BTW don't feel you need to provide me any extra value because of my paid subscription. My vote is to make this available to everyone. It's an excellent description of trade, and the more people who see this, the better. I think there is value in posting it first for subscribers but the value is not that I see it first. The value is that as I write this, there are only three other comments so I KNOW you are going to read it. That is more than enough.
In my previous comment I should have said 'lose - lose more bigly'.
I think that you can't understand Trump in a rational sense. He is a predator for whom a win-win relationship simply doesn't exist. He only understands win-lose and he needs to be on the win side of that equation. His animal sense of relative strength correctly sees a win-lose opportunity in the trade relationship between the US and its neighbours. So his need to win drives him to take advantage of these relationships. What he also doesn't realize is that win-lose often disguises a lose-lose bigger opportunity. The other thing is that Trump has absolutely no understanding of the advantages that come with having a good reputation (honest business is the most efficient form of trade) since he's never once had this experience.
Trump doesn’t really seem to want to pull the tariff trigger. He may have a fetish about tariffs, but he appears to fear the consequences. He seems to be using tariff threats to show his base that he can bully others. He wants cheap wins. He also wants to use the tariffs domestically to extract “deals” for himself. He has the power to threaten to mess up many businesses, and Congress won’t stop him. He can extort money and political favors by jiggling his tariff lever. He will never make permanent deals because he can pull that lever whenever he needs another fix.
Also, his base seems to think he won the standoffs with Canada and Mexico when all he got was what he had before. But you can’t explain that to them. They just say, “ you refuse to accept when Trump wins. You just don’t want him to be successful. “ Up is down with them.
They are cult members. I hold out a small amount of hope that he will eventually screw them so blatantly that they can’t excuse it. Then, I realize that he sells them phony crypto and they still live him.
The theory of Trump is that most of his cult knows he’s a grifter, but the all believe they are in on the grift, and that it’s others that are getting screwed, so it’s all good.
The history of these populist strongmen that there will always be another promise offered and there will always be another scapegoat to blame for current failures. Sobering!
I'm suspecting that not a whole lot of them took Econ, and if they got it in one semester of senior year in high school it was not that well taught and they didn't understand much of it anyway.
Most other POTUS understand the huge benefits of a win-win partnership and relationships for trade and defense, GOP and DEM (Eisenhower, Kennedy, Reagan, Bushes, Clinton, Obama,Biden), Trumperdiddlydoo does not.
It seems he is incapable of grasping that basic concept of mutual benefits from partnership.
Trump is simply a useful idiot at this stage of the project. Listen to what Vance says at the Paris AI summit. I expect this be be very instructive after Vance declared an open dictatorship yesterday in relation to untrammelled executive power. May l recommend to read Defying Hitler by Hafner re 1930s Germany.
Trump controls the brown shirts (aka MAGA). So I don't think he's a useful idiot. Trump and Musk complement each other (in a VERY odious way). They need each other - at least for now. This is a very very dangerous moment.
Another great analysis by Krugman, with a clear synthesis. I am a theoretical physicist, I know how hard it is to catch an essence and express in not too many words.
I am worried though that this is an article for times of democracy, not when fascism knocks at your door (I believe actually that the door has been already opened). I have been terrified for years by the lack of awareness of the dangers of fascism, as if the US has been somehow vaccinated against it. As a European, who learned his craft and lived in the US was many years, I was always struck by the ignorance there of what fascism is and how vulnerable societies and countries are, when you have great crisis. And a country with insane social differences, when a few own as much as half of population, and 1% as much as 90% is what we call a runaway mode - this by itself unstable, threatening democracy and the rule of law. The problem does not start with some Trump and Musk, it is the capitalism gone crazy that produced them. I hope I am wrong, but to me the time for subtle analysis is long gone. I pray for this great country, but I fear that every day it gets more and more too late to salvage democracy.
Which Europeans? The difference between say Germany and Hungary is a difference between paradise and hell. In any case, my comment was not about the state of affairs of human rights and civil liberties in the US and Europe. Simply. here in Europe most people had to log through fascism or are going now as in Hungary, so there is awareness that helps you recognise fascism when it arrives at your door.
