Krugman's Harshest Post Yet

[joshcryer]

45. He actually viewed NAFTA as a political move, not economic.

The problem is that he and many others underestimated just how horrific it would be to American wage earners. They thought, oh, the minimum wage would be continually lifted, the American public would continue to prosper, etc, etc. Krugman actually believed NAFTA's effect was "trivial" on the scheme of things and the foreign policy aspects were worth it.

While NAFTA's labor and environmental costs will be minimal, the U.S. public believes otherwise. At the same time, NAFTA's economic benefit to the United States, while real, will be small. One might then ask: Why should the Clinton administration expend a great deal of its depleted political capital in pursuit of an unpopular and economically trivial agreement? The answer is that Mexico's government needs NAFTA, and the United States has a strong interest in helping that government.

That (edit: the trivial economic impact) didn't happen, but the converse did, so the effects were far worse than anyone could've imagined. Thus the calls to renegotiate NAFTA. Krugman was wrong and he admits as much these days.

He doesn't call the effects of NAFTA on wages "modest" as some other Third Wayers might.