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lassebirk's review against another edition
4.0
Summary: Free trade theory based on Ricardian comparative advantage rely on a number of assumptions that don't necessarily hold in all cases, such as:
* Assuming immobility of capital (capital may move to the country with lowest wages)
* Assuming that increasing productivity in sectors in other countries will not remove comparative advantages resulting in zero trade
* Assuming that specialisation in industries where a country has short term advantages always give the highest long term growth (may be untrue if specialising in dead ends such as wine growing. Non-dead ends are typically technologically advanced industries with scale economies, which can allow near-monopolies to form, benefiting the host country)
Author suggests a general import tariff of approximately 30% on all goods and services to avoid complicated policy fights over special interests, arguing that it will inherently benefit new small industries more that have not yet reached scale economies and old large industries less.
* Assuming immobility of capital (capital may move to the country with lowest wages)
* Assuming that increasing productivity in sectors in other countries will not remove comparative advantages resulting in zero trade
* Assuming that specialisation in industries where a country has short term advantages always give the highest long term growth (may be untrue if specialising in dead ends such as wine growing. Non-dead ends are typically technologically advanced industries with scale economies, which can allow near-monopolies to form, benefiting the host country)
Author suggests a general import tariff of approximately 30% on all goods and services to avoid complicated policy fights over special interests, arguing that it will inherently benefit new small industries more that have not yet reached scale economies and old large industries less.
jgauthier's review
4.0
I first approached this book wearing my skeptic's hat. I had the idea that free trade had pretty much won in the world, and that protectionists were merely members of the economic fringe. Fletcher resolved this prejudice via a few hundred pages of clear, level-headed and surprisingly accessible prose.
We begin with Part 1: "The Problem." When, where and why does free trade fail? What are the common fallacious arguments given in support of unrestricted trade, and how can we effectively counteract them? From the start, Fletcher works to make clear that he is not out to overthrow capitalism or plunge the US economy into isolation.
Not what you expected from a book with such a title, right?
Part 2 delves into the economics and history of free trade. I was worried that this section might be too technical for someone like me with nothing more than a semester of economics study, but Fletcher makes an effort to stay extremely down-to-earth. This section contains a fascinating attack on "Ye Olde Theory of Comparative Advantage," along with detail on exactly how free trade hurts the nations who engage in it (excepting the nations who only pretend to engage in it).
Part 3 is a summary and a call to action. It suggests a "natural strategic tariff," and evaluates the economic and political consequences (domestic and foreign) of such a change. We end with an overview of recent political events that involve free trade.
The following campaign trail quotes are fairly amusing—if not now, then definitely after you finish the book:
John McCain, with the National Association of Latino Elected and Appointed Officials (2008):
Fletcher compares this "triumphalist" rhetoric with that of British officials of a recently past century, who also championed free trade as their empire crumbled.
Barack Obama in Flint, MI (2008):
First of all: who cheers on free trade in Flint, MI? And who actually believes that our dynamism is sufficient to counter Chinese currency manipulation?
This book has left me confused. I began as a staunch free trader, but I've changed since then without a doubt. In any case, I think it's important that more people read this book. It's important that we revive the debate on free trade, rather than discounting (as I was doing just last month!) the merits of rational protectionism.
We begin with Part 1: "The Problem." When, where and why does free trade fail? What are the common fallacious arguments given in support of unrestricted trade, and how can we effectively counteract them? From the start, Fletcher works to make clear that he is not out to overthrow capitalism or plunge the US economy into isolation.
The fundamental message of this book is that nations, including the U.S., should seek strategic, not unconditional integration with the rest of the world economy.
Not what you expected from a book with such a title, right?
Part 2 delves into the economics and history of free trade. I was worried that this section might be too technical for someone like me with nothing more than a semester of economics study, but Fletcher makes an effort to stay extremely down-to-earth. This section contains a fascinating attack on "Ye Olde Theory of Comparative Advantage," along with detail on exactly how free trade hurts the nations who engage in it (excepting the nations who only pretend to engage in it).
Part 3 is a summary and a call to action. It suggests a "natural strategic tariff," and evaluates the economic and political consequences (domestic and foreign) of such a change. We end with an overview of recent political events that involve free trade.
The following campaign trail quotes are fairly amusing—if not now, then definitely after you finish the book:
John McCain, with the National Association of Latino Elected and Appointed Officials (2008):
The global economy is here to stay. We cannot build walls to foreign competition, and why should we want to? When have Americans ever been afraid of competition? America is the biggest exporter, importer, producer, saver, investor, manufacturer, and innovator in the world. Americans don't run from the challenge of a global economy. We are the world's leaders, and leaders don't fear change, hide from challenges, pine for the past and dread the future. That's why I reject the false virtues of economic isolationism. Any confident, competent government should embrace competition—it makes us stronger—not hide from our competitors and cheat our consumers and workers. We can compete and win, as we always have, or we can be left behind. Lowering barriers to trade creates more and better jobs, and higher wages.
Fletcher compares this "triumphalist" rhetoric with that of British officials of a recently past century, who also championed free trade as their empire crumbled.
Barack Obama in Flint, MI (2008):
There are some who believe that we must try to turn back the clock on this new world; that the only chance to maintain our living standards is to build a fortress around America; to stop trading with other countries, shut down immigration, and rely on old industries. I disagree. Not only is it impossible to turn back the tide of globalization, but efforts to do so can make us worse off. Rather than fear the future, we must embrace it. I have no doubt that America can compete and succeed in the 21st century. And I know as well that more than anything else, success will depend not on our government, but on the dynamism, determination, and innovation of the American people.
First of all: who cheers on free trade in Flint, MI? And who actually believes that our dynamism is sufficient to counter Chinese currency manipulation?
This book has left me confused. I began as a staunch free trader, but I've changed since then without a doubt. In any case, I think it's important that more people read this book. It's important that we revive the debate on free trade, rather than discounting (as I was doing just last month!) the merits of rational protectionism.
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