That I felt was always lacking in the US, from the first day I found almost nobody aware that it may arrive there too. Fascism was and still is associated with other countries and cultures. This time around, keep in mind that the US is actively supporting, arming and almost encouraging the nazi-like government to commit a genocide in Gaza.
I am a paid subscriber. Your writings are a model of truth and clarity. There is value in your post for others and I am happy to see you make it available.
To understand the Trump tariffs, just imagine that the only thing you needed was to hit some revenue target, using tariff revenues. That, because the only thing you care about, w/r/t/ the tariffs, is the revenue. And that, because the only point of it is to let you keep your tax cuts for the wealthy. But you can't raise "taxes".
And suddenly, the whole "policy" snaps into focus. It has nothing to do with trade, America's position in the world, or anything else that a reasonable person might consider.
Instead:
A) You must keep insisting that tariffs are not taxes, because you are not allowed to use the t-word, as a Republican. So this is a way to raise revenues, without saying the t-word.
B) And "policy" consisted of sorting countries from top to bottom, not in terms of U.S. trade deficit, but in terms of U.S. imports only -- because that (less elasticity of demand, once you impose the tariffs) determines your revenue.
So, why was it 25% each for Mexico and Canada, and 10% for China? My guess is, that's because that's when they hit the required projection of tariff revenues that they need.
Why are we now talking about tariffs on everything, from all countries, characterized now as "reciprocal tariffs"?
Best guess, the revenue target has changed, or the estimated revenues from the existing tariffs have changed.
Sometimes it's difficult for really bright people to understand how not-so-bright people think. If the Trump tariffs appear divorced from any rational thinking about international trade, that's because they are.
It doesn't mean that they were done at random or that they were otherwise harmless.
If you get you mind around the fact that a) they are a source of revenue that b) you can claim is not a tax ... then sorting countries by descending volume of U.S. imports, and imposing a tariff as needed, that's as deep as the policy thinking needs to go.
Add in a lack of deep thinkers on the team, just for good measure.
If MAGA people noticed gas prices going up will they not notice the increases caused by tariffs? How will Trump explain this 6 months from now? Maybe by then it will all be over and Gestapo will have stamped out all discourse except their own.
As a poor student who can’t *really* afford a subscription at this point in time (but who has ambitions to get one when I graduate in the summer), I am really grateful for the people who argued for this to be made widely available for free! And of course to Dr Krugman for making it available to all.
Given I’m taking a class in International Trade, this wonkish piece was brilliant. I’d love to see more recorded stuff like this in the future.
The one thing I wasn’t sure I followed and could use a bit more explanation was about the 9-10 minute mark about why the accounts must balance. I need to know more about that arithmetic involving investments.
This follows directly from the fact that there are two sides to any trade - one offers a good or service and the other gives cash. So if I sell you two apples and you sell me one orange (and say they have the same price), I will end up with some of your currency in the bank, which in effect is my investment in you. I have a trade surplus with you but also a capital deficit with you.
I think a big part of the confusion comes from the terminology. If more goods leave my shores than come back, it is a “surplus” in trade. If more capital leaves my shores than come back it is an “outflow” of capital.
I’m trying to imagine the simplest of scenarios to make it make sense.
A jar of maple syrup crosses the Canadian border into the US. Ten US dollars go the other way. (Does it matter if it’s US dollars or Canadian?) Those $10 are spoken of as some sort of “investment” in the US. Is the currency kind of an IOU that eventually has to be paid back? There’s also something about it coming from the “savings” of the US?
I’m working on it.
(And I actually did pretty well in micro and macro back in the day, but it’s gotten pretty rusty.)
