The Hypocrisy of Leftist Economists, including Nobel Laureate Krugman regards Trump's Tariffs, is disturbing.

Lets cut to the chase and expose the rank contradictions of left-wingers harping on about how awful are Trump's tariffs. Lets first zero in on NZ Labour Party Hypocrite Number One, my mate David Parker. He doesn't seem to mind me getting stuck into his economics, and why shouldn't I when he's a lawyer? We meet up around once a year to take each other on, he reads this Blog, and I admire his willingness to debate, so here goes. Like Stiglitz and Krugman, Parker has lamented the evils of high inequality. For decades the left has argued that a lot of that inequality and the plight of low earners has been caused by globalization. An influential economist I used to know a bit called Robert Freeman wrote an article called Are your wages set in Beijing? The answer for low unskilled earners is (partly) "Yes". For decades the likes of Big Name economists Krugman and Stiglitz have written about the evils of too much globalization. "Hyper globalization" they call it. And now they viciously attack their own popularly elected President for addressing it somewhat with his tariffs.

So let's clarify a point in this regard. What is our former Trade Minister Parker's solution to the inequality and plight of the poor brought on by ever more free trade and capital flows and low-skilled immigration around the world? Roughly speaking, sign more free-trade agreements, but expand the welfare state to protect workers from the greater instability. How are Mr Stiglitz, Mr Krugman and Mr Parker, not to mention his all-time biggest buddy, the French socialist economist Thomas Piketty, going to fund this bigger welfare state? In NZ's case, through higher taxes on wealth and capital. Our Labour Party - as well as the Democrat Party in the US - and similar more left-leaning parties around the world - are all for signing more free trade agreements - but at the same time lament that this means the poor in their countries will increasingly have their "wages set in Beijing". To deal with that issue, their answer is higher taxes - including capital and wealth taxes - to pay for the fall-out.

So what's the problem with the leftist (high tax) solution to globalization? (Krugman loves super highly taxed Denmark's welfare state). In the US, low income workers rejected that Bernie Sanders model, even ones who used to always vote Democrat. The NZ Labour Party is placing its bets in our country's next election that lower Kiwi earners will not do the same. What's particularly striking is that the views of Krugman, though he may have won a Nobel Prize, are so hypocritical, so down-right contradictory, that at least one Blog in the world has to call them out. The fact is, like him, many Americans think globalization has gone too far. The fact is, unlike him, they don't want to pay higher taxes to pay for the fall-out. Although tariffs are a form of tax, the choice for Americans is one between a tax on imports, versus higher forms of other taxes to fund more generous welfare. So far voters there have chosen the former. The only economist in the US I've seen making any sense on this matter is Greg Mankiw, former President Bush's Chief Economic Adviser, who argues that should any good come out of the present trouble, it will be the introduction of a GST style (consumption) tax in the US, which they currently don't have. He's right - that's probably the least distortionary way of raising revenue and closing the US fiscal gap. As for capital & wealth taxes in NZ to do that kind of heavy lifting, and use the revenues to increase welfare generosity, I'm not convinced. At a time when NZ has the chance to attract greater volumes of foreign capital, whacking in those taxes would mean shooting ourselves in the foot.