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A rising young star in the field of economics attacks the free-trade orthodoxy of The World Is Flat head-on—a crisp, contrarian history of global capitalism. One economist has called Ha-Joon Chang "the most exciting thinker our profession has turned out in the past fifteen years." With Bad Samaritans, this provocative scholar bursts into the debate on globalization and econ A rising young star in the field of economics attacks the free-trade orthodoxy of The World Is Flat head-on—a crisp, contrarian history of global capitalism. One economist has called Ha-Joon Chang "the most exciting thinker our profession has turned out in the past fifteen years." With Bad Samaritans, this provocative scholar bursts into the debate on globalization and economic justice. Using irreverent wit, an engagingly personal style, and a battery of examples, Chang blasts holes in the "World Is Flat" orthodoxy of Thomas Friedman and other liberal economists who argue that only unfettered capitalism and wide-open international trade can lift struggling nations out of poverty. On the contrary, Chang shows, today's economic superpowers—from the U.S. to Britain to his native Korea—all attained prosperity by shameless protectionism and government intervention in industry. We have conveniently forgotten this fact, telling ourselves a fairy tale about the magic of free trade and—via our proxies such as the World Bank, International Monetary Fund, and World Trade Organization—ramming policies that suit ourselves down the throat of the developing world. Unlike typical economists who construct models of how the marketplace should work, Chang examines the past: what has actually happened. His pungently contrarian history demolishes one pillar after another of free-market mythology. We treat patents and copyrights as sacrosanct—but developed our own industries by studiously copying others' technologies. We insist that centrally planned economies stifle growth—but many developing countries had higher GDP growth before they were pressured into deregulating their economies. Both justice and common sense, Chang argues, demand that we reevaluate the policies we force on nations that are struggling to follow in our footsteps.


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A rising young star in the field of economics attacks the free-trade orthodoxy of The World Is Flat head-on—a crisp, contrarian history of global capitalism. One economist has called Ha-Joon Chang "the most exciting thinker our profession has turned out in the past fifteen years." With Bad Samaritans, this provocative scholar bursts into the debate on globalization and econ A rising young star in the field of economics attacks the free-trade orthodoxy of The World Is Flat head-on—a crisp, contrarian history of global capitalism. One economist has called Ha-Joon Chang "the most exciting thinker our profession has turned out in the past fifteen years." With Bad Samaritans, this provocative scholar bursts into the debate on globalization and economic justice. Using irreverent wit, an engagingly personal style, and a battery of examples, Chang blasts holes in the "World Is Flat" orthodoxy of Thomas Friedman and other liberal economists who argue that only unfettered capitalism and wide-open international trade can lift struggling nations out of poverty. On the contrary, Chang shows, today's economic superpowers—from the U.S. to Britain to his native Korea—all attained prosperity by shameless protectionism and government intervention in industry. We have conveniently forgotten this fact, telling ourselves a fairy tale about the magic of free trade and—via our proxies such as the World Bank, International Monetary Fund, and World Trade Organization—ramming policies that suit ourselves down the throat of the developing world. Unlike typical economists who construct models of how the marketplace should work, Chang examines the past: what has actually happened. His pungently contrarian history demolishes one pillar after another of free-market mythology. We treat patents and copyrights as sacrosanct—but developed our own industries by studiously copying others' technologies. We insist that centrally planned economies stifle growth—but many developing countries had higher GDP growth before they were pressured into deregulating their economies. Both justice and common sense, Chang argues, demand that we reevaluate the policies we force on nations that are struggling to follow in our footsteps.

30 review for Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism

  1. 4 out of 5

    Randal Samstag

    Ha-Joon Chang is not widely known (except by astute Goodreads readers!), even among economists, in the United States, but he is a rock star in his native Korea. He is not mentioned in the index or the bibliography of the recent neo-liberal tract, Why Nations Fail, by Acemoglu and Robinson. But on a recent trip to Busan, the Republic of Korea’s second largest city on the southern coast, I stopped beside Haeundae Beach to take in the scene. I began a conversation quite quickly (in English, my Kore Ha-Joon Chang is not widely known (except by astute Goodreads readers!), even among economists, in the United States, but he is a rock star in his native Korea. He is not mentioned in the index or the bibliography of the recent neo-liberal tract, Why Nations Fail, by Acemoglu and Robinson. But on a recent trip to Busan, the Republic of Korea’s second largest city on the southern coast, I stopped beside Haeundae Beach to take in the scene. I began a conversation quite quickly (in English, my Korean is rudimentary) with two Korean businessmen and somehow, when the conversation came around to the state of the world’s economy, I mentioned that I was reading Chang’s 2007 book, Bad Samaritans. At first the Koreans didn’t recognize the name, but that was because I had used the westernized word order for his name, Ha-Joon Chang. “Oh,” the one guy said, “Chang Ha-Joon! I am reading that book too.” Chang is currently a professor in the Faculty of Economics at Cambridge University (Cambridge on the Cam). You can find his mini-biography on his blog here: http://hajoonchang.net/my-background/. He is the author of a number of texts (he lists 14 books on his blog) in the economics of development, including the recent work, 23 Things They Don’t Tell You about Capitalism. For a quick summary of these 23 things you might look here: http://www.huffingtonpost.com/ian-fle.... Bad Samaritans, first published in 2007, is a devastating critique of the neo-liberal theory of development. At the end of the prologue Chang lists the following heterodox positions that he will argue: Free trade reduces freedom of choice for poor countries Keeping foreign companies out may be good for them in the long run Investing in a company that is going to make a loss for 17 years (Nokia) may be an excellent proposition Some of the world’s best firms are owned and run by the state ‘Borrowing’ ideas from more productive foreigners is essential for economic development Low inflation and government prudence may be harmful for economic development Free market and democracy are not natural partners Countries are not poor because their people are lazy; their people are ‘lazy’ because they are poor The resulting book, while perhaps not as ‘cool’ as the 23 Things book, is full of tongue-in-cheek humor backed up with well-informed factual argument. The book includes examples from development stories around the globe, but especially from his native Korea. The theories of the neo-liberal visionaries are devastatingly criticized in the book, but for the most part he does not attack them by name. Rather, he describes examples of policies implemented by the World Bank and International Monetary Fund (IMF) which have been informed by neo-liberal development theory and points out how these policies have often led to the opposite outcome from what their proponents claim for them. An exception to this rule is Thomas Friedman, neo-liberal journalist, whose book The Lexus and the Olive Grove is isolated for criticism in Chapter 1 as embodying the fictitious history of neo-liberal development theories, as opposed to the real history of less-than expected success or outright failure. For me the most revealing story in the book comes in the early going in Chapter 2 in which Chang reviews the history of how today’s rich countries became rich. He conclusively shows that this was not by following the free trade policies that have been advocated by the World Bank and IMF to developing countries in the past forty years. Chang resurrects a long forgotten work in economics by Daniel Defoe, the author of the famous character of Robinson Crusoe. Defoe had a colorful career besides his life as an author of literature. He was a businessman, tax collector, political commentator, and spy for both Tory and Whig governments. He was also an economist. Defoe’s book on economics, A Plan for the English Commerce (1728), tells the story of how the Tudor monarchs, Henry VII and Elizabeth I, used “protectionism, subsidies, distribution of monopoly rights, government-sponsored industrial espionage and other means of government intervention to develop England’s woollen manufacturing industry – Europe’s high-tech industry at the time.” Defoe’s character, Robinson Crusoe, is often used as an example by neo-liberal economists of homo economicus, the rational self-interest seeker who drives the development of free market economies; but Defoe’s actual work on economics shows “that it was not the free market but government protection and subsidies that developed British woollen manufacturing.” This is opposite of the story told by Acemoglu and Robinson. They give credit to the abandonment of protectionism as the spur to Britain’s growth, but it doesn’t occur to them that without that protection, Britain’s growth wouldn’t have gotten off the ground. After the Napoleonic Wars when the protectionist policies of the Tudors had been able to establish British manufacturers as the most efficient in the world, these manufacturers recognized that free trade was now in their interest. The manufacturers agitated in favor of the abolition of the Corn Laws, that kept low cost grains from being imported to feed the industrial workers of the new Britain. It is at this juncture in the history of the industrial revolution in Britain that David Ricardo, economist, politician, and stock-market player, originated the theories of free trade that are parroted by neo-liberal economists today. Ricardo’s theory of comparative advantage “argued that trade between two countries makes sense when one country can produce everything more cheaply than another. Although this country is more efficient in producing everything than the other, it can still gain advantage by specializing in things in which it has the greatest cost advantage over its trading partner.” Chang admits that Ricardo’s theory is correct “within its narrow confines.” However, when one country is technologically backward compared to another, “it takes time and experience to absorb new technologies, so technologically backward producers need a period of protection from international competitions during this period of learning. . . . Ricardo’s theory is, thus seen, for those who accept the status quo but not for those who want to change it.” A perfect example of this is the United States in the nineteenth century. Adam Smith had argued that the Americans should not develop manufacturing. Thomas Jefferson agreed. But thanks to Alexander Hamilton, who became America’s first Treasury Secretary at the age of 33, a different policy was followed. Hamilton’s Report on the Subject of Manufactures from 1791 presents a rationale for what became the program for development of industry in the United States. The core of this idea was that “a backward country like the US should protect its ‘industries in their infancy’ from foreign competition and nurture them to the point where they could stand on their own feet.” Following the issuing of Hamilton’s report to Congress the average tariff on foreign manufactured goods was raised from 5 percent to 12.5 percent, but this was far short of his recommendations. But after Hamilton’s death (after the famous duel at Weehawken with Aaron Burr) his program was adopted in full. After the War of 1812, the US Congress raised tariffs to an average of 25 percent. Once elected in 1860, Lincoln raised industrial tariffs to the highest levels so far in US history. This was justified by the expenses of the Civil War, but tariffs on manufactured goods remained at the 40 to 50 percent level until the First World War, the highest of any country in the world at the time. How many Americans realize this fact about their history? And despite (or because of?)having the highest tariffs in the world, the US in the nineteenth century was the fastest growing economy in the world. Free trade economists have argued that this was in spite of protectionism, but Chang points out that the same story has been repeated over and over again in the century that followed; by Germany, Sweden, France, Finland, Austria, Japan, Taiwan, and Korea. Another example of a cherished neo-liberal policy story in which the facts look much different from the theory is told in his Chapter 7 on financial prudence. Low inflation is gospel for neo-liberalism. “Inflation is bad for growth – this has become one of the most widely accepted economic nostrums of our age.” But during the 1960s and 1970s while Brazil’s average inflation rate was 42 percent per year, it’s (inflation-adjusted) per capita income grew at 4.5 percent per year. During the period when Brazil embraced neo-liberal policies between 1996 and 2005, its inflation rate dropped to 7.5 percent per year, but its per capita growth rate also dropped to an average of 1.5 per cent per year. A similar story played out in Korea, which had inflation rates close to 20 percent in the 1960s and 1970s while its economy was growing at ‘miracle’ inflation-adjusted rates of 7 percent per year. Chang insists that “I am not arguing that all inflation is good. . . . But there is a logical jump between acknowledging the destructive nature of hyperinflation and arguing that the lower the inflation rate, the better.” The inflation rate does not have to be in the 1 -3 percent range for economic growth to occur. The examples of Brazil and Korea show this. There is much else in this book which debunks long-cherished apparent truths of neo-liberal development economics: the story of Finland’s refusal to permit significant foreign investment in their country; the story of Pohang Iron and Steel Company (POSCO), which grew to be the third largest steel company in the world (in 2008), but started as a state-owned (Korean) enterprise; the story of the economic success of Singapore with its state-owned premier airline and a host of government-linked enterprises in telecom, power, transport, semi-conductors, shipbuilding, engineering, shipping, and banking. All of these stories (and others) are worth reading. You can hear Chang talking to Amy Goodman in 2009 about Bad Samaritans here: http://www.democracynow.org/2009/3/10.... He comes across as either extremely naive in the ways of US politics or completely deadpan in his reply to Amy’s question that the proper response to the financial crisis of 2008 would have been to nationalize the US banking sector. He gives very reasonable arguments why this should have been done and points out that many countries have had successful growth with essentially public ownership of banking; for example, France. He doesn’t seem to realize how crazy we really are. Apparently he hasn’t been watching Fox News.

