Krugman Slams Romney on His Trump Attack

His technical point is correct:

There was so much wrong with Mitt Romney’s Trump-is-a-disaster-whom-I-will-support-in-the-general speech that it may seem odd to call him out for bad international macroeconomics. But this is a pet peeve of mine, in an area where I really, truly know what I’m talking about. So here goes.

In warning about Trumponomics, Romney declared

If Donald Trump’s plans were ever implemented, the country would sink into prolonged recession. A few examples. His proposed 35 percent tariff-like penalties would instigate a trade war and that would raise prices for consumers, kill our export jobs and lead entrepreneurs and businesses of all stripes to flee America.

After all, doesn’t everyone know that protectionism causes recessions? Actually, no. There are reasons to be against protectionism, but that’s not one of them.

Think about the arithmetic (which has a well-known liberal bias). Total final spending on domestically produced goods and services is

Total domestic spending + Exports – Imports = GDP

Now suppose we have a trade war. This will cut exports, which other things equal depresses the economy. But it will also cut imports, which other things equal is expansionary. ..

OK, I’m sure some people will start shouting “Krugman says protectionism does no harm.” But no: protectionism in general should reduce efficiency, and hence the economy’s potential output. But that’s not at all the same as saying that it causes recessions.