This very readable book is aimed at both ordinary concerned citizens and people with a bit of sophistication about economics. It is a systematic examination of why free trade is slowly bleeding America's economy to death and what can be done about it. It explains in detail why the standard economic arguments free traders use all the time are false, and what kind of economic ideas - well within the grasp of the average American - justify protectionism instead. It examines the history and politics of free trade and explains how America came to adopt its present disastrous free trade policy. It looks at the breakdown of specific industries and how we can rebuild them and bring millions of high-paying jobs back to this country. It examines what's wrong with NAFTA, CAFTA, the WTO, and the proposed Trans-Pacific Partnership. It is sharply critical of the current establishment, but from a bipartisan point of view, so it should satisfy progressives, conservatives, and everyone in between. Unlike many past critiques of free trade, it is economically-literate; it also explains New Trade Theory, the hot new area of economics that critiques free trade.
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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
About the Author
Ian Fletcher is an Adjunct Fellow at the California office of the U.S. Business and Industry Council, a Washington think tank founded in 1933. He was previously 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 with his wife and daughter. --USBIC
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More About the Author
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.
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46 of 55 people found the following review helpful
5.0 out of 5 stars
A Passionate, Well Thought Out and Superbly Written, Plea for Reason and Sanity on Trade
February 6, 2010
By Ron Baiman
Format:Paperback
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.
Fletcher proposes that any regressive tax effects of a Strategic Tariff be neutralized through rebates to low-income consumers. I would go farther and propose that revenue from the tariff be used to raise wages and environmental and social standards in developing countries along the lines of a "solidarity trade" policy as proposed for example in Baiman "Unequal Exchange Without a Labor Theory of Prices: On the Need for a Global Marshall Plan and a Solidarity Trading Regime," Review of Radical Political Economics 2006, 38(1). I would have also liked Fletcher to include a reference to the fact that not only does Ricardian comparative advantage lead to woefully misguided trade policies, it is also mathematically erroneous on its own terms as a argument for "free trade". In fact for Ricardo's parable to work England would have to put a tariff on Portuguese wine - see Baiman "The Infeasibility of Free Trade in Classical Theory: Ricardo's Comparative Advantage Parable has no Solution," forthcoming in Review of Political Economy 2010 22(2). For a comprehensive review of: a) Large scale permanent living jobs program, with complementary, b) trade policies, and c) industrial policies, see "Toward a New Political Economy for the U.S." on the Chicago Political Economy Group (CPEG) website: [...]. However, though he doesn't go as far as I would have liked in some areas, I couldn't agree more with the basic point of the book that free trade doesn't work and that something must be done to re-balance world trade.
Fletcher's vision is informed by a Schumpeterian "evolutionary" economics approach that has been championed by Norwegian economist Erik Reinert as the "Other Canon" of a more than 500 year old, but periodically lost, wisdom in political economy on the means by which nations become wealthy. This is a very important school of thought that is fiercely opposed to the reigning "Neoclassical" economic paradigm. This is an very important book that should be required reading for all policy decision makers and students of political economy. Our future may hang in the balance. Read this book! It is a breath of fresh air, even for "old hands" like myself who have been critiquing and reading critiques and alternatives to free trade economic policies for many years.
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.
Fletcher proposes that any regressive tax effects of a Strategic Tariff be neutralized through rebates to low-income consumers. I would go farther and propose that revenue from the tariff be used to raise wages and environmental and social standards in developing countries along the lines of a "solidarity trade" policy as proposed for example in Baiman "Unequal Exchange Without a Labor Theory of Prices: On the Need for a Global Marshall Plan and a Solidarity Trading Regime," Review of Radical Political Economics 2006, 38(1). I would have also liked Fletcher to include a reference to the fact that not only does Ricardian comparative advantage lead to woefully misguided trade policies, it is also mathematically erroneous on its own terms as a argument for "free trade". In fact for Ricardo's parable to work England would have to put a tariff on Portuguese wine - see Baiman "The Infeasibility of Free Trade in Classical Theory: Ricardo's Comparative Advantage Parable has no Solution," forthcoming in Review of Political Economy 2010 22(2). For a comprehensive review of: a) Large scale permanent living jobs program, with complementary, b) trade policies, and c) industrial policies, see "Toward a New Political Economy for the U.S." on the Chicago Political Economy Group (CPEG) website: [...]. However, though he doesn't go as far as I would have liked in some areas, I couldn't agree more with the basic point of the book that free trade doesn't work and that something must be done to re-balance world trade.
