How Nations Grow Rich: The Case for Free Trade

Hardcover | February 1, 1997

byMelvyn Krauss

not yet rated|write a review
There can be no doubt, writes economist Melvyn Krauss, that the prosperity of the industrial nations since the Second World War has been due largely to global specialization and interdependence. No one country does all tasks today -- products are designed in one country, produced in anotherand assembled in a third. The increased standard of living resulting from global specialization in turn has led to the growth of the modern welfare state, including an increased demand for economic security and social measures which guarantee politically-determined minimum consumption standards forcitizens. Ironically, says Krauss, as the debate over the North American Free Trade Area (NAFTA), the General Agreement of Tariffs and Trade (GATT) and the recently established World Trade Organization demonstrate, today's welfare state has evolved into a protectionist state. U.S. consumeradvocates (Ralph Nader) see free trade as a threat to consumerist legislation. U.S. environmentalists (Jerry Brown) see free trade as a threat to environmental legislation. U.S. human rights advocates (Anna Quindlin) see free trade as a threat to human rights abroad. In How Nations Grow Rich, Krauss argues there is no inherent reason why the growth of the welfare state in the Western industrial countries should conflict with free trade that is, there is no inherent reason for the welfare state to be protectionist. Exposing fallacious "welfare state"arguments for protection, Krauss makes a powerful case for free trade in general, and NAFTA in particular, as mechanisms for raising U.S. living standards. Americans are made better off through a reallocation of U.S. productive resources from lower-to-higher productivity uses--from textiles tocomputers, for example. Moreover, by raising wages in Mexico relative to the U.S., Krauss expects NAFTA to help reduce both legal and illegal immigration. Were states like California to reduce their generous social services and affirmative action programs, labor immigration from Mexico would fallto politically acceptable levels. Krauss' novel insight that migration and foreign trade are alternative means of effectuating international exchange is used in this lively and informative book to shed light on a host of important policy issues. By the very act of restricting textile and apparelimports, the U.S. virtually compels foreign textile workers to migrate to the U.S. The European Union's tariff against East European exports provokes a flood of Eastern workers to Western Europe. In How Nations Grow Rich, Krauss dispatches both traditional and newer arguments for protection with unusual verve and clarity. Addressing the belief that protectionism boosts employment, he points out that import restrictions can destroy U.S. jobs when imposed on materials we use as parts. Forexample, in 1991, Apple and Toshiba suffered a dramatic increase in their production costs as a result of a 63% tariff on imported Japanese flat-panel display screens. This "protect-America" policy backfired, causing these two mega-companies to move their production facilities abroad. In responseto protectionist demands that the U.S. close its markets until Japan reduces its trade barriers against U.S. goods--that trade be fair before it can be free--Krauss points out that in a market economy where consumers are kings, only a consumer-based equity standard is valid. Thus what the "fairtrade" protectionist argument really comes down to is the nonsensical proposition that because foreign countries damage their consumers by foolish protectionist measures, equity demands the United States follow suit. This wide-ranging and stimulating book clarifies such important and often inaccessible issues as development policy, foreign aid, trade sanctions, child labor, human rights trade linkages, immigration, European Monetary Union and affirmative action trade policies. How Nations Grow Rich is mustreading for anyone concerned with public policy and international economics.

Pricing and Purchase Info

$38.50

Ships within 1-3 weeks
Ships free on orders over $25

From Our Editors

In How Nations Grow Rich, Krauss argues there is no inherent reason why the growth of the welfare state in the Western industrial countries should conflict with free trade-that is, there is no inherent reason for the welfare state to be protectionist.

From the Publisher

There can be no doubt, writes economist Melvyn Krauss, that the prosperity of the industrial nations since the Second World War has been due largely to global specialization and interdependence. No one country does all tasks today -- products are designed in one country, produced in anotherand assembled in a third. The increased stan...

From the Jacket

In How Nations Grow Rich, Krauss argues there is no inherent reason why the growth of the welfare state in the Western industrial countries should conflict with free trade-that is, there is no inherent reason for the welfare state to be protectionist.

Melvyn Krauss is a senior fellow at the Hoover Institution, Stanford University, and Emeritus Professor of Economics at New York University.

other books by Melvyn Krauss

Format:HardcoverDimensions:160 pages, 9.57 × 6.46 × 0.71 inPublished:February 1, 1997Publisher:Oxford University Press

The following ISBNs are associated with this title:

ISBN - 10:0195112377

ISBN - 13:9780195112375

Customer Reviews of How Nations Grow Rich: The Case for Free Trade

Reviews

Extra Content

From Our Editors

In How Nations Grow Rich, Krauss argues there is no inherent reason why the growth of the welfare state in the Western industrial countries should conflict with free trade-that is, there is no inherent reason for the welfare state to be protectionist.

Editorial Reviews

"This is a forceful and very readable book on a subject in today's headlines. There are few economic writers--two or three at most--who go quickly and clearly to the heart of the matter and Krauss is one of them. I find him to be particularly good at exposing the speciousness of populardiscussions of how the world economy works."--Edmund S. Phelps, McVickar Professor of Political Economy, Columbia University