While I am against Krugman's view on this particular thing, his view refelcts a complex issue, not only in economics, but also in policies.
If you know his work, you should know his work on strategic trade theories. Those theories, together with some other types of trade theories, indicate free trade is not necessarily the best for every trade partner.
Second, even under free trade theory, exchange rate is normally free to adjust to balance trade. This is his point about China's currency policy.
It is true that China's currency is pegged to the US one and is not directly influnced by market.
But your point is true that he is working in the US interests, not as a "free" economist.
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