Imagine instead a 1,000 jars of maple syrup (because it is an easier example). Now you have US$10,000. If this is an asset you don't need to convert to $C (which would enable you to buy Canadian goods or services) then you will want to earn some interest in your account: you may buy a US asset such as an equity or a bond or some other interest bearing financial instrument, Voila! The US$10K has now returned to the US as capital, to be allocated somewhere by the entity holding the money. Of course, this is very simplistic, but if you, say, deposit the funds as a non-interest bearing US$ account in a bank, the bank does not just let it sit there and it will eventually find its way as a capital investment in the US. One small adjustment to this is the growth or shrinking of exchange reserves, which may actually be held in cash, although mostly these will be held as Treasury bills and the like, so they too find their way back to the US. Hope this highly truncated explanation is helpful: I left out many, many details and possible alternatives.
I’m better understanding the balance side of things. But now I’m trying on the simplistic “a surplus is better” mindset. In this case if you export more than you import, you have cash, and therefore you’re rich. You’ve built up your savings, which also is capital available for banks to loan out for business expansion. Only in this case, the interest is going to US entities as opposed to foreign ones. Could this be an argument for a trade surplus being better?
I didn't understand that either. A further explanation would help me understand the rest of the lecture. Following the given definitions, I have no idea why the amount of a country’s trade imbalance would have anything at all to do the amount of money foreign countries have invested, let alone be equal.
Like others in the comments field, I don't subsribe in order to get privileged information but to support your overall service to the public. But today I noticed an unexpected benefit: The quality of the comments among your subscribers is especially high.
I’ve lingered in bed listening not looking. That’s a compliment to Paul Nobel from an English Major who cringed at those alphabet letters amongst real numbers in his math (Ugg) book. I head down for my first Earl Grey tea which I will lace with Irish cream, an homage to my newfound wisdom about Ireland’s balances and Wile E Coyote’s control over gravity. Paul has enlightened me: do not look down and all will be fine. Lewis Carroll taught math. O frabjous day!
Feedback from the feedback: Most people don't know the difference between an accounting identity and an equation. Many economists and economics professors also don't get it often, leading them to things like The Doctrine of Immaculate Tranfer. Most business school MBAs I have known especially don't know. The inability to distinguish between an identity and an equation has been the source of a lot of grief, especially in policy. Reducing exports does not necessarily mean that GDP will increase, for instance. A similar thing happens when one discusses the balance of payments. People do not grasp why the current and the capital accounts must balance each other.
Suggestion: Please do a brief lecture on this issue exclusively for the public. Give illuminating examples. Why? Because you are a national treasure and you can communicate this better than anyone else I know (besides Robert Solow, who is deeply missed). Let the people see. There's a general thirst for knowledge; even the people on the Right say things like "do your research" these days. They want to know but what they find is usually crap. At least they should be able to laugh when their policymakers say stupid stuff, on trade for instance.
This is because most business schools grade on a curve. I saw people get 50% on an exam and still get an A. I have had many arguments with cum laude MBAs who did not know anything. When I studied to be a Certified Management Accountant, I learned that half the test takers failed to reach the passing score of about 75%.
I don't think it has anything to do with the relative quality of MBA curricula in general, or one business school vs. another.
My primary field of interest in business school was Marketing and Organization/Business Mgmt, rather than Finance, Accounting, etc., so I'm still fairly ignorant on topics like Macro Economics that Paul Krugman usually writes about. I find his writings very interesting, but his specialty and article topics are in a fairly narrow niche, one that relatively few MBA students (plan to) get into. I appreciate his ability to explain these (to me) complicated issues in terms I can grasp.
Just like my undergrad field of Mechanical Engineering: it's too broad to expect that any ME curriculum will teach you the specifics of every discipline in the ME field. The best you can hope for is the ability to quickly learn those specifics when you land your first job. Likewise, fresh out of school with an MBA, you're still a generalist.
Very informative and easy to follow! I like the diagrams - and also did in your old Times blogs - they always enhance and illustrate your points.
