Krugman Talks Sense on Trade and Immigration

From David Henderson. Krugman was interviewed by Josh Barro. Excerpt:

"Trade:

Barro: Let's talk about trade. Do you worry at all about Trump's rhetoric on trade? What if he follows through on threats to withdraw from NAFTA or to start a trade war with China? What's the effect of that in the US? Krugman: The NAFTA issue I think is a really a huge issue, if it happens, which is probably why it probably won't happen. The thing about NAFTA is not so much who are the beneficiaries. I mean, I think United States benefits from NAFTA, but the main point there is that there's no such thing now as Mexican manufacturing and US manufacturing. There's North American manufacturing.
It's this tightly integrated complex of industries where stuff is shipped back and forth. Different pieces of an automobile are made all over the continent, and if you break that up, if you disrupt it, then we're talking about a lot of disruption at the industry level, we're talking about a lot of plants closing, new plants opening. It would be exactly the same sort of thing that people complained about from the growth of trade, except this time it's like the old joke about the motorist who runs over a pedestrian and says, "I'm sorry, let me fix it," so he backs off and runs over him again. That would be a hugely costly thing if we really disrupt NAFTA. That means that industry is horrified at the prospect. So in a way trade is going to be the test of whether there's any of that Trump orthodoxy left. Is he willing to block the big companies on that?

Immigration:

Barro: Regardless of whether there's a good remedy available to Trump, or whether the remedy that he's talking about makes any sense, is he right in his critique that free trade and relatively loose immigration policies have depressed the wages of native-born American workers over the last few decades? Krugman: Trade a little bit. Most estimates do suggest that increased International Trade did have some depressing effect on blue-collar wages in the United States. We import labor-intensive products; that reduces the demand. It's probably not huge, and it's probably mostly in the past. It's not a continuing force of further downward pressure. Immigration, actually, the evidence suggests that immigrant workers are not for the most part competing with native-born workers. They're competing with immigrant workers who are already here, more than that. Even though you take somebody with 11 years of education from Mexico or Central America, compare them with somebody with 11 years of education born here, they're actually very different, the skill sets, the occupations are very different. The immigration thing, although it's the one that resonated most with with Trump voters, is probably in fact the place where his economics is just wrong. He has a better case on trade."