Monday, March 28, 2016

Who are the free traders?

Paul Krugman has an odd column today, suggesting that if you are a free trader, the Democrats are historically a better bet for you.  He writes,
When I say that Republicans have been more protectionist than Democrats, I’m not talking about the distant past, about the high-tariff policies of the Gilded Age; I’m talking about modern Republican presidents, like Ronald Reagan and George W. Bush. Reagan, after all, imposed an import quota on automobiles that ended up costing consumers billions of dollars. And Mr. Bush imposed tariffs on steel that were in clear violation of international agreements, only to back down after the European Union threatened to impose retaliatory sanctions. 
Actually, the latter episode should be an object lesson for anyone talking tough about trade. The Bush administration suffered from a bad case of superpower delusion, a belief that America could dictate events throughout the world. The falseness of that belief was most spectacularly demonstrated by the debacle in Iraq. But the reckoning came even sooner on trade, an area where other players, Europe in particular, have just as much power as we do.
This narrative ignores some inconvenient evidence to the contrary, such as the fact that in 1993 a majority of Democrats in Congress voted against NAFTA, while a majority of Republicans voted in favor.

But what really caught my eye is how wrong Paul is about the Bush steel tariffs. I was there for part of this episode, so I am confident that his interpretation--that President Bush was a protectionist--is completely backwards.

President Bush wanted to get Trade Promotion Authority (aka Fast Track) to negotiate future trade deals. It was, however, a hard sell in Congress. The steel tariffs were imposed as a quid pro quo to get a few of the votes needed to pass TPA. The political calculation was that it was worth suffering a small, temporary trade restriction to get the tools needed for a broader, more permanent opening up of trade.

Yes, after about a year and a half, the tariffs were found to have violated international trade rules, but that was always anticipated. Indeed, one can say that it was part of the plan. When the WTO ruling was announced, President Bush happily removed the tariffs, just as he had always intended.

The trade promotion authority that this political calculation yielded pushed the free trade agenda forward.  It led, for example, to CAFTA.  When this trade agreement came up for a vote in 2005, once again a majority of Democrats in Congress voted against, while a majority of Republicans voted in favor.

Friday, March 25, 2016

Almost everything you hear from POTUS candidates about trade deals is wrong

The new IGM Panel poll of prominent economists asks about this proposition:
An important reason why many workers in Michigan and Ohio have lost jobs in recent years is because US presidential administrations over the past 30 years have not been tough enough in trade negotiations.
Only 5 percent agree, while 64 percent disagree.  (The rest were uncertain or did not answer.)  A previous poll asked about this statement:
Past major trade deals have benefited most Americans.
On this one, 83 percent agreed, and zero percent disagreed.

So the next time you hear some candidate complain about trade deals, remember that he or she is disagreeing with the vast majority of economists.

Wednesday, March 23, 2016

Commentary on Trump's Economics

  1. Alan Blinder
  2. Jon Hartley and Glenn Hubbard
I don't know any mainstream economist--right, left, or center--who has good things to say about the economic policy views of Donald Trump.  But, somehow, I don't think this fact will deter his supporters.

Sunday, March 13, 2016

More Competition

The Stigler Center of the University of Chicago has a new blog.

Friday, March 11, 2016

The Latest from Merle Hazard

FYI: Both Merle and Alison Brown (the banjo player) are former Ec 10 students.

Wednesday, March 09, 2016

From My Inbox

Tuesday, March 08, 2016

Hillary on Outsourcing

It depends on when you ask.

If you are interested in reviewing the 2004 furor over outsourcing, click here (published version).

Saturday, March 05, 2016

Debating the Ten Principles

In the new issue of the Eastern Economic Journal, David Colander critiques the Ten Principles in my favorite textbook and concludes they are insufficiently nuanced. Here is my response.

Wednesday, March 02, 2016

A Reading for the Pigou Club