  2. 5 out of 5

    Trevor

    We all know what a good Samaritan is – someone who, despite the ethnic stereotype associated with them and their racial dislike for people more like us, stops when they see someone in trouble and helps them, regardless of their differences or the personal cost to themselves. This is a book about how developing nations are being ‘helped’ by developed nations – and its message is the exact opposite of the good Samaritan story. That is, rather than those nations being helped to develop, they are be We all know what a good Samaritan is – someone who, despite the ethnic stereotype associated with them and their racial dislike for people more like us, stops when they see someone in trouble and helps them, regardless of their differences or the personal cost to themselves. This is a book about how developing nations are being ‘helped’ by developed nations – and its message is the exact opposite of the good Samaritan story. That is, rather than those nations being helped to develop, they are being grossly hindered. The author makes no judgement about whether this is being done intentionally or not – or as he says, whether the rich nations are trying to kick away the ladder they themselves have climbed or whether they truly believe that what they propose and impose on developing nations is ‘for their own good’. His point is that what is being imposed on the developing world is the opposite to what was done by the developed world in their development – and that what is being done to the developing world seems virtually designed to keep them poor. As such, we need to change how we relate to these nations and allow them a pathway toward development. This book provides an interesting counter-narrative about how the developed world became rich, and therefore is very worthwhile even for the economic history lesson it provides. There’s a really nice bit at the start where he talks about his son and how it wouldn’t matter what incentives he offered him, his son still wouldn’t be able to perform brain surgery right now. His son was at the time 4 or 5. This sounds absurd, except that the standard line used to justify our treatment of developing nations is that economics is the study of incentives and how humans (and nations) respond to them. We assume that if you create the incentive, the response will look after itself. In fact, standard theory suggests that if you don’t force developing nations to enter into direct competition with developed nations, that is, if you don’t remove all protection from developing world economies, then this will prove to be of more harm than good to these economies. This is meant to be for a range of reasons, such as, that these countries will pursue industries they are not suited to, protection will allow their new industries to grow flabby and inefficient, that the economies will just waste their resources on products that could be more efficiently be produced elsewhere – and so on. He points out that while this is almost certainly true in the first years of the country establishing a new industry, once it has been nurtured – in much the same way that his son is going to be nurtured and protected from harsh competition for the next 10-20 years – the nation will be much better able to stand on its own two feet. That is, it will be better off than if it had followed standard economic theory. He provides lots of examples of how nations have built their own industries, not least in his native Korea, but also elsewhere too, Japan for instance. He says these early industries never had a competitive advantage over the potential imports from more developed nations, and that Ricardo’s theory of ‘comparative advantage’ would have demanded that they should never have begun building these industries. However, as Korea’s car industry has proven, sticking to your comparative advantage is not the best strategy. He ends by saying that unless your nation is remarkably blessed in natural resources, you are unlikely to ever become developed until you develop industries. There is talk of being able to skip industrial development and move straight to services, but, as he also explains in one of his other books, it is much harder to improve productivity in service industries than it is in industry proper, and so if there is a choice, productive industry ought to be the one you pick. This book provides a very long list of ways in which poor countries are exploited by rich countries – all while they assert they are working in the best interests of the poor countries. I really liked his discussion of time and how comparatively wealthy countries often think people in poor countries deserve to be poor because of their lackadaisical attitude to punctuality. However, as he points out, it is industry that demands strict time keeping and therefore industry produces our obsession with ‘being on time’, rather than the other way around. Rather than this being a reason for poor nations being poor, the lack of punctuality is a symptom of their lack of development. Industrial development cures poor time management. I liked this book – and I’ve liked all of his books on economics so far.

