This was fascinating: Thank you. And I'm perfectly willing to occasionally be your audience for a trial run of an upcoming presentation. But I do hope you won't switch substantially from writing to podcasting: I find it much harder to absorb complex ideas by listening to them vs. reading them.
The insights are different for me. I see that in reading / listening to Heather Cox Richardson and in my audio books. I like it both ways unfortunately.
Hey Paul. Regarding your intro, I'm a recently retired senior comms professional with good creative skill sets who'd be very happy help you package your content for other formats. I've always been grateful for the benefit of your insights and perspective over the years, and would gladly contribute all of the above free of charge just as a matter of giving back and contributing to your voice being heard in these very important times. Thanks for this new post today and if this is ever of interest please just message me back here. Cheers.
My take on Paul's excellent explanation is that he politely explained why the Orange Simpleton's simplistic solutions won't work and will lead to some serious consequences for the US economy and the US Taxpayers. My guess is tRump will lean on his Congress and they will declare the we are oh so lucky to be blessed with the billionaire class and then reward them with a ridiculously low tax rate.
& it will be about hiding true metrics from the Bureau of Labor Statistics and other indicators of economic health. Control that information and discredit through Social Media anyone who speaks up/speaks out.
Watch how the Fed Chairman and regional Gov will be attacked when they have to bring misinformation and disinformation up at rate meetings. The clock to 13 is ticking.
May I suggest that if you want to use derogative terms such as 'Orange Simpleton' that you take your comments back to X or to Truth Social where they might be appreciated. I think Paul has tried to talk about substance, not personality here, something I support and appreciate.
I assumed Stephen Brady is 12 years old and his mother wasn't around to correct him. Name calling should never be a part of communication between mature adults.
I'm a non-wonky artist who's fascinated by wonky economics. Later today, when I can sit down with a cup of coffee and concentrate hard on what's talked about, I plan to listen to this podcast. For now I simply want to say that from my non-wonky artist's perspective, the tariffs Trump wants to use against Canada are about the best way possible to make Canada hate us. I'm pretty sure Trump's and huis uber-nationalist advisors dont' care one bit about this, but are instead eagerly anticipating thousands of Canadian businesses, in response to the tariffs, moving to the United States
The question is really how many Canadians with businesses hurt by his tariffs will, either out of fury at Trump or plain old-fashioned Canadian patriotism, refuse to move to the United States.
As a Canuck I agree with your position, except to offer the friendly edit of “the tariffs Trump want to use against Canada are about the best way possible to make Canada hate us” to “the tariffs Trump has proposed have already made Canada hate us”. Some also might suggest exchanging “us” for more a specific noun and that “dislike” would be more polite than “hate”. Sorry, but we are deeply concerned about the direction (some of) the “us” has chosen. You can show some love and help reduce Canada’s ex-energy trade deficit with the US by buying/importing a “Canada is not for sale” cap and/or tuque from https://canadaisnotforsalehat.ca (no affiliation).
He only did that to punish Trudeau. Canada is planning to defiantly, and rightfully, respond with it's own tariffs - including on Florida oranges. I wonder if that means His Orange MAGA Majesty will have to pay a tariff every time he visits Canada?
He cannot even legally visit my country (Canada) since he is a convicted felon, unless the Canadian government excludes him from that law purposefully.
In the case of China there is a legitimate reason - but The Orange Deity is going about it totally the wrong way. China first became a trading partner when Tricky Dickie and his Handler Hank Kissinger decided that Capitalism is incompatible with Communism, so by trading with China we'd blow their political system apart. It was ridiculous then, with a near catastrophic result for us now.
The idea that Capitalism is incompatible with Communism was little more than a right wing fantasy that pleased the oligarchs with promises of legal near-slave labor. The end result is, along with prostituting the job market, an emboldened China that's now threatening conquest, starting with Taiwan and most of the South China Sea, but by no means ending there.
Carefully targeted tariffs at a reasonable level can be an effective >part< of a larger policy to reign in Xi a little bit, just not the insane, poorly if at all reasoned ones that His Orange MAGA Majesty is proposing.
