Customer Reviews

Free Trade Under Fire: Second Edition

5 star:		(4)
4 star:		(5)
3 star:		(2)
2 star:		(0)
1 star:		(2)

 

 

Irwin's book, together with Bhagwati's Free Trade today,
makes a strong case for free trade. The argument is clear and
the book is easy to read and full of evidence supporting
free trade. Among other topics, the author discusses
the harmful effects of protection on developing/
developed economies, trade and the environment
and the role of WTO. Irwin's book is non-technical
and more historical than Bhagwati's. The latter
is more theoretical, at least in some parts, but also
a great read. For arguments against free trade using
economic theory see "trade warriors" by Marc Busch or " global Trade and Conflicting National Interests"
by Ralph E. Gomory, William J. Baumol

This book makes a reasonably decent defense of free trade. It speaks in predominantly layman's terms, and is entertaining enough to hold the layman's attention. Irwin does a good job refuting the most patently ridiculous claims that free trade victimizes those it employs and other silly claims.

It doesn't do the best job demonstrating that trade with developing countries benefits wealthy nations, however. It does try to do so, and offers some evidence, but I wish the book had made a stronger effort in this area as this is where most protectionists simply cite the trade deficit as manifest evidence that we are worse off in free trade, without understanding that our standard of living rises when we have cheap goods, and the market for our high skill jobs and products increases as developing countries grow wealthier.

The book does bring up a good point of accounting balance, noting that foreign investment in the U.S. offsets the trade deficit, but I fear that most protectionists are sufficiently xenophobic that this argument is likely to scare them rather than reassure them.

It pains me to give this book such a mediocre rating. If one sticks to its central message, it is clearly a five star book. Unfortunately, Irwin overreaches with his argument and attempts to paint the entire world with one broad stroke. In his eagerness to create a comprehensive model of the world, he overlooks many of its shortcomings.

Let me start with the strengths of the book. Irwin's analysis of trade in the United States is superb. In it he reveals many common misconceptions of domestic trade policy. He does a brilliant job dissecting contentious issues in the developed world and exposing the special interests at their core. Irwin does an excellent job pointing out that opposition to trade on environmental or labor grounds is misguided and counter-productive. Furthermore, his analysis of import relief in the form of tariffs, anti-dumping, and other methods, is thorough and well-researched.

My primary objection to Prof. Irwin's book is that he continually equates world trade with free trade. Since no country practices free trade to this day, it is surprising that this distinction is not made. The failure is a flaw that plagues his entire book. Irwin completely disregards the history of protectionist policies in the US. He claims that protectionism `materialized overnight' in the 30's when in reality, the Smoot-Hawley tariff increased import tariffs to 48% from 37%. A dramatic increase, no doubt, but to say that protectionism materialized out of nowhere is in complete disregard of the facts. Protectionism was a fundamental part of American economic history; a dramatic example is the fact that many historians attribute the dispute between the North and South over import tariffs as a larger cause of the Civil War than slavery. Protectionism was also a vital part of Northern manufacturing history. One could certainly make the argument that American would have been better off without protectionism, but Irwin does not do this. Instead, he simply ignores this inconvenient fact. Another point in same vein is that Irwin attempts to correlate the growth of the U.S. economy with falling trade barriers. While this is not a comprehensive book on US economic history, the failure to address US history of protectionism is a fault of this book, and reduces its persuasiveness.

At this point it is shocking to me that the rigorous academic work of the first several chapters descends so quickly. This book becomes a two-star book once Irwin begins to delve into the developing world. In his eagerness to prove the universality of free-trade theories, Irwin's begins stretch empirics to prove his point. Let me explain.

To support his theory that free trade is helpful to development, though he is careful to point out that it is only one part of a comprehensive strategy, Irwin relies on China and India. He argues that since these countries opened up to the world, they have become rich. He hopes that by arguing that autarky is bad, that it follows that the other extreme--free trade--is the answer. While he acknowledges continued capital intervention and currency manipulation in China, he seems to forget about these when they can't be used to prove his point. The reality is that China and India are not examples of countries that shifted from high levels of protectionism to free trade; they are examples of countries that shifted from import substitution protectionism to the form of protectionism that helped East Asia get rich--export-led protectionism. I am NOT necessarily saying that protectionism is beneficial to development, but Irwin certainly dismisses this possibility without offering any serious evidence.

