Tuesday, July 23, 2013

Paul Krugman Talks Trade

Paul Krugman rarely ventures into transportation territory, but a recent post of his should stimulate some thought among transportation folks, especially goods movement people.
In this blog posting “America is Flat” (here) he calls attention to some data showing a decline in Americans moving from state to state and to some other data suggesting, at least, that domestic trade (as opposed to international trade) is trending downward.  The reason?  The U. S. economy has become less regionally specialized over the years.  We no longer live in a time where steel comes from Pittsburgh and butchered hogs come from Chicago.  The daily occupations of most Americans just don’t differ that much from region to region, so we don’t have that much reason to ship things to one another or move from place to place. 
Krugman also suggests that the big rise in international trade isn’t necessarily due to some “inexorable force,” and may be “more special and less generic than often imagined.”
He doesn’t leave us with a takeaway – in fact saying he has no idea if there is any policy relevance in these findings – but I will suggest two, both of which you have heard from me before.
First, we should be cautious about making straight-line projections of future growth in imports (and investing billions of dollars based on those projections) and assuming that current trade patterns will persist indefinitely.  A lot can change.

Second, we should really start scratching our heads about what a future with more decentralized, high-tech manufacturing might look like.  We are in the age of the 3D printer after all. 

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