Edit: Tariffs will not bring back manufacturing jobs.
Thank you, Paul, for continuing to share your insights with such passion and clarity. I’ve been following your work for years—first in the New York Times, then through your books, and now here on Substack. It’s inspiring to see your dedication to thoughtful analysis, even as the world often pulls us into the political arena.
For the record, Chase Oliver, the Libertarian presidential candidate, proposed the creation of a new "Ellis Island"- anyone who wants to immigrate can identify himself, pass a background check and come on in.
Mike, so were the government policies allowing jobs to leave the US. We were forced to buy cheap foreign products when nothing was made in America any longer. It didn't have to be that way, and pretending it was inevitable because that is what happened isn't an honest interpretation.
You call the iPhone "cheap foreign product" that you are forced to buy? Well, the iPhone accounts for about 8% of our trade deficit, but generally considered representative of American business prowess. Nike does the same thing. Our trade deficit is a feature of our free enterprise system, rather than a bug. I think we would be quite a lot poorer if government dis-incentivizes businesses from sourcing overseas. As Pettis and Krugman seem to agree, government focusing on increasing manufacturing or export is a problem detrimental to the Chinese economy..
Well, it is indicative of very natural progression which rich economies go through. We shift the costly burden outdoors which help us get stuff not only cheaply but also helps other developing or underdeveloped economies which rely on their comparative advantage of labor. A rich country with high gdp per capita can't continue to remain a manufacturing first nation. Slowly, but surely services sector as a higher percentage of gdp would take over.
Also, American manufacturing ain't battered or bruised. It's just behind services. It never made financial and competitive sense for our companies to keep producing products at a costly rate which they would have no choice but to pass on to the consumers. Outsourcing such products made them efficient and condumers better off by ushering in more product choices and cheaper prices.
Another thing is by employing the competitive and comparative advantage of other nations we were able to sire category of products which wouldn't have been produced otherwise.
Supply chains found the most optimal outcome to become efficient (* though nations bend it by weaponizing world's overdependence on them. US and China are prime exampled. Efficiency doesn't ensure security. This system too doesn't.)
In a borderless world with multiple provinces, the comparative advantage and globalized supply chain would've ben the order of the day. It is close to natural.
Does that mean it's perfect and non-corrupt? No. But rarely anything is. Thanks.
That is true, but along with cheaper prices we also have increased poverty, homelessness, etc., and we haven't figured out a solution beyond "Let them eat cake!".
By the way I am in favor of taxing the rich, more stringent banking regulations, and government choosing winners in some cases tilting the biased playing field towards the needy and middle class. Though most of it happened under Biden. It was a start.
But the measures which help address aforementioned menaces may intersect with free trade and comparative advantage stuff, but largely both are not mutually exclusive. I think we are conflating multiple concepts and attributing every one of them for our woes.
Trade didn't decline despite addressing those concerns under Biden. Though it can be argued nothing much of significance was done.
Winston, it has been the core tenet of Reaganomics to hold that free trade based on comparative advantage and competitiveness can't exist without laxed regulation, low to zero government spending and lower private sector taxes. That tenet is fundamentally wrong, and we are literally reiterating the Reagsn doctrine by conflating the two and parroting the same.
Amen! The so called "Reagan Revolution" seems to have been set into infinite recursion with no apparent way out. I wish I could say I knew the solution, but I don't. I only know it's politics.
The adage "no such thing as a free lunch" comes to mind. Technology is reducing the jobs out there and will continue to do so, even if we do not ever achieve a workable artificial intelligence. I would bet the Robber Barons never expected the "wealth" the unionization movement took away from them would return with a high multiplier due to increased consumption from the working classes.
Actually not increased poverty. Yes, free trade has its downsides and I have concurred with that in my answer. But free trade is one of the most prominent features of globalisation or hyper globalization. Ghost towns are reality. But these are more of the aspects of globalisation per se. We are currently at one of the lowest unemployment rate, may be close to the best balance between inflation and jobs. Homelessness is a very different structural problem and cities are more prone than rural areas, but the rural folks have been at the receiving end of the globalization woes.
