Photo: Economist Paul Krugman, looking a bit uncertain.
Listening to the radio yesterday — our local NPR station. Always a dangerous proposition. The hopeful, upbeat stories are as rare, these days, as the Mexican Wolf. (Approximately 140 of them still living the wild, but you probably knew that.)
The news commentator was interviewing Paul Krugman, a controversial economist if there ever was one. You have to be careful about believing a person who has written a column for The New York Times for 25 years, and who has written or edited 27 books on economics.
The topic was, of course, the Trump tariffs. But it’s like the weather. Everyone talks about it, but nobody does anything about it.
It doesn’t help that we don’t know if the tariffs are real or just a “negotiating tactic.” But that doesn’t stop us from talking. Especially, the economists have been talking.
The weird comment by Dr. Krugman — at least I thought it was weird — was about the economy, because he’s an economist and he probably thinks everything is economic. I can imagine him watching a football game and thinking about the economic impacts of a 45-yard field-goal kick.
Which is not to belittle economics. (Or football.) We need economics, if for no other reason than we have college students enrolled in economics classes, and we wouldn’t want them taught by football coaches. (Even though the final result might be better for everyone.)
But back to the weird comment.
Dr. Krugman was being interviewed by Scott Tong, who posed questions about “the trade war”. Could it persist? And what would happen if it did persist?
Usually, when somebody starts a war, people end up dying in large numbers. But in a “trade war”, ordinary people merely get financially screwed, while a few billionaires amass huge profits. The longer the war persists, the worse for ordinary people and the better for billionaires.
Dr. Krugman noted one group of people who are kind of stuck in the middle.
Clowns to the left of me, jokers to the right, here I am…
The people stuck in the middle are American manufacturers, who are now hesitant to build their planned factory in Mexico or Vietnam because there might be huge tariffs imposed on their products. But they also don’t want to build a factory in the U.S. because the huge tariffs on foreign goods might get “negotiated”, and disappear, by the time they get the factory built.
When you let a convicted felon set your national trade policy, the future is very uncertain. And nothing bothers a manufacturer like uncertainty. (For the rest of us, it’s just a normal part of life.)
Then Dr. Krugman said:
Basically, you’ve created a lose-lose situation where anything you do has a high probability of turning out to be a stranded investment where you’ve flushed your money down the toilet. So what’s gonna happen — we can already see it happening — is that businesses are putting their plans on hold. Who’s going to want to commit money to an investment project when the whole environment for investment depends upon the whims of Donald Trump? And so many of the private forecasters are now saying, ‘well, recession is more likely than not,’ and it’s coming entirely out of this wildly erratic, unpredictable policy.
If this happens, and it looks quite likely that it will, it will actually be the first time in history that a President has actually caused a recession.
I think that’s a weird comment.
And totally unfair, to blame a possible recession on a well-meaning President just because he has a wildly erratic, unpredictable trade policy.
My ex-wife was wildly erratic and unpredictable, and that’s actually what I liked best about her.
On the occasions when I didn’t hate her for it.
Besides, the recession hasn’t happened, yet. And if it does happen, it’s actually because all the American manufacturers want certainty, and are sitting on their hands and doing nothing to grow the economy, just because of a little erratic, unpredictable behavior.
I lived with it for 24 years, and I’m still alive to tell the tale.
My point being, nothing in life is certain, except economists making predictions.
And death and taxes, too, of course.