Are Anti-Dumping Tariffs Intelligent?
One area in which I had always thought that Paul Krugman and I pretty much agreed close to 100% was his own area: international trade. His “Ricardo’s Difficult Idea” is one of the best things ever written on trade and his Pop Internationalism is also excellent. See his bio in The Concise Encyclopedia of Economics for more on his excellent work.
So I was surprised while watching this interview to see him say the following (at about the 10:00 point):
But you know those [anti-dumping tariffs] are part of the system. I mean the people who devised–The world trade system as it exists, uh, I’m going to get in trouble with some Trumpies, or something, but anyway is actually a system designed by intelligent people. And one of the things it has is it has escape clauses, it has safety valves. There are if there’s a hugely disruptive surge of exports, you are able to do things like anti-dumping duties, market disruption measures to give yourself, to provide a cushion to give yourself some time.
But anti-dumping duties are a bad idea. As Fred Smith once put it in a pithy line that trade economist Jagdish Bhagwati (who taught Krugman at MIT) quoted in his book Protectionism, “If our antidumping laws applied to U.S. companies, every after-Christmas sale in the country would be banned.”
Count me shocked. Whatever other differences Paul Krugman and I have, I had no idea that he thinks anti-dumping duties are part of an intelligent plan.