Fletcher's vision is informed by a Schumpeterian "evolutionary" economics approach that has been championed by Norwegian economist Erik Reinert as the "Other Canon" of a more than 500 year old, but periodically lost, wisdom in political economy on the means by which nations become wealthy. This is a very important school of thought that is fiercely opposed to the reigning "Neoclassical" economic paradigm. This is an very important book that should be required reading for all policy decision makers and students of political economy. Our future may hang in the balance. Read this book! It is a breath of fresh air, even for "old hands" like myself who have been critiquing and reading critiques and alternatives to free trade economic policies for many years.
29 of 35 people found the following review helpful
Format:Paperback
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. entities have invested about $3.2 trillion in China alone, and added another $340 billion in 2009.
2)No Externalities (effects not reflected in prices): China is well-known for its serious air and water pollution problems, some of which cross international borders.
Another externality problem is that funding trade deficits via asset sales and foreign debt, as well as turning over the sourcing and/or manufacturing of key products (eg. generators) cedes control to other nations. (Remember the Arab Oil Embargo?) Adam Smith, another respected free trade proponent, specifically cautioned against this problem.
3)Mobile Labor: Ricardo and his acolytes assume displaced labor can easily move between industries. Unfortunately, I have frequently met people who lost jobs in industry A, then trained for industry B - only to see that industry then decimated by offshoring as well, then ending up in low-paying service jobs. Some free trade defenders claim that offshored jobs must be weighed against the number of Americans working for foreign-owned companies. Fletcher retorts that this logic is invalid because few of these jobs are NEW, that they are primarily existing jobs at existing enterprises. As for 'winning' U.S. industries hiring more people - Fletcher contends that they're winning because they have high productivity, and thus aren't likely to hire more workers. Finally, U.S. workers whose homes are 'underwater' are in poor financial ability to move - a 'short' sale creates substantial tax liabilities and wrecks credit; abandonment isn't any better.
Other free trade defenders assert that our low unemployment rate (until now) vindicates free trade. Not so, says Fletcher. Displaced workers eventually find something to do - usually in low-value-added, low-wage areas (security guards, construction, waitressing, retail) not subject to international competition, though often under wage-pressure from illegals. Finance, education and health care have been other major growth areas - the first creating considerable destructive impact, and the latter two representing mostly waste because they are grossly overstaffed compared with other nations. Fletcher adds that the U.S. economy has ceased generating net new jobs in internationally-traded sectors. All our job growth is now in non-tradable sectors.
4)Currency Manipulation Doesn't Occur: Try selling that idea to Secretary Geithner and the G-20.
5)Savings From Off-Shoring Outweigh Losses From Lost Jobs: Fletcher says we actually have no data on this.
6)Free Trade Frees Up Resources to Do Something Better: Supposedly high-technology would benefit from resources released from sending manufacturing overseas. However, we already have a trade deficit in high technology manufactured products, and China will soon have more biotechnology research equipment in a single building than the entire U.S. More specifics: In 1989 only 30% of Chinese imports competed with high-wage industries in the U.S.; in 1999 that rose to 50%. First Solar is the only U.S. company among the world's top ten solar panel producers, and most of its production is in Asia. U.S. printed circuit-board production has fallen to 8% of the world total, down from 26% in 2000; similarly, only 7% of new semiconductor fab plants are now in the U.S. (up to $10 billion each). G.E. is the only U.S. firm among the top ten in wind-energy (18.6% market share). In 2008, no cell phones were produced in the U.S. Our machine-tool industry market share has fallen from 28% in 1998 to 5% in 2008. As for the future, Georgia Tech's 2008 triennial "High Tech Indicators" study that takes into account human skills, national policies, number of scientists involved, high-tech export success, etc. placed China ahead of the U.S.; off-shoring also weakens research at our universities, and strengthens Asia's.
