Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism by Ha-Joon Chang
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Book Reviews of Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism
Book Review: The side of capitalism you don't read about.
Summary: 5 Stars
This piece is arguably the most thorough examination of corporate driven globalization to date. In this highly critical work every aspect of free trade and neo-liberal policy is examined. Mr. Chang is sure to give you the neo-lib reasoning to their policies and breaks them down with the facts.
He starts and ends the book with hypothetical situations. In both instances he presents an purposely exaggerated, but still quite plausible, depiction of what free trade could look like in the future. IMO the best chapter is number two. In this chapter he examines the United State's and British rise to prominence. You quickly realize it was not through a "level playing field" or a "Golden Straight Jacket " as advocated by Thomas Friedman, but through 40% tariffs and mass state intervention.
Specializing in development econ. Chang spends most of the book looking at how the IMF, WTO, and WB have implemented neo-lib policies and consequentially devastated economies in the global south. His argument and evidence are damning! The statistics provide alone are enough to make the book worth reading. The issues of inflation, corruption, child labor, Intellectual property rights and, democracy are all analyzed at length.
The most important thing to take from this work is that free trade is partially acceptable when nations have fully developed and their "infant industries" are ready to step onto the global scene. However, this can take many years where protectionism and other statist policies are required. There is no alternative for developing nations. Nations that stick with their low productivity "natural advantages" stay on the same economic level. Only when countries defy the market and seek new tech. do they climb the latter to prosperity that the Western World is maliciously kicking down.
I'm studying to be a professor in International Relations and I assure my future students this will be a required text!
Book Review: Confirms Naomi Klein
Summary: 4 Stars
Naomi Klein's masterful work Shock Doctrine documents in exhaustive detail what is wrong with the free trade theory and practice that is being enforced around the globe. This work, though much smaller and simpler in scale, essentially confirms what Klein says, that the IMF and WTO and World Bank are not the helpers of the developing world, but their enslavers. Klein, however, personalizes her accusations, blaming the Chicago Boys (ie disciples of Milton Friedman's Chicago School of economics) and presents it as almost a grand conspiracy. Chang sees less bad intent and more misunderstanding behind the disastrously wrong prescription being given to the world for how to prosper.
The writing style is clear and simple, and no one should have much trouble following Chang's line of reasoning. He makes good use of a few simple metaphors to prove his point. His image of his son, and his need for sheltering and support until he can get an education and grow up to be a productive member of society is memorable--the point being that urging under-developed countries to compete on a level playing field with mature manufacturing countries is just as silly as sending his 8 year old off to work would be. The comparison is telling because just as the non-productive years of a child's life is what enables him to become well-educated, so too there are children whose future is foreclosed by their need to work from childhood. Developing countries are in just that position.
The main weakness that I see in this book is a certain thinness in the factual support. Very large conclusions are often apparently supported by a handful of examples. His native Korea was as poor as Mozambique just a generation ago, and look what it's done. Therefore, don't rule out Mozambique as a future world power. But are there other similar examples? European travelers thought Japanese were lazy 100 years ago. Ok, but the evidence is one or two small anecdotes. Was that really the general view? Was it really a widespread belief that Germans were inefficient and corrupt?
Also, most who oppose things like NAFTA in this country do so because it is hurting our own economy. Is there really much concern in the US for the consequences for the poor countries? One can only assume that free trade must be beneficial for *someone* and if it isn't the poor countries, it would probably be...us. So the idea that we're doing this for our own benefit may not sit well with American protectionists.
But an enlightening read, and very accessible.
Book Review: A qui profite? (who profits?)
Summary: 4 Stars
The author rightfully points out that (firms in) underdeveloped countries can not compete successfully with the big international companies. Dropping their defenses (allowing free trade) usually ruins them. All this is proved very well in the book and is also competently discussed in most other reviews. But this is not the end of the story.
What happens to the population in the developed countries under such free trade? The big companies have the incentive (better profits!) to move factories abroad or just to sell them. Well-paid jobs are lost. Entire industries are moving away. Therefore, the workers in the developed countries also suffer and as a result, the majority of the population suffers too. The only winners for the moment are the big internationals. In the long run they are doomed too.