Corporate greed, lack of regulation, banking corruption owing to intermingling of various forms of debt instruments and political patronage and mostly mismanagement from local government are some of the factors responsible for urban woes.
That operates under the domain of globalized world, supply chain industries but these are mostly different set of problems which intersect with globalization which is everywhere.
My point was regarding comparative advantage and trade only. It screwed up rural regions. That's fact and I don't deny.
But modt of the problems you listed have multi dimensional factors behind and are very complex in nature.
Let's say we shouldn't conflate Reaganomics with Comparative advantage and free trade. It's definitely an aspect but different.
Look at me. I come from India, and post liberalized world has helped India to become a better nation. It's still not prosperous, but it's significantly rich compared to 1990 for example.
1) The format nails it. One sees data and hears commentary about the data. Excellent inflection of voice. No face expressions. Adopt this format.
2) Was there supposed to be a slide on the dollar's exchange rate at the end? You talked about it, but no slide. Just checking in case it didn't upload.
3) The long view on a "normal" trade balance is very effective: a) as knowledge. b) counters the burgeoning "new" trade view nicely all by itself.
Thanks for your experiment, Paul! To me the modality is very effective. As a 63 year old working on my PhD in computational science (foundations of ai), the urge to ingest and summarize data and talks as quickly as I can, to move on to the next "thing to learn", is too tempting. Your pace and the quantity of detail is just right, for a topic like this. It brought me back to my undergrad days in Econ 101 with my wise old professor slowly and methodically would walk us through another topic, "...and on this chart we can see...". You could write forever on each of the major topics you covered (and I hope you do!). Here's one topic I'd love to see covered, or at least referenced, some up-to-date reading list about macro economics (sans BS & hype !). Thanks for your energy and hard work - I look forward to your posts, and this is one more thing to look forward to.
My wee brain has thought that there is a connection between our military spending and our ability to run trade and budget deficits. The US took on the job of insuring world wide stability post WW2 as the last man standing. The rest of the world sort of agreed to that job. I think the world buys our debt products and sends us stuff because of that implied guarantee of stability. If we lose the trust of the world then our outrageous privilege will disapear. Mr Trump's attempt to bully the world may be the spark that lights that fuse.
What if the US got paid for the military protective services that we "export" to other countries? Our trade would be closer to balanced. Perhaps military services in one of our greatest comparative advantages.
Not for long. Once China decides to shut down manufacturing of our military hardware and production of critical raw materials - while simultaneously invading Taiwan, and who knows where else - our military prowess will be toast.
I just listened to Krugman’s slideshow on trade imbalances. Paul beautifully stitched together some recent posts with historical data to paint a picture of what a strong economy means in the face of global trade. I highly recommend you spend the time learning what may be our new admins course and why it is dead wrong.
Fascinating. I really appreciate this deeper exploration of the topic, thank you for providing it. My suggestion is that a video where it would be possible to see the specific slides and hear your commentary would be beneficial, although it was also very useful to have a transcript of your comments.
Wow. Just wow. I'm absolutely in awe of Mr Krugman's ability to present a complex argument as cogently as he does here, and very obviously without even reading from a manuscript.
This was fascinating: Thank you. And I'm perfectly willing to occasionally be your audience for a trial run of an upcoming presentation. But I do hope you won't switch substantially from writing to podcasting: I find it much harder to absorb complex ideas by listening to them vs. reading them.
Jessa, I'm with you. Economics isn't my field, but I can understand it if I read it carefully.
I prefer reading, hands down.
I like listening in combination with visuals.
The insights are different for me. I see that in reading / listening to Heather Cox Richardson and in my audio books. I like it both ways unfortunately.
Amen. Podcasts' wheat:chaff ratio tends to be much lower than readable texts.
Hey Paul. Regarding your intro, I'm a recently retired senior comms professional with good creative skill sets who'd be very happy help you package your content for other formats. I've always been grateful for the benefit of your insights and perspective over the years, and would gladly contribute all of the above free of charge just as a matter of giving back and contributing to your voice being heard in these very important times. Thanks for this new post today and if this is ever of interest please just message me back here. Cheers.