Our service sector trade surplus is much smaller than the manufacturing deficit, and likely will soon also become a deficit, per former Federal Reserve Vice-Governor Alan Blinder. As many as 30-40 million jobs are vulnerable. India is probably the biggest threat here, and high-paying jobs in IT, legal, accounting and finance, medical, engineering, and R&D will be among those at risk.
7)GDP is a Good Overall Measure of the Economy: Unfortunately, it ignores growing income inequality and stagnating/declining middle-class incomes and benefits, and the numbers are artificially boosted by unsustainable borrowing, asset sales, and illegal immigration. (In the short run, both trade-deficit and trade-surplus nations benefit from trade between themselves - however, eventually debt in the trade-deficit nation accumulates to a level where it cannot borrow any more because the lost jobs have created declining median incomes and asset values.) GDP simply asks the wrong question "What's good for the economy?" rather than "What's good for America?"
8)Trade Deficits Don't Matter: V.P. Cheney is famous for stating that "Reagan proved (budget) deficits didn't matter." Similarly, others assert that America has survived years of record trade deficits, so trade deficits don't matter either. Fletcher compares that to saying that a patient with a strong constitution that survives cancer 'proves' cancer doesn't matter either. Denying that our trade deficit is a sign of trouble on the grounds that it "reflects inflows of foreign capital" sounds better, but hides the fact that "inflows of foreign capital" means either Americans accumulating debt to foreigners, or existing American assets being sold off to foreigners. Both make us a poorer nation.
9)Free Trade Has Reduced Global Poverty: Claiming free trade has reduced global poverty is bizarre given that, according to the World Bank, the entire net reduction in global poverty since 1981 has been in protectionist China; elsewhere it has increased.
10)Smoot-Hawley Tariffs Caused/Worsened the Great Depression: Fletcher points out that foreign trade was at such a low level at that time that it couldn't possibly have mattered; in addition, most of the tariffs were merely returns to prior levels.
Nobel-winning Milton Friedman took the position, per Fletcher, that it doesn't matter if economic theories make unrealistic assumptions, as long as they make the right predictions. Free traders' predictions of substantial overall benefits have not proven out in the U.S.
Author Fletcher contends that Asian nations take advantage of our blind spots on this topic with tariffs, and limitations on internal buying; China's forced technology transfer and thefts also reduces the rewards for American firms to develop new technologies. Free trade policy in the U.S. is sustained not because of its logical rigor, but to support strong political (bribing nations not to go Communist, or to help fight terrorism) and 'beggar-thy-neighbor' economic interests (eg. the 91% non-manufacturing workers, vs. the remaining 9% that are). Unfortunately, capital is disproportionately powerful (political donations) in America's political system, largely isolating free trade from political support for the economic interests of ordinary Americans.
Improving education is often touted as 'the solution' - not likely, however, when competitors' college graduates are also paid far less than comparable Americans. Fletcher predicts that eventually a crisis (eg. the U.S. going back into recession because of the collapse of the dollar) will allow Obama or his replacement to maneuver out of support for free trade. Surveys already indicate that voters' primary concern is about jobs, but they haven't yet connected the dots leading to free trade as the source of the problem. The Founding Fathers understood the value of protectionism, says Fletcher, so they explicitly granted Congress the power "to regulate commerce with foreign nations" in Article I, Section 8 of the Constitution. ('Free trade' implies no regulation.)
Fletcher would like to see free trade replaced with across-the-board 30% tariffs for all goods and services. Read more ›
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. entities have invested about $3.2 trillion in China alone, and added another $340 billion in 2009.
2)No Externalities (effects not reflected in prices): China is well-known for its serious air and water pollution problems, some of which cross international borders.