Additionally, Irwin sidelines other cases--like Russia--which pursued even more rigorous opening and privatization yet ended in disaster. He dismisses the export protection model of East Asia as inconsistent. Their real strength, he argues, as macroeconomic stability and strong domestic investment. He is simply unwilling to concede that the free trade doctrine may be qualified by the presence of an extremely undeveloped economy. While all of his explanations are coherent, one finds that the exceptions begin to outnumber the success stories. This should raise some red flags to the reader.

All in all, Irwin does a superb job showing how trade is a crucial part of any economy. Furthermore he provides ample evidence that free trade is an essential strategy for maximizing welfare in modern societies. He fails, however, is to demonstrate that undeveloped economies can benefit from free trade in the same way. There is in fact ample evidence (see: Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism) to the contrary. Whether or not Ha-Joon Chang is right, Irwin's limited analysis of developing countries fails to address any of these major criticisms. While my review has tended towards the critical, I want to emphasize that if one sticks to the core issues in this book, and skips over the development section, then this is a very well written book.

This book was very well written. It provides excellent, well documented evidence to support the ideas of free trade. For those who are against free trade, I would recommend reading this book. The authors provide good, logical arguments for free trade and its benefits. As cliche as it is, no one can deny we are living in a global economy and this book clearly explains how the United States and we as citizens are playing our role.

I have had the honor of having the author of this book as a professor in college. Not surprisingly he teaches classes dealing with international trade. All I can say is that he is an economist of the highest order and that he is capable of taking some extrodinarily difficult concepts and explaining them with a level of clarity that make them seem obvious. He takes this teaching approach to his book, making it both intelligent and approachable. If you ever actually wanted to know anything about international trade and even be able to discuss in a relevant manner the points at hand, read this book. You will be smarter for having done so.

In depth coverage of rural revolts and the grievances which led to them. Includes tables (in appendices) which show population distribution and numbers of haciendas versus ranchos in 1877 and 1910. Good information on the motivation of key personages such as Zapata, Villa, Carranza, Madero, Calles, and Obregon. Definitely for the person who is a student of the history of the Americas or peasant uprisings leading to revolution.

Doesnt it always seem that your friends subscribe to the wrong views, and you to the right one? Well, at least for me it is. Whether your pals are from the anarchist wing or the Pat Buchanan camp, or even deviate just a little from your (correct) free trade stance, you should read this book. And even if you believe in the unholy stance of skepticism of free trade , you should read it too, for "The Economist" said that if this book doesnt convince anti-free traders, nothing will; so go ahead and test your faithfulness.

I am not an economist, and I hate reading economics text books filled with useless jargon. Before reading some great books, economics was as complicated as chemistry, physics or calculas to me. But after reading a few books, "Lexus and the Olive Tree", "Mystery of Capital" and "Peddling Prosperty", I realized that it isn't that complicated, its just the economists who create this aura of an esoteric subject.

This book is written in simple language, but when it does use phrases that regular people don't understand, he does something rare - he explains their meaning.

This is an excellent book, but only after reading The Lexus and the Olive Tree. Tom Friedman's book is the main weapon in my debating arsenal, and "Free Trade Under Fire" book gives me a large cache of ammunition, as do Peddling Prospery (or anything else by Paul Krugman like Pop Internationalism, another MUST read), and Henrando de Soto's masterpiece "The Mystery of Capital"(dont even look at his "Other Path", it is simplified and better argued in this "Mystery").

Highly Recommended

This book dispels the myths about the perils of free trade. It makes a pretty good case for the promotion of free trade. Lots of graphs and data to back up the arguments. There was not one myth, that I had heard of, that was not addressed in the book. Book is very well organized and well written.

Would make a great gift for someone who falsely believes that the free market (trade) system is bad for America.............

The first chapter is a bit of a slog, but after that the book flows better. Certainly, the book is biased in favor of free trade, but the author clearly spells out its merits, and leaves the reader convinced. If you want to learn more about the topic, this book is worth the read.

Free Trade Under Fire is in my humble opinion, an irresponsible biased work and a deterrent to responsible balanced trade reform. First and foremost, the title is incorrect; it is not Free Trade that is under fire by trade reformists rather its fundamental failure mode, the Trade Deficit and its consequences. Douglas, a supposedly leading expert on his subject matter, knows that you cannot have Free Trade without a Trade Deficit in the U.S. Therefore, as a reader, I was disappointed that Douglas skirts the issue of how large yearly trade deficits could impact the U.S. economy's reliability over time. I would think that as a professor teaching Economics 101 he of course understands that no country can long sustain large yearly trade deficits without putting its economy at risk.

