Ep. 113 Will Tax Cuts Mean Millions of Lost Manufacturing Jobs?

18 November 2017     |     Tom Woods     |     3

Krugman argues that the GOP tax plan, even on its own terms, would blow up the trade deficit and lead to millions of lost manufacturing jobs. We teach the economics behind his argument, but also mention–get ready for this–that Krugman leaves out two big factors that completely undercut his case.

Krugman Blog Post

Tax Cuts and the Trade Deficit” (November 14, 2017)

Related Link

Overview of the Senate’s Amendment to the Tax Cuts and Jobs Act

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  • http://2vnews.com 2VNews

    Production or consumption tax?
    Which is harder to do?
    Get someone to stop working.
    or
    Get someone to stop buying things.

  • Intersnooze

    Good episode as usual. Mildly irked that after Murphy takes the listener through Krugman’s story, Woods goes off track with kitchen banter and it takes minutes to return to the subject at hand.

    The episode reminded me again of Russ Roberts’ point that “as economists, we’re always telling stories”. In other words, some policy change is proposed and the economist comes with a story saying “If you change A, this causes B, which results in C and D”.

    Now a skilled storyteller like Krugman will lull 98% of his readers into thinking ‘Yeah, that makes sense!’ and repeating the story to co-workers over coffee. It takes a bright guy like Murphy to remind us that ‘Waitaminute guys, his conclusion rests on this false assumption.” (In this case, no increased domestic investment).

    This particular story of Krugman’s is especially odious if you step back even further and think about what he’s really saying here: “If government reduces the cost of making stuff, stuff will get more expensive to make.”

    The corollary to his argument, I guess, is that government should raise taxes on businesses – you know, to make things cheaper.

  • davegrille

    The overall size of the spending as well as the taxing and borrowing is too large.