Manuel Suárez Mier*
Here is a short chronicle of the magnificent new book by the eminent economist Anne Krueger.
The most recent book by the great economist Anne Krueger, International Trade: What Everyone Needs to Know [1] has just been published, which is a feat of insight in explaining the virtues and functioning of trade between nations, very timely when protectionism resurfaces.
It is a text that gives clear and persuasive answers to the questions that are often asked by laymen and experts alike on a subject essential to the well-being of society and its progress, and which calls into question the charlatans who have burst onto the scene and reject the free trade.
Krueger, who deserves the Nobel Prize in economics more than many who have obtained it, has been a tenacious practitioner of the theories that she knows perfectly, and from her early professional years, she had the opportunity to apply them in paradigmatic cases such as those of India, Turkey, and South Korea.
She was able to observe first-hand the stagnation that protectionism brought to those nations and how, in the case of South Korea, it changed everything as soon as it adopted a growth model that shelved import substitution, and adopted free markets and trade.
She recounts those experiences and the remarkable emergence of China, and how the analysis of those cases achieved a better understanding not only of the costs of protection but also of the path that had to be followed to change things and progress as some countries did successfully, which led to a very positive contagion.
She points out how by the end of the millennium, most developing countries had changed their growth model to one that saw global trade as their lever for development and not as the danger into which it had been presented by the protectionists, many of whom got rich by thriving in its shadow.
The author chronicles the exemplary role that the US played at the end of the Second World War, when it finally left its recurring autarchic outbreaks, thus becoming a leader in the fight for freer markets, domestically and globally, an essential transformation to achieve the largest welfare gains in human history.
Among the cases that Krueger discusses in his text, is the evolution of NAFTA and its recent renegotiation, imposed by protectionist Donald Trump with the explicit purpose of “bringing jobs back to the US” and “eliminating its trade deficit with Mexico” through bureaucratic controls.
Krueger acknowledges that with the ill-fated USMCA, which appropriately does not use the word “free” in its name, the credibility of the United States has been in question as it casts doubts among potential partners of the benefit of negotiating with a country that denies its deals and imposes its whims by force.
Krueger’s reason for writing this didactic work is to influence citizens to be more skeptical about the supposed benefits of protectionism and to measure the damage it does to their well-being since, in the end, business strategy is determined by political processes.
*This was originally published in Spanish on October 16, 2020, in Excelsior
[1] Oxford University Press, September 2020.