  3. 4 out of 5

    Kevin

    Ha-Joon Chang was the first economist I read whose methodology seriously considered the real world (i.e. history, and not just that of the winners)… Oh, how dismal is mainstream economics?! I’ve since explored beyond Chang’s State Capitalist/social democrat reformist lens, but he remains useful to learn from and challenge. The Brilliant: --“Kicking away the ladder”: do-as-we-say, not-as-we-do. Power does not rely solely on direct violence; it is much more effective when it cultivates participati Ha-Joon Chang was the first economist I read whose methodology seriously considered the real world (i.e. history, and not just that of the winners)… Oh, how dismal is mainstream economics?! I’ve since explored beyond Chang’s State Capitalist/social democrat reformist lens, but he remains useful to learn from and challenge. The Brilliant: --“Kicking away the ladder”: do-as-we-say, not-as-we-do. Power does not rely solely on direct violence; it is much more effective when it cultivates participation. Thus, the “free market” ideology tactfully hides much of the actual history of how rich countries became rich (i.e. strategic protectionism + violent destruction of competition) and how poor countries are kept poor (i.e. open markets for low-productivity extraction and no protection to nurture higher-productivity sectors). --Thus, this book is a useful (accessible!) intro to dispel “free market” propaganda. --Also excellent is the last chapter (“Lazy Japanese and thieving Germans”) exposing the fallacy of blaming cultural traits for underdevelopment. I always welcome the clowning of stooges like Francis Fukuyama and Thomas L. Friedman. The Adequate: --Note the other side of accessibility: 1) The underlying social democrat ideology relies on the palatable liberal paradigm. 2) More in-depth concepts of “kicking away the ladder” are not elaborated on (i.e. “imperialism”, “core-periphery”/“Dependency theory”/“underdevelopment”). …Thus, this is a bridge for you to cross, not to get stuck on. --While I question State Capitalism, I can see how Chang can side with it given his life experiences of living through South Korea’s rapid development from the ravages of Japanese imperialism/proxy civil war (US imperialism *cough, cough*) to an industrialized hi-tech nation. His real world examples from a Development Economics perspective are certainly worth unpacking (trade history, FDI, public-private, Intellectual Property, Monetarism & inflation & interest rates, corruption, etc.)… The Bad: --OK, time to address State Capitalism. For someone who writes quite eloquently about status quo bias (e.g. Richardo’s Comparative Advantage theory assuming countries will stay at their current levels of technology) and the importance of power politics in understanding the economic fate of nations, remaining so resolute with State Capitalism raises concerns. --Historically, can it not be argued that State Capitalism (i.e. production of social needs run for-profit with endless private accumulation, with State protection/facilitation) took the nationalist competition behind “kicking away the ladder” to a terrifying global-industrial scale?! --The only solutions in the book (in the last pages) seem to be: 1) “Enlightened” power (with the only example being US post-WWII Golden Age) 2) A vague sense of (presumably electoral) democracy. …How anticlimactic? Enlightened whitewashing and delaying crises: Chang suggests that the US’s post-WWII Marshall Plan/global plan was “enlightened” power, compared to the age of colonialism/unfair treaties. Firstly, we are to de-prioritize the Truman Doctrine, the US's laundry list of imperialist global interventions (including ironically the genocidal war on Korea). -The Jakarta Method: Washington's Anticommunist Crusade and the Mass Murder Program that Shaped Our World -Washington Bullets -Killing Hope: U.S. Military and C.I.A. Interventions Since World War II ...In fact, US aide often came on the other side of military carnage! Japan's rapid re-industrialization was aided by US military contracts for destroying Korea. Next, South Korea's rapid industrialization was aided by US military contracts for destroying Vietnam (Drums of War, Drums of Development: The Formation of a Pacific Ruling Class and Industrial Transformation in East and Southeast Asia, 1945-1980). It's only “enlightened” if you erase the other half of the arrangement, where countries (Korea, Vietnam, Laos, Cambodia) received the most intensive bombings in human history. ...Secondly, even if we take the rosiest of perspectives, this period still reveals some deeper insights into capitalism that reformist Chang seems unwilling to discuss. Before the post-WWII Golden Age of Capitalism, the capitalist US (with its wealth of advantageous) somehow stumbled into the Great Depression that even FDR’s “enlightened” New Deals could not resolve. It took the greatest global war in human history to force a social transformation of the US’s economy into a war production economy (Military Industrial Complex), pushing State Capitalism to its greatest heights. Capitalism's “creative destruction”, indeed... ...Rebuilding foreign markets after the end of WWII to purchase US surplus production (with fears of pending overproduction and return to depression) was a necessity (The Global Minotaur: America, the True Origins of the Financial Crisis and the Future of the World Economy). Chang might stress the volatility of “Finance Capitalism” (i.e. blame “Neoliberalism”), but what about Industrial Capitalism and the relationship between Finance and Production? “The real force that pushed history to breakneck velocity […] was not the share market. Share markets were simply not liquid enough to bankroll Edison-sized ambitions. At the turn of the 20th century […] neither the banks nor the share markets could raise the kind of money needed to build all those power stations, grids, factories and distribution networks. To get those vast projects off the ground, what was required was an equivalently-sized network of credit. Hand-in-hand, shareholding and technology led to the creation of shareholder-owned mega banks, willing to lend to the new mega firms by generating a new kind of mega debt. This took the form of vast overdraft facilities for the Thomas Edisons and the Henry Fords of the world. -Yanis Varoufakis (Another Now: Dispatches from an Alternative Present) Capitalism’s Inherent Crises?: Now, let’s consider structural crises. Chang has little to say about why “Neoliberalism” occurred, which is pertinent if we are to believe State Capitalism can be restored to another “Golden Age”. Varoufakis (“Global Minotaur” recommended earlier) demonstrates the geopolitical factors of the US losing its post-WWII surplus to Germany/Japan by the 1970’s, thus was compelled to re-establish its economic hegemony via US Fed chair Volker’s “Controlled Disintegration” which: 1) Halted competition (which also includes derailing Third World industrialization, as the global south gets the worse and most silent treatment) 2) Unleashed Wall Street so the US can now recycle others’ surpluses (hence, the “Financialization” arm of Neoliberalism). 3) Stopped dollar-gold convertibility, so global trade relied solely on the US dollar which the US controlled the printing of: Super Imperialism - New Edition: The Origin and Fundamentals of U.S. World Dominance …Chang’s “enlightenment” and “democracy” seem so far removed from the hierarchical mechanisms of State Capitalism and global hegemony. Now, we can get lost in all the wonderful Marxist/WSA/Post-Keynesian theories on capitalist crises, but it seems clear that: 1) The masses, who own almost no share of the means of production, suffer most from these crises. 2) With such minimal ownership, the masses have low bargaining power for the resolution of such crises. …An accessible intro to this: Talking to My Daughter About the Economy: or, How Capitalism Works - and How It Fails …A vivid illustration of this crisis of ownership is the threat of automation. Now, how can automation, which frees humans from dehumanizing, repetitive drudgery, be such a threat? Simple: capitalist ownership means a minority own the means of production (the machines in this case), while the masses must sell the best hours of their lives to wage labor in order to survive. If wage labor is automated, then there is unemployment and the former wage laborer is free to starve. There is no democracy without economic democracy: State Capitalism can (at most) grudgingly give space to electoral democracy, with the constant threat of eroding electoral gains thanks to capitalism's one-dollar-one-vote structure and the power to do so given the distribution of ownership. In the age of transnational corporations and finance, where capital can teleport across the globe digitally in milliseconds while labor is still restricted by (increasingly militarized) borders, electoral democracy/sovereignty is a mirage. This is the core of Neoliberalism, "freedom" that prioritizes capital. Even if an elected political party challenges transnational capitalism, that area can be easily strangled with capital flight, and the subsequent economic collapse can be blamed on “socialism” or "populism"... What is missing is economic democracy, built on worker control; worker owned-and-operated cooperatives (i.e. those who work the machines should own a share in the machines), and international workers’ solidarity (instead of divided-and-conquered race-to-the-bottom competition to drive down labor conditions). What would this entail? -Step-by-step: Another Now: Dispatches from an Alternative Present -More focused on workplace: Democracy at Work: A Cure for Capitalism

  4. 4 out of 5

    Dion

    This book outlines in a light narrative what I have suspected for a long time: free trade *can* be good, but applied wholeheartedly and blindly and at the wrong time is mostly destructive. Fact: The US and Britain and Japan and South Korea built up their industries through pragmatic tariffs and government-sponsored protection/subsidization. NOT through the path of free trade. Almost no country has. Free trade does *not* make you rich, it's what you want the other countries to do when you are econo This book outlines in a light narrative what I have suspected for a long time: free trade *can* be good, but applied wholeheartedly and blindly and at the wrong time is mostly destructive. Fact: The US and Britain and Japan and South Korea built up their industries through pragmatic tariffs and government-sponsored protection/subsidization. NOT through the path of free trade. Almost no country has. Free trade does *not* make you rich, it's what you want the other countries to do when you are economically more advanced. Do what I say not what I do. The bad samaritans referred to in the title are those who mistakenly believe that free trade is the only path to improving the economy of third-world nations. They mistake the situation today (e.g. the US promoting free trade) with the past (the US was one of the *most* protected economies when it's industries were young and vulnerable). Thinking of NZ, we have opened up our borders for the dubious advantage of selling meat and milk so we can buy plasma TVs. How much better at producing meat milk can we really get? At the end of the day it's just food, with a very limited future potential of becoming valuable to our trading partners.

  5. 4 out of 5

    Leo Walsh

    Amazing when you think how ideological Economics has become. Most of what comes out of the media is Chicago School "Free Market." However, I began to notice that the people with the most intellectual muster, like Princeton's Paul Krugman and Cambridge's Ha-Joon Chang (author of this book) have consistently stood against the tide. As academics, they "stand outside" the world, and observe. They are also used to searing intellectual debate and precision as they face the peer review process. Which ma Amazing when you think how ideological Economics has become. Most of what comes out of the media is Chicago School "Free Market." However, I began to notice that the people with the most intellectual muster, like Princeton's Paul Krugman and Cambridge's Ha-Joon Chang (author of this book) have consistently stood against the tide. As academics, they "stand outside" the world, and observe. They are also used to searing intellectual debate and precision as they face the peer review process. Which makes their journaled articles which keeps them tenured--and thus their considered opinions--more balanced than studies commissioned for economic think tanks like the well-funded Cato Institute. These institutions fall prey to a "confirmation bias," and see what they want to see. That said, this book was an eye-opener. I was amazed to realize how true the author's contention is: There really is no such thing as a free market. We have laws which regulate commerce. And the most successful economies in the world have become that way by protectionist policies. This includes the US, Japan, England, and South Korea. Chang goes on to show that the World Bank is relegating poorer nations to poverty by forcing them to accept a "free market" solution using actual data, not ideology. In fact, these policies often stall economic growth, and transfer money to the more powerful countries. In short, like "trickle down" economics and "at-will" employment, the result is a greater concentration of wealth, and a weakening of treating people as "humans." I like this book well enough, but found the author's Twenty-Three Things They Don't Tell You about Capitalism to be a little better, since it is more comprehensive.