One of the key take aways for me after to listening to this is that the average level of "expressed education" of our elected leaders has declined to historically dangerous levels. What do I mean by that? I am confident that most of our elected representatives, senators and even most of our presidents (current incumbent excepted) have the intellectual and educational foundation to grasp the points in this lecture/presentation very quickly, including the importance of not norming and oversimplifying trade balance conditions. What we see in current practice, however, is a "dumbing down" of the expressed level of trade understanding among GOP Representatives and Senators to acquiesce to a singularly wrong-minded and uninformed leader with a large following of incompletely educated supporters. It is simply in their selfish personal interest to play dumb and join the contemporary GOP "march of idiocracy."
Brilliant and lucid. Suggestion: In the chart showing Spain's trade balance, a second series on Spain's capital account balance might visually reinforce the balance of payments issue right away. The next chart on the interest rate differentials with Germany then clinches the narrative about capital inflows.
Do it in this format more often than in prose/writing. I don't have estimates, but my own experience -- especially with kids, but adults too -- leads me to believe that a large proportion of people grasp things better by hearing and seeing than by reading. So mix it up for maximal effect. This one was very good. Thumbs up!
Thanks! It's been more than 50 years since I took an econ class, but if my instructor had been as clear as you, I might have taken more. (I'm a retired math professor, so the math was never the problem in econ, but the strange assumptions apparently designed to lead to the wanted conclusions.)
Physics person here. I never understood anything about economics until a roommate very slowly and patiently explained to me why there was no necessary shortage of food during the Siege of Leningrad. "Shortage" didn't mean what I thought it meant. At that point, everything clicked.
Nope. Supply and demand are curves, not points. As long as the black market functioned, there was no shortage, even though Leningrad was a scene of mass starvation, and Gaza at least a scene of mass malnutrition. "Shortage" is something that happens when the price mechanism is constrained. It has nothing to do with human needs. This usage is cray-cray, but AFAIK, it is flawless econobabble.
BTW don't feel you need to provide me any extra value because of my paid subscription. My vote is to make this available to everyone. It's an excellent description of trade, and the more people who see this, the better. I think there is value in posting it first for subscribers but the value is not that I see it first. The value is that as I write this, there are only three other comments so I KNOW you are going to read it. That is more than enough.
In my previous comment I should have said 'lose - lose more bigly'.
seconded
Seconded!
Thirded!
I think that you can't understand Trump in a rational sense. He is a predator for whom a win-win relationship simply doesn't exist. He only understands win-lose and he needs to be on the win side of that equation. His animal sense of relative strength correctly sees a win-lose opportunity in the trade relationship between the US and its neighbours. So his need to win drives him to take advantage of these relationships. What he also doesn't realize is that win-lose often disguises a lose-lose bigger opportunity. The other thing is that Trump has absolutely no understanding of the advantages that come with having a good reputation (honest business is the most efficient form of trade) since he's never once had this experience.
Trump doesn’t really seem to want to pull the tariff trigger. He may have a fetish about tariffs, but he appears to fear the consequences. He seems to be using tariff threats to show his base that he can bully others. He wants cheap wins. He also wants to use the tariffs domestically to extract “deals” for himself. He has the power to threaten to mess up many businesses, and Congress won’t stop him. He can extort money and political favors by jiggling his tariff lever. He will never make permanent deals because he can pull that lever whenever he needs another fix.
Also, his base seems to think he won the standoffs with Canada and Mexico when all he got was what he had before. But you can’t explain that to them. They just say, “ you refuse to accept when Trump wins. You just don’t want him to be successful. “ Up is down with them.
They are cult members. I hold out a small amount of hope that he will eventually screw them so blatantly that they can’t excuse it. Then, I realize that he sells them phony crypto and they still live him.
The theory of Trump is that most of his cult knows he’s a grifter, but the all believe they are in on the grift, and that it’s others that are getting screwed, so it’s all good.
The history of these populist strongmen that there will always be another promise offered and there will always be another scapegoat to blame for current failures. Sobering!
I'm suspecting that not a whole lot of them took Econ, and if they got it in one semester of senior year in high school it was not that well taught and they didn't understand much of it anyway.
