's not a one-size-fits-all situation, and factory jobs with middle class wages aren't going to spring up like mushrooms just because we start slapping tariffs on imported goods.
"According to a different analysis published in the MIT Technology Review, if iPhone assembly were done in the US but the components were still sourced globally, the cost of making phones (currently estimated at about $230) would rise about 5%."
http://www.businessinsider.com/how-much-products-would-cost-if-made-in-u...
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"And that’s why things seem so incoherent. One day Trump talks tough on trade; then stocks fall, and his advisers scramble to say that the trade war won’t really happen; then he worries that he’s looking weak, and tweets out more threats; and so on. Call it the art of the flail." More like the art of the nervous breakdown. He's all over the place more so lately because all of his "top" advisors have left the building and he has no one around him to try to steer him back to reality. It's only a matter of time now before he goes completely off the rails and the complicit GOP will actually have to act against him. One hopes it's in time for the #Bluewave2018 and the Dems crush the GOP in the mid-terms. If he doesn't implode by then, he will once the Congress flips blue and he gets impeached.
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It isn't enough for the House to flip. Dems need 2/3 of the Senate to vote to impeach. It is unlikely Dems will retake the Senate in 2018. Do you see McConnell getting behind that as majority or even minority leader?
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Rima Regas is correct. Impeachment is not the object since the Democrats will not come close to a super-majority in the senate. As several astute observers have pointed out, the real object is indictment, which does not preclude or foreclose impeachment but, rather, leaves open the possibility for later criminal prosecution. And Trump gives every indication that he's just itching to make himself indictable.
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yes I've never seen anyone work so hard at shooting themselves in the foot., after that foot came out of their own mouth.He must think that anything he does while residing @ 1600 is untouchable.
Ha ha ha
He really is THAT stupid Really.
Like everything else Trump says or does, it's all about him and not really the subject at hand. Trade is no different. Trump campaigned on trade. He's now making good on the promises he made while settling scores with foes, lining the pockets of cronies as well as his own, and laying the groundwork for 2020, even though the chances he'd win are slim to none.
The same is true of his tirades against Jeff Bezos. Trump doesn't give a rat's patootie about Amazon or monopolies. He cares a great deal about his cash cow: his image in the public sphere. Bezos' WaPo doesn't make Trump look good. Therefore, Bezos must pay.
Done deal.
As for China tariffs, Trump didn't slap them on any old goods. Stuff millions of Americans buy at Walmart, at least for now, is perfectly safe. See? He knows how to take care of us while making himself look tough and distracting us from Mueller... Not!
Trump just denied knowing about Stormy Daniels being paid off. Wanna bet Mueller will look into that as well? Wouldn't it just be delicious if Trump were to fall because of that?
---
What Trump Did While You Weren't Looking
https://www.rimaregas.com/2018/01/07/politicos-running-list-of-what-trum...
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