  6. 4 out of 5

    Sarah

    I think from the title people may assume this book is going to be anti-capitalism and free-trade, but it is not at all. It is a book critiquing neoliberalism and free-trade policies being pushed onto developing nations. Ha-Joon Chang advocates for capitalism in which the government has more control over the economy. This book argues that first world countries like the US and UK were protectionist when they were developing, rejecting free trade policies when it would harm their “infant industries” I think from the title people may assume this book is going to be anti-capitalism and free-trade, but it is not at all. It is a book critiquing neoliberalism and free-trade policies being pushed onto developing nations. Ha-Joon Chang advocates for capitalism in which the government has more control over the economy. This book argues that first world countries like the US and UK were protectionist when they were developing, rejecting free trade policies when it would harm their “infant industries” and subsidising those industries. Only when they had advanced manufacturing industries enough to compete globally did these countries open up to free trade. The author uses his home country Korea as an example of a country which rapidly became rich due to: • Promoting manufacturing industries with subsidies • Increasing tariffs on imports to encourage spending within the country • Copying products from rich countries until their manufacturing became advanced enough Koreans were discouraged from buying imports, and imports were disincentived by the high tariffs. “The Korean miracle was the result of a clever and pragmatic mixture of market incentives and state direction.” Developing countries are kept in low-productivity jobs when neoliberal policies are pushed onto them as they do not have the opportunity to grow their industries in the same way. Ha-Joon Chang also deconstructs some of the common reasons given as to why countries aren’t developing (because neoliberalism cannot be at fault!): -Corruption- The chapter comparing corruption in different nations was very interesting. Corruption doesn’t necessarily harm a country’s economy, the key factor being whether the money is staying in the country or being drained out of it. Corruption can be a way for people to bypass lengthy beaurocratic systems when starting a business, so in some ways corruption can actually be beneficial to the economy. Neoliberal policies which cut government funding also contribute to corruption - public officials are poorer so they are more likely to accept bribes. -Culture- Often people say argue developing countries have “cultures” which stop them from growing economically. The author also deconstructs cultural essentialism about developing nations. The stereotypes of German and Japanese people in the late 19th century are strikingly similar to the stereotypes of people in developing countries today. Germans were considered a “lazy” people by the British. Japanese people had a reputation for being too “emotional” and “focused on living in the present”. Once these nations became rich, the stereotypes changed. -Debt- The focus on not creating debt that began in the Reagan era has also meant that developing countries cannot borrow to kickstart industries or improve education. After reading this book I discovered that it is banned on South Korean military bases, because it "contains some information that related to anti-government and anti-Americanism."

  7. 4 out of 5

    Kurt

    Of the 5 books on economics I read since the crash, this one was by far the one that most challenged what I believed. I try to base my life on evidence and not ideologies I've grown to accept without much thought. Of the five books, his was supported with the most evidence. It challenged my notion that free market is always the best; And made me reevaluate when government spending is bad, when it is OK, and when it is best. It also makes me question my support of the World Trade Organization, an Of the 5 books on economics I read since the crash, this one was by far the one that most challenged what I believed. I try to base my life on evidence and not ideologies I've grown to accept without much thought. Of the five books, his was supported with the most evidence. It challenged my notion that free market is always the best; And made me reevaluate when government spending is bad, when it is OK, and when it is best. It also makes me question my support of the World Trade Organization, and whether it's moral for the US to use our Microsoft/Walmart-like power forcing economic policies on other countries in ways that is against their best interest. Many of the ideas are too new to my thinking for me to embrace them fully. I will have to stew over it for a year or two. My only complaint is that the title of the book, which he continually repeats throughout, seems like an ad homenin that gets in the way of the arguments. Overall, I highly recommend this to all Americans interested in economics or anyone who doesn't question the mantras "free trade is good", "all subsidies are bad", or "government is always the wrong answer". Ultimately, I think the book would be most useful for people who are leaders in charge of a developing country.

  8. 4 out of 5

    A

    I actually thought this book would be much better than it was. There is a coherent theoretical argument behind the whole import substitution, infant industries approach to development. I was hoping to see a more interesting/empirical defense of it (and maybe a more nuanced explanation of when/how it can work, and when it doesn't)...because development is ultimately an empirical question about "what works," not what makes sense in theory. Ha-Joon presents a basic version of theoretical argument, I actually thought this book would be much better than it was. There is a coherent theoretical argument behind the whole import substitution, infant industries approach to development. I was hoping to see a more interesting/empirical defense of it (and maybe a more nuanced explanation of when/how it can work, and when it doesn't)...because development is ultimately an empirical question about "what works," not what makes sense in theory. Ha-Joon presents a basic version of theoretical argument, but then just does some historical story telling to explain why it is "correct." His argument is basically that all developed countries used protectionist trade policies...therefore, protectionist trade policies cause development. But, there are also other common factors we could point to, i.e. many other potential variables behind growth/development (accumulation of capital, high savings rates, human capital, rule of law, functioning domestic markets, inclusive/exclusive institutions, exogenous technological developments, luck, etc.). I don't feel like he really addressed any other possible variables in why certain countries have developed rapidly. The economies that he pointed to also focused a lot on better economic policies in other areas, like education, etc. If you believe that another cause was really the key driver of growth in Asia (say rising human capital through education) then one could see development as something that happened unrelated to (or despite) protectionist trade policies (which just redistributed some gains/loses in an inefficient manner). The point being, his argument didn't seem to very effectively address how the policies he likes fit into a broader set of policies (education, health, relatively sound macroeconomic policies, etc.), and why the policies he likes were the decisive factor, and not other variables. Even if this is hard to prove definitively, he could have done a lot more to address it. Ha-Joon also neglects to really discuss when, how, and why protectionist policies have failed. Many, many countries have tried similar policy recommendation unsuccessfully, but he barely even mentions that there have been failures. He presents his "story" as if only developed countries tried these policies, they worked, and then everyone tried to keep it a secret. Maybe I am wrong about this, but my perception is that import substitution/infant industrial policies have been tried in many places for a long time, and to mixed results. In this respect, he is vulnerable to the same criticism that he makes of his caricature of "neo-liberals," in that he offers panacea, but then doesn't explain why it has failed so often when tried in history. Real insight would have come from explaining when his recommendations do/don't work and why, a more nuanced view on how they should be implemented, etc. Finally, in the later chapters he really fell into the habit of what seemed like attacking either dated views, or just straw men. His points were probably much stronger in 2008 when the book was published (or years earlier when he began working on it), but at least now a number of his claims about what "neo-liberals" (whoever these people might be) believe, or the IMF believes, seem untrue. Almost nobody mainstream supports 0% inflation targeting policies (my sense is most economist would consider that a very bad idea), deficit spending is not universally opposed (and the IMF regularly publishes "sustainability" analyses of debt/deficits, which would be a weird thing to do if you thought all deficits were unsustainable), etc. He also fails to mention in his tirade that the only time the IMF would even have any leverage on a country's domestic policies...is when that country is asking the IMF to give it money. Some of his points in later chapters are defensible ones that many people would agree with, but when he superficially or inaccurately present the opposing viewpoint (or maybe it is just really dated), it kind of gets at his credibility more than anything.

  9. 4 out of 5

    Tanja Berg

    This is an excellent book that shows how protectionism helped today's rich countries become rich. Chang successfully dismantles the neo-liberalistic lies that a market should be as free as possible in order for nation's to become richer. This is simply not true. There is also an axis of evil consisting of IMF (international monetary fund), the World Bank and the World Trade Organization (WTO) that through recent history has imposed rules on poor countries that have had to borrow money, which hav This is an excellent book that shows how protectionism helped today's rich countries become rich. Chang successfully dismantles the neo-liberalistic lies that a market should be as free as possible in order for nation's to become richer. This is simply not true. There is also an axis of evil consisting of IMF (international monetary fund), the World Bank and the World Trade Organization (WTO) that through recent history has imposed rules on poor countries that have had to borrow money, which have further impoverished them. Now, I live in a "rich" country, Norway. Sadly, this country's politicians have to a large degree bought into the lies of the Chicago boy's club, neoliberalism. Although not a member of the EU, Norway is a member of EEA, and thus have had rules of free movement of labor and other things imposed. I am derailing a bit here, but, we do NOT live in a post-industrial world of service. We definitely live in a society that thrives on production. Sadly, Norway has dismantled much of its industry, so that, aside from oil, we have very little left. This has been out-competed by cheaper competition abroad and through foreign investment having bought in to and then sold off Norwegian companies. We are also swamped by cheap labor from some EU countries, that erode the wage levels in Norway and the foundation on which society rests. Even in this global pandemic, there has been no restrictions - or even enforced testing - on the free labor movement. So this happens in Norway, which is still, by all definition "rich" (for as long as we have oil and there is a demand for it) - think of what happens to countries who have only fledgling industries which are forced into free trade. Correct, it goes to hell. The economics of society and the world is a table that we choose to set. In a completely deregulated society, we would - as Chang says - not invest in a child's education, but send them to work when they were six years old. We also need to invest in young industries, in order to reap rewards later, and that means protecting them from competition until they are mature.