Most other POTUS understand the huge benefits of a win-win partnership and relationships for trade and defense, GOP and DEM (Eisenhower, Kennedy, Reagan, Bushes, Clinton, Obama,Biden), Trumperdiddlydoo does not.
It seems he is incapable of grasping that basic concept of mutual benefits from partnership.
Trump is simply a useful idiot at this stage of the project. Listen to what Vance says at the Paris AI summit. I expect this be be very instructive after Vance declared an open dictatorship yesterday in relation to untrammelled executive power. May l recommend to read Defying Hitler by Hafner re 1930s Germany.
Trump controls the brown shirts (aka MAGA). So I don't think he's a useful idiot. Trump and Musk complement each other (in a VERY odious way). They need each other - at least for now. This is a very very dangerous moment.
Another great analysis by Krugman, with a clear synthesis. I am a theoretical physicist, I know how hard it is to catch an essence and express in not too many words.
I am worried though that this is an article for times of democracy, not when fascism knocks at your door (I believe actually that the door has been already opened). I have been terrified for years by the lack of awareness of the dangers of fascism, as if the US has been somehow vaccinated against it. As a European, who learned his craft and lived in the US was many years, I was always struck by the ignorance there of what fascism is and how vulnerable societies and countries are, when you have great crisis. And a country with insane social differences, when a few own as much as half of population, and 1% as much as 90% is what we call a runaway mode - this by itself unstable, threatening democracy and the rule of law. The problem does not start with some Trump and Musk, it is the capitalism gone crazy that produced them. I hope I am wrong, but to me the time for subtle analysis is long gone. I pray for this great country, but I fear that every day it gets more and more too late to salvage democracy.
good POV Goran Senjanovic, thanks!
Glad you appreciated it. I should have added that it was Krugman himself who's been worried about this for years, was anticipating it.
Which Europeans? The difference between say Germany and Hungary is a difference between paradise and hell. In any case, my comment was not about the state of affairs of human rights and civil liberties in the US and Europe. Simply. here in Europe most people had to log through fascism or are going now as in Hungary, so there is awareness that helps you recognise fascism when it arrives at your door.
That I felt was always lacking in the US, from the first day I found almost nobody aware that it may arrive there too. Fascism was and still is associated with other countries and cultures. This time around, keep in mind that the US is actively supporting, arming and almost encouraging the nazi-like government to commit a genocide in Gaza.
Also, put this out for non-paid subscribers, asap (apology to my fellow paid subscribers). The public will grasp this. They need to know.
He did. The Krugman penetration into MAGAworld is probably about .00001% though.
I am a paid subscriber. Your writings are a model of truth and clarity. There is value in your post for others and I am happy to see you make it available.
To understand the Trump tariffs, just imagine that the only thing you needed was to hit some revenue target, using tariff revenues. That, because the only thing you care about, w/r/t/ the tariffs, is the revenue. And that, because the only point of it is to let you keep your tax cuts for the wealthy. But you can't raise "taxes".
And suddenly, the whole "policy" snaps into focus. It has nothing to do with trade, America's position in the world, or anything else that a reasonable person might consider.
Instead:
A) You must keep insisting that tariffs are not taxes, because you are not allowed to use the t-word, as a Republican. So this is a way to raise revenues, without saying the t-word.
B) And "policy" consisted of sorting countries from top to bottom, not in terms of U.S. trade deficit, but in terms of U.S. imports only -- because that (less elasticity of demand, once you impose the tariffs) determines your revenue.
So, why was it 25% each for Mexico and Canada, and 10% for China? My guess is, that's because that's when they hit the required projection of tariff revenues that they need.
Why are we now talking about tariffs on everything, from all countries, characterized now as "reciprocal tariffs"?
Best guess, the revenue target has changed, or the estimated revenues from the existing tariffs have changed.
Sometimes it's difficult for really bright people to understand how not-so-bright people think. If the Trump tariffs appear divorced from any rational thinking about international trade, that's because they are.
It doesn't mean that they were done at random or that they were otherwise harmless.
