You know the answer, don’t you? Yep: everyone is counting on the US to become the consumer of last resort, sucking in imports thanks to a weak euro and a manipulated renminbi. Oh, and while they rely on US demand to make up for their own contractionary policies, they’ll lecture us on how irresponsible we’re being, running those budget and current account deficits.
... and ramps up the beggar-thy-neighborisms, like that's always worked before:
This is not going to work — and the United States has to take steps to protect itself.
For someone who claims to know a lot about the 1930s, or Bretton Woods, or the 1990s for that matter, this is an unbelievably stupid statement to make. Like, "Fail your first-year students" stupid. WAY stupider statement than a Nobel prize winner should ever, ever, ever, ever make, even if it's well beyond their area of expertise, which it is not. It is stupid whether you are thinking about economics or politics or both. Etc.
Quickly: when the world is in depression/decession, it is a really bad thing for national governments to pursue nationalist/isolationist policies. That is true for all, but it is especially true for those in position of global leadership, as the U.S. still undoubtedly is. This may seem obvious, but as Orwell said (reviewing Betrand Russell), "We have now sunk to a depth at which the restatement of the obvious is the first duty of intelligent men."
Anybody want to make a bet whether or not Brad DeLong -- recent commenter on international politics -- gives Krugman the same "we learned these lessons in the Great Depression and you're wrong" treatment that he gives every dissenting economist not named "Brad DeLong", "Paul Krugman", or "Mark Thoma"?
No? Too bad.
I'd step into the breach, but I'm busy re-orienting my schedule to Johannesburg time for the World Cup (work in progress), and working on several other projects, and am exhausted. But it does strike me that no one is reminding others of basic macro international political economy theory, and that this is a needed corrective to this sort of silliness coming from many corners of the blogosphere/punditry. Even from relatively intelligent folks who should really know better. I guess this blog is somewhat well-placed to do that, even though few read it except on those days when bigger fish link to it. So maybe over the coming days/weeks/months I'll discuss some of these basic fallacies, how they come about, why they are wrong, and how we can think better about the global political economy. And if it turns out well, maybe some of the bigger fish will link to it.
ADDENDUM: I am serious about every substantive point made in this post. As to the tone/hyperbole... I'm aping some of those in the blogosphere who are SHOCKED! SHOCKED! to discover that other intelligent people disagree with them. I hope to spend my time more on the substance than the tone in the future, but as they say: what goes around comes around.