  10. 4 out of 5

    Chris

    The more I educate myself in economics, the more I am convinced it is a science that can offer no more conclusive answers about public policy than philosophy does about ethics or the nature of the self. The difference being, that when I sit down to a philosophy text, my greatest expectation is that it will be a beautifully articulated series of beliefs that will raise questions I had never pondered, or present the world in a unique light. But I always expect these texts to fall short of their st The more I educate myself in economics, the more I am convinced it is a science that can offer no more conclusive answers about public policy than philosophy does about ethics or the nature of the self. The difference being, that when I sit down to a philosophy text, my greatest expectation is that it will be a beautifully articulated series of beliefs that will raise questions I had never pondered, or present the world in a unique light. But I always expect these texts to fall short of their stated goals of explaining the true nature of things. I read economics, however, because I want to know what policy makers should do to solve serious problems in the world around us. I expect real answers, backed by cogent proof -- preferably in graph form. But unlike other sciences, where great questions are ultimately settled before the community moves on to tackle larger problems, economists have been having the same arguments since the discipline was invented! The debate that Ha-Joon Chang tackles in his book Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism is whether the free trade policies propagated by The World Bank, The International Monetary Fund, and The World Trade Organization are in fact the best policies for developing countries to adopt. "The secret history of capitalism" in the subtitle refers to his belief that wealthy countries of today like American and Britain, didn't, in fact, use free trade to get to the positions they are in now -- they were actually heavily protectionist and interventionist up until recent times, when their dominance had already been established. Chang admits, "The mere co-existence of protectionism and economic development does not prove that the former caused the latter," but that, "Free trade economists have to explain how free trade can be an explanation for the economic success of today's rich countries when it simply had not existed very much before they became rich." Chang then turns to the modern day "miracle" economies of Japan and Korea, who have bucked historical trends and grown far more rapidly then economists thought possible. He details how these countries were able to achieve this success through a combination of protectionism and industrial policy. Everybody's favorite bugaboo, China, might as well be lumped into this group as well. This leads me of the most conspicuous contradictions between conventional wisdoms in America today: that free trade and small government are the American way and the only path towards sustained prosperity, and that if we don't get our act together CHINA is going to take over the world. Well, China certainly didn't gain ascendency through small government or free trade. Yet they are developing rapidly, and steadily -- hardly shaken by the global recession that nearly brought (and in the case of Europe may still bring) the developed world to its knees. Of course, there is much evidence that Chang must ignore in order to create a coherent narrative. The myriad failures of industrial policy outweigh the successes. He chooses to use GDP per capita growth as oppose to GDP growth to measure a country's development - this is fair but certainly a debatable strategy. He glosses over the fact that the policies implemented by Japan and Korea are very difficult to successfully enact without competent and relatively uncorrupt bureaucrats (although he does pose the idea that development is possible even with a lot of corruption). The most convincing sections of the book come at the end and deal with patent laws and culture, respectively. I am wholly convinced that patent law in western countries have been hijacked by monied interest, and policy in this area is not in the best interest of innovation or the public good. He also does a great job of debunking a popular lay strategy of blaming lack of development on cultural issues, rather than public policy. Bad Samaritans is another economics book that brought up more questions than it did answers. I think its an important book however, because it does highlight this "secret history of capitalism." Regardless of whether free trade is a policy that will bring greater good to the world, its important that we get our history right. Too many Americans believe that their nation has always been a bastion of free trade policy, and this is simply not true.

  11. 4 out of 5

    Sotiris Makrygiannis

    Despite the fact that he made a mistake on how old Nokia is, the Korean flirting of Finnish economy via a book, the feeling that I got that "piracy might be good" despite all that I find the book realistic enough to give it 4 stars. In fact is pragmatic, it says few truths like how "bad samaritans" can impose gender neutrality in order to obtain loans , even also how much meat one could eat...In any case Im not against totally Freedman, I think the guy was super good - maybe not that ecological Despite the fact that he made a mistake on how old Nokia is, the Korean flirting of Finnish economy via a book, the feeling that I got that "piracy might be good" despite all that I find the book realistic enough to give it 4 stars. In fact is pragmatic, it says few truths like how "bad samaritans" can impose gender neutrality in order to obtain loans , even also how much meat one could eat...In any case Im not against totally Freedman, I think the guy was super good - maybe not that ecological as one should have been, at least for a long term thinker. This book can open up your mind, to understand that we cannot apply globalisation to everybody at the sometime and for the same reasons, every country is different and requires different solutions. What has worked for one country MIGHT work for another but at different time on their evolution of the economy.

  12. 4 out of 5

    Steffi

    I should know better than to read this piece of mainstream economics. Book cover endorsements by: Financial times, Noam Chomsky and Bob Geldof. lol. This book ‘Bad Samaritans. The guilty secrets of rich nations and the threat to global prosperity’ by Korean popular economist Ha-Joon Chang (Random House, 2008) is essentially another version of Stiglitz, challening neoliberal orthodoxy in development economics in what is commonly referred to as the post-Washington consensus. These Ivy League, Nobel I should know better than to read this piece of mainstream economics. Book cover endorsements by: Financial times, Noam Chomsky and Bob Geldof. lol. This book ‘Bad Samaritans. The guilty secrets of rich nations and the threat to global prosperity’ by Korean popular economist Ha-Joon Chang (Random House, 2008) is essentially another version of Stiglitz, challening neoliberal orthodoxy in development economics in what is commonly referred to as the post-Washington consensus. These Ivy League, Nobel Prize professors are the intellectual version of the vulgar World Bank and McKinsey technocrats, but of course all within the same broader framework of neoclassical economics. Although many like to refer to themselves as heterodox economists, essentially they are all trying to ‘fix’ capitalism. Good luck, chaps! I have a whole separate shelf for these lukewarm development economists (on the progressive end within this shelf is Amartya Sen), at the other and less visible side of the room from Marxist, radical political economy which must not be contaminated by these heretics! Still, it’s an interesting enough summary and critique of some of the mainstream development economics discourses, for those interested in international development, which is killing me with its vulgar free market, free trade and MACROECONOMIC STABILITY obsession. Guys, you’re not economists, you’re propagandists for global capital.

  13. 4 out of 5

    Santo

    “Meat imports are restricted…, which not only benefits local farmers but also inspecting firms… The export of raw rattan is about to be prohibited, which will benefit the rattan industry… Businesses have to give priority to local products…” These are only some of the arguments put forward by Hal Hill and Monica Wihardja in an op-ed in The Wall Street Journal, ringing alarm bells about anti-reformist forces in the Indonesian Government. They argued that in spite of the upgraded investment ratings “Meat imports are restricted…, which not only benefits local farmers but also inspecting firms… The export of raw rattan is about to be prohibited, which will benefit the rattan industry… Businesses have to give priority to local products…” These are only some of the arguments put forward by Hal Hill and Monica Wihardja in an op-ed in The Wall Street Journal, ringing alarm bells about anti-reformist forces in the Indonesian Government. They argued that in spite of the upgraded investment ratings and political stability, the economic picture in Indonesia is slowly turning for the worse. That contrary to its liberal face, Indonesia is actually exercising policies favoring domestic production. I have to admit, I’m a rookie when it comes to economic analysis. But I have this gut feeling that all those supposed evils mentioned by Professor Hill and Ms. Wihardja are not necessarily all that bad. I may be wrong here, but if a policy benefits local industries, shouldn’t that benefit the Indonesian people? And shouldn’t that mean more than the argument about being “reform” or “anti-reform”, whatever those two labels are supposed to mean these days? These were some of the thoughts that kept on surfacing in my head as I read with much interest Professor Ha-joon Chang’s “Bad Samaritans: The Guilty Secrets of Rich nations and the Threat to Global Prosperity”. Going against the tide prevalent in a world dominated by free trade, comparative advantage, and other neo-liberalist values, Professor Chang’s book is an alternative account on development economics. An established scholar currently teaching at Cambridge University, Professor Chang provides a fresh look on the state of today’s international economics. Professor Chang argues that while supposedly wanting to bring prosperity to developing countries, the world’s wealthy nations and major financial institutions (the ‘Bad Samaritans’) are in fact enlarging the gap between the developed and developing hemispheres. In May 2011, he was invited by President Yudhoyono to talk in front of the Indonesian Cabinet on lessons learned from the Korean economic development. Of course, we’ve heard criticisms of liberal trade policies from many camps. But it’s always enlightening to learn more about them from a well established economist, and not some leftist demonstrator on the street, aggressively chanting the evils of globalization, wearing baklavas, fist punching in the air. It’s also stimulating to digest these well-researched, well-written criticisms not from a narrow, ultra-nationalist perspective, which is often regressive, thus resulting in isolationism and fear of the outside world. Professor Chang suggests the need for people, particularly policymakers, in the developing world to carefully reconsider the tune of neo-liberalism that we’ve become used to listening. A tune which has been played so often, and so intense, that it has become entrenched in our minds as “the truth”. How the world today is so much engulfed in the unchallenged virtues of free trade and globalization. A condition in which any alternative tune proposed would be regarded simply as “backward”, or “anti-reformist”. The book induces the reader to question the supposed superiority of notions such as comparative advantage and tariff reductions, particularly vis-à-vis the interests of developing countries. It forces us to reconsider the values of “infant industry theory” (developed by none other than Alexander Hamilton, the initiator of America’s industrialization and economic development in the 1800s) and the private vs. public enterprise argument (which overemphasizes on the ineffectiveness and inefficiency of public enterprises, while failing to consider similar conditions plaguing the private sector). It even delves into a discussion on corruption, and whether it destroys a national economy as much as the ‘Bad Samaritans’ would like us to believe. Professor Chang does not one-sidedly criticize globalization, for this is exactly what many critics have often been guilty of. He gives credit where credit is due, describing that free trade is indeed beneficial for countries whose industries and comparative advantage have evolved. But for many developing countries, lacking in industrial capacity and relying too much on natural resources export, free trade only condemns them to a life of a second-class citizen in today’s international community. In particular, Professor Chang criticizes the double standard eschewed by many developed, western countries. “Virtually all successful economies, developed or developing, got to where they are through selective, strategic integration with the world economy, rather than through unconditional global integration”. The United States was the most protectionist country up until the end of the Second World War, when their industrial supremacy had become unchallenged. So was Japan, when it strengthened its industrial base, at a time when its biggest export item was silk. And Korea did it too, when in the 1960s it fueled funds into its steel industry, which at the time, was completely non-existent. We then ask the question, why are we being labeled as anti-reform when we try to emulate exactly all models of economic success since the time of Henry VII’s England? Are Indonesians today genuinely happy about being where they are in terms of economic growth, in particular economic production? Are we liberalizing our economy for want or for need? Or are we simply being bullied around by the developed world? In the words of Professor Chang, “free market economists would argue, Mozambicans should be realistic and not mess around with things like cars (let alone hydrogen fuel cells!); instead they should just concentrate what they are already (at least ‘comparatively’) good at – growing cashew nuts”. We need to change this perspective, because if Japan had stayed with what it was good at (i.e. making silk), then we’d be deprived of the Hondas, Toyotas, and Suzukis roaming our streets today. These are some thoughts worth considering, especially if we are prone to accepting opinions such as Professor Hill and Ms Wihardja’s as the norm. Have we accepted unconditional trade liberalization as common sense, thus labeling alternative perspectives as regressive and backward? If so, then maybe it is time for us to question, and even challenge such norms and common sense.