I enjoyed your talk but the last slide seemed to be missing.
Yeah, I noticed that too.
My take on Paul's excellent explanation is that he politely explained why the Orange Simpleton's simplistic solutions won't work and will lead to some serious consequences for the US economy and the US Taxpayers. My guess is tRump will lean on his Congress and they will declare the we are oh so lucky to be blessed with the billionaire class and then reward them with a ridiculously low tax rate.
& it will be about hiding true metrics from the Bureau of Labor Statistics and other indicators of economic health. Control that information and discredit through Social Media anyone who speaks up/speaks out.
Watch how the Fed Chairman and regional Gov will be attacked when they have to bring misinformation and disinformation up at rate meetings. The clock to 13 is ticking.
And if that doesn't work, sic the thought police on 'em.
May I suggest that if you want to use derogative terms such as 'Orange Simpleton' that you take your comments back to X or to Truth Social where they might be appreciated. I think Paul has tried to talk about substance, not personality here, something I support and appreciate.
I thought Orange Simpleton was quite polite, actually. I refer to him with much harsher terms.
I assumed Stephen Brady is 12 years old and his mother wasn't around to correct him. Name calling should never be a part of communication between mature adults.
I'm a non-wonky artist who's fascinated by wonky economics. Later today, when I can sit down with a cup of coffee and concentrate hard on what's talked about, I plan to listen to this podcast. For now I simply want to say that from my non-wonky artist's perspective, the tariffs Trump wants to use against Canada are about the best way possible to make Canada hate us. I'm pretty sure Trump's and huis uber-nationalist advisors dont' care one bit about this, but are instead eagerly anticipating thousands of Canadian businesses, in response to the tariffs, moving to the United States
The question is really how many Canadians with businesses hurt by his tariffs will, either out of fury at Trump or plain old-fashioned Canadian patriotism, refuse to move to the United States.
As a Canuck I agree with your position, except to offer the friendly edit of “the tariffs Trump want to use against Canada are about the best way possible to make Canada hate us” to “the tariffs Trump has proposed have already made Canada hate us”. Some also might suggest exchanging “us” for more a specific noun and that “dislike” would be more polite than “hate”. Sorry, but we are deeply concerned about the direction (some of) the “us” has chosen. You can show some love and help reduce Canada’s ex-energy trade deficit with the US by buying/importing a “Canada is not for sale” cap and/or tuque from https://canadaisnotforsalehat.ca (no affiliation).
Habs fans have already started booing during the US national anthem. I'm sure this will catch on with more Trumpy sabre-rattling.
Roscoe and Tim,
Please always remember that not all of us voted for the Clown in Chief.
He only did that to punish Trudeau. Canada is planning to defiantly, and rightfully, respond with it's own tariffs - including on Florida oranges. I wonder if that means His Orange MAGA Majesty will have to pay a tariff every time he visits Canada?
He cannot even legally visit my country (Canada) since he is a convicted felon, unless the Canadian government excludes him from that law purposefully.
He would've been convicted a lot more if it weren't for that incompetent puppet Aileen Cannon.
Mexico, Canada and China are USA's largest trading partners...all on Trump's poking to aggregate for no reason list.
I meant aggrevate.
In the case of China there is a legitimate reason - but The Orange Deity is going about it totally the wrong way. China first became a trading partner when Tricky Dickie and his Handler Hank Kissinger decided that Capitalism is incompatible with Communism, so by trading with China we'd blow their political system apart. It was ridiculous then, with a near catastrophic result for us now.
The idea that Capitalism is incompatible with Communism was little more than a right wing fantasy that pleased the oligarchs with promises of legal near-slave labor. The end result is, along with prostituting the job market, an emboldened China that's now threatening conquest, starting with Taiwan and most of the South China Sea, but by no means ending there.
Carefully targeted tariffs at a reasonable level can be an effective >part< of a larger policy to reign in Xi a little bit, just not the insane, poorly if at all reasoned ones that His Orange MAGA Majesty is proposing.
