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An articulate and conscientious critique of free trade that should be read by anyone with serious interest in the subject. --Kirkus Discoveries
--This text refers to an out of print or unavailable edition of this title.
About the Author
Ian Fletcher is a Research Fellow at the San Francisco office of the U.S. Business and Industry Council, a Washington think tank founded in 1933. He was formerly an economist in private practice, serving mainly hedge funds and private equity firms.
This is an excellent book on a very important topic. The U.S. economy is hemorrhaging high quality export industry jobs at an astounding rate and a major causal factor is the mistaken and destructive "free trade" doctrine, the legitimating factor behind "free trade policy". Almost half of our manufacturing workforce has disappeared since 1987 and more than a third of large factories just since 2001. Not coincidentally 2001 is the year China joined the WTO. Our country is in a deep hole that desperately requires new thinking and new policies.
This book summarizes the theory, the policy, and the history of "free trade" and provides a well-argued alternative that is described with insight, clarity, and in a vibrant and captivating style. The book is divided into three parts: the Problem, the Real Economics of Trade, and the Solution. In the Problem section, Fletcher describes the US situation and goes over and tears apart the standard arguments for free trade and some of the wishful "remedies" to the U.S. trade problem such as more "education" and "post industrialism". In the second part, he provides a masterful analysis of core ideas of "comparative advantage" and why this does not justify free trade. The final section of the book provides a wealth of information on actual trade policy and real world trade that leads into a first rate summary of recent theoretical advances in "real trade" theory (as opposed to the largely ideological and mythological "free trade" doctrine). He than proposes and argues for a politically and economically practical alternative: a "natural strategic tariff" that would in many ways level the playing field between US and foreign exporters in the most important dynamic manufacturing and service export sectors.Read more ›
Ian Fletcher, economist, is an Adjunct Fellow at the San Francisco office of U.S. Business and Industry Council, with a specialty in protectionism and industrial policy. Fletcher believes that America's financial mess and our festering trade crisis were both caused by bad policies that mainstream economists told us were OK. His writing is data driven, uses common sense, is interesting, and eschews arcane mathematics. The 'bad news' is that overcoming free trade will be an uphill fight - 97% of economists support it.
Iif only 'free trade' doctrine was the provenance of university mathematics departments, it wouldn't last five minutes. Elementary math is enough to discredit the underlying thinking. Unfortunately, in the past two decades the U.S. has accumulated a $6 trillion trade deficit following its prescriptives. University of Maryland economist Peter Morici estimates the U.S. economy is about 12% lower than it would be absent these trade deficits.
Fletcher contends that many free trade supporters are simply Ayn Rand cultists (eg. Alan Greenspan) or libertarian ideologues (eg. Milton Friedman - anti Social Security, Medicare, postal service, public education, welfare) passing those views off as economics. Fletcher's "Free Trade Doesn't Work" reports that the logic supporting comparative advantage/free trade makes ten erroneous assumptions, invalidating its conclusions. My slightly modified version:
1)Immobile Capital: David Ricardo, originator of the theory of comparative advantage that underlies free trade, wrote that free trade would be limited because investors would not want to entrust their capital with a strange government and new laws. Thus, it would remain 'in-country.' Probably true in 1817 when Ricardo wrote this. No longer - U.S.Read more ›
Mr. Fletcher hits the impact of America's free trade initiatives in the guts! He is spot on with the analysis of and the effects of how we have mismanaged our economy which of course has landed us where we are today.
The US has played the free trade game without reciprocation and as a result has stripped our manufacturing capacity and our ability to rebound from our current economic malaise. Thanks Ian, for a great evaluation of where we are and how we must manage going forward.
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In 1947, total international trade stood at about $50 billion. In 2006 it amounted to $11.78 trillion, having risen at a far faster pace than world gross product. Since 2000, world trade has increased by 88%. These statistics are not surprising to many because numerous Economists including Adam Smith in 1776 and David Ricardo in early 19th century have written on why countries should and do trade.
What if all the trade theories, especially the famous "comparative advantage" are wrong? With a ship laden with falling containers (probably from China) on its cover, Mr. Fletcher has written a book with an astounding title; "Free Trade Doesn't Work: What should replace it and why". His argument is simple, free trade theories are wrong.
The book is divided into three parts: the problem with free trade, the real economics of trade, and the solution. The problem section describes the US situation and accounts why comparative advantage (which he takes as the standard argument for free trade) does not work. In the real economics of trade section, the book has an analysis of core ideas of comparative advantage theory and why they do not justify free trade. Mr. Fletcher lists seven "hidden assumptions" that invalidate Ricardo's comparative advantage theory. In the solution section, Mr. Fletcher suggests an imposition of a blanket tax of 25% on all US imports. He calls this a "natural strategic tariff". Mr. Fletcher goes on to argue that free trade is not bad for the US only but for all countries: developed or developing.
The beauty of this book is that it does not only raise the problem; it provides a solution. But lets take a stroll into the "hidden assumption" field before we become converts to Mr. Fletchers line of thinking.
Ian Fletcher is Senior Economist of the Coalition for a Prosperous America, a 2.7-million member organization dedicated to fixing America's trade policies and comprising representatives from business, agriculture, and labor. He was previously a Research Fellow with the U.S. Business and Industry Council, a Washington think tank. Before that, he was an economist in private practice, mostly serving hedge funds and private equity firms. Educated at Columbia University and the University of Chicago, he lives in San Francisco. Details about his book Free Trade Doesn't Work may be found at freetradedoesntwork.com.