If you get you mind around the fact that a) they are a source of revenue that b) you can claim is not a tax ... then sorting countries by descending volume of U.S. imports, and imposing a tariff as needed, that's as deep as the policy thinking needs to go.
Add in a lack of deep thinkers on the team, just for good measure.
If MAGA people noticed gas prices going up will they not notice the increases caused by tariffs? How will Trump explain this 6 months from now? Maybe by then it will all be over and Gestapo will have stamped out all discourse except their own.
As a poor student who can’t *really* afford a subscription at this point in time (but who has ambitions to get one when I graduate in the summer), I am really grateful for the people who argued for this to be made widely available for free! And of course to Dr Krugman for making it available to all.
Given I’m taking a class in International Trade, this wonkish piece was brilliant. I’d love to see more recorded stuff like this in the future.
The one thing I wasn’t sure I followed and could use a bit more explanation was about the 9-10 minute mark about why the accounts must balance. I need to know more about that arithmetic involving investments.
This follows directly from the fact that there are two sides to any trade - one offers a good or service and the other gives cash. So if I sell you two apples and you sell me one orange (and say they have the same price), I will end up with some of your currency in the bank, which in effect is my investment in you. I have a trade surplus with you but also a capital deficit with you.
I think a big part of the confusion comes from the terminology. If more goods leave my shores than come back, it is a “surplus” in trade. If more capital leaves my shores than come back it is an “outflow” of capital.
I’m trying to imagine the simplest of scenarios to make it make sense.
A jar of maple syrup crosses the Canadian border into the US. Ten US dollars go the other way. (Does it matter if it’s US dollars or Canadian?) Those $10 are spoken of as some sort of “investment” in the US. Is the currency kind of an IOU that eventually has to be paid back? There’s also something about it coming from the “savings” of the US?
I’m working on it.
(And I actually did pretty well in micro and macro back in the day, but it’s gotten pretty rusty.)
Imagine instead a 1,000 jars of maple syrup (because it is an easier example). Now you have US$10,000. If this is an asset you don't need to convert to $C (which would enable you to buy Canadian goods or services) then you will want to earn some interest in your account: you may buy a US asset such as an equity or a bond or some other interest bearing financial instrument, Voila! The US$10K has now returned to the US as capital, to be allocated somewhere by the entity holding the money. Of course, this is very simplistic, but if you, say, deposit the funds as a non-interest bearing US$ account in a bank, the bank does not just let it sit there and it will eventually find its way as a capital investment in the US. One small adjustment to this is the growth or shrinking of exchange reserves, which may actually be held in cash, although mostly these will be held as Treasury bills and the like, so they too find their way back to the US. Hope this highly truncated explanation is helpful: I left out many, many details and possible alternatives.
I’m better understanding the balance side of things. But now I’m trying on the simplistic “a surplus is better” mindset. In this case if you export more than you import, you have cash, and therefore you’re rich. You’ve built up your savings, which also is capital available for banks to loan out for business expansion. Only in this case, the interest is going to US entities as opposed to foreign ones. Could this be an argument for a trade surplus being better?
Helpful for me! 🇨🇦
I didn't understand that either. A further explanation would help me understand the rest of the lecture. Following the given definitions, I have no idea why the amount of a country’s trade imbalance would have anything at all to do the amount of money foreign countries have invested, let alone be equal.
Like others in the comments field, I don't subsribe in order to get privileged information but to support your overall service to the public. But today I noticed an unexpected benefit: The quality of the comments among your subscribers is especially high.
I’ve lingered in bed listening not looking. That’s a compliment to Paul Nobel from an English Major who cringed at those alphabet letters amongst real numbers in his math (Ugg) book. I head down for my first Earl Grey tea which I will lace with Irish cream, an homage to my newfound wisdom about Ireland’s balances and Wile E Coyote’s control over gravity. Paul has enlightened me: do not look down and all will be fine. Lewis Carroll taught math. O frabjous day!
I never took an economics course in college, so I found this enormously helpful.
Thank you!
