The Free Trade Heretic

By Sirota, David | In These Times, July 2008 | Go to article overview

The Free Trade Heretic

Sirota, David, In These Times

Ha-Joon Chang is an award-winning Cambridge economist whose new book, Bad Samaritans, explodes what its subtitle calls "the myth of free trade." At a time when Democrats are bashing NAFTA and Republicans are championing a NAFTA-style free trade deal with Colombia,

Chang shows how the entire debate over trade has divorced itself from history and economic reality. Phrases like "free trade," in fact, are misnomers unto themselves, leading the world into a globalization debate whose basic premises are inaccurate.

But that's not all that is inaccurate. Chang says that while the media and political elite lead us to believe industrialized countries achieved their wealth by eliminating tariffs, history suggests it's exactly the opposite: The strategic use of tariffs is precisely what built the industrialized world into an economic powerhouse. Bad Samaritans shows that wealthy countries' demands on poor countries to reduce tariffs is a way to keep the developing world in a subservient role-or a means to "kick away the ladder," as he puts it.

But the brilliance of Bad Samaritans doesn't derive solely from its forceful arguments or irrefutable history, but also from its conversational style-a rare quality in the esoteric world of economics. Not geared toward the academics, pundits and elites whose propaganda has polluted the globalization debate, Chang's book is for the rest of us who are getting screwed by unfair trade policies.

Bad Samaritans claims that most trade "experts" Ignore the history of trade policy in building up industrialized countries. Specifically, you assert that protection and tariffs-not free trade-have always been a cornerstone of any successful industrial policy. Why do you think these experts ignore this history?

First of all, there is the power of ideology. There is no reason why even the mainstream neoclassical economists should support free trade. However, allegiance to free trade has become the union card for "kosher" economists.

Even economist and New York Times columnist Paul Krugman, who made his name by building mathematical models showing the limits of free trade, had to cover himself by emphasising that, despite his models' conclusions against free trade, he does not actually recommend government intervention because we "cannot trust the government." This prompted the Chicago economist Robert Lucas to ask ironically why, then, Krugman bothered to build those models in the first place.

Secondly, there is the influence of special interests. Having built their whole careers advocating a certain worldview, free-trade economists have a lot to lose if they admit they have been wrong-even if faced with contrary evidence. Also, when you advocate ideas that serve powerful interests, you get more research grants, invitations to more prominent public forums, higher lecturing fees and more air time and column inches.

Then there is the sheer power of numbers. When 99 percent of economists believe in free trade, it is easy to pretend that the 1 percent does not exist or that they are incompetent. With their numerical advantage, free-trade economists can always assert that professional consensus is on their side. Of course, if the numerical majority was always right, the sun would still be going around the earth and the earth would still be flat.

As world populations become angrier and angrier with current trade policies, could the field of economics change from its current free-trade orthodoxy?

Let's not forget that in much of the world for much of the time, free-trade theory was not an orthodoxy, even in economics. It was the orthodoxy in the late 19th and the early 20th century in Britain and its sphere of influence-but elsewhere, it was not the orthodoxy. Even during that time, protectionist theory was the orthodoxy in the United States, Germany and many other countries. In the 1960s and '70s, in much of the developing world, free-trade theory was discredited because people there had seen how free trade imposed on them by imperialism prevented their economic development. …

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