Edit: Tariffs will not bring back manufacturing jobs.
Thank you, Paul, for continuing to share your insights with such passion and clarity. I’ve been following your work for years—first in the New York Times, then through your books, and now here on Substack. It’s inspiring to see your dedication to thoughtful analysis, even as the world often pulls us into the political arena.
'Free trade' should also include free trade in labor as well.
Yes it's funny how so many free-market enthusiasts seem to be bitterly opposed to the free movement of labour. A blatant ideological contradiction.
For the record, Chase Oliver, the Libertarian presidential candidate, proposed the creation of a new "Ellis Island"- anyone who wants to immigrate can identify himself, pass a background check and come on in.
I hate the use of "Free Trade". All trade is managed!!!! Damnit!!
Mike, so were the government policies allowing jobs to leave the US. We were forced to buy cheap foreign products when nothing was made in America any longer. It didn't have to be that way, and pretending it was inevitable because that is what happened isn't an honest interpretation.
You call the iPhone "cheap foreign product" that you are forced to buy? Well, the iPhone accounts for about 8% of our trade deficit, but generally considered representative of American business prowess. Nike does the same thing. Our trade deficit is a feature of our free enterprise system, rather than a bug. I think we would be quite a lot poorer if government dis-incentivizes businesses from sourcing overseas. As Pettis and Krugman seem to agree, government focusing on increasing manufacturing or export is a problem detrimental to the Chinese economy..
Need to make more babies to manufacture indefinitely
True. Thanks for insights.
Well, it is indicative of very natural progression which rich economies go through. We shift the costly burden outdoors which help us get stuff not only cheaply but also helps other developing or underdeveloped economies which rely on their comparative advantage of labor. A rich country with high gdp per capita can't continue to remain a manufacturing first nation. Slowly, but surely services sector as a higher percentage of gdp would take over.
Also, American manufacturing ain't battered or bruised. It's just behind services. It never made financial and competitive sense for our companies to keep producing products at a costly rate which they would have no choice but to pass on to the consumers. Outsourcing such products made them efficient and condumers better off by ushering in more product choices and cheaper prices.
Another thing is by employing the competitive and comparative advantage of other nations we were able to sire category of products which wouldn't have been produced otherwise.
Supply chains found the most optimal outcome to become efficient (* though nations bend it by weaponizing world's overdependence on them. US and China are prime exampled. Efficiency doesn't ensure security. This system too doesn't.)
In a borderless world with multiple provinces, the comparative advantage and globalized supply chain would've ben the order of the day. It is close to natural.
Does that mean it's perfect and non-corrupt? No. But rarely anything is. Thanks.
That is true, but along with cheaper prices we also have increased poverty, homelessness, etc., and we haven't figured out a solution beyond "Let them eat cake!".
By the way I am in favor of taxing the rich, more stringent banking regulations, and government choosing winners in some cases tilting the biased playing field towards the needy and middle class. Though most of it happened under Biden. It was a start.
But the measures which help address aforementioned menaces may intersect with free trade and comparative advantage stuff, but largely both are not mutually exclusive. I think we are conflating multiple concepts and attributing every one of them for our woes.
Trade didn't decline despite addressing those concerns under Biden. Though it can be argued nothing much of significance was done.
Winston, it has been the core tenet of Reaganomics to hold that free trade based on comparative advantage and competitiveness can't exist without laxed regulation, low to zero government spending and lower private sector taxes. That tenet is fundamentally wrong, and we are literally reiterating the Reagsn doctrine by conflating the two and parroting the same.
Amen! The so called "Reagan Revolution" seems to have been set into infinite recursion with no apparent way out. I wish I could say I knew the solution, but I don't. I only know it's politics.
The adage "no such thing as a free lunch" comes to mind. Technology is reducing the jobs out there and will continue to do so, even if we do not ever achieve a workable artificial intelligence. I would bet the Robber Barons never expected the "wealth" the unionization movement took away from them would return with a high multiplier due to increased consumption from the working classes.
