Economist Paul Krugman, the longtime defender of global free trade and a member of the failed “Never Trump” movement, now admits that globalization has failed American workers.
In a column for Bloomberg titled “What Economists (Including Me) Got Wrong About Globalization,” Krugman admits that the economic consensus for free trade that has prevailed for decades has failed to recognize how globalization has skyrocketed inequality for America’s working and middle class workers.
In the past few years, however, worries about globalization have shot back to the top of the agenda, partly due to new research and partly due to the political shocks of Brexit and U.S. President Donald Trump. And as one of the people who helped shape the 1990s consensus — that the contribution of rising trade to rising inequality was real but modest — it seems appropriate for me to ask now what we missed. [Emphasis added]
The pro-globalization consensus of the 1990s, which concluded that trade contributed little to rising inequality, relied on models that asked how the growth of trade had affected the incomes of broad classes of workers, such as those who didn’t go to college. It’s possible, and probably even correct, to think of these models as accurate in the long run. Consensus economists didn’t turn much to analytic methods that focus on workers in particular industries and communities, which would have given a better picture of short-run trends. This was, I now believe, a major mistake — one in which I shared a hand. [Emphasis added]
Krugman, though, writes that he and his fellow free trade economists “had no way to know” that globalization of the American economy or a surge in trade deficits “were going to happen,” though the anti-globalization movement had warned for years of the harmful impact free trade would have on U.S. workers — including Donald Trump.