(Paul Krugman is a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. This piece first appeared in the New York Times.)
- So why are we facing a semiconductor shortage? Part of the answer is that the pandemic created a weird business cycle. People couldn’t go out to eat, so they remodelled their kitchens, and they couldn’t go to the gym, so they bought Pelotons. So demand for services is still depressed, while demand for goods has soared. And as I said, practically every physical good now has a chip in it. But as Chad Bown of the Peterson Institute for International Economics documents in an important new article, the Trump administration’s trade policy made the situation much worse. When Trump took us into a trade war with China, there was clearly a lot he and his advisers failed to understand about modern world trade …