"We’re going to need an extended period...that makes it clear that voters are insisting on politicians who care about the rule of law."
Amen & amen.
1
Dr.Krugman’s “corruption Occam’s razor” is generally very useful prognostication tool with this administration. Expect crude thuggery as a default policy position.
If Ms.Meggan Dissly has concerns about Trump’s policy toward France she should expect something “completely off base” like relocation of US embassy from Paris to Jerusalem. It may even be enthusiastically supported by Bret Stephens.
I can believe what I am reading...really Dr. Krugman? Here's only one of your comments that gets me: "China is a bad actor in some ways, especially in not respecting intellectual property and arguably in de facto subsidizing some industries".
Bad actor in SOME ways? DE FACTO subsidies? What about SAIC-GM and BAIC-GM? You support China's forced marriage between US corporations and their state-owned enterprises like they did in my example of GM? THAT, is the core of the Chinese way of doing business...
7 million open jobs
6 million people hired in a single month
3.5 million people quitting to move to jobs with higher pay and better working conditions
lowest unemployment in 69 years
record median household income
record median personal income
double Europe's economic growth
4
If President Trump is right about anything it would be completely accidental! He has bragged often that he follows his gut. Well,I have no inclination to trust President Trumps' gut!
Kim Jung Un has promised that he's planned something 'big' for Christmas for us. Why wait for this evil, little man to deliver? Thanks to President Trump, any edge the USA had of an early response warning for North Korea is gone. As Lt. Joe Kenda said, 'If someone threatens to kill you, it would be in your best interests to listen to them!
You followed Presidents Trump's gut when he chose to align himself with Saudi Arabia! Look what that led to in Pensacola, not to mention all the US troops he sent to Saudi Arabia. I don't feel reassured by the President's claim that he is" monitoring the situation" with the Saudis nor can I ignore the threats from North Korea and China . Look back at his denials of the Saudi Prince's complicity in the Jamal Kashoogi (sp) murder! This one man, President Trump, has done more in three years to undermine the safety of the USA than anyone else in history. Now President Trump is focused on the Military top brass and starting a cold war with China. Since elected, he has generated constant chaos both at home and abroad. If you don't stand up now, there may be no one left to stand up for you later. I don't mind telling you the hair on the back of my neck is standing straight up!
3
Krugman states that Trump hasn't rallied other countries to join the U.S. in pressing China, and is picking fights with everyone and "doing it wrong."
"Doing it wrong" is an understatement.
The problem is that Trump’s financial expertise is limited to bamboozling business people, taking their investment money, running a business to the ground, and fiing for bankruptcy.
Then, he leaves them holding the bag while he looks for more victims to con.
Complain and Trump sues them.
Trump loves stooges, yes-men and useful idiots who will do his bidding from William Barr at DOJ to Peter Navarro at the Office of Trade and Manufacturing.
So, Trump is flying solo with whims, a colossal ego, and impulsiveness as co-pilots.
Playing the tariffs’ game requires financial expertise and skill, and the cooperation of other nations. World leaders consider Trump a buffoon on the world's stage.
In China, Trump is playing checkers with gangster/thug chess masters. So, he takes advantage of the weight and power of the American presidency.
Asked about Trump's "big strategy,"
Krugman nailed it: “I think it’s a lot cruder than that — more about extortion (don’t expect any favors unless you book my hotels) than stock market manipulation. It’s a sort of corruption... never assume sophistication when crude thuggery is sufficient."
The "stable genius" recently said the tariffs might go beyond the 2020 election, and the stock market dropped 300 points.
Yeah, Trump is a financial wizard, and I'm a walrus.
5
History is repeating itself and we are doomed. Because just like John Meynard Keynes, his protegé is ( you! ) and you're wisdom is being ignored. Are we heading for WW III?
2
Yawn.
The headline suggested a return to reality, but the rant goes on.
I don't know if you read the New York Times, but, if you did, you might notice that the Editorial section is well stocked with left-wing nonsense, fueled by the increasing possibility that The Party Of All Things Bright And Beautiful is engaged in a stampede over the cliff of reason and into the North Sea.
Economics, on the other hand, is handed around, among visiting authorities, like mashed potatoes at Thanksgiving dinner.
Have you ever considered a career in that field?
Who knows, you might have a future there.
5
@Good John Fagin Agreed. Imagine all the Times readers and how much they regret pulling out of the stock market when Trump won like Krugman (and others) suggested.
1
@TPey
Sorry Professor, Doctor Krugman.
My portfolio is up 70% so far this year.
The Horror, the horror!
I'm still trying to figure out how there is a "Right Track" with a Communist as well as outlaw country. Amoral capitalists put the American worker in the jaws of the Red Dragon and are laughing all the way to the bank conveniently located overseas.
David Brooks recently had a piece about his college naivete about socialism and now extolling capitalism. Newsflash for Messrs. Brooks and Krugman: We don’t have either; American capitalism is a one-way street to grand larceny.
1
As much as I dislike Trump and his megalomaniacal leadership, his instinct towards China is correct. I say instinct, and not intelligence, because what Trump is applying to China is what Trump knows how to do--use his gut and plow through the reason. It is the pressure that no other country has given to the Middle Kingdom Bully since its economic rise. Trump has limited intelligence, but he knows how to respond to bullies. I guess it takes one to know one.
2
I'm afraid Mr. Krugman has had a few too many Trump-branded steaks. The fat may have gone to his head.
Also wondering if he was the last student out of Trump University's hallowed Department of Fraudulent Economic's Halls before they were shut down.
More than likely though, it may just be the Times trying its darnedest to be fair and balanced and he, unfortunately, drew the shortest straw.
Just the mere mention of an American tariff used to send shock waves through the business community. They knew the danger of a trade war, which was always to be avoided like the plague.
Given that Trump takes his commands from a hostile Russian overlord who has dirt on him, it's not surprising that it has caused so much damage that Krugman says we won't ever recover. What is a shock is the business community's strange willingness to go along with this insane, suicidal move. Was the tax cut really worth this?
2
Based on profound ignorance, prejudice, laziness and a long history of casual, careless, negligent and willful misrepresentation Mr. Trump has build a Maginot Line of U.S. trade policy, easily breached by his enemies, real and imagined, and of no use to American business or to the U.S. economy.
Trump's surprise tariff or talks announcements may be manipulation for insider buddies, and might be being studied by experts.
The only logical explanation (if there is one) is that the coal lover and in general lover of all dirty, dangerous, and disease causing fossil fuels, Trump wants to freeze the World Economy to disrupt investment in general. This will also disrupt investment in installing new alternative energy that is now rapidly and globally displacing fossil fuels. This maybe a futile attempt to prolong fossil fuels from becoming valueless goo, poisonous gases, or sooty lumps to be left undisturbed deep underground for eternity.
It is the only explanation I could think to give Trump's actions meaning of economic purposeful action.
On the other hand I concede there maybe no logical economic purpose to Trump's actions. The economic wars, pardoning war criminals, disparaging NATO, etc it may simply be all about making headline to trigger Republican lemmings to lockstep following the Great Leader in making .... "America Great Again" ...not. While poisoning America does not make it great again, it does successfully trigger the lemmings to follow, regardless of the ruinous economic consequences to follow the opioid economic high.
1
@Eli Why do Americans need any explanation concerning Trump other than he's nuts? Why is the rest of world so silent? When America prosecuted the war in Vietnam the rest of the world was quite outspoken. Why aren't we demanding the US change its policy?
People who don't like Trump, like Krugman, will never like Trump.
Nothing new.
But, regardless of Trump’s lack of social skills, he’s getting things done that need done.
I see a future with China at the helm under Democrats.
4
Has anybody ever sat down and thought about what an ideal long term target for China's place in the world would look like from an America centric perspective? That is the first thing you do when you develop a strategy. Think about the scenario you want to achieve.
2
It's a shame that all of Trump's private sector three card monte experience won't help much in the global chess match he's tangled up in.
Luckily, Mitch McConnell is promising that tcm will be the official senate methodology for the impeachment trial.
Looking at this as a purely trade based issue is to ignore the geo politics at play. China is a responsible global citizen only when it suits them. They have interest in promoting and supporting a liberal view of world trade but only on their terms. They bully, threaten, and meddle in less powerful countries without shame or apology. Forget about this obsession with Russia. The real challenge and rival is China. China is preparing their citizens, their economy and their armed forces for a war with the West. Better to weaponize our economy and trade policies now or we may find ourselves in a shooting war with a much more wealthy and economically prepared China within a decade. I dont doubt that many business people are unhappy with the China trade difficulties. They are concerned with their share price. I am concerned about our nation and it's people.
1
This response only spoke to the damage Trump has caused with regard to trade, foreign trust in the US, etc. Krugman speculates it may take 3 presidential cycles to repair.
Krugman has not touched on the internal damage Trump has caused in the State Department, Education Department, Department of Interior, etc, which will take decades to repair. Trump has not drained the swamp but has enhanced the swamp with his incompetent cronies.
Is it possible that everyone has forgotten just what a sweet deal we had with China? They sold us all the consumer goods we wanted on credit, and all we had to do is keep buying!
As for the loss of manufacturing, the failure of incomes below the executive suites to rise, and the rot of our civic glue, well despite what your favorite despot and his army of sycophants have to say on the subject, that was and is not China or Mexico’s fault! You have to look far closer to home, to those you have benefited the most, to cast proper blame, or rather reward! You gave those same folks a HUGE tax break. Did your tax burden go down? No, that’s right, YOUR taxes went up by the eliminated deductions! But I must be careful! Small Government might be listening, and it is mandatory that we be respectful now.
Trump is on the Wrong track because ... he has made the assumptions of a classic schoolyard bully. 'I am bigger and stronger than that new smarty-pants Asian kid the teachers like, so I will bully him at recess 'till I own him! That will be fun and easy to win.'
But that other kid (country) may be a new one (economy), but really is smart, and is deeply and culturally familiar with playing the long game. Only 15% of Chinese trade is with the USA, and while that is good profit margin business, there is always the EU and the rest of the world. We need their low-cost production - iPhones and parts and markets for our food production, more than they need us any time soon. Their economy may be slowed somewhat, but it is still running more than twice ours, about 6% GDP/yr.
This trade war hurts America, but is easy to win, if you are patient and you are China.
1
Whether President Trump’s trade war succeeds or fails is irrelevant. What is relevant is that he is trying. He knows it takes votes cast by actual voters to capture a win. He wastes no energy pleasing non-voters.
On the other hand, pandering to non-voters, legal, illegal, lazy, unregistered, independent or otherwise, doesn’t occupy him.
The NY Times, the DNC, and the MSM would do well to remember that actions speak louder than words and much louder than virtue signaling and arm flappery.
Leftist professors and administrators donating part of their obscene salaries to students would be a start, but that requires action, sacrifice, and pain.
1
@Paul Doctors used to bleed patients as a remedy. You could say: "At least they were trying" but that makes no sense when what you are trying isn't working. A smart CEO changes course but Trump supporters love the tough guy routine so Trump sees no reason to alter course. America is the Titanic but the iceberg will take us all down.
1
The Dems want to have it both ways" to globalize yet to "buy local think global". They do not want to be protectionist say in farming yet they want to encourage local organic farmers. It is called schizophrenia. It doesn't work that way. The reason most manual labor blue collar people are Republican is not because they are backwards or overly simplistic - nope, the opposite is true: they simply see the hypocrisy of the dem's ways. Yes, I know, the President and His Cabinet are no saints either. But that is a poor excuse to be what the Democrat Party has became: an elitist, global, hypocritical force for destruction of local trade and farming in this country.
1
"Navarro is just making stuff up."
Sad-eyed Pete seems so authentic and knowledgeable to this gullible layman. Is it a convincing act or the real deal?
Dr. K says Pete's a sham, but I guess Trump and I see beauty or at least reliability where Dr. K sees incompetence and perhaps even evil. It's hard to judge a book by the cover.
(I've never been a good judge of character: I voted for Clinton twice.)
It is embarrassing for Trump's supporters that I have to keep pointing this out, but judging from the comments I've seen below, it is necessary and will continue to be.
The economy is not "booming" under Trump unless you also admit that it was booming under Obama. GDP growth of 2.9% in 2015 under Obama is not "terrible" while 2.9% growth in 2018 under Trump - his high water mark - is "awesome." 2.7 million jobs added in 2018 is not "terrific" while 3 million jobs added in 2014 is "weak." Bringing the unemployment rate down from 10.0% to 4.7% under Obama isn't a "weak recovery" while a further decline to 3.5% under Trump is the "greatest economy ever."
The country's economic performance under Trump does not justify having a president who is a moral degenerate, a con man and a pathological liar, especially when one considers that it is no better than it was under Trump's dignified predecessor.
3
The more telling question - which should have been the headline - is: "Is it Possible That Professor Krugman Could Have Been on the WRONG TRACK With China???" All those years. And all those followers of Professor Krugman? All of those previous Presidents and Secretaries of State?
Or, is it possible, that China has only benign intentions toward the USA??? the same benign intentions that it's demonstrating in Hong Kong, that it's demonstrating with its Muslim encampments in Kashgar?
Benign? Maybe not.
1
The man who predicted a world wide recession on election night 2016 thinks Trump is wrong (really wrong!) on China? I'm shocked!
Sorry, but Mr. Krugman had lost all credibility to fairly evaluate anything this President does.
I guess all Black folks thrilled with history's lowest Black unemployment on record shouldn't be happy? Or, heck, anyone in this economy? My State pension? UP. My retirement? UP. Kid's college? UP.
Sad Mr. Krugman can't even temper his hate enough to even begrudgingly admit that some things Trump has done have worked for many Americans.
Even this Clinton voter finds the constant resistance to ANYTHING Trump does, makes Mr. Krugman look small. China needed to be confronted, and IF America is the only Country willing to do it, so be it. And the reason we are alone in doing it is because our allies economies continue to struggle while ours surges.
2
This was such a valuable format! Please, Times, more of this! An extended conversation with one of your gonzo op-ed writers and your passionate readers. Just wonderful. Thank you Dr. Krugman
2
Nobody's going to buy your schtick until there is widespread distress in the American economy. Where's that? Happen to notice the employment data? Or the stock market? If China were passing tariffs along you'd see widespread increases of import prices from China. Latest index reading from October: 98.4; where was it two years earlier when all this hubbub started? About 100.
You're always accusing everybody of ignoring or cherry picking the facts, but open your eyes man, your team is down 21 with a minute to play. Trump is a self-dealing abomination. But there is nothing going on to make anyone except the most dyed in the wool neoliberals think that his tariff policy is particularly troublesome. Sorry that reality doesn't conform to your theories, but it's not reality that's wrong.
"North American Free Trade Agreement actually contains labor-rights conditions, although they haven’t been well enforced."
Correct, and anyone with 1/2 a brain knew all along they NEVER WOULD BE ENFORCED.
Which is the reason why NAFTA ALWAYS WAS A SCAM FROM DAY ONE.
Having lived there and heard with my own ears that China wants to destroy us, that this is economic warfare, WWIII and that the brutal dictatorship of China is not going to stop until China is the sole superpower of the world... anything we have to do to disentangle and remove any power China has over us and our allies, unfortunately, we must do.
20
Trump's trade wars are a phoney farce. He says to Xi, pretend we have crippled China's economy and in 2020, before the election, we will lift the tariffs and boom! I will look like a genius and China wont be any worse for it. Think about it. China cant be threatened. It holds our debt. It makes everything that our economy needs and wants. If there were true tariffs, Walmart, Nike, and Target would be collapsing by now. The one thing Trump cant control is Mother Nature and he is devastating our deficit by trying to bail out corporate farmers with billions in aid until this is over. China doesnt need our crops and our pigs. The GOP is trying to pretend our economy is booming and it may be for Wall Street but it isnt for Main Street. When this farce is over, our economy will face a reckoning. Trump, in his dominance of a weak GOP and his desire to be King, has been given far too much power and we must never let this happen again with the next president.
26
".. especially in not respecting intellectual property and arguably in de facto subsidizing some industries. But Trump isn’t taking on China over those issues, and hasn’t even made any clear demands."
.
This must be a typo.
.
These are precisely the sticking points in the negotiations according to many press accounts, and the points on which Beijing reneged in May, derailing talks that have yet to get back on track. What does Mr Krugman think Lighthizer is insisting on enforcement mechanisms for? Because Beijing cheats on these issues.
.
As for, "doing it the wrong way," after two-plus years of economists criticizing Trump for tariffs, none has said what the *right* way is. When Trump told Lighthizer to begin the 301 investigation in September 2017, all we heard was "Smoot Hawley!" "Great Depression II!" Etc.
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We're still waiting. And China's reeling, this week unilaterally lifting their tariffs on soybeans and pork, insane imports for them to tax. Beijing needs the trade war to end. We don't.
.
We'll never reach a real agreement with Beijing so long as Xi and his hardliners are in power. That will be our doing, not theirs, and that's a good thing. These negotiations aren't about trade. They're about concentration camps, Hong Kong, the South China Sea, and making stronger an adversary who never stopped fighting the Cold War.
.
Trump might not have it all figured out, but he's the first President to move in the right direction. That's a good thing.
1
China, or more accurately the Chinese Communist Party, is the biggest threat facing humanity. This trade war has put them on the back foot as they have finally realised that taking over the world will not be so easy. So instead of fighting Trump on this one the American public and their political leaders should get behind him. Fight him on everything else if you want but on this one you are on the wrong side of history.
1
I hate to break it to you PK, but Trump is on the right track about many things - China is one of them. The only thing Trump can't be counted on to do is keep quiet and to magically be "cool and sophisticated". Once you accept that; he's a darn good president.
1
given trumps' track record of epic failure and fraud over the course of his "business" career, i suspect that china has finally starting to figure out his bluster and bully routine. somebody may be on the right track and it isn't trump. the chinese are very patient people, eventually we'll find out that trump has been played badly.
Why is it that no one ever addressed, or addresses the roll our corporations played in our political relationship with China?
No one forced the thousands of US businesses to move manufacturing to China, they went their ASAP to exploit low wages. And they signed China's exploitive trade agreements.
So now China is the bad guy because we signed up for everything being complained about today?
Then there is the TPP — an acronym for the Trans Pacific Partnership trade deal, a proposed agreement between 12 Pacific Rim countries and the US. As of 2017, Trump in his trademark ignorance has pulled the US out of this trade partnership along with pretty much every high stakes treaty.
So the result of the Obama administration's poor messaging (because they knew many would object) to the corporate give away including their obscuring the political ramifications. We are now without a strategy, basically after Chumps stupidity, we have almost zero leverage. And oh! The American press also deserves blame as it never managed to illuminate the facts in a neutral light because our press is more interested in throwing gasoline on the fire than approaching events in an informational light.
1
How generous of you Mr. Krugman to suggest Trump is ever on track. He can't even find Grand Central Station' He's never had to ride the rails.
This is an awful headline. Most readers never click past the paywall, and the headline infers that Krugman grudgingly agrees with Trump's actions. Whereas the article makes clear that is false.
As Krugman originally articulated, what Trump loves about tariffs is their authoritarian nature.
He can impose them at will and declare victory as the bamboozled masses cheer in delirium...before they eventually realize it was all puerile performance art.
We should remember that there was an adult solution in place to combat China's unfair trade trade practices called the Trans-Pacific Partnership (TPP) between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States that would have countered China's trade power, but the current President torpedoed it out of spite and cultured stupidity.
In fact, the USA could still join the revised TPP - now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership - IF we had adult leadership.
https://en.wikipedia.org/wiki/Comprehensive_and_Progressive_Agreement_for_Trans-Pacific_Partnership
The thing to remember about Trump is that he always needs a bailout at the end run of his performance art.
In Atlantic City, his daddy helped before the bankruptcy courts bailed him out.
In his real estate deals, bankruptcy court has been his friend after bankers took huge baths.
And now, it's democracy, free and fair elections, America's reputation, the United States Constitution and the very idea of truth that's taking a bath thanks to Donald's malignant narcissism and war on reason.
Adult leadership is needed in America, not cheap tariff performance art.
2
Continue on the same path on tariffs bad threat to World Pres. Donald Trump dweal maker given could destroy both China and America due to Pres. Donald Trump's threats I believe that go back study 101 Economics his advisers Peter Navarro should be in a mental hospital his sci-fi book finance economics bad for the United States , Pres. Donald Trump since he's been in office on a campaign to destroy free-market society. We should look at the man himself fell businesses on unpaid workers and three or four bankruptcies.
