Monday, March 28, 2016

WAR Krugman versus Mankiw

These two really don't like each other. It's a Keynesian version of the WWF.

Paul Krugman wrote this morning from his perch at NYT:
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.
Before Harvard's Greg Mankiw could have downloaded the entire column to his computer, he responded:
Paul Krugman has an odd column today, suggesting that if you are a free trader, the Democrats are historically a better bet for you...
[W]hat 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.


  1. Yeah OK Mankiw you expect the public to believe that George Bush and his team of economic advisers conspired to pull one over on Congress, hundreds of employers in the US Steel industry and thousands of union members across the country? He did all this right under the watchful eye of the public and media and no one on the inside spilled the beans? Take off the tinfoil hat, sir.

  2. Members of Chinese and Italian Mafia argue over who is better at extortion. Consumer loses again. News at 11.