Ed Glaeser on Ha-Joon Chang
Ed writes:
Those Who Do Not Know the Past - December 26, 2007 - The New York Sun: Mr. Chang alleges, with scant evidence, that [America and Britain] grew great because of these tariff barriers.... Mr. Chang... argues that since rich countries have public ownership and deficits, it is rank hypocrisy for us to try to forbid them to the poor. An alternative view is that economists shouldn't be required to endorse the worst policies of their own countries. While it is easy to quibble with some of Mr. Chang's more bizarre statements about American political history, such as his claim that "slavery was not as divisive an issue in antebellum politics as most of today believe it to have been," he is certainly correct that America was quite protectionist.... The most curious thing about Mr. Chang's retelling of American history is his suggestion that there is anything secret about this history of American protectionism. The Tariff of Abominations and the Smoot-Hawley Tariff are both mainstays of high school history classes....
The book would have made a more serious contribution if it shed more light on whether American or English protectionism helped or harmed these countries. Post hoc does not imply propter hoc.... The high physical costs of crossing the Atlantic in the age of sail made it natural, with or without tariffs, for the Lowells to want to weave cotton on this side of the pond. Mr. Chang is going to have to do better than just point out that Americans and Englishmen had tariffs to make the case that tariffs produced growth.
There is a substantial empirical literature that looks at the relationship between trade openness and economic development.... My own research in this area found that openness had little impact on middle income places, but is particularly valuable for the poorest places. Certainly, there is no empirical consensus that openness is either good or bad for growth.
The lack of consensus on the connection between growth and openness does not imply that Mr. Chang's protectionism is equally attractive as the open borders urged by the Washington consensus. Adam Smith and David Ricardo didn't urge free trade because trade begets growth, but because trade makes goods cheaper for ordinary people.... Even if protectionism does encourage industrial growth, it only does so by hurting ordinary people, who have to pay more to buy the goods of inefficient domestic producers.
Mr. Chang's protectionist brief suggests that the costs that tariffs impose on ordinary consumers are worth paying since the government can use tariffs to promote the right industries. Smith would have been skeptical about putting such faith in the government, and today's developing countries certainly deserve no more trust than the government of George III.... The best thing to come out of this book is its challenge to the advocates of free markets to explain why England and America did so well despite embracing policies that were not always that free...