If or when we see his taxes it was explained a lot things his laundry of money, with his golf course Russia with love.
If you remember the 1988 Vice Presidential debate between Lloyd Bentsen and Dan Quayle, you certainly recall the former burying the latter with his “You’re no Jack Kennedy” riposte. But it was another statement Bentsen made, on economics, that the Democrats should be resurrecting at this time. The senator from Texas observed: “Allow me to write $200 billion in hot checks, and I too can give you the illusion of prosperity.” Only now it’s well over $900 billion, and projected to be $1.1 trillion next year. Why is it that deficits only matter when a Democrat is in the White House?
1
Here is Trump on the business of new home construction,
Speaking at a White House meeting on Friday about small business and regulation.
The NYT should report Trump verbatim, without tidying it up.
. … We have a situation where we’re looking very strongly at sinks and showers. And other elements of bathrooms — where you turn the faucet on, in areas where there’s tremendous amounts of water, where the water rushes out to sea because you could never handle it — and you don’t get any water. You turn on the faucet and you don’t get any water. They take a shower and water comes dripping out, just dripping out, very quietly, dripping out. People are flushing toilets 10 times, 15 times, as opposed to once. They end up using more water. So EPA is looking at that very strongly, at my suggestion. You go into a new
building, or a new house or a new home, and they have standards where you don’t get water. You can’t wash your hands practically, so little water comes out of the faucet. And the end result is you leave the faucet on and it takes you much longer to wash your hands. .. For the most part. you have many states where they have so much water, it comes down — it’s called rain. They don’t know what to do with it.
1
Some of you here refer to some of the damage Obama did to the Office of the Presidency. Overstepping executive powers made way for Trump’s normalized abuse of power. 26,000 bombs dropped without consulting Congress? Backing Wall Street and leaving the American people to never actually recover after 2008 and overseeing the greatest increase in dynastic wealth is the history of our country...? He may be suave and well-spoken, but the damage he has done to our country, including giving control of the ACA to the insurance industry instead of giving us a public option while he had so much momentum... is ongoing. He could have been an FDR. He chose to join the oligarchy. Time for actual change, with the only one we can trust... FDRBernie
2
If anyone tries to explain away Trump’s clumsy and disruptive behavior as genius that just does not conform with the same old ways, maybe they should just let themselves see what there is to see. Do that and one realizes that Trump is not thoughtful and not able to think through the consequences of his actions
It is impossible, totally unreasonable to expect Krugman or NYT to be objective on this matter since their hatred for Trump is indescribable, and they are openly proud of that.
I think he is doing a fantastic job on this front, the only US president actually doing something about that, and I expect the vast majority of Americans to support his efforts, the liberals excepted, of course, they live in a parallel, high-end world.
And at the end, this is not a war of any kind, the word is wrongly and awkwardly chosen, we have a dispute with them since we want a more balanced trade which they fiercely oppose. Nothing wrong here by US!
1
Is it Possible Trump is on the Right Track With China?
It's as like as a cow jumping over the moon.
China and now growing Southeast Asian manufacturers are not the only perpetrators of American manufacturing declines of the past 30 years. As pointed out in previous comments, corporate decisions to chase profits in lower labor markets, American high schools not emphasizing ”STEM” studies and Americans appetite for lower cost foreign-made goods. American corporations are responsible for educating and training foreign workers in technology conceived and developed by Americans. This is where the problem lies. Sure the stock market is soaring, take out the financial service, software businesses stock market contributions then where are we in GDP. ”LIARS FIGURE! ,FIGURES DO NOT LIE!!”
1
We may have removed the spray paint a few elections down the road, but the vandals will still be stockpiling it, awaiting another vandal in chief. Fifty years ago they called themselves the silent majority. The recent electoral college wins have shown they are now the loud minority. Putin, of all people, supplied their their MAGA megaphones.
Dodge started building its Caravan in the early eighties in Canada. There was some controversy because it was a defined as a truck. Trucks sold in this country but not built here got a tariff. No one complained. It was Canada our neighbor and they needed jobs too.
When China starts producing electric cars much cheaper than they do here and Europe what will happen to American car sales and jobs? Electric cars are cheaper to build if you are building them in huge quantities. Gas and Diesel powered cars are more complicated are becoming to expensive for most people to afford. Would you agree to tariffs then?
1
Trump is dragging out a resolution to the trade war with China to strategically position a denouement mid summer so he can claim a victory—never mind that he will likely acquiesce to a position of vulnerability. He is in it for the optics—actual gains in trafing with China is secondary—mark my words. The trade war will end in June/July with the US as the loser...
20
He got nowhere but until he does not want to reach a conclusion, yet. Not sure why because he just lies about poor outcomes and claims victory and dismisses all reports to the contrary as fake.
4
@Sean Egan Nothing suggests strategy. EVERYTHING since Day 1 seems ad hoc. If there were strategy, there would be fewer complaints from the professionals who do think like that.
6
Free trade with China has, contrary to the predictions of free trade economists, Krugman included, NOT made China more democratic, or increased freedom in China. Instead it made China more repressive from Hong Kong to its Western border in Xinjiang.
It was free trade that gave China the technology to become a surveillance state , to the degree that it now keeps track of every citizens .
Nor has it made China's external politics more peaceful. The trade surplus was used to build the world largest blue water Navy
"With Ships and Missiles, China Is Ready to Challenge U.S. Navy in Pacific"
NY Times, 2018/08/29
Have a look at this carrier group. Is that what you want ?
https://static01.nyt.com/images/2018/08/29/world/29china-navy-1-print/merlin_137389209_409545e1-15f4-46f4-bb93-c3375859f5d4-jumbo.jpg?quality=90&auto=
And it is not only the US that is getting nervous. Australia made the largest ever peace time purchase to keep the Chinese Navy out of her Northern waters
In short, the conflict is way beyond economic consideration
Economics is a subset of strategy, and not the other way around
As to the economic effects of Trumps "Trade War" the most significant one it accelerate the shift of the supply chain of US companies is to Vietnam .
To the delight of the Vietnamese.
14
@talesofgenji
Don't send an economist to do a president's job.
Even if the president isn't doing it.
@talesofgenji
I wish I could give comment more than one like, it really hits the nail on the head. The great mistake we made when we gave China PNTR was believing that capitalism would liberalize and democratize the country.
If anything the converse is true -- now American companies are censoring content to avoid the ire of China. China's oligarchs are more secure than ever and our moral standing in the world is weaker than ever.
I don't know if cutting off trade with China will be good for the industrial midwest but I do know that our current policies are paying for the bullets lobbed against the protestors in Hong Kong. We should stop trading with China for many of the same reasons we divested from Apartheid South Africa.
3
@DanInTheDesert
Government support by the population in China are at numbers the West can only dream about.
Not to many people would like to have the US system as it works now.
3
Krugman, you still don't get it! For more than 30 years China has abused the gifts of trade and technology and the benefits of both that the United States so generously gave to help China. You seem to forget that the United States undertook a mission to help China rise out of the poverty of Communism and become enabled to become the technological, industrial, economic and military power that it is today. The thanks from China is to steal intellectual property, disregard trade laws, impose vast restrictions on imports from the U.S. and militarize islands in the Pacific. Don't forget how China devalued its currency too, furthering its goals of economic supremacy.
I loathe Donald Trump. He is an evil, repugnant bully. Trump's ignorance is unparalleled. HIs disregard for the rule of law and the Constitution of the United States is appalling and dangerous.
But, despite his failings he recognized that China was and continues to do great damage to the United States.
Millions of Americans have lost their jobs due to our benevolence and good will toward China. Donald Trump capitalized on the anger and frustration of those millions. For that reason we see no reason to get "back on track" with a nation that seeks our total demise and destruction.
I don't want to reverse what Trump is accomplishing. I want to see America stand up to the Chinese Communists and restore our economic power. China is not a friend or competitor of the U.S. China seeks our destruction.
9
@Jack Frost
I admire ordinary (OK, especially slightly extraordinary) Chinese, and I don't want to see them (or Russians, or Iranians, or Americans for that matter) impugned for the actions of malevolent leaders they may have been misled into supporting.
With that absolutely essential caveat established, I agree with you. I wish that instead of shuffling between their dorms and their labs, Chinese students in America would be required to meet and discuss these issues with their counterparts in America and elsewhere. Both Chinese and American students would also be required to stick their most cherished appendages in a locker - or at least turn them off - during these sessions. Pencil and paper only.
3
@Ben Thank you Ben! I could not have expressed your thoughts better.
I wish Mr. Krugman would read and understand what motivates the supporters of Trump. China has enjoyed special nation trading status with the United States at the expense of our jobs, our industry, and our children's and grandchildren's future. There was a sincere belief that if China would embrace economic reform that political reform would follow next. It did not. The great economic success of China only enforced and encouraged the Chinese Communists point of view that China is a rising power while the United States is in decline. How tragically ironic and sad it is that it took the likes of Donald Trump to finally stand up to China and call them out for what they truly are; Communists who wish only to stay in power and impose their system of government and control of people on other nations.
Donald Trump is the bully who recognized another bully and wasn't afraid to stand up and face it down.
The real effect of Donald Trump's trade war was to awaken both Democratic and Republican elites and remind them that America's middle class needed someone to stand up and represent them. And not sell them out for a pipe dream of establishing Democracy in a Communist nation like China.
I loathe Donald Trump. I also loathe Chinese Communists and elitist American politicians.
Professor Krugman needs a dose of reality. America's future is at great risk both because of China and Trump.
2
A lot of people have been betting against the US for 250 years. History shows that this bet has not been on the winning side.
1
Navarro claims that China pays for the tariffs not American consumers. In order to keep up sales they give up profits. Why would they do that? Fear of American consumers doing without rather than paying more? Not reasonable but plausible. But, alas, untrue. American consumers pay more because of tariffs and are not earning more so they can afford to buy, less.
Krugman’s states that if China were bearing the costs of the tariffs the costs of imports would be falling “a lot.” This is not a true statement. If China were bearing the costs of the tariffs, import prices would remain unchanged. If the importer were paying the costs, prices for consumers would remain unchanged. If the consumer were paying the costs, it would be reflected in increased inflation. Are we currently facing increased inflation?
3
I am Canadian and if I was American I would not have voted for Trump AND I am a long time reader of the NYT and in general support left leaning causes.
It is with these lenses that I read this article and it makes me uneasy. I get that we don’t like Trump and are horrified by some of the behavior, decisions, approach of the man. I get that he’s an impossible president to warm up to and again, I am no supporter BUT his policies on China have had some OBVIOUS upside, have obviously worked better than any critics thought they would, and he obviously (to me) makes some valid points about what China has to change DESPITE it hurting some of his base (farmers for example). Further, for a president who seems inconsistent and mostly seems to come up with policy on the fly Trump has been talking about this topic in a consistent manner for close to 20 years and again, he makes some REALLY valid points.
In short, there is lots to critic about the president in general and about his trade policy with China in particular BUT you have to be able to find many obvious ‘he’s dead right’ points on this portfolio or you are really not trying and this critic becomes not about the policy but, again, about Trump and how much we like or dislike him.
5
@Saar how have trumps policies worked better ?
I love and admire your country by the way.
Mr. Krugman, Trump must be duping the world into believing that he is tough on China although he doesn’t address key issues like export subsidies and intellectual property.
What does he benefit from showing a Potemkin village?
He hasn’t even “rallied other countries to join America in pressing China to change.” Instead he alienates allies and partners, who also bear a grudge against Beijing's practices.
It’s clear that Trump wants to deliver on his 2016 campaign pledge, even though he’s “doing it wrong.” Will pandering to his core supporters pay off in 2020?
2
So, what exactly is it that the rest of the world should do differently in order to get China to become a responsible partner?
Here's the key: 1) China has made it clear for a long time they will make no material changes to policy.
2) The counter question then becomes, "Are you willing to accept their "rules" of the game going forward, or do you believe they need and are worth challenging?"
3) If China will not make material changes to policies, then in an important way, IT DOESN'T MATTER which strategy is chosen to pursue policy change in China by the US.
This is why tariffs may not be optimal, but it doesn't really matter.
4) The only way China will materially change its policies is via enduring significant pain/losses. This is why experienced China watchers say, "Sure TPP, WTO, and allies are great, but have NO impact on changing China policy, as none materially inflict losses on China." (Like, Germany is going to join US economic sanctioning of China on anything!).
Likewise, changing presidents will have NO impact.
5) Tariffs and targeted decoupling WILL inflict significant losses on China, and likely that is why the Trump administration is pursuing them, and why China is actually rather concerned about that goal.
6) Fundamentally, it's not a trade dispute. Both the Xi regime and Trump administration see this not as a minor skirmish but a major fundamental SYSTEMIC conflict that will chart the direction of history for years to come.
4
PK is correct that we need a rules based trade system.
Where he (and the rest of the mainstream) goes wrong, is in their assumptions regarding which rules and strategies will actually work in the real world.
The current system of rules, is too complex and difficult to enforce. Rather than a super complex system of unified labor laws, environmental laws, etc - which we do not have, and clearly will not have in the foreseeable future - we need a *results* based trade system.
Warren Buffet proposed such a system, based on "import certificates", which would guarantee balanced trade.
https://www.google.com/amp/s/fortune.com/2016/04/29/warren-buffett-foreign-trade/amp/
There could be a very gradual transition period, where the initial ratio on the certificates (import vs export) could match the present trade imbalance ratio. Then, over time, the value would be adjusted, until trade is balanced.
This would negate any trade advantage gained by exploiting workers or the environment, reducing incentive for a "race to the bottom". It would free up each nation to pursue higher wages, shorter hours, and other policies, without losing industry, and without long term currency risk.
For IP, we could still cooperate with as many nations as possible, by collectively not buying goods from cheaters. Long term, China promises to be a major creator of IP. Thus, no worries long term about Chinese IP compliance - it will be in their self interest.
4
"especially in not respecting intellectual property and arguably in de facto subsidizing some industries". The US has been subsidizing some industries for many decades - Agriculture, Oil and Gas, Armaments, Real Estate, Pharma, Telecom, come to mind quickly. It is done through tax exemptions, accelerated depreciation, giveaways of publicly funded research and other public assets (like bandwidth), and military interventions to protect the interests of Oil & Gas. Arms manufacturers get free salesmen in the form of US Ambassadors.
5
Here's an idea: change the trade laws to make it harder for the president to impose tariffs without good cause. Take a leaf from the British and prohibit him from acting without advice, require a two-thirds majority of his advisors to support the decision, and/or allow the courts to overturn a tariff if they determine it was arbitrary and capricious. That should restore confidence.
@Iris We should not be trading with China in the first place, just like we hardly traded with the Soviet Union
"We’re going to need an extended period — maybe three presidential elections in a row — that makes it clear that voters are insisting on politicians who care about the rule of law."
In a tribalism kind of society we've devolved into the only rule that seems to make sense is "my tribe wins and everyone else fails" and "my tribal chieftain is the ONLY one worth listening to."
God help us all. The tribal chieftains certainly won't.
5
Before new technologies gave us more efficient fossil fuel production, where did we go to get oil? We exploited the natural resources outside of our borders!
Similarly, (for one example) when we want new and faster computers and electronics, we need sources of rare-earth elements (which we don't have), and sources of lower-wage assembly lines to put the products together. It's all about managing a supply chain. As China began to realize pure Maoist principles needed to adapt, and CPC's aims to remain in power were superior to all other goals, the control of the population took shape - from the one-child policy to relocating the peasant farmer to urban areas.
That provided us with a manageable supply chain, and a willing partners in China's leadership to shift our manufacturing overseas. Our domestic manufacturers no longer needed environmental surveys and rigorous zoning hearings in order to build or expand plants - China welcomed the opportunity to assist with building facilities and putting idled farmers to work.
There are many facets to the U.S./China relationship and it's virtually impossible to count them. To unwind them - or restructure them - causes pain in one spot because we tried to remedy something else. Tariffs, by themselves, are not a solution. They can only be seen as a starting point to sit down and discuss future economic relations. Just as NAFTA made sense in the 90's, but needed to be revisited, so do our relations with a willing PRC.
This statement could use some fleshing out here:“Tariffs let him exercise unconstrained power, rewarding his friends and punishing his enemies,”
Can we see a list of trade war benefit recipients and some ways that the trade war helps his friends?
2
This statement could use some fleshing out here:“Tariffs let him exercise unconstrained power, rewarding his friends and punishing his enemies,”
Can we see a list of trade war benefit recipients and some ways that the trade war helps his friends?
1
I don't think successive non-Trumpism elections will get us "back on track". I am more inclined to think we never will gain trust and credibility. Nor should we here have trust that the old norms will be upheld. Sadly, we need to change some laws regarding the presidency and maybe, too, the Congress regarding checks and balances.
We have not only shown the world that we are not dependable but we have awakened ourselves (or some) to how vulnerable we are.
We sorely need to give this deep thought and discussion ( already happening somewhat around the margins) but as well, we some concerted action. With one party (the GOP) so depraved, we are far from any action.
14
@Potter
So your solution is to disconnect government policy from the electorate? Let the deep state (bureacrats) run the country's trade policies because they are not accountable to the electorate? Trump got elected on a promise to change trade policy so your reaction is to take away the president's authority on trade policy?
1
I imagine that Paul Krugman may have said this already but I'm not sure.
One of the hugh costs to the economy is the destructi0on of what's left of profitable family farming. The China tariffs are a boon for oligopolistic Big Ag, which gets the bulk of Trump's subsidies and is strong enough to withstand a few years downturn.
Once profitable family owned farms which made a good living off export crops like soybeans are broke. They don't have the capital to withstand such a long period of distress so they must sell.. To whom? Not to other distressed family farmers but to Big Ag, likely at fire sale prices.
A reputable institution should conduct a survey to show precisely how many many family farmers have been driven out of business by Trump's tariffs and the nature of the enterprises which bought their lands.
11
@Frank McNeil Your question should be broadened to address all businesses whose product is a commodity, agriculture, mining and services. What happens to the mom and pop stores, taxi and delivery services. restaurants. newspapers as well the family farms.
9
China didn't decide to move Buick City from Flint, Michigan to China in the 1980's, that was the executives at General Motors.
China didn't decide to make Apple watches in China, that was the executives at Apple that made that choice.
We are focusing on the wrong enemy. It is corporate greed that took those jobs away. And, it is Corporate Propaganda that has everyone focusing on China and not on them.
21
@Mitch While I agree you have made a valid and trenchant point - that it was American corporations that made the decisions to off-shore, that is only in part what you call "corporate greed". To a large extent, once Americans became addicted to cheap consumer goods of the sort offered by the Walmarts of the retail sector, goods that could be priced low because of the foreign cheap labor used to produce them in jurisdictions that were not so concerned about pollution or worker exploitation, corporations just followed the money" of their customers. But in that there was a certain measure of corporate greed in the background: the lower the cost of basic goods, the less American corporations can get away with paying their American workforce and we saw the results in wage stagnation. You are right, but there are nuances. Remember the "Buy American" bumper-sticker campaign? Now we just cross off the "Buy American" and replace it with: "Never Mind, I want my cheap shoes".
5
@G James I remember when Sam was alive, Walmart stressed that their products were made in the USA and Walmart instituted one of the first store recycling programs. What a difference a generation can make.
3
@Tom
Walton died in 1992 and Walmart imported long before that.
1
I respect your open-mindedness, Paul. You've been ceaselessly negative toward Trump, big of you to acknowledge he's doing something great on China.
Many voted for Trump precisely because he promised to fix the China problem, and to return manufacturing to the U.S., and to stop American companies from setting up in Ireland and other countries for tax purposes. The remarkable thing is that Trump has done what he promised.
8
@Tom: Trump hasn't fixed the China problem and he's shown that U. S. corporations don't need to offshore their profits because they can get just as good a tax break at home.
5
@Tom
You might want to check your facts, instead of blinding cheering on the false narrative that Trump is keeping promises. After all, the signs point substantially to the fact that there's no improvement in our economic relationships with China. See, e.g., https://www.foreignaffairs.com/articles/asia/2019-10-08/unwinnable-trade-war
And, our manufacturing numbers have been sliding for well over a year now:
"The Institute for Supply Management said its manufacturing index sank to 48.1% in November from 48.3% in October. Economists surveyed by MarketWatch had forecast the index would register a reading of 49.2%.