Another externality problem is that funding trade deficits via asset sales and foreign debt, as well as turning over the sourcing and/or manufacturing of key products (eg. generators) cedes control to other nations. (Remember the Arab Oil Embargo?) Adam Smith, another respected free trade proponent, specifically cautioned against this problem.
3)Mobile Labor: Ricardo and his acolytes assume displaced labor can easily move between industries. Unfortunately, I have frequently met people who lost jobs in industry A, then trained for industry B - only to see that industry then decimated by offshoring as well, then ending up in low-paying service jobs. Some free trade defenders claim that offshored jobs must be weighed against the number of Americans working for foreign-owned companies. Fletcher retorts that this logic is invalid because few of these jobs are NEW, that they are primarily existing jobs at existing enterprises. As for 'winning' U.S. industries hiring more people - Fletcher contends that they're winning because they have high productivity, and thus aren't likely to hire more workers. Finally, U.S. workers whose homes are 'underwater' are in poor financial ability to move - a 'short' sale creates substantial tax liabilities and wrecks credit; abandonment isn't any better.
Other free trade defenders assert that our low unemployment rate (until now) vindicates free trade. Not so, says Fletcher. Displaced workers eventually find something to do - usually in low-value-added, low-wage areas (security guards, construction, waitressing, retail) not subject to international competition, though often under wage-pressure from illegals. Finance, education and health care have been other major growth areas - the first creating considerable destructive impact, and the latter two representing mostly waste because they are grossly overstaffed compared with other nations. Fletcher adds that the U.S. economy has ceased generating net new jobs in internationally-traded sectors. All our job growth is now in non-tradable sectors.
4)Currency Manipulation Doesn't Occur: Try selling that idea to Secretary Geithner and the G-20.
5)Savings From Off-Shoring Outweigh Losses From Lost Jobs: Fletcher says we actually have no data on this.
6)Free Trade Frees Up Resources to Do Something Better: Supposedly high-technology would benefit from resources released from sending manufacturing overseas. However, we already have a trade deficit in high technology manufactured products, and China will soon have more biotechnology research equipment in a single building than the entire U.S. More specifics: In 1989 only 30% of Chinese imports competed with high-wage industries in the U.S.; in 1999 that rose to 50%. First Solar is the only U.S. company among the world's top ten solar panel producers, and most of its production is in Asia. U.S. printed circuit-board production has fallen to 8% of the world total, down from 26% in 2000; similarly, only 7% of new semiconductor fab plants are now in the U.S. (up to $10 billion each). G.E. is the only U.S. firm among the top ten in wind-energy (18.6% market share). In 2008, no cell phones were produced in the U.S. Our machine-tool industry market share has fallen from 28% in 1998 to 5% in 2008. As for the future, Georgia Tech's 2008 triennial "High Tech Indicators" study that takes into account human skills, national policies, number of scientists involved, high-tech export success, etc. placed China ahead of the U.S.; off-shoring also weakens research at our universities, and strengthens Asia's.
Our service sector trade surplus is much smaller than the manufacturing deficit, and likely will soon also become a deficit, per former Federal Reserve Vice-Governor Alan Blinder. As many as 30-40 million jobs are vulnerable. India is probably the biggest threat here, and high-paying jobs in IT, legal, accounting and finance, medical, engineering, and R&D will be among those at risk.
7)GDP is a Good Overall Measure of the Economy: Unfortunately, it ignores growing income inequality and stagnating/declining middle-class incomes and benefits, and the numbers are artificially boosted by unsustainable borrowing, asset sales, and illegal immigration. (In the short run, both trade-deficit and trade-surplus nations benefit from trade between themselves - however, eventually debt in the trade-deficit nation accumulates to a level where it cannot borrow any more because the lost jobs have created declining median incomes and asset values.) GDP simply asks the wrong question "What's good for the economy?" rather than "What's good for America?"
