3 ms·
I think Krugman was trying to make the case for why many smart people don't seem to understand how the theory of Comparative (as opposed to absolute) Advantage
by Osiris30 11y ago
I think Krugman was trying to make the case for why many smart people don't seem to understand how the theory of Comparative (as opposed to absolute) Advantage works.
I don' think he was arguing that that theory is the be all and end all of trade policy. The theory is a abstract model of the world - it is a useful guide like all abstract models but does not capture the world in all its complexity.
Both theoretically and practically, over the last 30 years, there is increasing evidence that Free Trade effects - like everything - depends on context and policies.
Krugman himself writes alot about this on his blog. Can't search for everything right now - but here is an example from a few weeks ago:
http://krugman.blogs.nytimes.com/2016/04/20/101-boosterism/ http://krugman.blogs.nytimes.com/2016/04/20/101-boosterism/
He has also been consistently lukewarm on the TPP trade deal exactly because of these issues:
http://krugman.blogs.nytimes.com/2015/04/26/this-is-not-a-trade-agreement http://krugman.blogs.nytimes.com/2015/04/26/this-is-not-a-tr...
"One thing that should be totally obvious, however, is that it’s off-point and insulting to offer an off-the-shelf lecture on how trade is good because of comparative advantage, and protectionists are dumb."