I'm no critic of works in economics. I'm not an economist even, rather more an analyst of and builder of the early fundamental systems in computing. I began blogging on economics in order to validate the intuitions of many Americans that both free trade and Supply Side economics can't work, conclusions I had reached by the tools that everyone has, intuition, observation and memory plus a little "mental calculus" of correlation. Some economists have focused on revealing the fallacies of free trade for some time. Ian Fletcher is among them and his book Free Trade Doesn't Work is a fine example of the state of the argument.
In a brief conversation I had with Ian over one of my folksy blogs on economics, he confided the focus of his work on the trade issue. I had been trying to build confidence in the public that their intuitions about trade were right, to build populist support. Ian suggests to me that there is plenty of populist support for reigning in free trade. Recent polls suggest that he's right. Ian suggests that government is in the thrall of free traders and that the decision makers are the people to whom one must make the case against free trade. They are fully capable of understanding it, may even believe in balancing trade, but are intellectually reluctant to go up against a well provisioned free trade advocacy machine.
Ian, through his writing and under the auspices of the USBIC lobby, means to take the free trade theory head on in the halls of government, making the intellectual argument in the face of free trade advocates. The free trade advocates currently hold a monopoly on the ear of our government.
Free Trade Doesn't Work has the very high information density one would expect for book on a complex subject. But it is not a math formula, intensive academic work written to some audience of somber university theory purists. It is a work of more passion and human connection than that. Not filled with statistical slight of hand, it appeals to the readers powers of observation and personal skills at reasoning. It is written as a political work, with all due deference to what is observable and provable about economies, a goal with which I personally identify. Politics is about not much more than economies.
The book's introduction is an analysis of the grip of economists on government. In a section titled, Sophisticated Math Doesn't Equal Sophisticated Thinking, Ian describes how math, being daunting to most of us in the un-mathematical class, wins arguments in economics simply because no one can spare the temporal agonies to verify it. My takeaway is that free trade wins the argument just the way the Wall Street derivatives over promising buffaloed a thousand pension funds and endowments. We've been had by a deluge of math, it seeming to overrule logic.
Reading on, Ian seems rather kinder to his peers in economics than I would be. He notes the academics reward the academically pure over the practical. The practical is messy and an academic is willing to disqualify assumptions that make the math more difficult. I, as a rather get things done than chat kind of engineer, find that observation to ring true.
In this work, Fletcher addresses the vacuous and/or fallacious arguments of the free traders that, among other things, global free trade will usher in world peace. He confronts the use of the long self aggrandizing view of Americans that they are a wonder of God given prowess, unassailable by lesser peoples and nations. Ian dissects the media forgotten, formerly media promoted, temptations of a billion new Chinese customers hungry for God given American products and culture. Ecstatic promises were made by the free traders and decades into the process they have proved empty, beyond empty really, more a pitfall. That's the problem with sophists. They pay for misleading only with their reputations while you pay for listening with your livelihood.
Fletcher addresses the dubiousness of allowing trade deficits to swell while budget deficits grow. Not only are we losing taxes through re-importation loopholes, but we are selling off assets in this country on which future income might depend, deepening our future budgetary distresses. We are exporting our future as well as our current jobs. Adding to this distress will be the "squeeze" of timing on return on our "investment" in free markets and trade. While the whole thing may work out in some future imagining, it will not work out if you necessarily need to cash out before the "theory" returns a reward, say at your retirement. Anyone who has worked in the stock market knows this to be a mortal truth, the long term is qualified by your life term.
As a veteran of the first market wars between Apple and Microsoft, I particularly like Ian's writing on "education" as a false hope for trade balance. Education (or knowledge) is of little or no competitive value if you give it away. In my own experience, Apple held technology closely, while Microsoft lobbied IBM to open technology so that the price of hardware could come down allowing more margin in the total cost of computing for software. Microsoft then made money while IBM did not. The first wave of off shoring technology was launched with IBM's imbecilic acceding to Gates' "wisdoms". Taiwan and Microsoft were the beneficiaries then, and the world saw technology reduced to a commodity, the profits from which would power precious little in the way of growth . That is until the Apple market model of closely held technology recently resurged under the hand of Steve Jobs. The model for American business is Apple, always should have been, not Microsoft.
Understanding the mechanisms of academic influence and analyzing the experiential outcomes is not enough though. Fletcher goes on for chapter after chapter. In the balance, no summary can do justice to the thoroughness with which Fletcher examines the propaganda and the intricacies of how we have come to institutionalize free trade. Both inside and outside of government, we seem to sanctify trade deficits; indeed, field an army of paid academic mercenaries as dedicated to the proposition of defending it as were the tribunes of the Spanish Inquisition.
Unbowed by such adversaries, Fletcher, just as relentlessly as its defenders extol free trade, explores the paths to breaking the institutionalizing of it, and finding alternatives for balancing it. These sections are a trove of strongly reasoned and memorable arguments for balancing trade. They are aimed to convince, to confront, and to win the argument at the highest levels of government.
This is a work for serious minds that want to right this ship of state. But his book reads, for an economist or the inclined, like an in depth tell all about the Hollywood producer studio star system machinations would read for a movie fan. The free market free traders should be very afraid that you read it.