8)Trade Deficits Don't Matter: V.P. Cheney is famous for stating that "Reagan proved (budget) deficits didn't matter." Similarly, others assert that America has survived years of record trade deficits, so trade deficits don't matter either. Fletcher compares that to saying that a patient with a strong constitution that survives cancer 'proves' cancer doesn't matter either. Denying that our trade deficit is a sign of trouble on the grounds that it "reflects inflows of foreign capital" sounds better, but hides the fact that "inflows of foreign capital" means either Americans accumulating debt to foreigners, or existing American assets being sold off to foreigners. Both make us a poorer nation.
9)Free Trade Has Reduced Global Poverty: Claiming free trade has reduced global poverty is bizarre given that, according to the World Bank, the entire net reduction in global poverty since 1981 has been in protectionist China; elsewhere it has increased.
10)Smoot-Hawley Tariffs Caused/Worsened the Great Depression: Fletcher points out that foreign trade was at such a low level at that time that it couldn't possibly have mattered; in addition, most of the tariffs were merely returns to prior levels.
Nobel-winning Milton Friedman took the position, per Fletcher, that it doesn't matter if economic theories make unrealistic assumptions, as long as they make the right predictions. Free traders' predictions of substantial overall benefits have not proven out in the U.S.
Author Fletcher contends that Asian nations take advantage of our blind spots on this topic with tariffs, and limitations on internal buying; China's forced technology transfer and thefts also reduces the rewards for American firms to develop new technologies. Free trade policy in the U.S. is sustained not because of its logical rigor, but to support strong political (bribing nations not to go Communist, or to help fight terrorism) and 'beggar-thy-neighbor' economic interests (eg. the 91% non-manufacturing workers, vs. the remaining 9% that are). Unfortunately, capital is disproportionately powerful (political donations) in America's political system, largely isolating free trade from political support for the economic interests of ordinary Americans.
Improving education is often touted as 'the solution' - not likely, however, when competitors' college graduates are also paid far less than comparable Americans. Fletcher predicts that eventually a crisis (eg. the U.S. going back into recession because of the collapse of the dollar) will allow Obama or his replacement to maneuver out of support for free trade. Surveys already indicate that voters' primary concern is about jobs, but they haven't yet connected the dots leading to free trade as the source of the problem. The Founding Fathers understood the value of protectionism, says Fletcher, so they explicitly granted Congress the power "to regulate commerce with foreign nations" in Article I, Section 8 of the Constitution. ('Free trade' implies no regulation.)
Fletcher would like to see free trade replaced with across-the-board 30% tariffs for all goods and services. Read more ›
11 of 14 people found the following review helpful
By Peter Bae
Format:Paperback|Amazon Verified Purchase
Like most free traders, I used to think from having taken Econ 101 that the issue of trade policy was a solved problem, elegantly expounded upon by Ricardo. I assumed that anyone deviating from the free trade orthodoxy must have failed to grasp this basic concept. But Mr. Fletcher clearly does, and yet, he disagrees!
"Comparative advantage is thus a wonderfully optimistic construct, and one can certainly see why it would be so appealing. Not only does it appear to explain the complex web of international trade at a single stroke, but it also tells us what to do and guarantees that the result will be the best outcome we could possibly have obtained. It enables a lone economist with a blackboard to prove that free trade is best, always and everywhere, without ever getting her shoes dirty inspecting any actual factories, dockyards, or shops. She does not even need to consult any statistics on prices, production, or wages. The magnificent abstract logic alone is enough. It is actually a pity the theory isn't true."
He goes on to explain the seven dubious assumptions baked into Ricardo's theory of comparative advantage that are necessary to justify its conclusions. Just to expound on one, the theory only studies what happens during an instant in time. But it's not enough to say that your comparative advantage today is in laying bricks--let's be happy with our lot in life--unless tomorrow, you're in the grave. And it doesn't explain how the other guy's advantage got to be writing computer programs. He wasn't born with that advantage; he developed it somehow in an earlier time period when, perhaps, his comparative advantage was in laying bricks and yours was in something more pleasant. The question of how to get from here to there is a critical one that countries like China, Japan, and Korea are tackling aggressively but that free traders don't even think to ask.