"This is the fourth straight sub-50 reading. Readings below 50% indicate business conditions are getting worse."
https://www.marketwatch.com/story/us-manufacturing-sector-weakens-further-in-november---ism-2019-12-02
6
@Tom So the 'China problem' is "fixed"? How? As Krugman states, the real issues aren't currency manipulation (which the USA does on a MUCH larger scale BTW) or the trade (goods) deficit per se... but rather IP (Intellectual Property) theft, market protection/subsidization & entry barriers... none of which Trump's "trade policy" has addressed!
As for corporate tax inversion (eg., Ireland 'mail stop' HQs), what has Trump done to alleviate that behavior (that Obama, Bush didn't already do)? Please don't say lower corp tax rates since the offending corps already had effective marginal tax rates MUCH lower than the post-tax bill rates.
In fact, the only part of the 2017 tax cut that MAY help reduce inversions moving toward territorial (from prior unitary/worldwide) taxation... but multinationals can (as do) still manipulate earnings AND operations to leverage tax havens... so time will tell the net benefits.... BUT remember the upshot is/will be lost corporate tax revenues.
Similarly, please don't say the 2017 tax bill's repatriation holiday helped slow tax laundering as 90%+ of the repatriated money already were dollar-invested... the only impact was lost tax revenue to the U.S. Treasury.
1
For years, well before Donald Trump appeared on the scene, American corporations -- in manufacturing, retail sales, consumer technology, home entertainment content and agriculture -- sought U.S. government assistance or relaxation of regulation regarding trade with China.
The argument was always the same: China is a huge market for American companies to exploit, and we don’t want to lose out to the Europeans or the Japanese or the Canadians.
Except in the cases of consumer technology (mostly telephones), American CDs and DVDs and agriculture, American companies were lying to us.
Companies were not interested primarily in China as a buyer of American products. American companies wanted, rather, to buy Chinese products, brand those products as American and re-sell the products in the United States and elsewhere.
In short, the greatest interest of corporate America in China was not in selling anything, but in buying cheap labor. That misdirection of purpose hurt the United States labor market, and ultimately it led to the current ham-fisted tariffs of Donald Trump.
18
@sdw You claims are a bit off track. From the point of view off the US consumer, China is the start of a very cheap supply chain - much less so, now that Chinese workers' wages have increased over the past decade or so. The market of 1.3 Billion people, a few hundred Million of whom have disposable incomes allowing them to buy luxury goods, makes for a significant, highly profitable market for all US, European, and Japanese companies. I believe I read recently that GM sells more cars in China than in the US - mostly not Chevrolets but Cadillacs, SUVs, and other high status, high profit models.
1
"To really get back on track, we’d need a defeat — not just of Trump but also of Trumpism, which would take multiple elections."
Lotsa straight ticket voters ahead.
2
The problem is that everything Trump does is short term. China plays the long game.
12
@rf7777
"Long term" fewer American companies and indeed other country's companies will be investing in Chinese manufacturing and infrastructure.
1
One of America's greatest business (and life) assets has been the presumption of trustworthiness. If we need a plumber, for example, we assume anyone who says they are a plumber is a plumber and can be basically trusted, even if they are outside our family or clan. Trust is a huge reason our economy has grown as much as it has.
The same is true for America as a whole. People in other countries have learned to trust us. Trump is breaking that trust. If the world learns it should no longer reflexively trust us, we will all poorer as a result.
9
How can one be on the right track in a war if it is certain you will loose in the lomg term.
If you demands money from a trade partner to enter your market, whick market 'owners' you think can ask more, China ofering a market of a few billion consumers or the US offering a market of less than 1/2 bn customers?
Details like unbalanced trades do matter. But this fact is in the end the decisive factor and in ANY tade war China will win, though it may take a decade or two.
1
People who demonize China need to be reminded that businesses were not coerced into relocating their manufacturing operations there. It was always about the bottom line, never mind the needs of American workers.
Trump enjoys presenting himself as the symbol of American puissance by picking fights with every nation--except Russia.
That, too, is about the bottom line.
12
Paul I count you as one the best going but really...He may be right incidentally, the way a clock is right even when broken, now and then.
Plenty of substantial issues to litigate for sure. But Trumps Motives? For him and him alone and to the extent he can play it to advance his status with the base.
Do not give this guy credit for shooting 20% just because he makes 2 out of 10.
2
I think you just read the headline and presumed what the answer was.
1
"I don’t think we’ll ever reverse the damage."
"We’re going to need an extended period — maybe three presidential elections in a row — that makes it clear that voters are insisting on politicians who care about the rule of law."
How many generations did it take for Volkswagens, Fiats, and Toyotas to start selling like hotcakes? We forgot the minor indiscretions of their makers' nations in pretty short order when the price was right.
If your Year Zero is the end of Tammany Hall, is "forever" over yet, or are we still unable to trust that party?
If steady rain is probable tomorrow I expect the weatherman on the 11 o'clock news to tell me NEITHER that I can plan a picnic NOR that I must go to Home Depot and buy lumber for an ark.
It's going to take me another three articles to regain confidence in my ability to distinguish earnest predictions from alarmist hyperbole.
1
Notice that, the Dow is directly impacted by Trump's tariff statements. He says, "We have come to an agreement" and the Dow goes up, then China says there is no agreement yet, and the Dow goes down. I bet Trump and family are making a huge profit on these market swings. And because he is President, no one accuses him of insider trading.
11
@David D'Souza I totally agree and have felt that way for some time. The Pavlovian response of Trump twitter statements with NO concrete evidence that what he is saying is true is amazing. The markets will drop 300 points on just a tweet. No matter how many times he does it. They don't take a deep breath and see if there is anything behind the tweet. Be like a baseball player predicting he would hit 5 home runs in a game and all the betting money goes to his team. And no matter he only hits one or none, he keeps saying it, and the gamblers keep putting money down. Even MLB would look to see if the player has a stake in the betting parlor. But American stocks and Trump's base....nope just double down on their bet.
2
I am intrigued by the discussion globalism has been very good for America's overall wealth but America is the least equal of all Western Democracies.
Like most of us here I fear for the future. We use words like socialism, capitalism, neoliberalism, communism, conservatism and liberalism but the real debate is about whether we want more hierarchy or more equality and whether there is a best equilibrium or perpetual motion.
Russia has virtually no poverty, it has a few extremely wealthy and an enormous middle where the janitor and the neurosurgeon live in adjoining apartments. Oligarchical Theocratic, Capitalist Russia is more communist than the Soviet Union with male life expectancy 66 and females sharing the life expectancy of other Europeans. Russia has lots and lots of widows.
If you believe you know where this is going you are wrong.
Here in Canada we don't do tariffs we are a trading nation and we do a blue cow that thank you for buying from your neighbourhood dairy farm. If you want to support your local industries you buy your local industries products. You also know your dairy producer has healthcare and his children have access to as much education as they can use. we call this a social contract and it gives us about four years more of healthy productive lives for male and female.
Trump may be on the right track because only he knows where he wants to go. Trump is President because America doesn't know where it wants to go.
3
@Montreal Moe: "Here in Canada we don't do tariffs we are a trading nation and we do a blue cow that thank you for buying from your neighbourhood dairy farm."
You are kidding, right? Milk imports from USA that are above your arbitary quotas are tariffed at rates ranging from 241% to 314%.
@Montreal Moe what about wisc dairy Moe?
@bob
There was a time I lived in Chicago and I couldn't get New York, Vermont or Illinois dairy. I have eaten some wonderful Wisconsin artisanal cheeses but I live in Quebec and I do look for the thank you from our Canadian dairy farmers.
I am far from Montreal and less than a mile from the nearest cow.
1
This quote begs a big question:
"All of the business people I know appreciate that Trump is standing up to China..."
Which business people do you know? Are they people who have made billions of dollars using China as a source? Are you speaking mainly of small business people, like someone who runs a pizza parlor, and thus appreciates the tough talk without taking a hit?
My supposition as to why previous presidents haven't "taken on China" is that big business asked or told them to lay off. The global shift to China, and the subsequent loss of jobs here, means very little if you are running a big company and making massive profits.
While there is great unfairness on the Chinese side, keep this in mind: you no longer need to build a factory, hire workers and get everything up and running over a one to two year period to make a sell products. You can call on suppliers in China, and the rest of Asia, to make what you need that you can then sell here. My impression is that this is how hundreds of new enterprises have been launched here, including the big success of GoPro action cameras.
U.S. corps only want high margin businesses. In Asia, they'll make anything for you.
9
Krugman only thinks of maximizing utility function. His business has nothing to do with cybersecurity, geopolitical supremacy.
And the need for inflation has been granted by these Tariffs.
As some of us have been saying since before the election. Trump is 100% right to come down hard on China and hard on illegals (read the virtue signalling on the left will lose you another election).
4
@scientella-
Maximizing utility function is what is taught in business school - my school did not even discuss a different way of doing business. Admittedly not the best, but certainly the type of school where the majority of MBAs are cranked out.
A couple of months ago it made the news when a few American companies suggested that might not be the best thing for the country. Can't put that one on Krugman.
3
Trump has come down “hard” on China in a haphazard, ineffective way that has hurt American farmers,workers, and consumers. Manufacturing jobs have not come back. He has not taken on China's intellectual property violations. He even has overridden national security concerns, being more concerned about Chinese jobs in Huawei's case.
Trump has cracked down on immigration, not just “illegal” immigration, and done so in vicious, entirely un-American ways. He has put innocent kids in cages; he has fueled the profits of the private prison industry; he has deported hard-working immigrants, even U.S. citizens. He has blocked refugees from coming to the U.S., where we once welcomed many. He's still hung up on his fantasy of a Border Wall that will be costly and simply not work. Have yet to see him get Mexico to pay for it! He's delusional.
Criticizing his immigration policies has nothing to do with virtue signaling; it has everything to do with pointing out his racism, White Nationalism, cruelty, and hatred of minorities and foreigners. Curbing immigration is also counter-productive; it's bad for the economy.
1
China is the single largest polluter on the face of the earth. More importantly, they are the single largest emitter of greenhouse gasses associated with climate change due to the amount of coal they burn and the lack of pollution controls on their plants.
China is the end market for the Ivory that comes from the slaughter of elephants in Africa and the reason the market is so lucrative for these poached animals.
China has had a devastating effect on American manufacturing workers and the resulting angst of these working men and women who have watched so much slip away is the one of the key reasons for the polarization of America today.
If Trump enacts policies that slow Chinese production and her economy, then Trump is actually cutting back emissions from Chinese polluters. Ivory sales go down. Americans may get back some of the jobs they lost. Polarization recedes.
Tariffs and quotas on Chinese imports are a means to a positive environmental ends. The costs may or may not be passed along to the consumer (so far were not experiencing noticeable inflation). If they are passed along to the consumer, it is a completely voluntary payment and one they should make for all the pollution they've caused.
It doesn't take a brain surgeon to figure out that Trump's trade war is a win for the planet. I understand it. Why can't Paul?
7
@Arthur Taylor China is the world's manufacturer - and for a reason, Companies big and small from around the world moved their production there because of the huge cheap labor workforce. As labor rates in China have increased, even before Trump, some work has moved to Vietnam, Cambodia and others for cheap labor. But the size of the workforce is much smaller. The only way it is a win for the planet is if production slows (recession or worse) or production methods improve. China is working on the latter now. Plus automation is really ramping up everywhere. Those jobs are not coming back. The jobs that are require higher education levels
7
@Arthur Taylor
Per capita, Americans are the worst polluters.
Great if China's emissions are reduced. I doubt that's the motivation.
If you're concerned about the planet, don't buy things made in China, and buy as little as possible from everywhere else.
1
@Scientist China out pollutes the U.S. by more than 2 to 1 in terms of greenhouse gasses. Reductions in China's output will be beneficial to the planet. China first equaled the U.S. in greenhouse gas outputs in 2004. In the 15 years since, they more than doubled and they are still climbing at a rapid rate.
The pure mental illness of the Trump haters is on full display when they can't accept any outcome from Trump even when it aligns with exactly what they purport to want. When Trump withdraws from the Paris Accords, which gave China 13 years to pollute at whatever levels they saw fit, and then indirectly achieves far more than the Paris Accords ever dreamed of with regards to China's growth in outputs, Trump haters are so mentally ill they can not accept this as a positive. If Trump were to achieve a cure for cancer and world peace, the Trump haters would blame Trump for policies that created overpopulation.
But we can't really expect individuals who suffer from psychological conditions to understand their own issues, now, can we? The myopia and hatred of the left - their need for achievements to be underpinned by psychological purity - is insanity. I, for one, want climate change pollutant outputs ameliorated and reversed. I care very deeply about conserving animal populations on this planet. I care very deeply about American working people and preserving their place in our society. Trump's China policy works for all three.
1
Yes, I'm concerned about the costs to each and everyone at home. My main question is about the costs of the farm bailouts. Now that they are in effect will there be a problem turning these payouts off? How long will they last? How much money will the bailouts cost? Who actually gets the money from the bailout? Also, the cost to buy from South America is now cheaper because of currency devaluation, how are farmers going to get their soybean market back from selling to China? I'd like to see an article about this issue. Thanks
4
We gain when we buy from China.
We gain when we sell to China.
Since both imports and exports are down, both the United States and China are being hurt.
It is important to do everything we can to subvert Chinese authoritarianism. While it is not enough in of itself to produce a free society, economic relations involve lots of small subversions. We could not economically isolate China if we tried, but it also would be a bad strategy.
@Mark "We" don't gain. People who's companies do business with China gain. You don't get to average me with Jeff Bezos and say "we're" better off. Jeff got virtually all the gains.
As to subverting Chinese authoritarianism, we tried the economic approach for 30 years. It almost worked. Except that technology evolved and allowed the regime to maintain control in the face of the factors (like middle class wealth increases) that were supposed to be the regime's undoing. China did not, in the end, liberalize. Doubling down on the economic engagement approach at this point is reinforcing authoritarianism, not reversing it.
3
@Mark When the wall came down and people took souvenirs, we in the west celebrated. In China, they said that is not going to happen here.
1
To answer Dr. Krugman's question, anything we do to oppose China's stealing of our intellectual property (IP) or dissemination their massive surveillance technology around the world is the right thing to do. The bigger picture is that China and the United States are both fossil fuel economies, and that neither country is doing anything meaningful to change this. That's what's important, and the trade war is a side issue, a distraction, compared to this.
3
@loveman0 I don't see the US doing anything on the IP issue. What they are doing has nothing to do with it
Paul has to stop watching MSNBC exclusively, and tune in sometimes to CNBC. If he did so, he would learn that the stealing of technology and intellectual property issues are at the heart of why there is no present agreement being reached between China and the USA.
By our standards, China is an outlaw country, and prefers to remain so. We should only sell them agriculture products and buy as little as possible there. We should embargo all other exports. China is far more of a threat than Cuba ever was.
In the 1930s, we sold Japan scrap metal, and it came back as aircraft carriers. Technology sent to China is the scrap metal of our generation.
15
Those opposing tariffs on China should ask themselves.
Did you ever support the idea of trading with the Soviet Union?
I am sure most of you will say No.
Then why do you support the idea of trading with a nation that is rapidly becoming a surveilance state and has a horrible human rights record??
The United States should not be in the business of empowering its enemies.
Those factories in China that cannot be reshored back to the United States should be in Guatemala, Nicaragua, El Salvador and Hounduras, solving the migrant crisis by providing jobs to nations that are in many ways our allies and ending the migrant debate once and for all.
Those factories in China should be in Thailand, Vietnam, and Cambodia. In Ghana, Kenya, South Africa and Liberia where access to the US market will uplift people economically as well as empower democracy, which is the very opposite of what trade with the US has done in China.
15
@Gerald China is much of the world's factory. Stopping trade with China is nigh on impossible. The Soviet Union didn't have much anyone in the west wanted. Having said that, I remember talking to a retiree from Los Alamos that said that there was much more scientific joint programs in the cold war than now. He even spent quite a bit of time working in the Soviet union (non military scientific work).
Agree that everyone should be looking to diversify supply chains. People do need to understand that it will increase costs. The reason China is so dominating is because the cost of goods are a lot lower than they would otherwise be.
2
Just to be as brief as possible, TARIFFS ARE THE ULTIMATE PEACETIME ADMISSION OF FAILURE. If they don’t work, then we go to war. It is that simple.
6
@Dave Mumper RIGHT ON! Which is why we need to support or armed forces
"Trump is using his office to enrich himself...."
I find this an unsophisticated assessment of Trump's psychology. Trump appears very uninhibited about using his office to promote his businesses, especially his hotel in Washington, but also all the resorts he stays at. The time spent at Mar-a-Lago and his other properties, at considerable government expense, represents valuable marketing and there is every evidence that he knows that.
But Trump's story is about feeling and being important, which is about far more than money. A lot of people are wealthy, but are satisfied merely to remain wealthy without wandering into politics. He obsessed about being on the Forbes wealthiest person list, even when he didn't belong there. This sounds like it is about money, but he didn't really get anything out of this apart from the satisfaction of feeling important enough to join the club. He has obsessed about popular votes and the size of the crowd at his inauguration. His obsession over Russian interference, which seems likely to get him impeached, is mainly about how it undermines the legitimacy of his election. None of these enhance his wealth.
The tariff story feels more like it is more about this than economics. Trump knows that tariffs make headlines, the true currency of Trumpism. They are marketing of Trump, selling the "I'm tough, America first" brand.
Sadly for Dr. Krugman (and the rest of us), economics may be beside the point on tariffs and trade policy.
4
@ACA If you had read the article that led up to this one you would have seen that Krugman covered your assessment of Trump's psychology in a similar way. His statement here about Trump enriching himself is an add on to the original article.
4
Trump hates it when someone else cheats and he or his interests lose.
He considers American jobs one of his interests.
And he understands that the Chinese need us more than we need them.
They will respond positively, or their economy will start to tank; their currency is already near the tipping point and with a drop in foreign reserve influx will make it dicey for them.
They are loaning a lot of money for their Belt and Road project, actually an economic hegemony strategy. They can't afford to have it derailed.
It's actually well played.
6
@Objectivist USA can hurt China a lot economically, that’s true. But you omit to recognize that China could hurt the US a lot as well, and I strongly suspect that China is much more resilient to this kind of pain than the US.
This economic war (so easy too win that I don’t understand why it is still ongoing) is the economical version of the MAD theory, the one which was never supposed to be tested.
3
@Objectivist
Actually, here in the real world, it is very poorly played. That explains why, almost 3 years into Trump's presidency, he has no deal. No deal with Iran. No deal with China. No deal with North Korea. That's because Trump is, above all, a con man. He conned people into thinking he was an astute businessman (and a great person to lend money to or invest in - ha!) and then he conned people into thinking he would make a great president. The Siena College Survey of presidential historians and scholars ranked Trump third from last. And that was before the Ukraine scandal.
Back to why he has played China all wrong. By making this about us vs. them, something Trump knows how to do quite well, it is easy for China's leaders to portray this as nothing more than America as nemesis and bully. If instead Trump had made this about specific trade offenses, like intellectual property theft and closed markets, this would have been difficult for China's leaders to dispute. Thanks to Trump's blundering, domestic political arguments in China are easy.
20
@Jon
"... If instead Trump had made this about specific trade offenses, like intellectual property theft ..."
Well, on your planet it may seem as you say.
Here, on the earth, the factual record proves that your planet is in an alternate reality:
"In light of China’s theft of intellectual property and technology and its other unfair trade practices, the United States will implement a 25 percent tariff on $50 billion of goods from China that contain industrially significant technologies. "
Donald J Trump, President, 15 June, 2018
https://www.whitehouse.gov/briefings-statements/statement-president-regarding-trade-china/
Trump being on the right track regarding anything is equivalent to a broken clock being right twice a day.
22
I wish you didn’t downplay stock market manipulation. I am fairly sure that he makes it drop, the filthy rich but low, and he makes it rise be withdrawing the threat that made it sink in the first place
10
Yes, someone should investigate if there was insider trading timed with the almost weekly pronouncements by Kudlow or Mnuchin that we were almost at an agreement, until suddenly it won’t happen before the election.
2
We were behind the TRIPs Agreement, for whatever it's worth. Undercutting the W.T.O., which oversees TRIPs compliance, won't help the enforcement of intellectual property worldwide. These matters are volatile, and thrashing about helter-skelter is risky. From the guy in the White House, expect no help on point.
5
Krugman's last response is instructive. The tariffs are causing problems but not big enough to make the overall macroeconomy turn south. Tariffs are bad public policy in the big scheme of things, they allow government to try to pick winners and losers. However, voters tend to fall for arguments that they "protect jobs" even though it isn't true in the aggregate. Trump will use them to reward his supporters and punish those who don't support him and as a means to get donations for his re-election campaign.