Actually not increased poverty. Yes, free trade has its downsides and I have concurred with that in my answer. But free trade is one of the most prominent features of globalisation or hyper globalization. Ghost towns are reality. But these are more of the aspects of globalisation per se. We are currently at one of the lowest unemployment rate, may be close to the best balance between inflation and jobs. Homelessness is a very different structural problem and cities are more prone than rural areas, but the rural folks have been at the receiving end of the globalization woes.
Corporate greed, lack of regulation, banking corruption owing to intermingling of various forms of debt instruments and political patronage and mostly mismanagement from local government are some of the factors responsible for urban woes.
That operates under the domain of globalized world, supply chain industries but these are mostly different set of problems which intersect with globalization which is everywhere.
My point was regarding comparative advantage and trade only. It screwed up rural regions. That's fact and I don't deny.
But modt of the problems you listed have multi dimensional factors behind and are very complex in nature.
Let's say we shouldn't conflate Reaganomics with Comparative advantage and free trade. It's definitely an aspect but different.
Look at me. I come from India, and post liberalized world has helped India to become a better nation. It's still not prosperous, but it's significantly rich compared to 1990 for example.
Exactly. Thank you!
It's a euphemism for "free for the billionaire/oligarch class".
Thumbs up. Observations:
1) The format nails it. One sees data and hears commentary about the data. Excellent inflection of voice. No face expressions. Adopt this format.
2) Was there supposed to be a slide on the dollar's exchange rate at the end? You talked about it, but no slide. Just checking in case it didn't upload.
3) The long view on a "normal" trade balance is very effective: a) as knowledge. b) counters the burgeoning "new" trade view nicely all by itself.
I really appreciate this more wonkish analysis and explanation/debunking of these economic ideas. Would love some more!
Thanks for your experiment, Paul! To me the modality is very effective. As a 63 year old working on my PhD in computational science (foundations of ai), the urge to ingest and summarize data and talks as quickly as I can, to move on to the next "thing to learn", is too tempting. Your pace and the quantity of detail is just right, for a topic like this. It brought me back to my undergrad days in Econ 101 with my wise old professor slowly and methodically would walk us through another topic, "...and on this chart we can see...". You could write forever on each of the major topics you covered (and I hope you do!). Here's one topic I'd love to see covered, or at least referenced, some up-to-date reading list about macro economics (sans BS & hype !). Thanks for your energy and hard work - I look forward to your posts, and this is one more thing to look forward to.
My wee brain has thought that there is a connection between our military spending and our ability to run trade and budget deficits. The US took on the job of insuring world wide stability post WW2 as the last man standing. The rest of the world sort of agreed to that job. I think the world buys our debt products and sends us stuff because of that implied guarantee of stability. If we lose the trust of the world then our outrageous privilege will disapear. Mr Trump's attempt to bully the world may be the spark that lights that fuse.
What if the US got paid for the military protective services that we "export" to other countries? Our trade would be closer to balanced. Perhaps military services in one of our greatest comparative advantages.
Not for long. Once China decides to shut down manufacturing of our military hardware and production of critical raw materials - while simultaneously invading Taiwan, and who knows where else - our military prowess will be toast.
Oh yeah, for sure.
I just listened to Krugman’s slideshow on trade imbalances. Paul beautifully stitched together some recent posts with historical data to paint a picture of what a strong economy means in the face of global trade. I highly recommend you spend the time learning what may be our new admins course and why it is dead wrong.
Hell, I already knew it's dead wrong. One needn't be a wonk to recognize that. It's just too blatant.
Fascinating. I really appreciate this deeper exploration of the topic, thank you for providing it. My suggestion is that a video where it would be possible to see the specific slides and hear your commentary would be beneficial, although it was also very useful to have a transcript of your comments.
I really appreciate this more wonkish analysis and explanation/debunking of these economic ideas. Would love some more!
Wow. Just wow. I'm absolutely in awe of Mr Krugman's ability to present a complex argument as cogently as he does here, and very obviously without even reading from a manuscript.
Bravo. It worked just fine. And it is good to hear your voice.