News & Politics

Paul Krugman: Trump Could Unravel One of FDR's Signature Achievements

The president's latest proposal marks a return to the "bad old days" of the robber barons.

Paul Krugman
Photo Credit: YouTube Screengrab

Shortly after Donald Trump was elected president, former Republican Speaker of the House Newt Gingrich bragged that Republicans would finally dismantle what's left of the "Franklin Delano Roosevelt model" of governance. More than a year later, they're well on their way to succeeding, having passed a comprehensive tax bill redistributing the nation's wealth from the bottom to the top and all but decimating the Affordable Care Act in the process. Now Trump is threatening to scrap one of FDR's signature achievements: reciprocal trade policy.

As Paul Krugman writes in his Thursday column, the president's newly announced tariffs on steel and aluminum are "arguably the Trumpiest thing Trump has done so far." Not only are they senseless (Trump has brayed about one-sided trade deals for decades, without even a rudimentary understanding of how they work), they're likely to prove incredibly destructive, triggering a trade war that hampers both the U.S. and global economies. 

"There’s a reason we have international trade agreements, and it’s not to protect us from unfair practices by other countries," Krugman explains. "The real goal, instead, is to protect us from ourselves: to limit the special-interest politics and outright corruption that used to rein in trade policy."

What Trump either refuses to acknowledge or simply fails to comprehend, is that free trade doesn't pit nation-states against each other but individual businesses. As a result, Krugman argues, protectionism tends to benefit a handful of entities with the ear of the government at the expense of the country as a whole. Cronyism was practically American trade policy until Roosevelt passed the Reciprocal Trade Agreement Act of 1934, which reduced tariffs on foreign exports in exchange for a more favorable rate on our own.

"The overall effect of the evolution of the world trading system has been very salutary," Krugman continues. "Tariff policy, which used to be one of the dirtiest, most corrupt aspects of politics both in the U.S. and elsewhere, has become remarkably (though not perfectly) clean."

The president's latest proposal would mark a return to the "bad old days" of the robber barons. "But that won’t bother Trump," he concludes. "After all, we now basically have an Environmental Protection Agency run on behalf of polluters, an Interior Department run by people who want to loot federal land, an Education Department run by the for-profit schools industry, and so on. Why should trade policy be different?"

Read Paul Krugman's column at the New York Times.

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Jacob Sugarman is the acting managing editor at Truthdig.