Knows his stuff on trade

It’s not necessary to believe everything Paul Krugman says, it is appropriate to listen to him on the subject of trade though. And here he’s entirely correct on what the purpose of trade agreements is. It isn’t to make sure that the dastardly foreigners don’t screw us over, it’s to make sure that the special interests within our own society don’t do so by co-opting politics and politicians:

But wait, there’s more. There’s a reason we have international trade agreements, and it’s not to protect us from unfair practices by other countries. The real goal, instead, is to protect us from ourselves: to limit the special-interest politics and outright corruption that used to reign in trade policy.

As the AEI goes on to point out:

President Trump’s reintroduction of unilateral trade sanctions under the bogus claim of national security will take us back to the “bad old days.” Other nations will retaliate, and “if this escalates into a full-scale trade war, we’ll be back to the bad old days. Tariff policy will once again be driven by influence-peddling and bribery, never mind the national interest.” One has only to remember the Carrier Company/Lockheed-Martin bullying and the Boeing threats to see this transpiring in real time.

The entire point of things like the WTO is to stop people like the steel and aluminium industries screwing us. No, not the Chinese or European ones from screwing Americans, but to stop the American industries from screwing Americans:

The IGM Economic Experts Panel at the University of Chicago’s Booth School of Business were asked their views on the statement

Imposing new US tariffs on steel and aluminum will improve Americans’ welfare.

The answer is no:

And yes 100% of those who answered either disagreed or strongly disagreed with the statement

As we’ve pointed out before:

A protectionist is someone who argues that you should be poorer so they can be richer.

Which is the point of trade agreements. Sure, the US steel industry would love to make itself – the owners and workers in it – richer and they really don’t care if that makes all other Americans poorer. The point of trade agreements which stop such tariffs being imposed is to stop them being able to do so.

Trade agreements protect us from our own politicians and their paymasters and voting blocs. That’s the very point of them.

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5 COMMENTS

  1. The blind squirrel done found an acorn! America’s conservatives often oppose arrangements like the WTO on the grounds of national sovereignty. But if Congress wants to join an international organization (that it can quit later) and thereby give up the power to discriminate against foreign goods (that is, give up some of the favors it might dispense to cronies), that’s fine with me.

    I felt that the proposed Pacific deal was much more than this, not just Congress giving up the option of economic intervention, but Congress subjecting American businesses to new foreign initiation of harm, EU-style.

  2. “Trade agreements protect us from our own politicians and their paymasters and voting blocs. That’s the very point of them.”

    Well, no. It’s the politicians and their paymasters who make the trade agreements. Why would they instigate something that disadvantages them? You make it sound like it’s we the people who make trade agreements.

  3. Let’s remember that Paul Krugman is the sort of man who spends the weekend watching you re-shingle your roof and then spends Monday explaining to you all the things you did wrong. When you ask him why he didn’t help in the first place, he says – without a jot of self-awareness – that he doesn’t own a hammer.