  14. 5 out of 5

    Void lon iXaarii

    This book brings out very interesting facts and perspectives, and some beautiful historical data that you rarely find referenced. It's a pity this leads the author to very pre-selected conclusions. You know, i never really got why Mises insisted in his treaty of economics to first analyze things on a pure logic abstract level. Now I do: as he apparently knew even almost a century ago, one can use history to argue quite opposing views, by picking data and times from a complex system, and indeed m This book brings out very interesting facts and perspectives, and some beautiful historical data that you rarely find referenced. It's a pity this leads the author to very pre-selected conclusions. You know, i never really got why Mises insisted in his treaty of economics to first analyze things on a pure logic abstract level. Now I do: as he apparently knew even almost a century ago, one can use history to argue quite opposing views, by picking data and times from a complex system, and indeed many do. The attraction that this book has (beside the brilliant writing and cool data) is that it appeals to our common moral value of freedom (especially from unjust & harmful forces), but I find it sad that the author not only stops at fighting against freedom from supra-national international forces but even goes on to after having argued from freedom of choice to use this newfound freedom to take that freedom away from the individuals. I find highly dubious that he puts the freedom of a nation state above the freedom of the individual. He must believe that he or people like him will then be able to then guide the individuals with their all knowing powers... which i find suspect. Why should proud powerful people have the power to manipulate the choices of their countrymen just so that in a talk amongst them they can brag who's country is the most powerful or skilled in a certain area? For example a big point of his is arguing for protectionism and directed economies, which are exactly that: the freedom to choose of a nation distorted so that somebody up high can tell the people which industry to focus on. That's fine if those people had godly powers, but if they happen to be human like us, what if they steer the masses in a direction that you don't want? Sure, it's great if they decide to focus on a certain industry you work in or are benefited from, but what if they use their tariffs or subsidies to guide towards one that's wasteful, or just useless or unimportant to you? As an example of the authors powers of (sneaky) persuasion at one point he uses the emotional logic of saying that protecting an infant industry is like him investing in his young son and saying how cruel it would him for him not to help him while he is young. True, but the sneakiness in his manipulative example lies in the fact that that in fact a country doesn't have only one son... it has millions. So let's go back to his example: lets say he didn't have 1 but 10 sons, and you happen to be one of them. And lets also be realistic and say that no family has infinite resources, so if it happens that a good university is in a distant place with many living and learning expenses: it may be that the family has only enough resources to 'protect' one of it's suns. Of course everybody arguing such things believes they are the gifted ones who'd get the perks, but what if you happen to be one of the other 9? What if you were born later or were a slow kid only showing gifts later, and by that time that family money has been spent? That is the case with countries: there are myriad industries to pick ones, and often the best ones for the future are yet so small that the government doesn't even have a name for them as they are yet only practiced in the garages of young entrepreneurs? In that case all the wise choices of their overlords directing growth are actually taking resources away from what would be most important to the people, what would make them most happy, all in the name of "they know better what the people want than the people", a logic we've seen often through history, along with it's often painful consequences. I'm not saying that sometimes, in some cases, in some few obvious things they might get it right... but like with a casino, the odds are against them, and yet they keep trying to hit that sweetspot jackpot attracted by that big theoretical win.

  15. 5 out of 5

    K

    The main argument of Bad Samaritans is that most rich countries became rich by using protectionism and rejecting free trade policies that would undermine their economies. When they became prosperous, they kicked the ladder so developing countries couldn't do the same. Nowadays, the same countries, largely controlling institutions such as the IMF and the World Bank, dictate which policies should be followed by the developing ones. This is similar to saying : Don't do as I did, do as I say. The boo The main argument of Bad Samaritans is that most rich countries became rich by using protectionism and rejecting free trade policies that would undermine their economies. When they became prosperous, they kicked the ladder so developing countries couldn't do the same. Nowadays, the same countries, largely controlling institutions such as the IMF and the World Bank, dictate which policies should be followed by the developing ones. This is similar to saying : Don't do as I did, do as I say. The book's content is spot on. The IMF is in Greece right now, working closely with the ECB and some wealthy nations (most notably Germany) causing irreparable damage in our economy. Neoliberal ideologues still propose that liberating the market is the only way out, so consistently, this is the outcome. Natural monopolies (water, electricity) will most certainly be privatized and that's just the tip of the iceberg : 26% unemployment, 50% youth unemployment were the backlashes of cutting down Greece's welfare state and as of today, there are no visible growth prospects. On a global scale, Eurozone is facing a systemic crisis which is continually spreading while political and economic elites propose the usual solution of ''tightening the belt''. As a result, vital economies such as those of Spain or Italy face multi-year recessions and all time high unemployment rates. So the author's conclusions and main analogies seem to be mostly correct. The only puzzling factor is that the increase in taxes, goes unmentioned as part of a concrete neoliberal ideology. I suppose there are tax cuts on very high incomes but as far as I can see, the so called neoliberal economists (monetarists, austrian etc. -even though these schools of thought are in fact, relatively antihetical towards one another-), such as Friedman were against taxes for the whole of the population (which of course include the elites on top). I haven't noticed this in Greece. In fact what happens is exactly the opposite where taxes pretty much kill any prospect for healthy economic activity within the confines of our economy. Nevertheless Bad Samaritans' core argument is very strong and remains true. Finding a balance between a regulating economy and free market is the key to economic success. Learn from those who did well instead of those who try to rewrite history to fit an ideology. Be pragmatic rather than dogmatic. In short, stay humble! * The chapter on culturalist theories of economic development is amazing.

  16. 4 out of 5

    Solor

    An important reading for whoever wishes to look beyond the crap fed by Media and governments experts financed by immoral and unethical International Corporations. The Formula Neoliberalism equals Development is another absurd lie trumpeted by the Good Guys of WTO, IMF and World Bank. Ha-Joon Chang is not a Communist, a Charlatan or a Terrorist. He is a scientist; a Reader in the Political Economy of Development at the University of Cambridge. He has also served as a consultant to the World Bank, An important reading for whoever wishes to look beyond the crap fed by Media and governments experts financed by immoral and unethical International Corporations. The Formula Neoliberalism equals Development is another absurd lie trumpeted by the Good Guys of WTO, IMF and World Bank. Ha-Joon Chang is not a Communist, a Charlatan or a Terrorist. He is a scientist; a Reader in the Political Economy of Development at the University of Cambridge. He has also served as a consultant to the World Bank, the Asian Development Bank and the European Investment Bank as well as to Oxfam and various United Nations agencies. In this book he supports brilliantly his thesis by supplying numbers, facts and figures which are never mentioned anywhere in papers and TVs alike. Globalization is imposing upon developing countries measures that will increase the gap between rich and poor: privatization of essential commodities markets; the lack of protection of sensitive national sectors that require time to grow; limitations of local governments actions; over-zealous conservative international agreement on Intellectual Property; and ultimately a pure competitive market, would allow more experienced and efficient operators (the rich guys) to steal a great share of the new economy while the hosting country will remain inadequately behind in terms of industry and cultural development.