11
Dr. Krugman's essays on U.S. trade relations are correct and and his history of the legislative authority for executive actions were carefully outlined in previous columns. Other scholars such as the Congressional Research Service confirm Dr. Krugman's views. https://fas.org/sgp/crs/misc/R44707.pdf
In my view, the President's trade actions, in his short time in office, have done serious harm to the U.S. and World economy.
My feelings are that the President has discovered that his actions and the response of the international community including China, Canada, Mexico, and Germany/Europe, U.K. have provided outstanding theater that have gained him political points as a "tough guy" who knows, and only his special genius knows, is the way to obtain a better deal for American consumers, American farmers and workers.
Unfortunately, as the World faces the realities of the interdependence of trade (some NOT PRICED) on the future of civilization like environmental abuse (oceans, atmosphere, global warming and destruction of the habitats) and waters and soils of agriculture, pollution of fisheries critical to the human food supply and controlling diseases from natural mutations that occur from time to time, the current Trump theater is not being checked, as required by the Constitution because in our System the Republican controlled Senate has the Constitutional authority over international trade agreements.
So, it might take a while as Dr. Krugman suggests. Vote Blue in 2020.
16
@james jordan: Life is too short to put up with the shenanigans of Trump.
@Steve Bolger
I agree, but I know from experience that it will require blue tsunami for a Congress to repair the damage done. I am not as pessimistic as Dr. K, on the time required to put America back on track but 2020 is crucial. Should voters fail to restore a Democratic majority, I am in the Krugman camp.
I don't kid myself. the next 20 years will be the toughest challenge the planet has faced in modern times. Global energy and coming to terms on healthcare in the U.S. will be the crunch drivers. The partnership between the modern regulatory welfare state and free enterprise will be put to the test.
Ok Mr Krugman, let's go over it again, what history has taught us and apparently you might have been bamboozled by Trump from your headline.
1-Trump was, is and will always be a free trader. If he was not he would have brought back his and Ivanka's trinket factories from India before they went belly up.
2-Tariffs are generally a lose/lose proposition as history has taught us. However, in certain, selected instances against the worst of slave labor countries taking away blue color rust belt jobs they are the last resort. Better to have Americans paying higher for goods but have jobs.
3-The worst thing to do is what Trump is doing, ie a insane trade war against friend and foe alike. Sooner or later disaster will result as history has taught us.
7
“'Why Is Trump a Tariff Man?' So why does the president avoid making the deals that might end this perpetual state of economic uncertainty? In a word, freedom."
Freedom isn't the word I'd use for grand and/or petty tyranny in service to ignorance, prejudice and inequality that defines the essence of Trump and his -ism.
The "exercise of unconstrained power" is anathema to democracy and the authority legitimately delegated by majority consensus to elected individuals and Constitutional instruments of governance.
Consent by the governed is expressed by a Constitutional framework that proceeds from past history and political norms to present circumstances and challenges.
Trump has no comprehension of and only contempt for the fragile balance between freedom and responsibility, and between individual and collective.
Chaos is the word Krugman should use to describe Trump's weaponization of trade and to the extent there is any method to this madness it is in the systematic denial of reason and rationality.
Trade deficits are the result of over-consumption and under-production...of over-spending and under-saving.
The epidemic levels of obesity among Americans is both symptom and metaphor of our predicament.
China eats our lunch because we're big, fat and lazy, and they're lean and hungry. Not because they're inscrutable, sinister and conniving.
12
I would add we need a vigorous center right traditional party of Lincoln GOP to escape from this funk. The GOP cult of personality of today requires repudiation near redemption by Republicans. Elections only matter if positive changes result. If the GOP fails to get it right we face a downward spiral of polarization. They foisted Trump off on the nation shamelessly protected him from day one. Soon to be acquitted by the Senate based solely on loyalty ignoring credible evidence. The Roy Cohn question framed for Trump and GOP Senators should be: have you no principles left?
8
@texsun
Lincoln's stance on slavery was admirable and unchalalenged.
In addition, and far less admirable, he was a progressive who eschewed the primacy of the federal government over states rights - and not just on the slavery issue, on many other policy issues as well.
Nope. We don't need a Lincoln GOP. We need a Trump GOP.
@Objectivist Lincoln went along with states' rights until the South seceded. Then he pursued total defeat of the Confederacy, as we may well need to do now against the neo-Confederates in and out of Congress; starting with their overwhelming repudiation at the ballot box in 2020.
8
@Bruce
Revisionism, and narrow portrayals of broader behavior, are hallmarks of marketing an empty philosophy.
Lincoln considered himself a conservate but his policies and underlying philospohical views prove that im nay respect, he was more closely aligned with whaat we, today, call progressives.
Examples (whoops, there they go again, with the facts):
"Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. "
And the there's that pesky revenue Act of 1862 which introduced a system where taxpayers were separated into multiple categories according to their incomes and taxed accordingly.
3
Trump's tariff on China has been aimed mainly to drive off foreign investments in that country and that is effective. Economy is the life line for this communist regime.
5
Mr. Krugman points to China's subsidies of certain industries as examples of unfair trade practices. But why isn't the huge US defense budget an unfair subsidy of the US high tech industry? Most of the money goes into state-of-the-art sophisticated systems, while the enemies we actually fight (and usually lose to) move around in old pickup trucks and use makeshift weapons. Also, aren't the government protections of domestic medicine prices another unfair subsidy? In Asian countries, we routinely buy US drugs at prices that are small fractions of what they cost domestically. How is that not an outrageous subsidy of US drug exports?
11
What's dismaying about all of this is that Trump is getting away with it. I'd like to believe that the GOP is too enthralled with being in control of the White House, the Senate, and the courts to want to risk losing it. After watching their actions since Trump took office and comparing them to how they've acted when a Democrat was in office I've changed my mind.
They are well aware of what he's doing and they don't care or they want him to continue. It's enriching them and money is the one language they understand most. Charity for them means they get all the goods.
16
Not all of Trump's policies are wrong. For example, as someone, who supports Social Security and Medicare for All can we really do that if we don't control our borders? Yep, and our policies toward China - formulated when the Magic Kingdom was a poverty stricken third world economy - need to change. We're competitors with China and our policy needs to reflect this dynamic.
5
@Chip Chasen
We can't "control our borders" with a wall. That is a ridiculously simplistic idea. Republicans have had ample opportunity to have comprehensive immigration reform and border security. They demurred. Senate Bill 744, passed by a vote of 68 to 32 in the Senate in 2013 (every single Democrat voted for it), was never even taken up in the House. Why? I believe it is because Republicans would rather have the issue to run on. If they actually address the problem, they can't use it to scare up votes.
For the same reason, Trump is now saying he would rather get a deal with China after the next election. How interesting. It is almost as if he would rather have the issue to scare up votes, as opposed to actually negotiating a deal.
9
It's time for Prof. Krugman to acknowledge that his theories are not working. 1.5 years ago he opined on these very pages https://www.nytimes.com/2018/03/03/opinion/the-macroeconomics-of-trade-war.html that tariffs on China would result in hyperinflation in the US and cause the Fed to sharply increase interest rates. Well, the opposite has happened. Now he's coming up with all kinds of other reasons why tariffs on China wouldn't work.
4
@RSSF
"Now he's coming up with all kinds of other reasons why tariffs on China wouldn't work."
The fact is they haven't worked so he doesn't need to come up with reasons why they "wouldn't work".
It's unclear what Trump hopes to achieve with his tariffs. The tariffs, and the negotiations, don't seem to be aligned with the things he complains about and the costs are being borne by Americans, not China.
8
@Barry Long The US consumer is doing just fine -- no shortage of anything, and inflation rate just 1.8 percent -- the lowest in years. Australia needs to come up with its own strategy of how to deal with China, otherwise it'll all be downhill soon.
2
@RSSF Read the article you link to again. In it Krugman stipulated that in order to eliminate the trade deficit a 20% across the board cut would be required. Trump's tariffs are no where near that yet.
2
Please forgive my ignorance about who wins when we all inherit the wind.
There is the lowest percentage of our species living in dire poverty ever. We live longer than ever. Our quality of life is the best it has ever been. We have a world of information and entertainment at our fingertips. We can produce far more than we can consume and much of this world will see the world's population decline without war, pestilence, or famine if we so desire.
Why are we having this discussion when if we co-operate can have what every political , economic, social philosophy promises? Maybe it is time to drop the Sapiens from our name.
3
@Montreal Moe: Too many people are having fun for some people to tolerate it.
I'm fairly certain that most US citizens don't care whether China thinks it can count on the US to play fair in trade policy.
The existing rules are wrong. They need to be changed.
Anybody can sit back and criticize Trump's trade policy. The mark of an objective person in favor of creating a system that US citizens actually believe in, one that if citizens truely understood all of the ramifications would judge it to be fair, would be to suggest the changes that would make it so rather than engaging in pot shots and degrading the affected citizens as deplorable or clinging to religion and guns.
The mainstream Democratic Party leadership and its donors are absolutely deplorable people. They're often times aided by the opinions of economists, who often cling to inaccurate labels as 'social scientists'.
This country would be absolutely nuts to elect someone from the so-called centrist, mainstream position of the deplorable leaders.
These petty little things like enforcement keep cluttering their minds with reality. Enforcement isn't the only problem. Trade is much more prone to local corruption and outright crime, so trading 'freely' with corrupt nations is corrupt at its core.
We don't live in the nice and tidy world that many economists pretend we do.
7
@Reeducated
"I'm fairly certain that most US citizens don't care whether China thinks it can count on the US to play fair in trade policy."
Except that if China can't trust the US to play by the rules, why would they consent to play by the rules. Trump isn't playing by the rules, he's making them up as he goes.
It's clear that Trump isn't interested in being fair. He just wants the US to win. Currently, it's obvious that Trump isn't winning so the US loses on both counts.
Trump isn't attempting to change the world trade rules. He's trying to bully the US's trading partners one at a time into cowering before the US's economic and military might. This reality becomes clearer when you look at some of the unjust tariffs he is imposing on other countries that play by the rules.
We don't live in the nice and tidy world that Trump's gullibles believe we do. Economists spend their lives trying to understand how economies work based on real world experience. They can't be brushed aside by ignorant elites like Trump who think they know it all after watching Fox news.
@Reeducated so share with us what a fair trade policy would look like to you.
Laissez faire is the true economic policy of the Trump administration--never mind his tweets and irritating behaviors. He's actually doing the right thing, just get out of the way and let the economy do whatever it wants, on balance everyone is enriched most by that. Social (socialist) economic planning ultimately does more harm than good.
1
I wonder if Dr Krugman was one of the original globalists who with others housed in Washington
agreed that we should allow China to do well as a manufacturing power house,destroy manufacturing
jobs in the USA, allow the Chinese to transfer intellectual property to themselves from US companies in China
and outright steal other intellectual property without consequence.This plan would eventually turn the
Chinese government into a freedom loving democracy.As with most plans conjured by the elites this
whole process was a disaster for America except it’s large international corporations and a whopping success
for China.
10
You’ve nailed it. Paul Krugman can’t respond to the realities on the ground. He’s holed up in an academic ivory tower.
The current US "trade" with China is simply a one-way conveyor belt of goods shipped from China to the US. 20% of China's exports in 2018 were to the US, and US exports to China represented just 0.5% of our GDP.
Given the minuscule level of what our exports to China mean for our economy, it's not worth the time to even have trade discussions with China or sign any agreement that does not meet our objectives of reciprocally-free markets (why are Google, Facebook, unrestricted movie imports not allowed in China?) and intellectual property protection (no arm twisting of US companies to provide China with know how, no ripping off drug patents, etc.)
We just had a blockbuster jobs report, and inflation is nowhere in sight, despite alarm bells from Mr. Krueger and others. The US consumer is not suffering. Of course businesses don't like tariffs, because they are the ones who profit from importing cheap goods. Even if we continue importing goods, I would much rather have those made in Vietnam, Korea, Taiwan, India and other democratic countries, rather than authoritarian China.
6
The supply chain is shifting away from China. A de-risking is happening.
While this will not create more American jobs, It will benefit to poorer countries like Malaysia and Vietnam. Also those countries have lower wages than China and don't have the same level of intellectual theft, so there is indirect benefit.
The NYTIMES article about the manufacturing collapse of Italy is eye open.
4
@Tom Italy's unemployment rate is hovering at 10%. They don't have the software, technology, and drug and research businesses we do. Watch western and southern Europe struggle in the coming years.
@RSSF
You know that India is a closed economy, in many ways more so than China?
India, for example, respects no drug patents at all. The government -- I think appropriately -- allows Indian pharmaceutical companies to manufacture patented drugs freely. Otherwise there would be few modern drugs available for Indians given the cutthroat pricing of Western Big Pharma.
India also forbids for religious reasons all imports of beef, cows, calves, etc., which is ironic because India is one of the biggest exporters of beef in the form of water buffaloes -- 20% of all global beef exports.
If you have a problem with US goods made in China, which has invested over $1 trillion in US debt, direct your ire at US companies who freely and without coercion choose to manufacture in China because it's cheaper, more reliable, and of better quality than anywhere else.
One problem with the Trump era is credibility -- he lies, his cabinet officials lie, his appointees lie, plus we know they tried to make the census a lie.
Why do you think the jobs report isn't a lie? Reagan changed the definition of unemployment, how we account for hunger (ketchup as vegetable), and federal collection of data on employment discrimination.
Already several jobs reports have been subsequently amended downwards. The jobs rate also doesn't account for workers who leave the job market, which is significant. Finally, the rate is a survey of 150,000 businesses that self-report.
6
The president has already won the trade war.
No businessman in his right mind would even think of transferring American jobs and factories to red China. Meaning millions of American jobs stay at home.
Second win is that foreign investors see the US as the safest place to do business.
Third win, no foreign country is going to obstruct American exports.... For fear of immediate ratalitory tariffs.
Trump as a business man has been the only person to make America first.
8
@Obummer
None of that is actually true. Trump's indiscriminate trade tantrums are not helping. U.S. manufacturing is in recession. The pace of overall job creation has slowed significantly from the relatively blistering pace under Obama. Who would want to invest anywhere that might be adversely impacted by Trump's tariff madness?
I used to avoid buying products made in China. Thanks to Trump and his tariffs, I now stock-up on China made goods before tariffs increase their price.
3
I beg to differ with the good doc.
I have come across stories (including one in NYT, I think), that the main point of contention is issues related to IP (intellectual property).
China has been stealing and wants to continue stealing IP. Later this month it has decried all businesses hand over keys to any encrypted data related to all aspects of the business. All businesses.
This fight is not about tariffs. It should not be. Two facts.
Scant evidence China reducing tariffs will change its balance of payment position or exports from USA flourish. Little besides StarBucks and Apple entice Chinese consumers.
And only beneficiaries from trade with China are bankers and big businesses. The sort Dr Krugman likely interacts with. Us small business owners have long recognized negative effects of trade with China. We are fighting one hand tied behind our back.
Its the issue of IP that merits most attention, and missing mention in this discussion.
Why?
7
@ParagAdalja: There will either be an impossibly Balkanized access to intellectual property over the internet, or a compulsory licensing system.
@ParagAdalja
German, British, French, Japanese, Korean, Italians have had factories in China for decades. China acquired much of its manufacturing competence from working with these countries, which also shared patents and copyrights.
It is blind hubris to accuse China of IP theft when China files more patents by a large margin than the US does each year. The so-called "theft" was a provision in contracts that US companies freely and willingly signed that required US companies to make products for the Chinese domestic market in addition to products exported back to the US market. The only gun held to the head of US companies re: IP was the one held by the US firms themselves.
What US firms want is entry to China's consumer market.
GM sold 150,000+ Cadillacs this year in China and about 900,000 other GM nameplates, making it the single largest car market for GM and the source of most its profits. GM patents freely shared with the Chinese earns the dividend every GM investor gets, and also backs up the pension obligations of GM's American workers.
Given the size and profitability of the Chinese market, most firms happily exchanged IP for access. Those companies -- like GM -- reaped and will reap billions in sales and profits in "payment" for its IP.
Rampant sinophobia makes it hard for Americans to accept responsibility for the trade deficit and easy to just blame those sinister, scheming Chinese.
6
@Yuri Asian
My mistake: GM sold 4 million vehicles in China last year. Volvo, owned by Chinese car maker Geely, has a major manufacturing plant in China to produce Volvos for the global market.
If a president chooses to impose tariffs, the tariffs should be consistent. That is not the case with Trump's tariffs.
Trump has promised to return manufacturing jobs to the United States. His tariffs are inconsistent and are not supporting US manufacturing. Here is one example.
MISCO is the only manufacturer of speakers in Minnesota and one of a handful surviving in the US. It employs about 100 workers. And it has a legitimate complaint about Trump's tariffs. MISCO uses components imported from China that are subject to a 25% tariff. If MISCO off-shored the production to China and then imported the finished speakers, the tariff would be 15%. Tariffs that give off-shored manufacturing a 10% price advantage. These inconsistent tariffs do not serve any ascertainable purpose other than to encourage more off-shoring. Here is a link: https://www.npr.org/2019/12/02/783359225/his-company-makes-speakers-now-hes-speaking-out-opposing-tariffs
12
Thank you for this. It is beyond important to get these points off view in front of the Trump apologists.
4
@Claire Green Thank you for your kind reply.
So - "all the business people" Megan (interestingly) from Paris asserts "appreciate that Trump is standing up to China [with his tariff actions] and they approve it." While I'd be interested to know exactly who these business people are, I have a strong suspicion they are neither soy bean farmers nor major corporate movers and shakers.
Instead, like people generally who tend to approve of most or many of Trump's controversial policies, I suspect they are of a sort not personally impacted by them but aching for any sort of disruptive action to a policy grudge they've long held, don't actually understand and really don't appreciate or care about the consequences of.
Until, that is, those consequences do impact them, in which case they still have a wondrous capacity for either forgiveness or shifting the blame.
11
So many comment here are not to the actual point. It's all the tangential truths about Trump.
Just because there isn't an existing theory as to why the economy is doing so well, doesn't mean it isn't; it is. The failure of theory and preconceived economic thinking to explain the vigor of the current economy, and the actually valid actions Trump is taking with respect to China have people like Krugman, notable intellects, puzzled.
Sometimes calling it like it is and acting on gut instinct works. China cheats, and tariffs on China are good. In addition even our Senator from Virginia, Mark Warner, has praised his actions vs. China in the cyber realm.
It is somewhat hilarious to watch the befuddlement of the intelligentsia. Economics is a dismal science it's said, and now especially true for those with strongly reflexive anti-Trump positions.
5
@Martin Economy is doing great for the rich and 1%; rest of us have not had a raise in forever. Tariffs? American taxpayers pay $28 Billion to the Agri Businees Big Shots in farm bailouts. So who is fighting China? Taxpayers. Trump takes credit for everything good; accepts no responsibility for the down sides
14
@Ray Sipe
Unemployment is at 3.5%. The best since 1969. That's not just the 1%. I agree there are so many, many things that need to improve but I see no solutions that stay within a competitive free market coming from the Democrats. Other systems simply do not work, and the best we can do so as to not completely destroy the economy is small incremental change.
3
@Martin
It's great to have a job, but when a $400 debt or an illness wipes you out, perhaps there is something that's not quite right about the upward redistribution of income and wealth.
8
The assumptions behind this piece, and most of the writing in the media about international trade, are that the development of globalization, and specifically the trade with China, has improved overall economic growth; and that there has been benefit to the majority of Americans. These assumptions are false. Economists would not be talking about "secular stagnation" if there had been improvement in GDP growth, and real-wage growth remains historically low. Krugman talks about returning to the trade situation the way it was before Trump, like Joe Biden talks about returning to the political situation before Trump. In neither way would things be going in the right direction if they are only returned to the status quo. The pre-Trump trade deals with China and many other countries have not benefited American wage-earners in particular. Maybe it would actually be a good idea if the Chinese and others could not depend on the US to keep exporting jobs to those low-wage countries and to make deals which mostly benefit only upper-income people in the US. The disruption which Trump has caused is generally not good, but to make real progress in advancing the welfare of the majority in the US trade has to be organized differently. In general the increase of inequality will not be reversed without considerable disruption of business as usual in this country.
