Should-Read: Paul Krugman: Trump and Trade and Zombies

Should-Read: Paul Krugman: Trump and Trade and Zombies: “Until now, the most visible neo-goldbug in the administration has been David Malpass… the former chief economist of Bear Stearns…

…a man with a Kudlow-like record of being wrong about everything. In particular, however, back in 2011 Malpass published an op-ed article declaring that what America needed to fix its economic ills was a stronger dollar (and higher interest rates). It was a bizarre claim. After all, at the time the unemployment rate was still 9 percent—and a stronger dollar would have made things even worse. Why? Because it would have made U.S. products less competitive, increasing the trade deficit—and a situation of persistently high unemployment is the one situation in which trade deficits really are an unambiguously bad thing, reducing the demand for domestic goods and services. But here’s the thing: Kudlow appears to share Malpass’s worldview. In fact, his first newsworthy statement after Trump announced his selection was a call for a higher dollar—something that would worsen the very trade deficit Trump sees as a sign of American weakness.

Why has Trump hired people with such conflicting notions about international economic policy? The answer, presumably, is that he doesn’t understand the issues well enough to realize that the conflict exists. And what both sides in this dispute share is a general propensity for invincible ignorance, which makes them Trump’s kind of people. Anyway, on international economics the Trump administration is now on track for a battle of the zombies—a fight between two sets of bad ideas that refuse to die. Pass the popcorn…


Brad DeLong
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