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Monday, January 30, 2017

Paul Krugman: Building a Wall of Ignorance

"The story seems, like so much that’s happened lately, to have started with President Trump’s insecure ego":

Building a Wall of Ignorance, by Paul Krugman, NY Times: We’re just over a week into the Trump-Putin regime, and it’s already getting hard to keep track of the disasters. ...
But I want to hold on, just for a minute, to the story that dominated the news on Thursday, before it was, er, trumped by the uproar over the refugee ban. As you may recall ... the White House first seemed to say that it would impose a 20 percent tariff on Mexico, but may have been talking about a tax plan, proposed by Republicans in the House, that would do no such thing; then said that it was just an idea; then dropped the subject, at least for now. ...
The story seems, like so much that’s happened lately, to have started with President Trump’s insecure ego: People were making fun of him because Mexico will not, as he promised during the campaign, pay for that useless wall along the border. So his spokesman, Sean Spicer, went out and declared that a border tax on Mexican products would, in fact, pay for the wall. So there!
As economists quickly pointed out, however, tariffs aren’t paid by the exporter..., they’re paid for by ... consumers. America, not Mexico, would therefore end up paying for the wall.
Oops. But that wasn’t the only problem. America is part of a system of agreements — a system we built — that sets rules for trade policy, and one of the key rules is that you can’t just unilaterally hike tariffs that were reduced in previous negotiations.
If America were to casually break that rule, the consequences would be severe. ... If we treat the rules with contempt, so will everyone else. The whole trading system would start to unravel, with hugely disruptive effects everywhere, very much including U.S. manufacturing. ...
All of this should be placed in the larger context of America’s quickly collapsing credibility.
Our government hasn’t always done the right thing. But it has kept its promises, to nations and individuals alike.
Now all of that is in question. Everyone, from small nations who thought they were protected against Russian aggression, to Mexican entrepreneurs who thought they had guaranteed access to our markets, to Iraqi interpreters who thought their service with the U.S. meant an assurance of sanctuary, now has to wonder whether they’ll be treated like stiffed contractors at a Trump hotel.
That’s a very big loss. And it’s probably irreversible.

    Posted by on Monday, January 30, 2017 at 09:54 AM in Economics, International Trade, Politics | Permalink  Comments (88)


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