Take America and China. The big American multinationals (think Wal-Mart) made a deal with China and gradually most American manufacturing moved to Asia. The big multinationals profited, China profited too (it got the plants and the know-how). Who lost? American industry workers lost their jobs. The talking heads explained that everyone benefited. Not true! Cheep goods? What about quality goods and good salaries? When you loose your job and go to work for Wal-Mart, a cheep shirt is no relief. The special skills of the workers are lost and these skills represent valuable investments. You can not benefit without a manufacturing industry. When you have no industry you have no engineering, later - no science. The bad Samaritans are bad also for their own countries
Book Review: great book
Summary: 5 Stars
this book along with naomi klein's the shock doctrine, michael albert's parecon and robin hahnel's economic justice and democracy are the best modern criticisms of free market capitalism. though chang seems to favor some form of market socialism blended with regulated capitalism, and i dont fully agree, the argument against free market capitalism is compelling and sound.Book Review: An argument for state-driven economic management
Summary: 3 Stars
Critics of free trade tend to fall into two camps, irrational and rational. The irrational camp includes hard core socialists and developed world nationalists such as Lou Dobbs, who have an almost religious belief in certain statist policies as some sort of recipe for broad based prosperity absent much evidence and they simply ignore any evidence that policies such as protectionism may do more harm than good. Ha-Joon Chang falls into the second group. His book is generally quite well written and he regularly acknowledges the trade offs involved in his discussions.
Anyone looking for evidence to raise trade barriers or further regulate markets in the developed world won't find it in this book. Chang is quite critical of "neoliberalism" but he generally seems to suggest low trade barriers on trade and foreign investment are wise in the developed world, or at least he doesn't think they are wrong. His argument is whether such policies are wise in the developing world and he goes on to argue for state-driven development strategies for developing nations.
Some of his arguments are interesting and even persuasive. Chapter 9 ("Lazy Japanese and thieving Germans") provides one of the best rebuttals I have seen of the argument that suggests some cultures are destined to fail. He doesn't say culture doesn't matter; merely that it isn't fixed over time.
Chapter 8 ("Zaire vs. Indonesia") has an interesting discussion of corruption. He suggests corruption is not necessarily incompatible with economic growth and modern China is certainly an example of the argument's validity. Nevertheless, he concludes corruption is worth fighting because it erodes confidence in governing institutions.
Other parts of the book are less compelling. One of his central messages is that proponents of free trade are ignorant of (or at least unwilling to acknowledge) the history of protectionism among now developed world economies. That may be true of the free traders he encounters casually but anyone who is even remotely familiar with the economic and political history of the US and UK would know they employed protectionism in the past.
I can't completely reject the argument that developing nations should engage in some protection of domestic producers, but his discussion of the topic tends to omit two problems. He rarely discusses the downsides of protectionism, such as the fact that if tariffs are used, it raises the prices of consumer goods to citizens, rich and poor alike, of those countries. Second, he admits that industries should not be protected in perpetuity but seems to assume such protections will be phased out at an "appropriate" time. Protected industries and their advocates generally don't want to give up the special privileges they enjoy and are often quite successful at delaying or even preventing the day of reckoning. Developed world agricultural subsidies are a perfect example. It is much easier to prevent a special privilege from being enacted in the first place then to end it once it is in place and has developed a constituency to defend it. At some point the costs of a protection that has outlived its usefulness outweighs whatever initial benefits it might have brought.
His discussion of state-owned industry in Chapter 5 also omits certain complications. He ignores the political difficulty in rationalizing a money-losing state owned enterprise. Unions can make demands of a private firm but ultimately they don't have an interest in seeing it go bankrupt. However, there is less of a restraint on union demands in the public sector because the treasury can be seen as a bottomless till. On page 113 he also makes an argument for state ownership of natural monopolies, such as electricity or land line telephones, ignoring the poor performance of many instances when these industries are in state hands.
Chang likes to cite countries that rejected the free market approach, but he is often selective in his examples. Some Asian countries, such as South Korea, China and Japan do appear to have successfully managed state-driven development. However, there are still plenty of others that are less appealing. Many of the far left love to cite Venezuela but much of Venezuela's success is from the oil bonanza, not necessarily wise economic policy. After a decade of increasing state control, nearly half the Venezuelan work force remains employed in the informal economy, devoid of labor protections enjoyed by those in less statist economies; even though Venezuela is flush with oil revenues.
Chang makes some mistakes or dubious statements in a few cases. He associates the Chrysler bailout with the Reagan Administration, when it was actually enacted under President Jimmy Carter. He also makes a reference to the "September 11 bombing of the Word Trade Center" which makes him sound like some nut job conspiracy theorist, although I did a Google search and didn't find any references that associate him the 9/11 conspiracy theories, it was a curious statement just the same.
I gave the book three stars because it is generally well written and acknowledges real world trade offs. I don't find all or even most of his policy prescriptions persuasive but he does make some of the better arguments for state driven development in the underdeveloped nations. Anyone interested is some credible counter arguments should check out Freedom From Want: American Liberalism and the Global Economy or In Defense of Globalization: With a New Afterword