Books like No Trade Is Free — picked by fans

Mr. Brzezinski was one of the very few who correctly described the power structures between the US and the rest of the world.

In my eyes, he had more wisdom than Henry Kissinger, and his view was a relief and a pleasure to read. I always thought: “Here is a wise man talking.”

My view of the damage that is being done by free trade with China seamlessly fits into Mr. Brzezinski’s worldview. He was a man I greatly admired.

This economist, who wrote “The Folly of Free Trade” article in the 1986 Harvard Business Review, wrote that free trade is not always good and scoffed at the religious-like belief that it is.

He is the only American thinker who wrote that clearly. Unfortunately, his writing was long-winded, which probably turned away readers. Although general opinion ignored his view, he was totally right, and we now sit with the problem of that ignorance.

I feel he deserves a statue, and I fervently hope the White House will one day have one erected for him, because, for a nation, it is right to honor its great thinkers, even if they were ignored in their lifetime and are no longer alive. 

Culbertson was right.

This book, so excellent in giving valid arguments and then predicting China’s supposed inevitable economic demise, is a clear example of how most American authors reason about China without taking into account the huge economic differences it has with our economy.

McMahon and all the others forget that a) in the year 2000 there were 600 million cheap laborers in the countryside, and there still are more than 200 million available now, b) the Beijing Communist dictatorship is cruelly keeping wages of production workers at less than half ours, and c) the existing free trade, started by Bill Clinton in 2000, provides a huge yearly income to China that erases all possible financial troubles they may have.

These three elements together make Mr. McMahon’s book an intellectual silliness. Most authors in our Western world make the same error. It is high time this be realized and corrected.

This book is unique in that, in clear language, it explains Keynes’ Theory of Employment, which created the present science of macroeconomics.

It was printed in 1948 and the following years, in English and 37 other languages. It still is, in my view, THE book about macroeconomics that every economist should read and try to understand. Nothing else comes even near it in clarity and exposure of the excellent work by Keynes.

Bastiat was a 19th-century French economist, writer, and politician. Economic Sophisms is a collection of short and enjoyable essays illustrating the case for free trade and attacking some economic misconceptions. Many of the essays’ themes and arguments are relevant today, and Bastiat’s critiques of big government are often witty.

In one essay, Bastiat presents a “candlemakers petition” to the parliament for protection against the unfair competition of sunlight, which was flooding the market with a superior product at virtually zero price. Modern critiques of zero price “monopolists” (e.g., Facebook or Google) should take note!

In What is Seen and Not Seen Bastiat introduces the “parable of the broken window” to show that economic resources are fundamentally scarce: resources expended on one activity are not available for others. Centuries later, many policymakers are yet to grasp this insight.

I loved this book because it helped me understand why the Washington Consensus policies of unchecked globalism, including free trade and unregulated markets, are inequitable and destabilizing. It convincingly explains why they have never been and never will be truly accepted by other countries.

Importantly, it helped me to understand how their application in the US has created the conditions that are causing its own incipient turn away from free trade and unregulated markets. Written with great clarity, it freed me to think more broadly about alternatives.

Drawing on extensive historical research, economist Ha-Joon Chang shows that today’s wealthiest nations became rich not by following the advice they have long given to poorer nations — embrace free and open markets with minimal state involvement — but by doing precisely the opposite: embracing policies of protectionism and significant state intervention. In admirably clear prose, Chang exposes the hypocrisy of the world’s richest nations and lays out a more promising path of development for the poorer countries of the world. 

This book makes the novel and, to me, fascinating case that the economy is an evolutionary system that is constantly changing, implying that the static equilibria of conventional trade models are not usefully predictive. It also made it clear to me, from a different perspective, that the industries in which a country succeeds are path-dependent.

If you are a mosquito, the next evolutionary mutation will not produce an elephant. Likewise, it is much easier to design and manufacture 3 nanometer-scale chips if you have already designed and manufactured 5 nanometer-scale chips. This drove home to me how important retaining the key industries of today is for our long-term prosperity.

I was excited to read this book, co-authored by a former president of the American Economic Association, because it proved using the same mathematical modeling that economists love, that trade is sometimes—often, in fact—win/lose.

Specifically, when a developed country like the US loses a large or high-value industry to another country, it loses more than it gains by being able to import the industry’s products at a lower cost. This encouraged me to dig further into the problems with US trade policy.

When I was an investment banker in the 80s and early 90s, the prevailing mantra was that what was good for Wall Street was good for the country. Nevertheless, I wondered whether slicing and dicing mortgages into different classes of derivatives and selling them to other financial institutions actually added value to the real economy. 

This book made it clear to me that it does not and shows how the overgrowth of the financial sector—rising from four to five percent of GDP in the 1970s to over eight percent in the 2000s—caused the Great Recession of 2008. This explosion of debt was used almost exclusively to buy existing assets, thus crowding out lending for plant, equipment, and research.

The Recession is over, but financialization, a powerful and independent factor undermining US industrial policy, continues unchecked.