Economists baffle me. They are obviously very smart people with a proper respect for mathematics. Their discipline has been chugging along for 200-odd years — plenty of time for the intellectual-evolutionary processes of debate, dialectic, and consensus, operating in free societies, to winnow out bad ideas and establish good ones as settled knowledge.
And yet all too often, when I read an article or a book by a fully-accredited economist, I set it down at last with the thought: “This guy is nuts.” Case in point here.
It is therefore with much relief & pleasure that I register a contrary case: Ian Fletcher’s new book, Free Trade Doesn’t Work. Fletcher’s a trained economist who has read and thought deeply in his subject. The book has 855 footnotes; the Select Bibliography, in teeny print, covers fifteen pages. Fletcher knows his stuff; but he can write, too, and does a great job of explaining the proposition in his title.
Like most conservative non-economists (I suppose), I have been going around with a vague notion that free trade is a Good Thing, protectionism and industrial policy Bad Things. The notion comes with some equally vague arguments to back it up:
‚—Ź Government bureaucrats are simply terrible at “picking winners.”
‚—Ź Protectionism subsidizes the incompetent and allows industries to stagnate in complacency.
‚—Ź Free trade may cost us low-quality jobs, but it replaces them with high-quality jobs.
‚—Ź Comparative advantage something something David Ricardo something; Portuguese wine, English cloth something something something something.
‚—Ź The 1930 Smoot-Hawley protectionist tariffs caused the Great Depression. (According to John McCain in the 2008 presidential campaign, they also caused WW2.)
‚—Ź Free trade drives globalization, which lessens international antagonisms and improves our understanding of other countries.
Ian Fletcher covers these and many other arguments in detail. Some, he shows, are flatly false. Smoot-Hawley, for example, was “a moderate and routine adjustment to America’s trade regime, not a major shock to the world trading system.” Others are true but need much qualification. While “picking winners” rarely works out well, broader industrial policy is like metaphysics: you can’t not have one. The choice is never between having or not having an industrial policy, it’s always between having a sound one or an unsound one. Comparative advantage? Fletcher gives over a whole 27-page chapter to it, and I now realize I never really understood it at all.
Of the doctrine of free will, Doctor Johnson observed that all theory is against it but all experience for it. Ian Fletcher’s book inspires a converse reflection on free trade: all theory is for it, all experience against it.
For sure nearly all economic theoreticians favor absolute free trade: 93 percent, according to Ian Fletcher. His book persuades me they are wrong. Check it out.