7
I see that Trump has some bewildered fans on this thread. No surprise there - he has bewildered fans everywhere. But in fairness, Krugman is wrong about something: he hopes that future voters will return to a supposed respect for "the rule of law" - that there is a "normal" we can return to if we but come to our senses. The problem with that hope is the reality that ordinary people only respect the rule of law when they believe that the laws and the system that they structure respect and serve them. When they come to believe otherwise they move to overturn that system by whatever means necessary. Trumpism is the result of 40 years of neoliberal capitalist aggrandizement by the elite and austerity for everyone else enforced by laws and policies that both Democrats and Republicans have imposed on ordinary working people. That's not a "normalcy" that most people will ever wish to return to. The only question for us is what better system we can organize to replace the one that brought us to this pass. There will be no widespread respect for the rule of law until we build an economic and political system that can elicit sufficient popular support for the laws that defend it.
13
@john riehle
Why is it that so many people support a party that is actively opposing worker power (e.g., right-to-work states)? Why do so many support a party that is undermining democracy (e.g., Citizens United) in order to favor plutocracy? Why so much support for a party that celebrates a law that would have meant 23 million people would have lost their health insurance, a party that disparagingly refers to universal health insurance as socialism?
The attacks on ordinary working people come from Republicans, not neoliberal capitalists. Until these working people turn away from the Republican party in droves, we will continue to have a country of the people by the people but for the privileged few.
13
Until voters insist that elected and appointed officials honor their Oaths of Office, the rule of law is another pipe dream like equal rights, liberty, freedom and equal justice ...
We need real people to run for office who will serve the common good, not the wealthy special interests. Please, consider voting for new candidates, rather than incumbents. Fresh blood, new ideas and term limits.
7
Reading the comments, few seem to understand the role of tariffs
Tariffs keep manufacturing in the US
Take the US auto industry. It would have disappeared were it not for the 25% import tariff on pick ups and SUVs , imposed by a Democratic President (L. Johnson) . The US auto industry;s segment not protected by tariffs, passenger cars (import tariff 2.5% ) is being shut down Chevy Cruze production moved to China
US workers without tariff protection can simply not compete with Chinese workers working at 1/4 of US wages
Yes, you could get a cheaper pick up truck or large SUV without this tariff - from China, Korea, or Mexico.
At some point , every country makes a decision to keep vital industry , even if it is more expensive to consumers.
Take for example, the Canadian diary industry. It's tariffs , on some products over 200% keep it in business. And NY Times readers overwhelmingly supported this when Trump
began to attack Canadian diary tariffs
Manufacturing is not any different.
9
But Trump has denied that US citizens will pay the tariff.
@GI
US citizens don't pay the tariff when they don't buy goods with tariffs applied. Very simple choice for everyone. I just wish that products with tariffs included were BOLDLY labeled with more than just the price tag.
Krugman's as well as many other economists' predictions should be taken with a large grain of salt. They famously predicted that US would fall into a deep recessions if Trump was elected . Of course, quite opposite happened and the economy took off almost immediately after the election, because businesses knew that less regulated and more business friendly times are coming, and were willing to invest. And that's nothing what will happen when the trade war with China is settled - the economy and the stock market will skyrocket (Krugman finally realizes that, hence this preemptive article). If, on the other hand, a democrat is elected for the next president, the economy will falter and at best go back to the anemic growth like under Obama ,or even worse into recession. Also, our "allies" will resume taking advantage of us, the border will wide open and incoming low skilled immigrants with completely different values will overwhelm the resources, and socialism will take over destroying capitalism - the very thing that made this country the strongest the world has ever seen. Now, let's vote. To each his own but there won't be do-overs
10
It is true that other countries will be wary of any deal with the U.S. going forward. This is not so much the "Trump effect" as it is the "anti-liberal disinformation effect." The grand deception is as pernicious as it is ubiquitous. The reason Trump has made far more than 13,000 false or misleading statements since taking office is because he can. He knows that the anti-liberal disinformation apparatus will provide cover. There is a direct link between the political disinformation and election outcomes. The detachment from reality - just read the comments from Trump supporters below - is what permits con men like Trump to take power and undo whatever Democrats have done.
I see no reason to think this pattern won't persist as long as the anti-liberal propaganda apparatus (e.g., Fox News, Sinclair, Limbaugh, One America News) continues to churn out disinformation.
12
We can talk, one thing is for sure, Trump is making lots of enemies in other states Capitols. He is creating chaos and uncertainty wherever he goes. They made fun of him but behind closed doors, they talk business.
3
Putin is very happy with a weakened America.
To understand who we are dealing with when negotiating with China, watch the recently released documentary One Child Nation concerting the one child policy in China from 1982 through 2015. You may come away concluding, as I did, that the heart of darkness in the Chinese political system is as real as in Iran or Syria. Our mantra in dealing with China must be, They cannot be trusted.
5
@ehillesum TPP was to be an international counterbalance to China. Both parties threw it under the bus durning the election because manufactured boogymen are easier to sell to voters than the complexities of trade deals.
3
Yes, but China is our creditor, let’s not insult them and have them call in almost a TRILLION is debt!
And they were spozed to what, let their population boom through the top of the atmosphere?
But please, continue with your lecture. It’s morbidly hilarious to see Trumpists nattering about trust, given what we just pulled on the Kurds—not to mention Hizzoner’s life spent cheating vets, contractors, employees, taxpayers, students, people stupid enough to buy Trump Steaks, his first wife, his second wife, everybody who worked for the Trump Taj Mahal...
"Even once Trump is gone, the possibility that America will elect another leader like him will shadow everything for decades to come."
That's exactly, and sadly, correct.
The majority of us who didn't vote for a hateful mobster for president are going to deal with the repercussions of a significant chunk of the population who have no ability to judge character.
Although I'm not sure it's going to hinder relations with China, who essentially have behaved like a smart Trump for the past decade or two. They take whatever they can get.
10
Good title! keep putting positive titles about trump, he will promote it, cause you know he doesn't read.Then when one reads it, it is not so positive after all- but the truth. Of course after the first one, I guess his readers would tell him what's in it.
3
Trump has only one policy for everything - hold onto power to enrich himself (and stay out of prison!) He has done nothing to improve the lives of the middle class and the growing number of the least fortunate.
Republicans are unforgivably reckless and irresponsible for allowing Trump to diminish and undermine the Constitution, the rule of law and civil governance.
What I can't figure out is why the Republican's wealthy donors are still supporting Trump's reckless and harmful rhetoric and misguided attempts of 'win-lose' diplomacy? Nobody trusted Trump before he became president, and I can't believe that has changed.
We should never lose sight of the fact that Trumpism is Republicanism. Unless the entire Republican party is relegated to the dustbin of history, we will never get on track, and I would argue that we have never been on track in my lifetime - 70 years.
10
America says WE are up to this, and if the World forgot how we helped them, then WE should not punish them, but set the task at heart to prove that we are NOT Trump nor the 21st Century Republicans. This is why America will always stand tall on Earth, it knows no borders, it is a religion to Justice, Liberty and Truth.
1
Tariffs have been in place on agricultural goods since the 1920 to protect US vital sections of US farming from outsourcing
Food is too important a resource to become dependent on other countries.
Consequently there is no free trade in agricultural goods - endlessly negotiated bi-lateral trade treaties
Peter Drucker, the founder of Management Theory pointed out in 2001 that same would , inevitably , happen to manufacturing in the US once it shrank to critical size
https://www.economist.com/special-report/2001/11/03/the-next-society
And that is what we see
1
Tariffs do two things and, both are bad - increase the cost of goods and, as a result prop-up inflation.
Depending on your economic situation this is a minor irritation or a devastating choice between food and medication.
Trump's base consists of under educated white males whose only real skill is smashing empty beer cans on their foreheads. As the misery grows for this group their allegiance to Trump grows, as the misery grows, so does the size of the size of Trump's base.
Newton Gingrich kindled the flames of underprivileged power with the realization that Evangelical Christians were thought of and treated like second class citizens. Gingrich turned the coalesce of this group with white Southern rage at the "War of Northern Aggression" into what became the "Tea Party".
Trump's understanding economics is limited to a mentality of "what's in it for me".
The very thing (tariffs) that impacts Trump's base in the worst possible way, is the engine for its growth in numbers and political rage.
The guy is crazy like a fox, when he leaves office in 2025, the U.S will have become a third world power with a plutocracy of unimagined proportions.
So, Mr. Krugman the only track Trump is on is the "Trump track" and it's a track that confers wealth and power on a very few at the expense of many.
4
Chinese intellectual property policy seems to be a serious part of current negotiations for the first time I recall. This is big deal for free trade generally and for America's economic future.
1
@Charles: Legal means to collect on patent infringements and the like are so iffy that the little tricks that make a process work are usually kept as trade secrets. One can relocate a factory, but one cannot separate the trade secrets out of it.
We'll never know where we'd be now if Obama had actually tried to "change things". His gross lack of business and political experience led him to the opposite position than what he had been elected to do: find out what role the Bush administration played for the Saud family on and before 9/11; why we went to war with Saddam instead of King Abdullah (see question 1) and maybe how the phony mortgage market and the insurance markets supported by tax payers went belly-up and caused a real recession. No, Obama reached out to the defeated and humiliated GOP, picked them up and dusted them off, saying "there, there, we still want to work with you". He stood by when Rahm Emmanuel told Progressives (i.e. people supporting Obama) what they could do to themself. Sat out 2010, his self-proclaimed biggest mistake. Really? The election that turned the entire country, the court system and the gerrymandered political map over to Red State politics? The one he could have saved by campaigning and getting his supporters to the polls? Trump or no Trump, we wouldn't be in as bad shape if Barack hadn't chosen to go high when they went for his private parts.
7
@Martin Veintraub I’ve wrestled similarly with Obama’s record. While I must confess that I like the man—the rare intellectual in politics— his longing for comity across the aisle was naive and a strategic error. This is also a problem for Biden as he insists that genuine bipartisanship is still possible, even as the GOP is walking all over him and his family.
8
@Martin Veintraub Dear Mr. Veintraub:- Very well put. Thank you.
3
@Martin Veintraub
Perhaps you don't remember, but vulnerable Dems ran away from Obama in 2010. They didn't want him in their districts. The ACA was not yet in effect, and it was not broadly popular. That had a lot to do with relentless Republican assault funded by dark money from the Koch brothers and likeminded billionaires. Many Dems refused to defend it, and its popularity didn't really grow until Trump tried to take it away in 2017.
Perhaps Obama could have done better, but the alternatives were John McCain and then Mitt Romney. Things could have been far, far worse.
2
Sure, it is possible that Trump knows what he is doing, if one willingly suspends their disbelief.
1
Sooner or later - even if just of the sake of intellectual objectivity flying in the face of journalistic despotism - you are gonna have to admit he has done some good things. Otherwise you strand us in a world where Trump is on the level of some James Bond villain. This makes news outlets look absurd, and the hysteria it fosters diminishes us all.
4
Trump is carrying out Putin's orders to terminate the business and cultural partnership between the U.S. and China. As Trump was talking about extending the apropos-of-nothing trade war beyond the next election, Putin was meeting with Xi to sign an agreement promising closer relations and the possibility of a military alliance, per the South China Morning Post. Putin is isolating the U.S., stripping us of allies and trade partners, as he tightens his grip on oil and gas, extorting deals with Europe, hoarding gold and dumping dollars. Something wicked this way comes.
13
@Big Text: Putin and Xi are closer to each other on economic policy than they are to Trump.
Imagine liberty and equal protection, with global issues handled by global agreements. I can only imagine it as a distant promise long lost by central planning and authoritarianism. Trump is proof why limited government powers is better than losing your soul, your liberty, your intellect, your reason.
@David: That could happen by fractal self-assembly if only people could be persuaded to try it. Scale-independence is a very pervasive feature in nature's order.
Are Americans paying for the tariffs? Here's a single, but illuminative data point. I am an amatuer but serious woodworker. Shortly before the tariffs went into effect I decided to replace two machines, a jointer and a planer, which had been in my shop for almost 30 years. They were both made in North America and were originally purchased for around $1500. The replacement machine options I was looking at performed both functions and sold for $2800 - $3200. Three American companies offer these types of machines but they are all made in China or Tiawan with Chinese steel. I sold my old machines but before I ordered a new one the tariff went into effect and the prices jumped to $4200. I didn't bite but instead bought two older style machines out of existing inventory. The final irony of this is that the single part which made the new machine so much better than the old one is manufactured in this country! I doubt I was the only sale they didn't make.
15
@Michael Hechmer: Route 128 around Boston used to have a lot of small machine shops, but now only shops with CNC machining centers can compete with parts made in China and flown around the world.
3
Great feature! Thank you NYT, and Prof K!
7
Krugman is pivoting and trying to avoid being caught flat footed (as he did numerous time in the past) when the trade war is settled and the economy and stock market skyrocket ,and the american farmers finally have a level playing field
8
@Jon trump isn't going to "settle" the trade war because trump lives on uncertainty and the ability to punish others. By the time another president brings back some sanity to our trade negotiations, other countries will have other trading partners, because (as Krugman says) they now understand that the USA isn't a reliable partner. The farmers aren't going to see any "level playing field".
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@Jon
The economy will not "skyrocket." Trump repeatedly disparaged Obama during the campaign for sub-3% growth and yet he hasn't achieved 3% growth either. If you believe Trump's bombast (4%, 5% or maybe even 6% growth), you'll believe anything.
As for the stock market, Trump lags well behind Clinton and Obama, who are first and second among modern presidents in annualized stock gains. That is the case even though Trump's huge giveaway to corporations is causing federal deficits to soar.
If you want a handy reference, you can print this out:
Democrats: lower deficits, faster GDP growth, better income growth, faster job creation, better stock gains.
Republicans: worse on all counts.
You're welcome!
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@ California (not surprising) Jon. Amazing how the left can look at the world as it is and see a fantasy land of their own making. Horses are actually unicorns and 3.5% unemployment and all of the wages flowing into households is, in fact, recession. The logic is this: Trump is bad so an apparently great economy is bad too.
2
Thirty years ago, economists like Krugman claimed that free trade was going to make everyone richer. They were wrong. Free trade devastated the American heartland, as irreplaceable economic opportunities were shipped overseas. Middle class wages stagnated.
However, the New York City financial community benefited. Free trade meant enormous deficits, and those had to be financed by manufacturing financial claims on Americans and selling them to foreigners. I believe that the growth of the US financial sector is closely linked to the growth of the US trade deficit. So Krugman's friends benefited, even as middle class America lost.
Another loser was the global environment. The growth of the Chinese economy was not inevitable. No country has achieved rapid economic growth without access to the American market. Opening American markets to China lead to rapid coal fueled growth, and enormous growth in CO2 emissions. China now accounts for over 25% of emissions, and emits more than the US. Free trade is to blame.
The US trade deficit is not equally spread among our trading partners. A few Asian countries, led by the Chinese, are responsible for the bulk of it. These countries sell us several times more than they buy from us, sucking demand out of the US economy.
President Trump is the first president in a generation to stand up for US interests against China. His tariffs on China are the start of a long overdue correction.
12
Brought to you by the same person who agreed on our dismal economic course during the Obama years, and followed that with dire predictions of collapse when Trump was elected. So now we’re losing against China, despite the evidence worldwide of shrinkage, record unemployed, inflation. For credibility’s sake, maybe he should get one right before he continues his failing rant to get rid of Trump. No matter how much Krugman wants the economy to be tanking, 266,000 new jobs and a 50 year low unemployment rate make his opinions irrelevant.
10
@HENRY That "dismal economic course" pulled us out of the Bush recession, cut unemployment from 10% to 5%, tripled the stock market, and got health care to 10 of millions of Americans. trump has managed to not torpedo the beautiful economy he inherited, but he has quadrupled the yearly deficit to 1 TRILLION dollars a year. Who do you think will be paying that off? Sure won't be trump.
20
@HENRY
FYI - the unemployment rate is the same as it was 50 years ago. Since then, the unemployment rate has gone up 6.2% under Republican administrations and down 6.2% under Democratic administrations. So much for the crazy theory that Republican economics is superior.
".... our dismal economic course during the Obama years...."
Huh? Not too informed on economic matters, I see. So, is 2.9% growth dismal or great? I'm talking about GDP growth in 2018 (Trump's peak year) and 2015 (under Obama). You can't have it both ways. It can't be dismal under Obama but awesome under Trump. Also, you should know that more than 800,000 more jobs were created in Obama's last 34 months than were created in Trump's first 34 months, and that is before the pending 501,000 benchmarking adjustment (downward) is made, which will markedly reduce the number of jobs added so far under Trump.
7
@David Goldberg. Funny how Dem created deficits were just fine, necessary even.
In summary - Trump is a self-serving demigod who cares not a smidge about anything but himself. That being said - the US I’m confident will recover after he’s but a pile of odorous ash upon the American political narrative. And when the page turns - I’m hopeful that the US will soon return to the station it has maintained for generations: a beacon for stability and reason.
2
'the troubles of Europe, which have a lot to do with a drastic slowdown of population growth;' -
Paallleeese...
Are you saying we need to continue with a Ponzi scheme mode of growth to have decent economic life?
If population decreases - it will be cheaper for the next generation to find homes, and so forth. With fewer people the Gross domestic national production might go down but life quality will go way up.
Beyond that the best thing for the planet if you are worried about climate change is a reduction in the number of people having kids- a nice alternative to wars, deforestation, massive fleeing of countries because of over population
save the large families when we figure out to how to make the moon or mars habitable, then we can go there,
8
@Ben Ross
Capitalist economies do not handle declining population well. Japan is an excellent natural experiment. Life is not so good in Japan now. You make a valid point that we must drastically reduce human population if we are to confront global warming. I just want to add an observation that capitalist economies will suffer when we do it.
2
Do tariffs ever make sense given that the penalty is paid by us? The answer depends on the intended effect. If we're trying to punish China, then no, they don't work because we're punishing ourselves. We pay the tariff, not China. If we're trying to make trade fairer, so that China can't undersell US products by using government subsidies to drop their prices, then that could actually work. Take steel, for instance. If China is selling cheaper steel in America (which they have and Trump himself has purchased) and that steel is subsidized by the Chinese government to make it more appealing to American buyers, we could place tariffs on Chinese steel so that the price matches US steel prices. But that's not what's happening with Trump's tariffs. Trump doesn't want China to compete with America globally, which is insane. He doesn't want their economy to eclipse ours. Again, insane. They have 4 times as many people. Of course their economy will eclipse ours. So Trump is punishing them for not agreeing to slow their growth, which includes government investment in some Chinese industries, especially chip technology. But our government invests in our economy, too. Ever heard of quantitative easing? We have about $4 trillion of it on the books at the FED right now. It's free money thrown into our economy to do what? Help it grow. In conclusion, Trump's tariffs cost us money and drive China away from us. TPP was correct process to pursue. Trump shot that dead.
6
How does Ivana's multiple copywrites with China figure into Trump's manipulation of trade tariffs and trade decisions? How can you demonstrate that he is enriching himself/his family with his moves? There must be a way to show it, since he only acts in his own self-interest.
2
Meritocracy based on competition will lead human race ahead. Toward that end. what have the us done lately beside infighting among ourselves and running up the deficit?
Well, I'm one businessman who is very supportive of this ONE, and only one, area of Trump policy. Mr, Krugman hasn't liked anything Trump has done and has predicted that the tariffs would have destroyed the economy by now. Mr. Krugman is an economist and he has yet to get one economic prediction right during Trump's term. i know because I have made quite a bit of money taking the other side of every Krugman thesis. So I will ask one question. We all agree China is a problem. Name one thing that any other U.S. president has done to correct this problem. However, I can see why he wrote this piece. It's easier than admitting past mistakes and talking about things like recent employment and wage growth numbers.
8
@ThirdWay Name one? That's embarrassingly easy. The Trans Pacific Partnership, engineered by the Obama administration to stack together all of the Pacific trade participants in an organization to counterweight China's huge size. Ah, but it was an Obama administration idea, so Trump sank it.
7
@ThirdWay
"Name one thing that any other U.S. president has done to correct this problem."
The TPP.
3
@Flaminia Ah yes, the TPP. That’s the same agreement that Hillary Clinton said was “deeply flawed” and that she didn't support, right? It's interesting that no commenter has tried to defend Krugman's prediction record. Come on over to winning side. You can either believe him and virtue signal or take the other side and be successful. Your family will thank you if you choose the latter.
It is quite possible. The competition for best solution is nil as previous administrations either saw no problem or chose not to address it. In any case Trump must be doing *something* right, as to do *everything* wrong would require a level of competence he doesn’t possess.