Feedback from the feedback: Most people don't know the difference between an accounting identity and an equation. Many economists and economics professors also don't get it often, leading them to things like The Doctrine of Immaculate Tranfer. Most business school MBAs I have known especially don't know. The inability to distinguish between an identity and an equation has been the source of a lot of grief, especially in policy. Reducing exports does not necessarily mean that GDP will increase, for instance. A similar thing happens when one discusses the balance of payments. People do not grasp why the current and the capital accounts must balance each other.
Suggestion: Please do a brief lecture on this issue exclusively for the public. Give illuminating examples. Why? Because you are a national treasure and you can communicate this better than anyone else I know (besides Robert Solow, who is deeply missed). Let the people see. There's a general thirst for knowledge; even the people on the Right say things like "do your research" these days. They want to know but what they find is usually crap. At least they should be able to laugh when their policymakers say stupid stuff, on trade for instance.
This is because most business schools grade on a curve. I saw people get 50% on an exam and still get an A. I have had many arguments with cum laude MBAs who did not know anything. When I studied to be a Certified Management Accountant, I learned that half the test takers failed to reach the passing score of about 75%.
I don't think it has anything to do with the relative quality of MBA curricula in general, or one business school vs. another.
My primary field of interest in business school was Marketing and Organization/Business Mgmt, rather than Finance, Accounting, etc., so I'm still fairly ignorant on topics like Macro Economics that Paul Krugman usually writes about. I find his writings very interesting, but his specialty and article topics are in a fairly narrow niche, one that relatively few MBA students (plan to) get into. I appreciate his ability to explain these (to me) complicated issues in terms I can grasp.
Just like my undergrad field of Mechanical Engineering: it's too broad to expect that any ME curriculum will teach you the specifics of every discipline in the ME field. The best you can hope for is the ability to quickly learn those specifics when you land your first job. Likewise, fresh out of school with an MBA, you're still a generalist.
Thank you for this. It was super interesting.
Very informative and easy to follow! I like the diagrams - and also did in your old Times blogs - they always enhance and illustrate your points.
One of the key take aways for me after to listening to this is that the average level of "expressed education" of our elected leaders has declined to historically dangerous levels. What do I mean by that? I am confident that most of our elected representatives, senators and even most of our presidents (current incumbent excepted) have the intellectual and educational foundation to grasp the points in this lecture/presentation very quickly, including the importance of not norming and oversimplifying trade balance conditions. What we see in current practice, however, is a "dumbing down" of the expressed level of trade understanding among GOP Representatives and Senators to acquiesce to a singularly wrong-minded and uninformed leader with a large following of incompletely educated supporters. It is simply in their selfish personal interest to play dumb and join the contemporary GOP "march of idiocracy."
Profiles in intellectual cowardice.
Not that some of them aren't just stupid. Comer, Coach Tuberville, etc.
Brilliant and lucid. Suggestion: In the chart showing Spain's trade balance, a second series on Spain's capital account balance might visually reinforce the balance of payments issue right away. The next chart on the interest rate differentials with Germany then clinches the narrative about capital inflows.
Do it in this format more often than in prose/writing. I don't have estimates, but my own experience -- especially with kids, but adults too -- leads me to believe that a large proportion of people grasp things better by hearing and seeing than by reading. So mix it up for maximal effect. This one was very good. Thumbs up!
Thanks! It's been more than 50 years since I took an econ class, but if my instructor had been as clear as you, I might have taken more. (I'm a retired math professor, so the math was never the problem in econ, but the strange assumptions apparently designed to lead to the wanted conclusions.)
Physics person here. I never understood anything about economics until a roommate very slowly and patiently explained to me why there was no necessary shortage of food during the Siege of Leningrad. "Shortage" didn't mean what I thought it meant. At that point, everything clicked.
Nope. Supply and demand are curves, not points. As long as the black market functioned, there was no shortage, even though Leningrad was a scene of mass starvation, and Gaza at least a scene of mass malnutrition. "Shortage" is something that happens when the price mechanism is constrained. It has nothing to do with human needs. This usage is cray-cray, but AFAIK, it is flawless econobabble.