  17. 4 out of 5

    Aditya Shevade

    I am writing this as I read the book so as not to forget my thoughts: 1. Protectionism is still bad - regardless of the few examples of how it succeeds there are countless examples where it fails - net neutrality for example. The protection provided to ATnT and Time Warner. The current tariffs and the whole fiasco with US trade. 2. The examples of how Korea flourished - it ignores a _huge_ problem that during the initial years people were extremely worse off than they would have been with free tr I am writing this as I read the book so as not to forget my thoughts: 1. Protectionism is still bad - regardless of the few examples of how it succeeds there are countless examples where it fails - net neutrality for example. The protection provided to ATnT and Time Warner. The current tariffs and the whole fiasco with US trade. 2. The examples of how Korea flourished - it ignores a _huge_ problem that during the initial years people were extremely worse off than they would have been with free trade. Author mentions the rampant smuggling and how even basic items were luxury. Individuals always suffer when this happens. Korea was able to get out of it - while India still has all the problems imposed due to import tariffs where people have to pay large sums to get mediocre products. 3. The British opium issue - this was mishandled by both. If people wanted opium - legalize it. Grow it yourself if you don't want to import it. If you ban and then curse Britain for smuggling it then you should have done the same with the dads of your friends who were smoking the illegal cigarettes. Dual standards. 4. The intellectual property theft, piracy and "copying" goods from other countries is also immoral - you cannot chose to be okay with this while abolishing the British opium trade. 5. There are arguments in the book about US growth because of / despite of protectionism and counter argument about Japan, Korea, Germany, etc growing as well. My counterargument to that is : India, Pakistan, Bangladesh, Srilanka, etc; where regardless of the abundant protectionism there hasn't been much growth whatsoever (compared to these other countries). 6. Moreover, in a place like India, again, government did and still does everything to keep businesses local and stop foreign investments - the state of Indian product in the world market could not be any worse. Barring a handful exceptions India does not make anything that leads in the world - tech, automotive, cellular, pharmaceuticals, education. None. It's a case of - why should I improve considering my government just bans anyone from entering the market. It's the worst condition for growth regardless of which policies you advocate. 7. The whole argument about SOE seems convoluted to me. The reason no one talks much about successful SOE, at least from my readings and observations is that there are less than 1% that I know which can be considered remotely successful (again my examples are limited to India) but barring the railway system, none of the Indian SOEs can be considered a success, in spite of the heavy tariffs, protectionism. I would argue it's because of these restrictions that they are mediocre because they are protected against any competition - there is no incentive for them to improve. 8. Same argument goes for the SEO community ownership vs private ownership. All it takes is one bad apple to cause community owned enterprise to fall. Because there is no way to get rid of those bad apples. What are you going to do if the government strong-arms into power and refuses to budge? There is little to be done - vs in a private enterprise board can vote to remove the culprit. 9 Which brings me to the point of managers in public companies and their incentive. Their incentive is the active investors who can remove unmotivated / under performing managers if they think they aren't getting their money's worth. To say that these managers don't have incentives to work is a gross misunderstanding of how businesses work. 10. FDI: I need to do more research here. (Please recommend a good resource / book for this if you know any). 11. Again there was some argument against monopolies and how patents cause parallel research which is "detrimental to the society" - 1). why do we care about that, again? 2). Monopolies will ensure that this does not happen. (I am not arguing for or against monopolies, just pointing out that there is contradiction in the book about this). 12. The biggest issue I see so far is the constant argument that society / social benefits outweigh corporate / individual freedom and benefits. This is something that does not, did not and will not ever make any sense to me. Individual above the collective - always. 13. Patents - I agree with pretty much everything advocated here. Patent system is broken. However this raises an important point - over policing / over government / excessive restrictions on _anything_ is bad. This is the perfect example of why government should not be in charge of these matters. If this is not an extremely convincing argument that slim governments are necessary, I don't think those still unconvinced will ever change their mind about it. 14. I am completely confused about the culture argument. I didn't understand what the author was trying to get at. Cultural differences exist and they do change the way you work / behave in life. This leads to different work ethics, abilities and is proportional to your chances of success. Economics and otherwise. Besides - you can't argue for a culture to be very good at contracts and trading only to say they stagnated and didn't grow out of it - that is not good trading. I won't say more here since getting into any religious fight, especially on the internet is futile. The whole book kept giving hints about society / people / country over individual. The argument that humans are equal is a misnomer. You listen to your doctor when you visit him/her because their medical opinion bests yours. Similarly, for majority people their electrician knows more about the wiring at their house than they do. Humans are unique, they are not sheep. Stop treating and expecting equality everywhere - we're not robots. Anyway, I can keep on arguing about this but I am not going to. Finally - did I like the book? Yes I did. I would recommend it to anyone interested in the topic. It challenged my views and made me think and evaluate why I like free trade and hate socialism, unlike other works which were horrendous. This was good, well thought out and made compelling arguments. A good read.

  18. 4 out of 5

    Rossdavidh

    Subtitle: The Myth of Free Trade and the Secret History of Capitalism. Ha-Joon Chang, the author, says he told Joseph Stiglitz (Nobel prize-winning economist) that he felt privileged to have been born in South Korea in 1963, when it was about as underdeveloped as Vietnam is today. South Koreans born even 20 years later have no memory of South Korea as a poor nation (although of course there are still poor South Koreans today, as there are still poor in every country of any size). The topic Chang Subtitle: The Myth of Free Trade and the Secret History of Capitalism. Ha-Joon Chang, the author, says he told Joseph Stiglitz (Nobel prize-winning economist) that he felt privileged to have been born in South Korea in 1963, when it was about as underdeveloped as Vietnam is today. South Koreans born even 20 years later have no memory of South Korea as a poor nation (although of course there are still poor South Koreans today, as there are still poor in every country of any size). The topic Chang addresses is, what did South Korea do right that (for example) Mexico didn't, that allowed them to develop so well and so fast? The short answer is, they essentially ignored what mainstream economics says to do, and instead copied what the UK and the US actually did when they were in the same position. I am simplifying, of course. Not every recommendation of mainstream economics is incorrect. However, it is worth noting that in the areas where the IMF and World Bank told nations like South Korea and Malaysia what to do, that they ignored their advice, very little has changed. That is, the results have pretty convincingly demonstrated that mainstream advice to developing nations on how to improve their economies has been demonstrated to be false. In a field like physics or chemistry, if the consensus model appears to be incorrect, in whole or in large parts, then there is a rush to change the model to improve this. Nothing of the sort has happened with economics, largely because the incentives for the working physicist or chemist (to be the richly rewarded inventor of the new model that fixes the problem) are different than the incentives of the working economist (who is often paid to be more or less a spin-master for the status quo). Some of the stuff in Bad Samaritans seems like shooting fish in a barrel. After seeing the rise of industrialized economies in Asia, that used high tariff walls and government sponsorship of new industries until they became competitive, do we really need to have pointed out that this is a better way to get rich (or at least less poor) than opening up your borders to far more technologically advanced economies? I mean Japan, South Korea, Taiwan, Singapore, they all did this. Nations in Latin America that tried to follow the IMF/WB advice did not find that it worked out well. Except Brazil, that more or less started to do well once they started bargaining harder at the WTO, often in collaboration with Russia, India, and China (none of whom ever took the IMF/WB advice much to heart). But, since mainstream economists of both right and left are still more or less pushing free trade between the Third World and the advanced economies, I guess it's still necessary to shoot the fish in this barrel, and Chang does a good job of refuting the globalization ideology. A focus on inflation over unemployment, an emphasis on strong intellectual property laws, no support for developing industries, they all get a chapter (and a bullet to the head). I do have some quibbles. He doesn't talk much about when free trade is a good idea, for example when nations such as France and Germany (at about the same level of development) or the different nations of Latin America (which have significantly different levels of development but are closer to each other than they are to the U.S.). Or, perhaps Chang doesn't think Argentina and Brazil should be making free trade agreements with each other? We don't find out. Which brings me to the primary quibble I have with this book, which is that it is primarily aimed at convincing would-be do-gooders (the so-called bad samaritans of the title) that they should be adopting different policies towards the Third World than they are. Little is said to Third World countries about what they should do, given the way the First World is currently acting (and realistically can be expected to continue to act). If faced with the prospect of World Bank loans that have thick strings attached, when should they turn down the loan? Chang doesn't say, he just says the World Bank shouldn't attach those strings. There's a considerable body of evidence that says that the UK was protectionist until they became top dog, and then became an advocate of free trade. The US was in its turn protectionist (using stiff tariff walls to keep out cheaper UK manufactured goods) until they were top dog, and then they in turn began to advocate free trade. China has adopted similar policies (sometimes using subsidies or cheap loans instead of tariffs), and if current trends continue they can be expected to switch and become the chief advocates of free trade in ten years. But, what if you're not as big as the U.S. or China? Chang also does a good job of outlining the history of intellectual property laws (short story: whoever is ahead, wants strong ones, everyone else isn't so sure, including the U.S. back in the day). But exactly what he is advocating, aside from "not so strong", is not clear. In practice most Asian tigers pretended to have IP enforcement, but didn't really, until they got rich enough to have lots of IP of their own that they wanted protected. Perhaps Chang's vagueness is because what he is really advocating is a calculated vagueness on the issue, and he is demonstrating by example? In the end, Chang does a good job of exposing how and why the current advice to developing countries is aimed more at serving the aims of the ones giving the advice, than the ones being advised. But, realistically, this can be expected to continue. What should the ones receiving the advice do instead, since they cannot expect to see a change in policy at the IMF/World Bank? Perhaps that is for the next book. By the time that comes out, perhaps we will be ready for a few chapters on how a formerly preeminent manufacturing power can regain their position, as well.