2
Mysterious to me — Tariff politics seem to award Trump magical powers unavailable elsewhere in our constitutional system. For instance, he gets to impose tariffs which kill markets for American farmers, and then, at his own discretion, without congressional oversight or appropriation, buy off the farmers' outrage by handing them billions from the federal treasury. How does Trump get away with this?
16
@S.P. Good question. Laws governing tariffs give a president a lot of unilateral power in an area that you would expect legislation to control. The devil is in the details: tariff legislation gives a president power to act without consulting congress in exigent circumstances - emergencies, etc. And the president gets to decide what constitutes an emergency. The farm subsidy is murkier. I live in farm country, but I still do not know the legal basis Trump used to pay our farmers $25+ billion over two years.
3
@S.P. Dear S.P.:- Congress gave him those rights. If Congress had any spine, it would change the law. We have an imperial presidency because Congress has time and again abdicated its responsibilities.
3
I am from Canada. Let me say how impressed I am with the quality of the discussion here. It is so much more informative than any broadcast discussions and gives me hope that America will rise again as a country to emulate and admire.
34
China is thinking ahead, not just focusing on drama for the 2020 election. They have invested heavily in building infrastructure in South America and Africa, and building more seaports and airports. We may become isolated, not by choice but because we didn't plan ahead.
16
@Monica
China, Russia, and EU are building rails for container transportation by rail to Central Europe too. They talk big, transporting millions of containers by rail across the continents.
8
Is it possible that both China and Trump have already reached a deal and they are following a script? That is what I think is occurring. For Trump wants to get concessions but to recognize dictators. There are most likely hidden payoffs that China does not want to get involved with. Minor concessions will be made until September so Trump will gain popularity before the election. In the end a few will be paid to the Trump
Aka Gotti like crew.
2
Interesting discussion, but Dr. Krugman is ignoring the elephant in the room. Trump and his trade negotiators are insisting China dump their entire economic model. They recently shot back their system is "far superior" to ours.
If China was demanding we get rid of capitalism and adopt a system more favorable to them, would we knuckle under? At this point Trump may be calculating that having the China trade issue unresolved, but looking like he's still fighting, will help his re-election chances.
17
"We’re going to need an extended period — maybe three presidential elections in a row — that makes it clear that voters are insisting on politicians who care about the rule of law."
This is why electoral reform is critical once Dems regain control of American government--HB1 is a good start (held up in the Senate). History will show that Republican's unscrupulous 2010 Red Map Strategy, gerrymandering Congress itself, will have cost the country more than simply electing extremists that enabled Donald Trump. It has shown the world that we have not taken care of our electoral system when we allow the beneficiaries of elections, politicians, to also pick their voters and place them into manufactured districts.
To regain the trust of our allies we will have to prove that we understand what's required for fair elections with fair representation of non-partisan districts, so ideas matter rather than map makers. Only then can they begin to trust us--and the relationship--again.
17
Paul. Most economists that I know - and I know quite a few - do not know business people. They work with data. In your comments you imply that you know enough business people to draw a conclusion about their attitudes in general. That would really surprise me. Any data to back this (direct knowledge of the attitudes of actual business people) up, or is anecdotal.
4
And Trump would argue that record low unemployment and a record Dow Jones validates his trade policy with China and his general economic approach. In fact he is making a strong economy the primary reason for his re-election. Is he ahead of the economists on this one?
2
@Milton Lewis The president does not make the economy although his propaganda states that. Consumers are holding this economy together. When we decide or are forced to decide that we have enough stuff, it's not going to be pretty. Investors are also returning to risky investments like CDOs. I checked home foreclosures online in my county. It's a whopping number. I recommend that we all prepare for bad times before they occur and devastate us. The current boom has gone on for too long.
3
@Milton Lewis
The Trump people are manipulating the economy with super low-interest rates. Shareholders a hoarding the $$$ and people get low paying jobs not enough to feed a family. If they save a few $$$ for a rainy day the few $$ interest earned, if it is only $10.00, will be taxed.
2
@Milton Lewis
The economy is growing at 1.9% even after Trump doubled the deficit to a trillion a year.
1
Readers had questions: Other than tariffs, how could the United States encourage other countries to adopt better trade practices? How come ‘readers’ don’t ask: «how could other countries encourage the United States » to have a HealthCare system?
17
The Trump administration is setting up China as the enemy that Americans will unite against.
Jealousy of China's economic success and trade prowess, more than facts, prompts the allegations of China's transgressions.
Fact: Our ever-increasing trade balance with China and the world is due to the failure of US industry to produce the consumer goods that Americans choose to buy.
Fact: As China plans, invests in, and secures its trade infrastructure for the future, the US is busily shrinking its international markets by imposing political sanctions, impetuous tariffs, and market uncertainties.
Fact: Chinese enterprises sometime overlook the overly-generous patent terms and protections that impede innovation and free-market competition in the US. American consumers, but not American lawyers, would benefit from a reformation of the patent/copyright racket.
Fact: Chinese software and electronic products may, like Google, Microsoft, and Amazon products, spy on us to collect marketing data. Our personal trivia is not otherwise worth the trouble of translation and analysis.
Fact: China is attempting to hasten the integration of minority populations in Sinkiang by an intensive "re-education" program. Integration is preferable to the alternatives, such as maintaining an under-privileged, under-performing social class (Jim Crow method), or banishment to reservations (American Indian treatment) , or senseless mass incarceration of adults and children (the Trump impulse).
4
Some of these facts seem to be wishful thinking, or positive interpretation.
1
Prof. Krugman
Getting back to the American economy, it would be beneficial to hear from you about a couple of things :
1. In economics classes it was common to hear that full employment, as evidenced by large data sets and outlined in text books, was considered to have occurred when the unemployment levels hovered around 4-4.5%. With the unemployment levels ticking at around 3.5% for a couple, will that waterline change? And why is that the unemployment continues to tick down and PMI continues to stay above 50% despite trade wars and tariffs? I would like to assume that is a flowdown effect from the later part of the Obama years and does not have much to do with lowering the corporate taxes. Does the data bear that assumption?
2. As the common economic wisdom, right or wrong, goes, inflation should increase as unemployment decreases especially in a low interest rate environment. Why is that the inflation is still hovering around the targeted rates of 2-2.5%? Is it because real wages (despite higher employment rates) are still low and spending is therefore still depressed relative to employment and interest rates.
Thanks in advance for your responses.
15
Re reversing the damage, confidence/trust and predictability. I live in Paris and remember the reaction in the French press to W. Bush's win over Kerry in 2004. One analysis pointed out that since 25-33% of the US electorate are evangelicals, (i) what can we possible have in common with them, and (ii) how can a country where these evangelicals can determine electoral outcomes ever be a dependable ally. Even if the US returns to a Clinton-type Democrat, the author wrote, they could always go back to to evangelical Republicans. Which is what happened.
18
No. His trade policies are not a long term solution. China's massive belt and road initiative, investing in infrastructure in over 150 countries will expand China's economic influence worldwide and they won't need us. We had a plan, developed under the Obama Administration, to expand trade partners in Asia as an attempt to isolate China, but Trump scrapped it. The anti-globalization crowd doesn't get it.
27
@cindy The TPP would have opened up our American market to international arbitration. The last thing we need. The US already protects most of these Western Pacific Rim nations-i.e. defense shield. We have more than enough influence in the region to obtain economic direction. China practices "debt trap diplomacy". Once there is full awareness, the "Belt and Road' initiative will dissipate.
2
A broken clock is correct twice a day. Doesn't mean its a useful tool for measuring the days time, or being an on-time,and therefore reliable person.
Plenty of people, most of them a whole lot smarter than Trump - have been insisting on our being more forceful towards China.
But we all know the reasons, at least the main reasons why past Admins held back, and in some ways even ignored the problems. Its mainly the fault of the Corporate lobbying that we stay the course, and allow them (US Corps, etc) to keep using China's cheaper manufacturing so they could then bring those goods back to the US and elsewhere, and make huge amounts of profits, shelter those profits overseas, and when necessary contribute to various PACs, and also when necessary hire up the retiring Politicians and their staffers as their advisors and lobbyists.
In other words; it's about the money and protecting their production streams at all costs. No matter that these same Corps, and their lobbyists were helping write trade policies that willingly handed over proprietary information, and in some cases, allowed China to become the sole provider of highly sensitive technologies, that often our Gov't and Military relied on.
All the obvious variables Trump rails against, were always obvious. Its a rather normal thing for us. Ignore the smoke.
One other toxic variable existed. The unproven, mostly Conservative belief, that more trade would eventually break China and bring it into the Democratic fold.
4
I disagreed with Prof. Krugman decades ago when the Chinese trade deficit was under $100 billion. I disagree even more now that it is about $350 billion. We don't need a trade war with China. We need a trade divorce. The Chinese don't understand the word "fair".
4
@bullone The trade deficit has little to do with fairness. Americans want cheap and decent products and there are no other countries can replace China. If Americans are not willing to pay ~ 50% more for products, the trade deficit will continue.
4
I started importing Chinese glass in 1994, unique hand created products only made in China. No tariff, no quota. I spoke with many producers at the time, all working within the system. Many producing there for low cost, selling to many countries but the US, if they did, they paid and accounted for the tariff. When China was brought into the WTO Walmart and Pier One consumed most of the factory’s production and it completely limited my timing and fulfillment. They were producing items they had been producing in the Southeast US. They put factories in the US out of business with their shift for lower cost production and higher profit. Big companies benefitted from this the most and regions around the US lost jobs. I believe removing the tariff and quota system with China was careless and most surely was influence from the lobbyists on beltway in DC. We now have a generation of Top 100 CEOs that grew up focused on their China policy, Paul, these are the ones that will tell you tariffs hurt. Meanwhile JP Morgan is now 6th on the list of top 25 banks, China has top 4, Japan 5th. Our production and their partnership agreements created this situation, please recognize the danger here. It literally is now or never, the communist party will not relinquish control beyond the system that has brought them to their unprecedented growth, without a major push.
4
This is interesting. I would like some clarification on the Southern production side. I certainly remember the giant increase in relatively cheap consumer goods available for the first time for the average home makers, especially in Pottery Barn and the like. I do like hearing from small ( and medium and specialized) business individual experience on this issue. Thanks.
1
"All of the business people I know appreciate that Trump is standing up to China — the first president to do so — and they approve."
You must not know any farmers. Or business people who buy from China. Or even consumers, for that matter.
18
I am a PhD in Economics and founded a company that employs thousands. Trump has done everything to destroy both our economic engine and our global reputation. Almost 1,500 farmers have been driven out of business due to tariffs. Absolutely no jobs have been created by him; but he has taken credit for it. Even infrastructure lies dormant.
Untold thousands have died from gun violence while bills go unanswered by Trump and McConnell. He has gutted SNAP, a safety net for mother’s and our military.
And he has divided our nation more than any other time since the Civil War with bigotry and hate.
Anyone who is “undecided” with regard to his vote has bought the whole package and that package is reprehensible.
317
Before I retired, I worked in big banking as a systems project manager/programmer. In my position, I worked along side the bank's business people in bringing & retaining outside customers.
The one thing we as the bank was aware of is if you loose a customer, they never come back!
12
To answer your question, yes.
The Chinese have needed to be confronted for years, and they respect being confronted as a show of force, not being pussyfooted around like previous administrations did with them.
It is all about now having respect (and fear) of your adversary.
4
@stan
They don’t respect Trump. They run circles around him: he’s playing with crayons and coloring outside the lines, they’re constructing a long term empire.
True confrontation would use alliances; trade pacts; domestic investment, incentives, and tax laws; and trade courts to strike needed balance. Trump and his sycophants are just not that smart.
Trump is out of his league and losing his mental capacity, what little he had. Read his statement from the small business meeting this week. If that doesn’t frighten you, I’m at a loss for words.
@stan What evidence do you have for that?
Is it possible that Trump is on the right track on much more than China? In my humble opinion and with all due respect to Prof. Krugman, Trump certainly is on the right track on Ukraine compared to Obama who was on the wrong left track and certainly there is no justification for Trump's impeachment.
3
@Girish Kotwal
Your comments underscore what Prof. Krugman is answer is to the last question. Trump may be gone but Trumpism will at least last for three decades. And I hope that we will at least have three sensible Presidents whether Democrat or Republican.
19
@Girish Kotwal
There most certainly is justification for impeaching Trump. He was trying to extort a "favor" from Ukraine in order to rig the next election in his favor. He succeeded in inviting the Russians to help him win in 2016, but that was more passive. Trump's actions with regard to Ukraine amounted to bribery - official acts (releasing the aid and a White House meeting) in exchange for help against Biden. Don't be blinded by partisanship. If a Democrat was actively seeking to win a second straight election with foreign help, you would most certainly be apoplectic.
30
@Jon from Murrieta, CA. Let us whether unjustified partisan impeachment makes any difference in removing Trump from office or it just ensures his reelection. Majority matters only in electoral college. Experts in constitutional law brought by Nadler were biased Democrats and the distinguished Professor Dr. Turley was the only unbiased law Professor from Georgetown law school. Polls are just as useless today as they were in 2016 and in 2020, Trump will win not because he is on the right track for the country but because there is no suitable alternative in the current Democratic bunch. As a vote of no confidence in the presidential candidates running for the nomination of the Democratic party, Bloomberg has thrown his hat and he reinforced that by saying "Trump will eat these candidates alive" What polls of independent voters you are talking about the 2008 or 2016?
1
Is it possible that Trump is on the right track on much more than China? In my humble opinion and with all due respect to Prof. Krugman, Trump certainly is on the right track on Ukraine compared to Obama who was on the wrong left track and certainly there is no justification for Trump's impeachment.
2
@Girish Kotwal 500 pro's in the field constutional law disagree and majority of independent voters in the polls as well.
13
@Bill mac from Florida Majority matters only in electoral college. Experts in constitutional law brought by Nadler were biased Democrats and the distinguished Professor Dr. Turley was the only unbiased law Professor from Georgetown law school. Polls are just as useless today as they were in 2016 and in 2020, Trump will win not because he is on the right track for the country but because there is no suitable alternative in the current Democratic bunch. As a vote of no confidence in the presidential candidates running for the nomination of the Democratic party, Bloomberg has thrown his hat and he reinforced that by saying "Trump will eat these candidates alive" What polls of independent voters you are talking about the 2008 or 2016?
1
Do GOP voters and members of Congress care enough about the rule of law and the U.S. constitution to select leaders who will act to uphold the rule of law above personal interest?
I am concerned that this corruption is so pervasive in our system - from the NRA, to Trump's extortion of others (who feel obliged to stay at the Trump hotels to curry favor), to the GOP members who remain silent and will not speak the truth about Trump's behavior out of fear of losing a future lucrative job as a GOP lobbyist.
Will it take only a few election cycles to push back the forces of corruption? I'm concerned the effort to monetize eyeballs via outrage, fear, and shock will continue after Trump is gone.
11
Historically growing countries like China have stolen technology from more developed countries. We did it with Britain. And remember most of it can only be done with the consent of the companies involved. They will hand over technology to open markets and to make profits.
7
@Bill
Our greedy companies handed over our rare metal patents therefore we not longer produce rare metals which we were so dependent on. Also the latest in solar energy technology among other technologies.
They could still have made an excellent income and keep people employed here but could not resist the big bucks China was offering probably backed by Chinese government monetary support.
6
Dr. Krugman Every time job numbers are posted, a lot of people (including me) wonder if there is double count. More and more people have multiple gig jobs. How is someone who drives an Uber during the day and works as a bartender at night counted in our labor statistics?
29
@Anne That someone is counted as employed. They count people who are either working or not, not jobs whether filled or unfilled.
3
@Anne
Given the high unemployment the real mystery is why wages haven't risen accordingly.
Trump inherited a 4.7% unemployment rate and an expanding economy from Obama.
Obama inherited a 7.6% unemployment rate and a contracting economy from Bush.
Obama's economy is still chugging along and Trump has kept it going. A Democratic President will also do his or her best to keep it rolling along.
77
I am a PhD in Economics and founded a company that employs thousands. Trump has done everything to destroy both our economic engine and our global reputation. Almost 1,500 farmers have been driven out of business due to tariffs. Absolutely no jobs have been created by him; but he has taken credit for it. Even infrastructure lies dormant.
Untold thousands have died from gun violence while bills go unanswered by Trump and McConnell. He has gutted SNAP, a safety net for mother’s and our military.
And he has divided our nation more than any other time since the Civil War with bigotry and hate.
Anyone who is “undecided” with regard to his vote has bought the whole package and that package is reprehensible.
37
@Barbara T Presidents don't own or control a global economy. Even Trump's tariffs aren't enough to take it down a peg. Besides, US economic policy is mostly done by Congress, not the President, and our economy was mostly done by free people and free markets, less so these days as more and more is controlled by government.
@David This is naive. If you think Adam Smith was correct in 1776, and is still correct now because free people and free markets are the driving force, you're missing the point. The point is that there is less freedom and markets become unfree when there is corruption. Corruption is stronger than the government any day, any place, at any time. Just look at other powerful countries who failed.
12
How many hard-working American are free of worries that a minor mishap with a car will bring on a personal liquidity crisis?
18
@Steve Bolger
Trump supporters just want a president who reassures them that it's the fault of a racial or religious minority.
Once again, I agree with Krugman. It will take possibly three presidential elections and at least eight years of wise rule by Democrats to swing our country back to where it was before Trump.
Democrats need to win big in 2020 so as to flip the Senate as well as several more state legislatures and governorships. Then Democrats must not only undo gerrymandering and voting restrictions, but they must set into place mechanisms to make sure NO political party can ever gerrymander its way to power, and debilitating Party primaries, again.
Indeed, after a big win in 2020, Democrats must govern to become the party of Lincoln, "with malice for none and charity for all." Only through becoming sensitive to the issues that drove the religious right to seek protection from such as Trump can we find the middle ground we need to restore civil discourse and common cause.
When we are able to create and maintain balanced voting districts nationwide, then we will have moderate Republicans and Conservative Democrats once again, as we had most of our history before Karl Rove's brilliant but corrosive invention of "playing to the base."
We do need two parties, so that while one party is ascendant, the other party, laid low in turn, must strive to understand voters' concerns and strategize to win elections that replace incumbents made corrupt or stupid.
It is the election cycle--dominance by one party, and rebirth by the other--that is the essence of our America.
13
Wise, sane moral rule by either party would be acceptable. It is not Dem vs. Repub., though the Senate seems to have become in very short order an arm of the Executive Branch. It’s Americans vs. trumpites, decency vs, corruption. Most who do not actually give corruption a pass really do believe this, because nothing is more obvious. You believe the world is round or you don’t.
1
@Dennis: I think the "Federalist Society" judiciary will be a rear guard of state's rights for two or three decades.
I am reading with fear all the terrible things Trump is doing with out economy. But, just could not make sense of continued growth and the very low unemployment. I am sure Professor Krugman knows better?
4
@Ahmet Goksun Because Presidents have limited control over a global economy. But Trump has increased our taxes (tariffs), increased our deficits (including paying off those he harmed with tariffs), but even that is small potatoes compared to the wealth and power of free markets in a global economy. Government is so lucky capitalism bails it out from its tyrannical controls and dotard mistakes.
4
This is so irrational. Why do people give Trump credit for the things set in place before his arrival? We hear over and over again that the economy is doing well, but there are layers and layers of economic history here. Wish there were articles with graphs showing how the dominos fell in 2008 and how they rose thereafter. Without perspective nothing can be judged correctly, which is only to the benefit of those who could not withstand judgement. Not to the benefit of our country. Maybe all blame or credit regarding the economy is completely unknowable, I remember the FT saying so at the height of the mess a dacade ago.
4
@Ahmet Goksun: Imagine charging your own credit cards with no limit and forever to pay.
I just felt sad about the naive of the scholars like Paul. A simple fact is that the US has been on the falling path before Trump got to the power. How to make the American great again - these scholars got no foggy idea!
1
@steve zhang
First, look at the way Obama took over Bushie's Recession. It is a (hands mostly tied) start.
11
@jumblegym Bush 2 created the housing bubble and financial debt instruments nobody understood? Correlation is not causation.
2
Falling path. Sounds like not-shining path.
There is a great deal of unfinished business with China yet to be completed. Only time will tell if Trump’s instincts are correct.
Nevertheless, considering Kerry’s and Biden’s questionable history of lucrative gravy-trains for their sons’ benefit in our foreign affairs I do not trust them to advance the American taxpayer’s and consumer’s interests whatsoever.
