How Nations Grow Rich: The Case for Free Trade

Abstract

How Nations Grow Rich: The Case for Free Trade Melvyn Krauss Oxford University Press, New York, 1997 140 pages, $22.50, hardback Melvyn Krauss's credentials are solid as an economist and supporter of the free market. A "case for free trade" is fully in keeping with a major thrust of much thinking on both left and right today. The predominant public philosophy of established opinion throughout the world now supports "the global marketplace." It is possible to say this despite most nations' and regions' throwing up trade barriers of one type or another as they seek to serve their local interests. The prevailing ideology leads, at least, to a ubiquitous lipservice supporting free trade. This book is an excellent primer summarizing the free trade position. Nevertheless, there is much to criticize: 1. The argumentation is ideological rather than reflective. 2. Little respect is given to opposing views. 3. Although Krauss argues that economic science and value judgments are to be kept separate, he nevertheless draws a good many value judgments, all of them making "the consumer" the sole standard and willing to sacrifice other values such as a given nation's well-being or the economic viability of millions of people within a given country (most notably, for our purposes, the United States). 4. Much of his case is out of date, or soon will be, in light of rapidly emerging world realities. Let's look at each of these: Ideological Argumentation Krauss's text is true to its name, "the case for...." It is essentially similar to a lawyer's brief for a client, in that thoughts are marshalled for their supportive value rather than as concepts to be objectively considered. This makes the book a polemic rather than a scholarly discussion. There is, of course, room in the world for polemics; but it is vitally important to realize the distinction between polemics and scholarship. An example comes when Krauss defends the Japanese acquisition of U.S. assets with a non sequitur. His sought-for conclusion is that foreign ownership is no threat. In support of this, he tells how those investments have been unprofitable to the Japanese themselves. But this is inappropriate evidence for his conclusion, since unprofitability at any given time tells us nothing about foreign-owned assets' profitability in general. A similar opportunistic marshalling of arguments is evident when he seeks support for his position that the North American Free Trade Agreement (NAFTA) is not causing the United States to lower its environmental standards. His supporting premise: that, under NAFTA, the United States is "exporting" its pollution-creating industries to Mexico. No one concerned about the environment would consider that a plus, but the idea that polluters are moving from the United States to Mexico (because of its lower standards) allows Krauss to bolster his main point. Here, he is willing to support an argument by undergirding it with something quite ridiculous. He does the same thing when he argues that NAFTA will help curtail the flow of illegal Mexican immigrants to the United States. "Oh, good!," conservatives will be inclined to say. But how is the flow to be stanched? By the wages of unskilled workers in the United States being bid downward and those of unskilled workers in Mexico upward! As in the expression "any port in a storm," Krauss seems ready to use any argument to support a desired conclusion. Lack of Respect for Opposing Views As with so much free-trade literature, opposing views are demonized, eliminating the need to discuss them seriously. Thus, "protectionists are master spinmeisters" who engage in "the big lie." Most specifically, the points that Pat Buchanan made during his 1996 campaign are written off with a reference to "the Buchanan knownothing Right." "Reason...may not be Pat Buchanan's forte. …