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Response to Shandris (Reply #8)

Wed Mar 16, 2016, 03:48 PM

9. I am sorry that Krugman does not meet your high standard for liberal economists. Does anyone?

A Protectionist Moment?

Furthermore, as Mark Kleiman sagely observes, the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins ó but we now have an ideology utterly opposed to such redistribution in full control of one party, and with blocking power against anything but a minor move in that direction by the other.

But itís also true that much of the elite defense of globalization is basically dishonest: false claims of inevitability, scare tactics (protectionism causes depressions!), vastly exaggerated claims for the benefits of trade liberalization ... Iíve always been clear that the gains from globalization arenít all that great ... less than 5 percent of world GDP over a generation.

The truth is that if Sanders were to make it to the White House, he would find it very hard to do anything much about globalization ó not because itís technically or economically impossible, but because the moment he looked into actually tearing up existing trade agreements the diplomatic, foreign-policy costs would be overwhelmingly obvious. ... Trump might actually do it, but only as part of a reign of destruction on many fronts.

But it is fair to say that the case for more trade agreements ó including TPP, which hasnít happened yet ó is very, very weak. And if a progressive makes it to the White House, he or she should devote no political capital whatsoever to such things.

http://krugman.blogs.nytimes.com/2016/03/09/a-protectionist-moment/?_r=0

Economists have promoted the last 50 years of trade and it is a complete, utter, total failure based on all their 'models'.

Trade has not been a failure for Germany, Canada, Sweden and others because they have "redistributed income to ensure that everyone wins". Of course, they "redistribute income to ensure that everyone wins" from the domestic economy as well as that related to international trade. (Progressive taxes, business regulation, good safety nets and strong unions work wonders if a government supports them.) That is our failing, not our trade 'model'.

What 'model' for trade would you propose for the future? Do we negotiate new agreements with countries? Perhaps just bilateral agreements (as Trump proposes) so that we will always be the stronger partner to better dictate terms?

Or do we go all 'Herbert Hoover' (or 'Donald Trump') on trade and unilaterally raise tariffs - requiring us to withdraw from the WTO and all trade agreements (which the republican base would love to see us do) - essentially go back-to-the-future of 1920's era of republican trade policy that FDR reversed?

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