Growing like a BRIC

This video gets a little down in the weeds on Brazilian tax policy (aren't you glad you landed on this blog... we have all the fun!) but the broader point here is well made, taxes and regulation in Brazil are respectively high and onerous. Brazil has the lowest growth at around 4%-5%, with Russia growing over 6%, India at 8% and China over 10%. Although interestingly, Brazil scores the highest of the BRIC countries in the Heritage Foundation's economic freedom index, so taxes or no taxes, they must be doing something right... or at least better.

Also, Brazilians seem to be very enthusiastic about globalization and are among the few who would actually like to see the pace of change quicken; far more so than Indians or the Chinese. Without have any data to back this up, a wild guess why this may be is that Brazilians see the benefits of globalization but are frustrated they cannot reap these benefits fully because of their cumbersome tax structure.

Deconstructing Krugman

It seems that few economists can raise the ire of other economists the way Paul Krugman can. In his latest column on trade, Krugman begins to discuss the increasing downward pressure being exerted on US wages by increased trade with developing nations.

As Krugman lays out the basic framework of his argument, he takes pains to state (twice) that he is not a protectionist. He does state in his final thought, however, that we should be wary of knee-jerk acceptance of trade and that we should listen to those who question trade.

This final thought has lead to two interpretations by Dani Rodrik and Greg Mankiw.

For his part, Mankiw seems intrigued by Krugman's thoughts(although would like to see the data backing them up) but wonders if we should take trade-questioners seriously if they are really just closeted protectionists.

Rodrik jumps on Mankiw's statement and asserts that people who question trade should not all by labeled as protectionists.

In fairness, I don't think that is what Mankiw was saying, that everyone who questions trade is necessarily a "protectionist" (which seems to be a bad word in economist circles.) What Mankiw (I think) was asking was if we know someone is a protectionist, should we listen to their views on trade? (presumably because their views will be highly skewed against trade).

My answer to Mankiw is yes, we should list to different (intelligent) views on trade, even if they are posited by a protectionist. Trade is crucially important to the economic growth of humanity and needs to be discussed, examined and deconstructed from many different angles. The purpose of this IMO is not to try to find a way to stop trade, but to continually try to find ways to make it better.

And to Rodrik I would agree that applying blanket terms to describe people's views is not helpful, but that is not what Mankiw was doing in this instance.