who analyze trade and have been warning for years. Of course they are ignored.

That's the standard economic theory, but I strongly suspect that actual investigation would disprove it. Had U.S. wages and earnings continued to grow in the past three decades as the same annual rate they were growing in the decades before 1980, the average American household would be earning DOUBLE what it is now. How much of those missing wages is attributed to loss of jobs to foreign trade? So far as I know, no economist has even tried to ask the question, let alone answer it. Hell, I have yet to see any economist that even raises the issue of the dramatic slowdown in the growth rate of working class earnings - I had to gather the data and perform the calculations myself.

How about measuring the lost opportunity cost of all those missing earnings? How many Americans kids the past three years have slipped into a resigned acceptance that they will never get a decent paying job in their small town or blighted inner city neighborhood, and turned instead to dealing drugs? Economists would have us count the "underground economy" as a net benefit, with ever inquiring about the costs of such trade offs.

What makes overseas labor cheaper? I suspect and believe, is the lack of environmental, consumer, and workplace regulations. I've seen travelogues on TV to places like Vietnam and India, that showed people using acetylene torches without a helmet or visor or other eye protection. It just boggles my mind. A decent welding helmet easily costs $150.00 or more, and that's just the minimum of protection. And by now, everyone should know about the horrible pollution problems China has created in the past two or three decades. No environmental equipment on a factory easily saves millions, even tens of millions, of dollars.

Hell, there are hardly any economists here who are willing to try and tally up the externality cost of pollution of domestic economic activity, let alone trying to figure out how much the externality cost of pollution is to manufacture something in China and then ship it to the U.S., and what share of that externality cost ought to be assigned to the U.S. as an offset against the supposed "benefit" of the import.

In purchasing power parity, the cost of an hour of labor from one country to another is not that different - a human body needs a certain basic level of calories, sleep, and health care to stay alive and useful for employment. So, the big difference in labor costs has to come somewhere else.

I think these considerations point to how worthless and bankrupt the economics profession is -- it should be a constant source of ongoing studies to compare U.S. safety and environmental regulations and costs with those of other countries, especially those that are the largest exporters to the U.S. Instead, we get professionally trained economists who shriek "protectionist" and "trade war" anytime anyone suggests that free trade is not all that great.

After missing the biggest financial collapse since the First Great Depression, you would think, or at least hope, that most professional economists would have the humility to stfu and begin asking some basic questions about what it is they believe they know.

We need to think of the way you would default on the debt without causing all kinds of chaos. I believe that is what the Glass Steagal firewall was for and I think we need a plan to triage the debt so that speculators end up losing out because of their bad decision rather being allowed to pass the buck in a Austrian school liquidation. After bankruptcy reorganization, we can go back to a revamped American system.

They also refuse to make their systems efficient. Their software/databases are so out of date, records are completely in the stone age. Of course they offshore outsource any software development, which in turns creates more waste and crap.

I suspect they spend more money on people trying to screw their customers than payout. That and lobbyists, PR. Be nice to see their breakdown but that's what happens when one lets a monopoly run amok.

I wasn't aware David Rockefeller and Peter G. Peterson were Jewish. In fact, I believe Rockefeller is Protestant and Peterson started out as Greek Orthodox.

Great article post, BTW. We can't have an economic recovery....without an economy to begin with.

Seems obvious to most of us.

Krugman whipped out the theory and graphs to show there is a maximum in terms of a nation "printing money" but we're not there yet.

I think he's going to have a hear attack over this austerity insanity, when what we really need is very specific, targeted spending and policy.

Spending to fund "green technologies" in China, Germany and France is not the best use of funds. (duh).

And if the guy actually wanted to debate facts I would have pointed that out.
In 1930 the debate was level of trade protection. Now the debate is how to have free trade with as many 3rd world nations as possible.

World trade collapsed in 1914 and never recovered. The reason once the guns stopped firing was because of the war debts. America was demanding huge sums of money from our allies. Sums so high that they couldn't pay it off.

Most Americans don't know this: Britain and France defaulted on its debts to America before Germany stopped trying to pay off its reparations.

It's those war debts that caused all the other nations to enter the beggar-thy-neighbor trade strategy, because they needed the trade surplus to pay interest on the war debts, that was killing world trade.

But these are all facts, and some people simply don't want to hear them.

Notes the only time it did this was in the 1980's, between the two recessions (commonly referred to as the double dip).

here.

I personally have a hard time believing a sentiment index causes anything, but I do believe it reflects something and that's the situation, the economy has not recovered at all for the U.S. workforce, middle class, those of us who work, need wages and do not trade in derivatives.

Excellent Article. I agree with part one — The Cyclical Problem — of your assessment. But I think with part two — The Cyclical Problem — you are wrong.

From an economic view point imports are a benefit and exports a cost. The problem with free trade is, that its proponents praise always the overall gains from it which so outweigh any downside but always forget to mention the implication of this appraisal.

Given that the overall gains to society outweigh any losses there are still winners and losers. Now this losers must be compensated for their loss by society. So much the free trade theory. Unfortunately this compensation actually never happens. That's the problem.