Paul Krugman writes that trade does not equal jobs and concludes that trade restrictions cannot even in principle trigger a depression. After all, restricting trade means restricting exports (less jobs!) but it also means restricting imports (more jobs!) so everything washes out.
Well, let’s try an extreme example. Suppose I prevent everyone in America from trading with anyone outside their own households. We’d eat only what we could raise in our own gardens, burn only the fuel we could gather from our own backyards, and wear only the clothes we could make for ourselves. In other words, we’d all be living pretty much at the subsistence level. Would you be willing to call that a Depression? I would. Krugman, apparently, would not.
Krugman is absolutely correct that under these extreme trade restrictions, you’d be just as employed as you ever were — you’d be getting up at 5AM to milk your cows and tend your garden before going out to gather firewood and climbing up to patch the holes in your roof. Krugman even acknowledges that you might be poorer as a result when he says “There is a case for freer trade — it may make the world economy more efficient”. But he insists that this wouldn’t count as a depression because you’d still be working.
That’s at best idiosyncratic; everyone else defines “depression” in terms of prosperity, not in terms of employment. But let’s accept his language and agree that, yes, you could impose a bunch of trade restrictions without affecting employment — we’d all still be working just as hard, or even harder. The right response is so what? Most of us care not about how much we work but about how much we earn.
It’s very bad practice for an economist to make policy recommendations without telling you what he’s trying to maximize. Krugman is frequently guilty of this particular sin. But now he’s given us an insight into what he thinks is important. By relegating “may make the economy more efficient” to an essentially parenthetical remark and putting all the emphasis on how much we get to work, he’s revealed a lot about his priorities. Those priorities are nuts.