2
@Charlie What was Biden’s “lucrative gravy train for his son?” That is a theory that has been debunked. There’s no evidence of that. None. But what of Jared and Ivanka? Do you find any nepotism there? What does Ivanka do exactly?
@Charlie
Hey, what about Jared and Ivanka. They are benefiting economically more than any other president's children. Disgraceful
@Charlie: When being openly dishonest is taken for honesty there is nothing left of integrity anywhere.
As I see it, Trump et al have a very rudimentary, even primitive, vision of the China problem. And no vision on how to address trade imbalances with allies. What he is doing with China has some positive measures but no coherence nor consistency. Much less long term strategy. It ends up corrupting and distorting results and benefitting no one.
3
@Tufik Habib: An extreme present hedonist doesn't sync well with someone else whose historical perspective stretches back to the dawn of urbanization.
As I see it, Trump et al have a very rudimentary, even primitive, vision of the China problem. And no vision on how to address trade imbalances with allies. What he is doing with China has some positive measures but no coherence nor consistency. Much less long term strategy. It ends up corrupting and distorting results and benefitting no one.
10
@Tufik Habib: Far be it from the US to consider what it might have done wrong to make it less hassle to ship things back and forth all over the Pacific because it is less costly than manufacturing in the 50 Balkan States of the US.
2
Perhaps it's especially difficult for a Nobel Prize winning professor to fully appreciate the importance of a very low unemployment rate to a lot of voters who are in much more insecure economic positions?
3
@David: Some of the fortunate never lose a sense of humility for having been singled out for some prize. There are 7000 one in a million talents in all human pursuits now.
1
@David
Just seeing a low unemployment rate is hardly the whole story. What are the jobs and how much do they pay? How many workers included in the employment figures were forced to stop looking for a good paying job and take a job that pays much less than their previous job? Has average household debt gone down? Has delinquency on loans gone down?
Do you really think your understanding of this is superior to Krugman's?
31
@David Regardless of whether Prof. Krugman is guilty of the bias you suggest (I'll call it "Ivory Tower Syndrome) the issue you raise is important. People who finally have jobs, or business, or opportunity, will be happy and are likely to vote for the incumbent.
I personally question the quality of the jobs, because I have worked in retail and have seen companies like Target systematically eliminate experienced full-time workers and replace them with part-time, entry level people (or self-checkouts) that pay limited or no benefits. That's but one example, but it's representative.
And I have my doubts as to how much credit the current administration deserves. You have to remember, we are still normalizing the effects of the great recession, i.e., we had a huge amount of catching up to do and are still doing it. And the root causes of that bust, with the collateralized mortgage securities, Lehman's collapse and the near-collapse of the monetary system (GE was down to 30 days operating capital and couldn't write new commercial paper!) lay with the Chicago School of Economics, Alan Greenspan, and Ayn Rand, warmly embraced by Republicans.
(To be fair, George Bush's administration and that of Barack Obama tackled solutions together, putting the needs of the nation foremost.)
But back to a point you made: Yes, jobs matter.
8
One thing is for certain: tariffs won't "bring back" manufacturing to the USA, which is why our "economy" will never recover to pre-1980's status, and will continue to rely upon the false lagging indicator of GDP based largely on consumer spending on stuff...made in China. Yes, there are small segments of manufacturing that continue lead and produce innovation in the US (e.g., Tesla), but for the most part the USA is headed down a long, slow economic spiral of unsustainability and vulnerability.
14
What steps would be wise to take, assuming you have an idea of such a path ahead?
Trump’s cockamamy policies will take a fair slice of time to reverse their momentum presuming the appreciation of new democratic leadership that emphasizes the rule law, fairness in international trade and a concentrated willful effort to reverse our global warming predicament. New tax law that will reasonably reapportion our national tax base to apply equitably to all to share our wealth with all groups of citizens. A tight grip on progressive tendencies should also be inculcated in our new process. Conservatism needs tacking back from it’s oppression of many citizens with reduced circumstances. Healthcare and family support are very important.
7
The roots of "Trumpism" have always been with us and probably always will be. If we're not to suffer a repeat we need to draw a line between free speech and propaganda. The modern communication environment is a gift to would be dictators. Not to mention politicians and other bad actors, who are stretching the truth to breaking point.
30
Tarrifs are the most effective "non-nuclear" way of dealing with China.
Tarrifs are still the most accepted way to engage in a trade conflict without de-facto declaring war. Anything seriously over and above tarrifs would invite serious thoughts of a hot war between the US and China.
I'm assuming the US business folks Dr. Krugman is speaking with have operations in both the US and China. In such a case, they're biased towards the larger potential market, China.
Interestingly, Chinese business leaders are far more patriotic and invested in the long-term benefits for China than Americans seem to be.
But back to the tarrifs issue: they're the best option amongst a basket of poor ones to deal with China.
The worst decision ever was including China in the WTO. But unfortunately that ship has sailed.
3
@JOHNNY CANUCK: By its sheer size and wealth, China enjoys economies of scale to meet its domestic demand such that additional production for export is done at the lowest marginal cost.
3
@JOHNNY CANUCK says who? You?
Krugman is saying that if the US wanted to use tariffs, it should have gotten Europe on board, but no, we'll use tariffs on anyone at anytime and for any reason. How dumb is that?
"Interestingly, Chinese business leaders are far more patriotic and invested in the long-term benefits for China than Americans seem to be. "
What's the dividing line between patriotism and brainwashing? Between an individual's love of country and the top-down obligation to do so?
The support still had by Trump in America indicates of course that a very large percentage of Americans are clueless about public affairs and don't really care. But another factor to consider is that the establishment of both Republicans and Democrats (I don't mean The Deep State) have never done a very good job in recent decades of making the public aware of world wide and domestic economic issues, the role of scientific and technological progress, the opportunities and fears the future holds for us all. Individuals have done so, men in business, science and technology, but not our political leaders, not even our more or less good presidents: not Obama, not George Bush, not Clinton. Trump instructs the nation in the absence of good instruction. It's like having the town drunk run the schools.
10
Would Trump have been better to take a different approach： assembling WTO member states, and EU leaders, to work together with China to engage in fair trade practices? China, like Germany (and others) have an industrial policy. We don't.
Should this fact be addressed in discussions of subsidies and fair trade?
3
China figured out years ago that feeding people required industrial output and efficiency. Both improve every year and Poverty will disappear in China in the foreseeable future. Education is picking up speed in numbers and quality. Scientific publishing improves every year and is beginning to look very promising. The number of engineers and scientist are exponentially increasing at breakneck speed and newer scientist resemble American and European graduates. Soon however, and by the simplicity of numbers, they will have giant armies of STEM professional. Time is what Bejing is after and they already look over the horizon and see dummy Brexit and dummy Trump dystopia. They remain true and steady with citizenry alignment and enormous political will.
10
I am tired of the caterwauling over who actually winds up paying the cost of Trump's tariffs. If China is dodging the cost of Trump's tariffs, why is it holding up even a modest initial trade deal over them? If Krugman is right, China should be crying all the way to the bank thanks to Trump's tariffs. But no, it has not budged an inch.
Remember that Trump wants to keep the option of imposing tariffs for the excellent reason that China has failed to keep its past promises. If Trump's tariffs are an empty threat, why is China so insistent on barring tariffs in the future?
3
@Ian Maitland: Trump argues that China pays his tariffs by devaluing its currency to prevent the prices of its products to rise in the US.
@Ian Maitland
You may be tired of the caterwauling of who winds up paying for trump's tariffs but I know that his China tariffs are taxes that come home to us, the American taxpayer to be paid. On top of those tariff taxes are also the bail out of American farmers again being paid for by the American taxpayer. Trump is using our tax dollars in order to bribe our farmers to vote for him in 2020. To me that is just as bad as trump blackmailing Zelensky over aid to Ukraine. The Ukraine monies were voted bipartisanly to aid in Ukraine's struggle against Russian aggression. What I'm tired of is all of trump's caterwauling.
28
@Steve & kensbluck:
But neither of you explain why China is digging in its heels over Trump's tariffs if it is only US consumers that are picking up the tab for them.
I admit that I am no supporter or fan of Donald Trump -- far from it. But I'm willing to give credit where credit is due and yes, it's about time someone brought it home to the Chinese when it comes to their patently unfair trading practices and outright theft of American cyber intelligence.
That said, tariffs should be used as a means to an end and not the end itself.
It remains to be seen if Trump has gotten that far.
7
I don’t care what numbers Professor Krugman can point at. American consumers are NOT going to bare the full cost of the tariffs. Big retailers are going to squeeze wholesalers to keep their price points. And wholesalers are going to squeeze their Chinese suppliers to cut down their margins. That’s basic economics. Chinese businesses are definitely going to suffer and put pressure on Beijing- which is the point.
2
@Greg Economics is in principle a social science, and that second word means that it is supposed to be based on evidence, not on axioms we are not allowed to question. That makes insisting, against the evidence of the actual numbers, that this or that simply must happen because it simply must happen an example of basic theology, not of basic economics.
14
@Greg Greg, maybe not consumers but how about the farmers who are losing their market for many products they have been exporting to China.
The Trump tariffs caused China to retaliate by making US agricultural products expensive so China just turned to other countries more then happy to sell stuff to China at a lower prices.
This is a direct result of Trump's tariffs.
4
@Kathleen Martin
The WSJ has been reporting on this for months. But then...that publication actually cares about news...not Trump hatred all the time.
What doesn't get reported, and what Prof Krugman ignores, is that the tariffs (or threat of) on China, has a caused a massive migration of manufacturing out of China, specially in network/electronics.
It is true that the move has not been back to the USA. It has been to Taiwan, Vietnam, Indonesia and other, mostly Asian, counties. But that has made the US meaningfully less dependent on China. And that is good for our global security, and will make it easier for future presidents to stand up to China.
President Trump has shown that we can take on China without noticeable adverse impacts to American consumers and our economy. Up until now every one, though they disliked China's policies, had been afraid to stand up to then.
On the subject of uncertainty, uncertainty is good. We want BMW to be unsure, when they build their next factory, if tariffs may come, and they should build it in America to be on the safe side. We want Apple to be unsure if they should continue to make 100% of iPhones in China.
6
The one positive I see in Trump's trade war is that companies are moving out of china to other asian countries like Thailand and the Philippines. Although this is entirely accidental, as Trump says he wanted them to move back to the U.S., this will weaken our dependence on China trade. We will all pay the price, but this is at least something.
1
See what I don't get is this - China is heavily automating its factories but still manages to employ people. How does that work? Is it low wages?
From my perspective as an American businessman that employees over 500 people both in the United States and in India, I see that the U.S. has a structural cost issue.
Some of this is a consequence of exchange rates, but some is also related to policy. The fact that I have to pay for people's health insurance is insane. Ideally the government pays for health insurance based on personal taxes (progressive of course) or taxes on business unrelated to employment.
The businesses can hire based on salary cost alone. A much more comparable cost structure to our overseas competitors.
The single simplest thing that we could do to improve competitiveness is to transfer health care cost structure away from business.
Mike
39
@Chris
"The single simplest thing that we could do to improve competitiveness is to transfer health care cost structure away from business."
And the only way you can do that is to require the businesses to pay wages sufficient to allow the workers to cover their own health care costs.
If that's just too drastic a move for the business, than that business will need to agree to pay a tax rate that will allow the government to subsidize the workers' healthcare expenses.
Either way, a good faith contract for good work means that the worker's labor and the business' profits need to support one another: i.e. The life of the business for the life of the employee. No amount of verbal juggling can escape that bond and maintain success in a stable country.
7
There is another option - single pay universal health care. It works in other western democracies.
11
@Chris
No matter how you twist it, healthcare costs are part of wage costs, if the employer does not pay then the wages must be increased so the employee can pay the premiums out of pocket, pay via taxes, the same, the employee needs an increase to pay out of his paycheck, you can't just pocket the costs and move them on the backs of your employees. Health care benefits are earned income.
2
Sensible rule number one for a nation like the US....
NEVER, EVER, let a real estate investor, particularly a very self serving one, drive economic and trade considerations for the nation where the life blood is not real estate.. but actual goods and services trade.
24
WE need to become more efficient, better manufacturing etc. to compete. Both China and US using more AI and robots to increase productivity.This means less jobs.This must be acknowledged and policy to help distribute the wealth not hoard it by a few.
Rather then blame China we need to look at ourselves and see how we can be more competitive.
China has 2 billion people, we have 400 million and we should expect they will accumulate more of the wealth by sheer numbers.Its a fact.
2
Krugman was correct, for trump tariffs are his way of grabbing control without ever being challenged to even have a position.
Lying, bullying, threatening, making vile person attacks and reneging on agreements are not successful negotiation tactics.
Any successful negotiating with China will take continuous negotiations, agreements and adjustments with different presidents each building solid steps for the next as well as the world will have to agree to a set of international business laws.
This requires leadership and the ability to stand on honesty , integrity and positively influence other countries to agree to a common position. trump is the opposite of these.
Furthermore successful negotiators are informed, knowledgable people who can express themselves in complex matters and understand the positions of others. trump has neither of these qualities.
If trump’s decades of history in what he calls “business” which is using law to cheat people, or his obvious inability to sit across from another person and have meaningful communication —instead of ranting at them and acting like a three year old— are not enough, successful strong negotiators do not make public threats about negotiation terms, if they are strong negotiators they make them in private because ether understand power relationships.
trump makes threats using positions in public which tells you he is only attempting to influence his fans. The trump tariffs are solely for his personal agenda.
13
These answers by Krugman and all his other columns are indicators that, just like the three "academics" who testified for the House impeachment hearings, he hates Trump personally. The difference is that for years Krugman has found NOTHING positive to say about Trump or his policies. If you listen to Krugman you'd think we'd be in a depression or recession by now. The reality? We have some of the best economic measures in decades but Krugman can't bring himself to even point those out. . .and if he did he'd spin them negatively. But what else would you expect from a supposedly expert economist who famously predicted the economy would tank when Trump took office?
3
"MD, Paris: All of the business people I know appreciate that Trump is standing up to China — the first president to do so — and they approve....
Krugman: None of the businesspeople I know think that."
I think this is the most interesting Q&A because it highlights a real divide in the business community, between the isolationists (let's just make everything in America) and globalists (let's make and sell things everywhere).
The largest market for GM is China, and most of the parts are made there. But alot of the design of vehicles, factories and processes happens here in the US, for all GM markets. And stuff developed in China like parts for EVs, might be assembled here one day as well.
Shutting off this interchange, even when justified, has costs to the US economy, workers and investors. When Google was forced to stop selling its popular Android mobile OS to Huawei for the huge China mobile market, Huawei quickly introduced their own OS, a huge loss for Google.
Frankly, China is unlikely to finalize any substantive trade agreements with the US larger than a hill of beans, because exports to the US represent only 3% or 4% of their economy. The stronger tactic would have been an agreement with many other countries impacting a much larger share of China's exports.
Thst was called TPP and Trump killed it, so now we are on the outside looking in, while all of the other countries finalized the TPP Obama originally led.
Sad.
30
Krugman is just making stuff up. Here he tells Megan Dissly that "Trump isn’t taking on China over [intellectual property] ..."
But one of Krugman's own sources contradicts that claim. The linkage between Trump's tariffs and China's failure to respect intellectual property is unmistakable. Here is LibertyStreetEconomics.
"In August 2017, the Office of the U.S. Trade Representative (USTR) announced that it had launched an investigation to determine whether Chinese policies related to technology transfer and intellectual property were actionable under the Trade Act of 1974. In April 2018, USTR announced its finding that these policies 'are unreasonable or discriminatory and burden or restrict U.S. commerce.' A number of trade actions against Chinese goods have now been announced. The first tariff increase came in July 2018, and was followed by a sequence of further hikes as the trade dispute continued. By June 2019, according to the USTR estimate, some $250 billion in Chinese goods faced an additional tariff of 25 percent. Another round of sharp increases was announced in August but these moves have been largely postponed. However, an estimated $120 billion in additional goods were hit with a tariff hike of 15 percent in September."
5
Even a broken clock occasionally shows the right time.
China is an authoritarian, oppressive state with a dismal record on human rights.
Tariffs are just a start. Our avowed policy should be to not allow trade with an oppressive, hostile foreign power. Why are we funding our enemy?
65
@Celeste
And a mercantilist economy, to boot, that actively restricts imports and has an industrial policy that is export-led.
7
@Celeste Because it would be much worse for everyone if we decided to take a hostile position. We are both making money. We are both benefiting. I shudder to think what happens when we that's no longer the case.
6
@Celeste
For a number of reasons. Trade is a powerful form of diplomacy. We make money, China makes money; we don't go to war. Also we need each other.
We can't divide the world up into black and white zones anymore. It's absurd.
What we CAN do though is make alliances, like Obama did with the TPP. Of course that was too logical.
17
This was interesting. I wonder how much education plays into all of this. It seems to me that if economic movers and shakers read Krugman, the economy would be a lot better off. But what percentage of the American population knows an iota about economics? Trump went to Wharton, and used to be friendly toward Democrats, but even he knows nothing. The idea that individuals are rational economic actors has been eviscerated. I think we need more education about a whole host of things––75 percent of Americans can't name the three branches of government. Some rich people have to step up to educate the American people through the means they usually acquire information. Seventy percent are on Facebook. How about an educational campaign for the good of the country?
4
I say this as a person who is extremely strongly opposed to Trump: the American unemployment rate is historically very low right now
and that is extremely important to millions of Americans who do not have tenure and depend upon a job to put food on the table.
I wish Krugman would address that issue in his articles.
4
@David
Most American's have enough self respect to call themselves employed - no matter how many low paying hustles they have to stitch together in order to survive.
We all adapt.
But the general trend is a steady drop in wages, and a slow rise in the cost of living.
All those people in leadership positions would be wise to address this now. Sooner or later, their competence at sustaining their activities' and business' will be on the line, and avoiding a drastic haircut involves steady visits to the barber.
1
Why sure. It’s also possible that I will win the Powerball Jackpot tonight, and will be able to finally leave Kansas, donate my House to the Humane Society, and our Vehicles, and most furnishings. Even most of my 2000 Books. In other words, be out of here the same week I get the check, and move to a fabulous Condo in downtown Seattle. Of course it’s POSSIBLE, especially since tomorrow is my Birthday.
But, it ain’t gonna happen. And on the rare occasions that HE does something useful, worthwhile or logical, it’s entirely accidental. It’s like a Comet. Rare, incidental and NOT to be counted upon, with extremely rare exceptions.
80
Happy Birthday, Phyliss. I really hope you win the jackpot tonight.
7
@Phyliss Dalmatian
Here's to you Phyliss from a former Wichitan. I left Kansas at age 17 and never looked back. But Phyliss look on the bright side, you just might win Powerball and t-Rump hopefully will be gone soon in 2020. I live in both New York and Florida. We have loathed him in New York for the last 40 years and are glad to see his back side. As a Floridian, woe to me for now once again I will have him as a neighbor. Emphasis is on the NEIGH to this so called stable genius. Happy Birthday.
13
I’m an Ohio Native, Kansas was like a different Planet to me, in many ways. But, I did choose to move here, for the Husbands Career. We will be retiring fairly soon, and moving to Florida to care for my Parents. I’ll be the new “ Florida Woman “. But Trump will always be the ultimate “ Florida Man “.
Seriously.
4
Dr. Krugman (and hi from a former GSB student), please say more about "maybe, shifts in United States business ... have moved us toward technology companies that don’t need to do a lot of physical investment."
Intuitively, this makes sense: If the value-added components of a product come from intellectual activity instead of manufactured goods, the added "pay" will flow there, in salaries for the information worker, vs to the manufacturers of input products. This would mean fewer economic ripple effects for IT than traditional heavy and light manufacturing - at least in the traditional sense. Instead, ripple effects come from higher salaries and equity stakes (stock market) of IT workers and founders, resulting in, among other things, skyrocketing real estate values as cities like San Francisco created more (high-paying) jobs than apartments and houses.
These same effects were probably seen earlier in the growth of international financial centers like New York, London and central Hong Kong, resulting in luxury office and residential real estate, supportive services, entertainment, travel, and consumption. These service businesses also create value and jobs at the firms that support them: lawyers, accountants, software services. But all those would also have been provided to HQs of traditional manufacturing firms - in addition to investment in heavy equipment, mechanization, raw materials, and component parts.