I am baffled as to why Douglas, a leading economists on Trade Policy, disregards key facts such as 1) these large trade deficits have now substantially increased the national debt due to constant tax losses primarily from job losses, outsourcing, and offshoring. Such constant tax losses add to the U.S. debt burdening our citizens. This is a huge U.S. reverse tariff. Yet Douglas opposes any tariffs. So left unanswered is this fact that, not only do we have massive job losses, but ordinary citizens are forced to subsidize free trade's failures paying for these layoffs through the huge tax losses! 2) He also overlooks the fact that foreigners now own between 15 and 20% of all U.S. businesses but only employ about 3.5% of the workforce. 3) This is the result of the enormous cumulative U.S. trade deficit where foreigners now own $7.85 trillion more of us than we do of them, another key fact he chooses not to discuss. 4) Foreign business in the U.S. also end up paying less tax which he does not divulge. 5) We also note that contrary to his original unemployment thesis, statistical data now available shows that countries with higher trade deficits tend to have higher unemployment. 6) Overlooked is the unreliability of Free Trade. Citizens have only one life to live; they do not wish to constantly have to start over with their education process. 7) As well, unemployment government sponsored education programs add to the national debt that he fails to mention. 8) Finally, he displays total disregard for real root cause analysis, which is basic to Reliability Economics.

As a trade reformist and a Reliability Economist, I have sent emails to Dr. Douglas on many of these facts and have received no response. I have spoken to him recently on the radio about the trade deficit and he suggests that Americans should save more. This in my modest opinion is akin to no answer to what America's number one problem is and what his book should be about.

The key difference between Irwin Douglas and his admired Adam Smith and David Ricardo, free trade originators, is that Dr. Douglas now has mounds of modern data that I think he is too biased to study and see more clearly how these large cumulative U.S. trade deficits are taking their toll on the reliability of the U.S. economy. Like a piece of metal that is bent back and forth, the cumulative damage will eventually show up and cause the metal to break. The economy is interrelated; Dr. Douglas disregard these long term trade deficit consequences such as increases in the national debt, greater separation of wealth, foreign ownership, America for sale, mortgage delinquencies related to outsourced job losses, etc.. All these issues he leaves behind apparently choosing ideology over data.

It is a mystery why, he misleads the reader on Smoot-Hawley's 1930 tariff failure which he does not point out was implemented at a time when the U.S. had a trade surplus even though he has now apparently written possibly a misguided book on the subject, entitled Peddling Protectionism: Smoot-Hawley and the Great Depression! Tariffs are known to be most effective to balance trade when a country has some clout as a valued customer. He also feels that Smoot-Hawley Act was somewhat of a contributor to the Great Depression even though he knows most economists claim this is a myth. Eager to persuade the reader, this and other comments are not put into proper perspective; rather he chooses to bias his arguments against protectionism. Still, if we agree, it does not answer the question ... how to get rid of these enormous yearly trade deficits.

And what protects Americans now against cheating. WTO safeguards are not as effective as he suggests. Free trade policy actually encourages foreigners to cheat as every country wants to export America to death. Honestly, contrary to free trade theory, America is at a "Comparative Disadvantage". Well known is unethical trade deficit problems related to: Currency Manipulation, Excessive Job Outsourcing, Foreign Product Subsidies, Non tariff Trade Barriers, Lack of Intellectual Property Rights Protection, and Product Counterfeiting. Douglas knows this but seems to perpetuate the WTO as the best we can do rather than own up to the failure of "Comparative Advantage". In my modest opinion, a good trade policy should protect American citizens. I was disappointed that he did not step outside the box and even consider the benefits of something like a balance trade policy, which Douglas quickly dismisses with an 18th century old Adam Smith's ideological comment rather than look at today's cumulative trade deficit failure data and how it is depressing our entire economy. From my point of view, Balance Trade would of course eliminate the trade deficit, not violate WTO policy, and would discourage cheating.

In my humble opinion, Dr. Douglas misses the boat on exploring the full cumulative reliability effects of the now $7.85 trillion U.S trade deficit. I doubt that even Adam Smith or David Ricardo ever really intended their theories would properly apply in the extreme case of today's U.S. massive trade deficits, (with 59% now going to communist China in 2009). Douglas an obviously expert on Free Trade and a leading economists, should know all these facts but has chosen to write a bias ideological work wittingly misleading the public and irresponsibly perpetuating America's destructive trade policy path.