The Myth of Free Trade

Ha-Joon Chang, Bad Samaritans: The Myth of Free Trade adn the Secret History of Capitalism. Bloomsbury Press, 2008.

Ha-Joon Chang (Faculty of Economics, University of Cambridge) has written a witty and interesting reply to go-go globalization books. Anyone who believes the myth that today’s wealthy nations got that way through neoliberal free trade policies (and that this is the only road for developing countries today) will be entertained and informed by the “secret history” of protectionism.

The book is provoked by Thomas Friedman (The Lexus and the Olive Tree), informed by Friedrich List and driven by a deep understanding of the real history of economic development in Asia and elsewhere. I found the chapter on corruption especially good, although there is much to appreciate throughout.

The book is aimed at a general audience and the writing sometimes understandably lapses into the sort of rhetorical excess that Friedman et. al. are known for and therefore comes dangerous close to the sort of rhetoric I wrote about in Globaloney. Sometimes, alas, I think the author even crosses the line.

I wish that there had not been quite such a long gestation period between the debates that provoked the book and its eventual appearance. Finally, a bibliography would have made this volume more useful to potential student readers.

Interested readers should also check out Dani Rodrik One Economics, Many Recipes for a well-reasoned recent critique of free trade orthodoxy.

Economists Speak Out!

Joseph Stiglitz, Aaron Edlin and Brad Delong (editors), The Economists' Voice: Top Economists Take on Today's Issues. Columbia University Press, 2008.

The Economists’ Voice (http://www.bepress.com/ev/) is an innovative online journal (part of the Berkeley Electronic Press project) where prominent economists discuss and debate important public policy issues. The articles collected in this volume were originally published online and are still available there, an advantage especially to students who seem increasingly to rely upon online rather than hardcopy resources.

The book contains 35 short essays in nine broad theme areas. Climate change is analyzed by a trio of Nobel Prize winners, Thomas Schelling, Kenneth Arrow and Joseph Stiglitz. Other themes (and selected authors) include the International Economy (Bradford DeLong), the economics of the Iraq war (Stiglitz), U.S. fiscal policy (Michael Boskin and Ronald McKinnon), social security (Paul Krugman, Edward Lazear and Barbara Bergman), and tax reform (Boskin, Martin Feldstein, Robert Frank). Social policy, the death penalty and real estate markets complete the eclectic mix of topics.

I recommend this book, but I books are inevitably dated, so I recommend readers check out the online journal with its full archive and continuing stream of thoughtful articles on important policy issues.

Economic Gangsters Uncovered!

Raymond Fisman and Edward Miguel, Economic Gangsters: Corruption, Violence and the Poverty of Nations . Princeton University Press, 2008.

This is a book that deserves a wide readership – I recommend it wholeheartedly.

Some readers will come for the clever title and the cover’s provocative silhouette of a machine-gun wielding gangster. More, I hope, will be drawn to the book by reviews like this one and the authors’ important message. Economic Gangsters is topical and lively, as its cover suggests, but it is also deadly serious and deeply engrossing.

Fisman (Columbia Business School) and Miguel (UC/Berkeley) study perhaps the most important question of our day – why some countries grow and prosper while others are trapped in a self-reinforcing cycles of violence, corruption and poverty. Economic incentives help create an these problems, the authors argue, and policies that alter economic incentives can help eliminate them.

The book features the sort of clear thinking, crisp economic analysis and creative empirical detective work that fans of Freakonomics will recognize and appreciate. Six major case studies and many smaller examples provide evidence to support the case. The authors conclude with a discussion of how cleverly designed program evaluation techniques can help uncover policies to escape the violence-corruption poverty trap.

I liked Freadonomics but I complained in my review that it didn't really have a point. Creative economic analysis is fun, but so what? What good is it? Economic Gangsters answers this critique. Economics is fun and useful. Dismal science? Hah!

One word review: Bravo!