Join Nobel Prize-winning economist Paul Krugman as he dives into the complexities of tariffs and trade, particularly during the Trump administration. He reveals the impacts of a 20% tariff on China and the renegotiated USMCA on U.S. relations with Canada and Mexico. Krugman also discusses the evolving relationship between political decision-making and economic theory, and how Biden’s policies are reshaping the economic landscape. Plus, he offers insights on the American healthcare system, comparing it to global models and addressing public sentiment for reform.
Paul Krugman highlights the risks of Donald Trump's tariff strategies, stressing their potential havoc on North American manufacturing dynamics.
Despite inflation challenges, Krugman believes Joe Biden's economic legacy will be positively re-evaluated due to strong post-pandemic recovery efforts.
Deep dives
Paul Krugman's Shift to Self-Publishing
Paul Krugman has transitioned from a long career with the New York Times to self-publishing on Substack, allowing him greater freedom in expressing his views. This change has enabled him to be more candid and less restrained in his commentary on economic policies. Krugman reflects on the evolving nature of journalism, noting that the New York Times is moving towards a model that emphasizes less quantity in terms of published work. With his new platform, he aims to engage more directly with his audience, sharing insights almost daily.
Trump's Trade Policy and Tariffs
Krugman discusses Donald Trump's persistent tariff strategies, highlighting Trump's belief that trade deficits signify economic weakness. Notable is Trump’s renegotiation of NAFTA into the USMCA, which he has now deemed ineffective. Krugman emphasizes the interconnectedness of North American manufacturing, suggesting that potential tariffs against Canada and Mexico could have devastating consequences. He raises concerns that Trump's administration may lack knowledgeable advisors to inform better trade decisions, risking a return to destructive trade policies.
Biden's Economic Legacy Amidst Inflation
Despite high inflation rates during Joe Biden's presidency, Krugman believes that history will eventually judge Biden favorably, likening him to Harry Truman. He argues that inflation was largely a result of global supply chain disruptions caused by the COVID-19 pandemic, a circumstance outside Biden's control. Krugman points out that many advanced economies experienced similar inflation spikes, indicating a broader trend rather than a failure of the Biden administration. He believes the U.S. managed to achieve a strong post-pandemic recovery and indicates that this resilience is a significant aspect of Biden's economic legacy.
The Balance of Politics and Economics
Krugman emphasizes the importance of balancing economic theory with political realities when formulating policies. He posits that while expert economists should inform political decisions, they must also account for how policies will resonate with the electorate. Citing the healthcare debate, he argues that policies must align with public sentiment, which can sometimes mean straying from pure economic logic. Ultimately, he suggests that successful policy-making requires a practical approach that blends rigorous economic insight with awareness of political landscapes.
This week: Paul Krugman may have ended his iconic New York Times column but he’s still going to tell us what’s going on. Felix Salmon and Emily Peck are joined by Paul Krugman to get wonky on global trade, discuss the relationship between politicians and economists, and examine the economic legacy of Joe Biden.
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Podcast production by Jessamine Molli and Cheyna Roth.
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