Missing in this book are the Luddite, candle industry-protecting critiques of trade that pollute much of the protectionist side of the debate. This bolsters the author's credibility.
After thoroughly discrediting free trade as it is currently practiced by America's policy makers, the author goes on to give his prescription for correcting our trade problems.
"Comparative advantage is thus a wonderfully optimistic construct, and one can certainly see why it would be so appealing. Not only does it appear to explain the complex web of international trade at a single stroke, but it also tells us what to do and guarantees that the result will be the best outcome we could possibly have obtained. It enables a lone economist with a blackboard to prove that free trade is best, always and everywhere, without ever getting her shoes dirty inspecting any actual factories, dockyards, or shops. She does not even need to consult any statistics on prices, production, or wages. The magnificent abstract logic alone is enough. It is actually a pity the theory isn't true."
He goes on to explain the seven dubious assumptions baked into Ricardo's theory of comparative advantage that are necessary to justify its conclusions. Just to expound on one, the theory only studies what happens during an instant in time. But it's not enough to say that your comparative advantage today is in laying bricks--let's be happy with our lot in life--unless tomorrow, you're in the grave. And it doesn't explain how the other guy's advantage got to be writing computer programs. He wasn't born with that advantage; he developed it somehow in an earlier time period when, perhaps, his comparative advantage was in laying bricks and yours was in something more pleasant. The question of how to get from here to there is a critical one that countries like China, Japan, and Korea are tackling aggressively but that free traders don't even think to ask.
Missing in this book are the Luddite, candle industry-protecting critiques of trade that pollute much of the protectionist side of the debate. This bolsters the author's credibility.
After thoroughly discrediting free trade as it is currently practiced by America's policy makers, the author goes on to give his prescription for correcting our trade problems.
Most Recent Customer Reviews
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Read This Book and Understand Exactly What Rich Country Economics and...
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Published 13 months ago by Rob Julian
5.0 out of 5 stars
Everyone in the US must read this.
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easy to understand, informative, entertaining
What a fantastic read for the beginner like myself. This was a great introduction to a lot of encomomic ideas (It left me wanting to learn more). Read more
Published 18 months ago by edmond_dantes
2.0 out of 5 stars
This book presents arguments that have been going around for a very...
The US standard of living is just too high compared to many other countries. With globalisation, some of the differential will disappear. Is this immoral? Read more
Published 21 months ago by Jackal
5.0 out of 5 stars
Every thinking American should be reading Fletcher's book.
Free Trade Doesn't Work: What Should Replace It and Why, 2011 Editon deserves a wide readership. It is
written in an easy to understand language. Read more
written in an easy to understand language. Read more
Published 21 months ago by R.J. Hayes
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Brilliant presentation of the incompatibilty of long-term economic...
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Published 21 months ago by leslie bolinger
5.0 out of 5 stars
Reconciling what we observe against what we're told
Ian Fletcher's Free Trade Doesn't Work might better be titled In Defense of Freedom. There are too many "exceptionalists" in the United States; people who believe that there is... Read more
Published on April 2, 2011 by lowvelocity51
5.0 out of 5 stars
Common Sense that is long overdue in Trade Policy.
After nearly 30 years in the American workforce, it has been very clear to me that "the free trade emperors have no clothes", but I have never been able to comprehensively punch... Read more
Published on March 31, 2011 by Barry Schaeffer
4.0 out of 5 stars
Free Trade doesn't work 2011 edition
Free Trade is like Alice in Through the looking glass the faster you run the further behind you fall.This leads to social aberrations homeless people,drug addiction etc. Read more
Published on March 29, 2011 by Fred
5.0 out of 5 stars
Interesting, thoughtful, persuasive, relevant
This guy makes a lot of sense. Free trade is the sleeper issue for Campaign 2012. Some smart politician could ride a tariff bill into the White House. Read more
Published on March 3, 2011 by Fishman
