30 juni 2005

Krugman: liberal no more (The Flemish Beerdrinker)

Alex Tabarrok - rightly so - condemns Krugman’s terrible column on China as being illiberal demagoguery:

Paul Krugman used to be a liberal economist; no longer. His abandonment of economics has long been plain, Krugman’s abandonment of liberalism was announced in yesterday’s commentary on China. What really upset me about Krugman’s column is not the bizarre economics but the illiberal politics. In the last twenty years China’s economic growth has lifted hundreds of millions of people out of poverty and nearly unspeakable deprivation. China’s abandonment of communism is one of the great humanitarian events of all time. And what does Krugman have to say about this improvement in well being? (I paraphrase).

’Watch out. Now is the time to panic. Their gain is your loss.’

It’s hard to over-estimate how awful Krugman’s column is. Consider this:

China, unlike Japan, really does seem to be emerging as America’s strategic rival and a competitor for scarce resources...

’Strategic rival’ is the kind of term that would-be Metternichs throw about to impress their girlfriends but what does it mean? Everyone is a competitor for scarce resources. Even those nice Canadians compete with Americans for scarce resources. Are Canadians a strategic rival to be feared? The real question is how do rivals compete? Do they compete with war or by trade? China is moving from the former to the latter but shockingly Krugman prefers the former. Exaggeration? Consider this statement:

...the Chinese government might want to control [Unocal] if it envisions a sort of "great game" in which major economic powers scramble for access to far-flung oil and natural gas reserves. (Buying a company is a lot cheaper, in lives and money, than invading an oil-producing country.

So what does Krugman recommend? Blocking the bid for Unocal. In other words, support China’s fear that they may be cut off from oil and encourage the invasion of an oil-producing country. Nothing can harm the prospects for world peace more than the vicious idea that we do better when they do worse.

Tabarrok then approvingly quotes Brad DeLong and Adam Smith. But then it’s a pity that DeLong cannot stand up more for his own conviction when it comes to criticizing Krugman (see Steve Carr’s comment: "Very disappointed in this post. Krugman’s piece was precisely the kind of mercantilist posturing that he once was so hard on, and that you’re presumably opposed to, and you’ve given him a complete pass."). And i would also quote Bastiat who said that if goods don’t cross borders, weapons will. Let’s hope that no one will listen to Krugman’s policy advice because that would bring Bastiat’s fear a little bit closer.

See also Don Boudreaux at Cafe Hayek. Why o why can’t we have better columnists?

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