@Kim
The US is a post-industrial economy. It is now largely a services driven economy, with strong hooks into other nations economies for import of goods from other nations. Like it or not.. this is reality. And.. after 30 years of completely re-engineering their economy (with a lot of self-intested businesses in the US supporting and helping) they are now moving to a more balanced economy... blending both manufacturing and services in their GDP. In this regard, Trump is about one to two decades late to the game.. because now low cost, high volume manufacturing is increasingly leaving China and setting up in Vietnam and a handful of other Asian nations.
There are exceptions of course (like big auto and big machinery), but even these are declining in the US as US companies simply move and build factories inside other nations (particularly in Asia) and Trumps tariff approach is simply accelerating corporations pulling the trigger to do so.
5
@Chuck thanks, yes, I agree. I should have been more clear: I'm not trying to turn back the clock. My point was that while we've seen this move from industrialization to a services economy happening, we haven't heard much about research and data showing precisely how the flows of capital from profits and value-adds has changed. If we understand that shift, in numbers, better, it will help illuminate possible tax, policy and labor changes -- and do so from a perspective of data, not intuition and observation.
Dr. Krugman's full quote, which I didn't include, was that this could be contributing to an economic slowdown -- which I took to mean that a dollar benefit to the economy from an IT or service firm is actually not as great as a dollar earned from manufacturing. If so, that's the first time I've heard this, and it means that our GDP calculation is inaccurate. I'd like to know more.
2
Time to get out of the ivory tower: tariffs are working! I can report that many suppliers cut their selling prices to offset 10% of the impact of the tariffs to remain competitive, helped by the RMB edging up to about 7 per USD -- so "China has been paying for it" short-term while much manufacturing is shifting to the Philippines, Vietnam, etc. This pain caused to China is the only way to get that country's attention, letting us take a shot a reversing IT theft, mandated Chinese business partners, forced technology transfers, and closed business sectors. Any pain caused to the USA as a result of tariffs is preferable to being nibbled to death over the next 20 years, as has been the case for the last 20. Trump's instincts are right on target, and his alleged motivations, so important to are irrelevant. In southeast Michigan manufacturing operations are running full-blast, help-wanted signs for toolmakers, die-setters, etc. are everywhere, industrial real estate is hard to find, all the No Help Wanted and For Sale signs of the Obama and pre-Obama days are gone.
8
@rick12346
Time to take off the rose colored Trump branded glasses! All long term economic trend lines show that what we are seeing are in the trend lines that started in the Obama era. The best you can say is that, so far, Trump hasn't managed to cause much damage.
That is a lesson in just how little the POTUS has to do with the economy in general. The reason Obama was successful whereas Trump has been less so has to do with hiring the "best people". Obama brought in qualified smart people while Trump's cadre is increasingly in jail or similarly disgraced.
Mr Krugman is making a case that a very specific thing that Trump controls, tariffs, is NOT having positive results. Your anecdotes do not disprove his studied approach to reality.
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@rick12346
You are entitled to your opinion, but that does not make it a fact.
Many suppliers of goods and services in the US ARE NOT absorbing increasingly high tariffs and are passing them on to consumers... mainly because Trump has now rasied them to levels that can actually drive said companies out of business if it becomes prolonged.
And that is just one side of the tariff issue.. because when you tariff a nation.. they will tariff right back.. toe to toe.. and in the case of China.. this has literally gutted farmers.. who spend the last couple of decades carefully building and expanding trade in their farm goods deeply into Chinese markets. The types of prodcuts that are NOT in high demand from US consumers.... like soybeans as just example... a highly profitable crop with a huge demand in China. Now... soybeans are rotting on the land, or in storage because they are unable to sell them.
34
Yeah we will put your observations ahead of logic reason and data.
Thanks for that.
Thank you, Prof. Krugman, for taking the time to respond to questions. It's a huge gift to us all.
40
I should like to know if the trump admin has been selling data from our agencies, such as Department of Agriculture, through his cabinet members, who make money and the data is used to increase insurance prices to farmers?
1
The 'right track'. Depends on how that is defined. They right track for Trump is minute to minute according to how any decision benefits him, and him alone.
My 12 yr old granddaughter said it clearly this morning: "new doesn't always mean good, look at our new president."
3
Trump always needsa boogey man he can lift up and then condemn in front of his supporters.
As such, it is not actually in his personal interests to revolve trade issues with China. The exact opposite is true, because in China... Trump sees a boogey man that is already largely disliked and not trusted by misinformed Americans who live for an perpetual US vs THEM mind set.
The only thing that will drive Trump to revolve something like this is when he sees a clear and unambiguous way to claim it as a personal victory. If you have followed Trump over the years in the press.. this is exatly who he is and how he behaves.
3
I have a friend who owns a small, specialized manufacturing company in Ohio. He tells me that, when he goes to recruit workers for the factory floor, maybe 1 or 2 out of 20 applicants are worthy of considering for hire. He typically will hire someone, pay them $20/hour and if they are good workers, find that they leave in 6-9 months, when they are able to secure better pay elsewhere.
I do believe that the Chinese need to crack down on intellectual property theft, but until we address the problems in our own workforce, blaming others will just forestall doing the things necessary to improve our competitive standing in the world.
12
@ejr1953
"He typically will hire someone, pay them $20/hour and if they are good workers, find that they leave in 6-9 months, when they are able to secure better pay elsewhere."
This is interesting, but I don't know what it says.
If good workers can make more than $20/hr, why doesn't he pay more to retain them?
If other employers can pay that, but he can't, he is either keeping too much of the profits for himself or his business is basically not a sound one.
7
Trump left unbridled will continue to do as Trump has done, and we must remember that economic statistics report what has happened and not what is going to happen. Consider Former Fed Chair Janet Yellen's comments of 21 NOV 2019 when she said "the U.S. economy is in “excellent” shape but facing several risks", and it is the words of competent economists that we should heed.
5
I heard that Trump manipulates the markets so that his friends can make a lot of money (he intimates them first of course), which they then funnel into his campaign. Is that true? Why else would he go back and forth on his China comments?
12
@SP
Cannot be proven, but probably true.
Though I doubt he does it on his own... but rather since we know he responds to any loyalist who whispers in his ear... it is more likely his friends are telling him what actions to take and since it was their idea, they know it before the public and can quietly cash in behind the scenes.
This definitely needs a lot more scrutiny.
5
@Chuck True. That would be safer for him. However, he uses his personal phone, so the conversation need not be a stealth one...All he has to say is that he needs their "support" for reelection, then later in the chat say that "there will be some good news on China soon"... That is enough for them to make millions and pledge "support". His campaign coffers have been brimming full lately, it was reported...
2
The entire paradigm of politics no longer has any basis in rational analysis. In policy most americans are benignly liberal : want some help ,want a fair playing field ,want good education , fair taxes etc. but those are not what seem to drive people at the polls . It is how they FEEL about themselves . Am I disparaged -- is a someone else getting more then me -- I FEEL left out. So Trump comes along and fulfills all these fantasies . He is the symptom of long festering resentments felt by many who believe others think they are better than they. It is immature yes, but we are an immature nation who has never really suffered as a nation-- we have never been invaded -- we have never been bombed ( why 911 shocked us so) . Unfortunately for the kind of change to happen that Krugman speaks of EVERYONE has to suffer; that's what happened in the depression and we got the New Deal and Great Society. Until then we will be destroyed by a thousand little cuts .
5
I don’t know, we had a really nasty civil war. I think that counts as suffering.
It is interesting to read this piece after having just read the opinion column on John Maynard Keynes. Trump is trying to run foreign policy on the cheap and doing enormous damage to our system of alliances. (See the Secretary Mattis resignation.) If this tilt towards isolationism continues, I fear for the stability of the world.
26
If Mr. Trump really is getting income from bookings at his hotels by people doing business with the US government, I would think this would be as clear a case of corruption as could be made.
Would it not be a strong article of impeachment?
How could this sort of graft be exposed?
Are there not reporters digging around after this?
7
The plurality that elected Trump has destroyed the hopes of most of the world, including the United States, that we can be counted on to keep our word.
11
@Cassandra
Clinton won the plurality of votes 48.5% to 46.4%. Trump won the electoral college because of less than 100,000 votes cast in three swing states.
I totally agree that Trump's winning the presidency and his subsequent behavior makes it hard for the rest of the world to believe we will keep our word.
2
@Cassandra
"The plurality that elected Trump..." was in the Electoral College.
Say what you want about Trump and more than likely I will agree, but the most liberal Democrat must give him credit for confronting China's unfair trade practices, which both Democratic and Republican administrations failed to do. Whether a trade deal happens under his watch or a Democrat China's unfair trade practices will be addressed. At the same time we see more and more manufacturers moving out of China, which Trump needs to be credited for
4
@Vincent my understanding is that Obama's efforts with TTP were to address the very same issues. Don't be surprised if Mr. Trump's final agreements end up looking a lot like what has already been achieved through TTP.
9
Go back a few decades to when China opened up to western manufacturing and manufacturing companies couldn’t ditch their skilled and dedicated employees fast enough to move their factories to low wage China. Governments didn’t lift a finger to stop them and seemed content to watch desperate workers adjust to zero hours, low wage jobs.
Now these same companies and governments are crying foul over unbalanced trade deficits. What did they think would be the results?
65
@MJM
Companies do not care squat about trade imbalances for a nation. They only care if they personally lose trade opportunity.. which is why most corporations in the US strongly prefer free trade with as few constraints as possible. THAT by the way.. used to be the Republicans key point on trade and the economy as well.. until Trump.
4
Trump tweeted a criticism of the World Bank yesterday for giving China another large loan. China lends out money to developing countries in which it is actively involved (Africa, other Asian nations, South America).
Trying to cut off sources of funding for China, this time through scolding the World Bank publicly, is no way to run policy. We have appointed staff at the World Bank. We have a trade office. We have a Department of State. Twitter is not a part of any of the agencies we have at our disposal and diplomacy and trade bargaining are best done on friendly terms.
Trump, instead of using the tools and people who were confirmed by the Senate to run policy and negotiate terms, prefers to use social media to shame counterparts into submission. This hurts us in many ways, especially over the long term. Can anyone imagine that European and Chinese leaders are weary of the American public? We elected a Trump. Might we do it again? Can we be trusted after Trump?
China, no doubt, needs to be redirected. Pushing China against the wall isn't the way to do it. Trump's tariffs have cost us billions in lost trade and paying farmers bribes from the special farm bank to compensate them for lost sales has helped Trump by reducing the level of outcry and pacifying the largest farmers. But they've not been compensated for losing out to other nations (Brazil is one) that have taken their place as suppliers of soy and other agricultural products.
Congress needs to step in.
23
If there was a Nobel Prize for political and economic insight and communication, I think Krugman would highly considered for it.
Continuity means a lot, and for example, had the American voters supported the real potential of Obama in 2010 and given him the congressional support he needed to accomplish anything, 2016 would have flown right in behind him. With that, so much in international progress in climate and arms would've been achieved.
We blew it in 2010 .. and have collected the consequential herk-jerky results.
43
@Feldman it is tragic....
If our genius President is on the right track with China it’s bound to be a mistake. His motivation with China, as with everything else, is to appeal to his base and boost his popularity with the credulous. Anything else is a means to that end, as he learned when scrambling for ratings for his tv show.
7
Trump is confronting China as a grade-school bully. All bluster, no action and backs down at the first sign of resistance. We need smart policies. More realpolitik, less noise. More George Kennan, less Steve Bannon. God — I thought I’d never say this — but I miss Richard Nixon in this instance.
163
@Logan Anderson
It’s true, Nixon was one of our strongest Presidents. Trump ain’t great. But he’s better than Obama the pushover, Hillary, or anyone else the Democrats or Republicans have to offer.
9
@Logan Anderson In October 2016 I told my friends that if Nixon were to rise from the dead, I'd vote for him -- though I sure didn't when he was alive. I stand by my words today.
18
Hey, I’ve been missing Nixon for literally years. And if THAT doesn’t describe this regime adequately, nothing will.
Seriously.
13
As with many other policies of this prez, the biggest cost to his actions on tariffs are to be measured in the loss of trust in the U.S. to act equitably - and legally - inside a framework which the U.S. itself in large part created, or to jettison that framework when some Jabberwock comes along who doesn't like strictures.
The refusal of Congress to assert its primacy over trade policy, remaining supine to the 'national emergency' claims of the White House, will have 'unintended consequences' lasting far longer than this kakistocracy (hat tip to Dr. K.).
81
If Trump is doing something and Democrats ignored or failed to do something about the issue, all Democrats know that Trump is wrong.
2
@John Bowman, and all Republicans insist he's right, even when it's glaringly obvious he isn't.
Withdrawing from the TPP may come to be seen as a turning point in history when the US began ceding a leadership role in the world. If Trump hadn't alienated all our allies, he could be speaking for two-thirds of the world economy in negotiations with China instead of our 20%. I farm, so Donald keep sending me my soybean checks.
152
@LewisPG "Withdrawing from the TPP... a turning point in history when the US began ceding a leadership role in the world...."
I've wondered, would Sanders or lead us down the same path? And where/how do we find the right balance between protecting American interests and being part of the world business community?
4
We had so much hard fought successes in TPP that we negotiated for our benefit. Silly that we walked away from it. It was the mechanism to marginalize China by aligning with many countries that are being bullied by China. This one event will cause a dramatic reduction in our soft power for years to come.
20
@Joe I think the point by Lewis and Krugman both is that China was indeed a bad player, but presenting them with a united front would be way more effective than going it alone. It seems that trump would rather pick fights with absolutely every other county, friend and foe alike, at the same time. Consensus building would have been a much more effective way to go, but that's not the way of the bully.
6
The Chinese deserve to feel the pressure for their approach to intellectual property, subsidizing industries, workers' rights, and environmental standards, but Trump's disorganized and unpredictable "strategy" is not getting results. The uncertainty does nothing to bolster the confidence of US businesses to invest in domestic production.
They may not like the trade war, but I think that the Chinese are willing to wait out Trump.
Their system is better-equipped to ride out a slump than ours, where elected officials tend to be ousted when the economy falters.
58
Prof. Krugman is enabling Trumpism in two ways.
First, he (perhaps inadvertently) made no reference to the multilateral process (WTO etc.) when he said that he is in favor, in some circumstances, of using import tariffs as negotiating tools.
Second, he wants to make judgments about government exchange-rate policy that, again, are not consistent with the (grudging) tolerance of the multilateral system (the IMF) for different policies.
These are openings for Pres. Trump to use his personal discretion.
3
@Joe Ryan, "discretion"??
Trump has a “track” on China? Which one is it? Increase tariffs? Threaten to increase tariffs? Delay increases in tariffs? Negotiate in bad faith, offer a deal and then back off? Call China the enemy and call their leaders childish names? Say China wants to make a deal, but he wants a better one? Say China is begging for a deal, and then say he can wait until after the election, a whole year, while farmers’ suffer, American consumers pay higher costs for goods, and American taxpayers foot the bill for his farmer welfare program?
Trump has no track, he is completely off the rails.
304
@Troy
His track is.. as always.. all about marketing Trump.
When/if trade issues get toxic enough that he looks bad to a wide range of voters (excluding his locked in base) he will quickly settle, and for less then what would be good for the US, or achievable with real diplomatic trade discussion based outcomes ... because it's always about Trump and Trump looking good.
34
@Troy From what I see this "farmer welfare' Only helps rich people and corporate farmers. These are basically investors not actual farmers.
Farmers in my view Own or lease the land and are active in the day to day farming of the land, not just sitting in a city office counting the dollars come in. And now it's tax money. Our money.
23
@Fourteen14 -- You are talking about combat, not trade systems. The difference is that in the former you expect to encounter the other guy only once. If maximizing your advantage during that one encounter kills or cripples your counter-party, so what? You are on to the next victim. Trump has lived that way all his life. And then he got elected president, where almost nothing is about combat, and everything is about continuing relationships with other folks who have power of their own. Trump is flailing because nothing in his life ever prepared him for a situation like that.
11
I cannot stop guffawing. If Trump is on the right track with China it is entirely by accident. Please how can anyone ever attribute any intelligence or farsightedness to Trump. He has got to be the stupidest president of all presidents or world leaders ever. And yes I see you George Bush, but even you were smart enough to know you were not smart. It is astounding how people can give completely undeserved attributes to this idiot.
Will these people ever wake up? Will they ever admit they were so off the mark? I certainly have misjudged people in my life. And did feel awfully foolish for doing so.
245
@cheerful dramatist
Thank you! Your simple honesty made me laugh, despite the despair.
11
I suspect some cherry picking from the myriads of comments, but this set of reader comments (and Prof. Krugman's replies) are a very nice sample of what the NYT should strive for in it's professed claim to present all sides. Cloudcuckooland need not be represented.
5
I'd settle for politicians who believe in reality. Then, there's some hope we'll get more politicians who believe in the rule of law.
129
@Bradley Bleck
We must never relent from making the rule of law our reality. This is what America is and does... until very recently (like 3 years)
1
Xi Jinping is the princeling son of a Chinese Long March legend who fell from grace during the latter days of Mao Zedong. Before being resurrected by another Mao victim Deng Xiaoping.
Donald John Trump inherited 295 streams of income from his New York City real estate baron daddy that shielded him from the consequences of being the worst losing businessman in America over a ten year period.
Two dudes in the words of a Texas sage ' who were born on third base and thought that they had hit a triple' are not likely playing with a full deck of reasonable tariff war cards.
But Trump is much more constrained by the nature of our republic than Xi is by the nature of his. And Xi has far more governing and political experience than Trump has. Along with being significantly intellectually more gifted and knowledgeable than Trump.
110
Krugman is just trying to salvage his reputation at this point. Like all the other globalists, he spent two decades predicting that free trade would cause China to liberalize and play by the rules, and that American jobs and industries would survive and flourish. Both predictions were utterly wrong. Time to find a new economics guru.
20
@Greg
"Krugman is just trying to salvage his reputation at this point. Like all the other globalists, he spent two decades predicting ….American jobs and industries would survive and flourish..."
What's unemployment currently sitting at? And according to Trump (all knowing economic guru), the state of the economy is the best in American history.
Can't have it both ways.
Yes, Krugman got some things wrong, but if you follow him you'll also see he admits to doing so (after seeing the economic data that proves he was wrong).
I've never seen him predict that free trade would "cause China to liberalize and play by the rules". Do you have a reference you can point to?
56
@Martin
Yeah, because tariffs are working. Businesses aren’t afraid to invest capital in America and American workers anymore. Sometimes the simplest explanation is the correct explanation.
4
@Greg
Well, I say Mr. Krugman can be forgiven for his crystal ball not accurately forecasting Xi being made communist leader for life. That's a game changer no one predicted, and with significant nationalist consequences.
8
I would not be surprised if Trump is making money off of his trade tweets. He has a history of market manipulation dating back to the 1980's. For a while he made money of buying up a block of stock in a company, announcing he was planning a takeover, and the selling of the price rally in that stock. He got away with this a few times before everyone figured it out and stopped responding to the signals.
He's done this before, I don't see why he wouldn't do it now.
116
"Respecting intellectual property"? We're not talking here about the Chinese sapping an American artist's livelihood, but rather the profits of drug makers and software developers -- the government granted monopolies which the likes of Microsoft and Big Pharma exploit for enormous profits and political power, including the privilege of writing their rules for their own intellectual property.
Why should non-stock holding Americans care, when in fact we get cheaper goods from China, when they scoff at the companies which are bleeding Americans dry?
3
Sigh.
Software and drug designs are intellectual property, okay? Maybe be a little less hellbent on yelling at Paul Krugman?
21
@Robert
Glad to hear you love paying Bill Gates an annual tithe and unregulated American drug prices make you giddy with happiness.
I'm not yelling, but I'll take holler over a boomer sigh, any day.
We are rebuilding our house and anything that is/or has come from China is more and all for the same reason.....tariffs.
Peter Navarro is not living in reality. Suppliers for everything from porcelain tiles to faucets have told us the same story.
186
@Randall Selland : If all the things you need to make a house come from China, that's a problem too.
37
Tariffs won’t fix that. The manufacturers will move to another low cost company. The few that do come back here, they will automate away most of the jobs. Those jobs that left decades ago aren’t coming back. Ever.
15
@Smilodon7 : If the suppliers were distributed across the low cost countries of the world, that would be somewhat better. I'd call it the consolation prize, but it would be better than nothing. If China makes everything, they could strangle us by stopping exporting; we wouldn't even be able to buy extension cords or hammers and nails.
I know those jobs aren't coming back, but if we don't want to become more of a welfare state, we need to figure out what people can do, and how they can get paid to do it, and how to sell whatever it is to other people.
Buying more than you sell is the path to penury.
8