  19. 4 out of 5

    Mahmoud Ashour

    There is no book that has changed my beliefs about Economics as much as this book. (hence the 5 stars ) This book takes conventional macroeconomic wisdom and flips on its head. One of the things that I loved about this book is that before the author attacks any idea, he would present first all the arguments that are for this idea and then dismantle it one by one with both logic and empirical evidence from history. The main ideas that the writer disagrees with are. 1) Free trade is important for th There is no book that has changed my beliefs about Economics as much as this book. (hence the 5 stars ) This book takes conventional macroeconomic wisdom and flips on its head. One of the things that I loved about this book is that before the author attacks any idea, he would present first all the arguments that are for this idea and then dismantle it one by one with both logic and empirical evidence from history. The main ideas that the writer disagrees with are. 1) Free trade is important for the development of the economy 2)Public enterprises hinder economic development as opposed to private enterprises. 3)Intellectual Property should be closely protected by developing countries. 4) Corruption and/or cultural traits are the reason for developing countries' dire conditions. Here are the most important quotes and sections of the book “But once British industries had become internationally competitive, protection became less necessary and even counterproductive. Protecting industries that do not need protection anymore is more likely to make them complacent and inefficient, as [Adam] Smith observed. Therefore, adopting free trade was now increasingly in Britain’s interest.” P.46 Of course, tariffs are only one of the many tools that a country can use to promote its infant industries…Britain and the US may have used tariffs most aggressively, but other countries often used other means of policy intervention, for example, state-owned enterprises (SOEs), subsidies or export marketing support-more intensively. P.58 (paraphrased quote) Historically governments used to poach skilled workers from abroad to develop its industries. P.58 In the earlier stages of development, most people live on agriculture, so developing agriculture is crucial in reducing poverty. P.80 Today, South Korea is one of the world’s industrial powerhouses, while North Korea languishes in poverty. Much of this is thanks to the fact that South Korea aggressively traded with the outside world and actively absorbed foreign technologies while North Korea followed its doctrine of self-sufficiency. P.82 As South Korea shows, active participation in international trade does not require free trade. Indeed, had South Korea pursued free trade and not promoted infant industries, it would not have become a major trading nation. It would still be exporting raw materials ..or low technology low price products. P.82 Zaire Vs Indonesia Zaire in 1961 annual income per capita was 67$. Its president Mobutu, who ruled for 32 years is estimated to have stolen $5 billion. In 1997 income per capita in purchasing power terms was one-third of its level in 1965. In Comparison Indonesia in 1961 annual income per capita was 45$. Its president Mohamed Suharto, who ruled for 32 years is estimated to have stolen $15~$35 billion. In 1997 income per capita in purchasing power terms rose by more than three times during Suharto’s rule. In Indonesia the money from corruption stayed inside the country, creating jobs and incomes. In Zaire, much of the corrupt money was shipped overseas. P.160 “If you must have corrupt leaders, you at least want them to keep their loot at home.” P.164 “History shows that, at earlier stages of economic development, corruption is difficult to control.” P.166 “When people are poor it is easy to buy their dignity – starving people find it difficult not to sell their votes for a bag of flour.” P.166 “Democracy has an intrinsic value and should be a criterion in any reasonable definition of development.”P.178 My Favorite chapter is Chapter 9: Are some cultures incapable of economic development? People’s behavior is not determined by culture. Moreover, cultures change; so, it is wrong to treat culture as destiny. P.194 “Countries become “hardworking” and disciplined” (and acquire other good cultural traits) because of economic development, rather than the other way around.” P.197 “Changes in economic structure change the way people live and interact with one another.” P.201 “Countries should defy the market and enter difficult and more advanced industries if they want to escape poverty.” P.210 Without a strong manufacturing sector, it is impossible to develop high productivity services. P.214 “Once accused of inconsistency, John Maynard Keynes famously responded: ’When the facts change, I change my mind -What do you do sir ?’” P.219

  20. 5 out of 5

    Andrew

    This is a must-read for anyone who pays even modest attention to modern economics. If you are such a person, you're chronically exposed to a toxic sea of neoliberal propaganda -- free trade, open markets, globalization, blahbity blah blah -- even the most liberal experts like Paul Krugman spew it forth. Spending a lifetime in such a poisonous environment is bound to make you sick, but luckily Chang has an antidote concocted of cold, hard historical fact. I already knew a lot of this in theory but This is a must-read for anyone who pays even modest attention to modern economics. If you are such a person, you're chronically exposed to a toxic sea of neoliberal propaganda -- free trade, open markets, globalization, blahbity blah blah -- even the most liberal experts like Paul Krugman spew it forth. Spending a lifetime in such a poisonous environment is bound to make you sick, but luckily Chang has an antidote concocted of cold, hard historical fact. I already knew a lot of this in theory but lacked the details to support a meaningful argument, so this book is a valuable resource for anyone else in my boat. Learning about Korea, Japan, Germany and the Scandinavian bloc -- much less the uber-protectionist history of the U.S. and the U.K. -- makes it feel absolutely scandalous that the "developed" world prescribes exactly the opposite recipe to countries now in their old shoes. I won't go into the details -- Chang's book is short enough and accessible enough that you really just need to pick it up and hang out for a few days -- but I will say specifically that his chapter on culture was indispensable. In a handful of pages Chang largely succeeds in dispelling the myth that countries don't develop because they have a poor or "lazy" culture. Instead, he cites compelling evidence that our notions of culture are not only subjective but discriminatory and self-reinforcing, and that the same countries apparently have vastly different cultures depending on how their economy is doing. What Westerners used to say about Japan and Germany was particularly eye-opening; they essentially used the same insults in the early 20th century that people now reserve for Africa and Latin America. Chang argues convincingly that common cultural slights -- lazy, unambitious, not good planners, etc. -- are byproducts of low employment/industry, not the cause of it. Furthermore, Chang points out that blaming culture for the economic ills of a country is inappropriately fatalistic, as most people believe culture to be static. He notes various cases which dispel the notion. There are too many good passages to mark, so I'll just highly recommend that everyone read it. If you're reading this review, you're interested enough in economics to make this book vital. It's not perfect: Chang is somewhat repetitive and there are too many typos. But it is important and even entertaining, and I guarantee you'll be glad you read it (unless you're a neoliberal, and then you're in for some discomfort -- but still, ultimately glad I suspect). Not Bad Reviews @pointblaek

  21. 5 out of 5

    Isaac

    An alternative title for this book could be: Neo-Liberalism is BAD! If you don't know what that is, no worries. You will be sick of the term just 20 pages into this book. Anyway, some interesting things this book argues: - Not only is piracy fantastic for developing countries (hooray for piracy!!!) but almost all rich countries have indulged in it themselves on their way up the global ladder. It follows that advancing patent and copyright laws are having dire consequences for developing countries e An alternative title for this book could be: Neo-Liberalism is BAD! If you don't know what that is, no worries. You will be sick of the term just 20 pages into this book. Anyway, some interesting things this book argues: - Not only is piracy fantastic for developing countries (hooray for piracy!!!) but almost all rich countries have indulged in it themselves on their way up the global ladder. It follows that advancing patent and copyright laws are having dire consequences for developing countries e.g. the golden rice example. - Corrupt governments can be a relatively good thing for developing countries, especially if it speeds up a turgid bureaucratic systems and allows underpaid officials to keep their jobs. (Poor countries often don't have the taxation to support their officials). - Culture is practically insignificant from an economic standpoint. Muslim? Confucian? Protestant? (sorry Max Webber!) It doesn't matter squat!! Economy creates hard working culture. The most striking example is Japan and Germany's 19th Century reputation for being lazy, unambitious, and carefree. Given the economic conditions, any country can and will produce an energetic work force. - Probably ALL rich countries have blood on their hands, when it comes to stifling the growth of developing countries. Double standards abound. - Nationalisation and state subsidies are probably the BEST defense for budding industries in developing countries. (This is main argument of the book and is probably the most complex and difficult to explain). So there you have it. I'll admit the book wasn't as accessible as I had wished - each chapter starts vividly, but descends into very complex ideas quickly - but it met my expectations as to it's content. I'm just happy for one thing. I am as angry as anyone about the state of the world *rage*, and this book has helped me articulate that anger to myself. (Not I believe I could make a difference *sadness*) P.S. A few bits of advice for those with no background in economics (like myself). This is not a light read like Bad Science. It's full of initialisms that are explained but I found myself flipping to the index to remind myself what they meant. A glossary would have been nicer.

  22. 4 out of 5

    Willowwind

    A detailed rebuttal of free market ideology for the lay person from an award winning Cambridge economist born and raised in pre-industrial Korea. The author shows how the free market policies imposed by the IMF and World Bank have seriously damaged developing countries as well as setting the record straight about how the current industrial giants (far from practicing free trade) consistently protected their infant industries. This excellent and lucid book also deconstructs free market ideology i A detailed rebuttal of free market ideology for the lay person from an award winning Cambridge economist born and raised in pre-industrial Korea. The author shows how the free market policies imposed by the IMF and World Bank have seriously damaged developing countries as well as setting the record straight about how the current industrial giants (far from practicing free trade) consistently protected their infant industries. This excellent and lucid book also deconstructs free market ideology itself, showing where many of its tenets not only have not worked but are simply wrong in their conception. Another wake up call to the current American political values and the social morass they have led to.

  23. 5 out of 5

    Andrew Price

    Excellent little book that easily refutes neoliberal, free trade dogma. Ha-Joon Chang isn't against trade, he just believes developing countries should act first in their own interest to protect industry and build a manufacturing base before they open up. Ironically, this is what many, if not most of the developed nations have done, and of course it is the exact opposite advice we give to developing countries in Africa and South America etc. By prescribing the latter, we are making sure those de Excellent little book that easily refutes neoliberal, free trade dogma. Ha-Joon Chang isn't against trade, he just believes developing countries should act first in their own interest to protect industry and build a manufacturing base before they open up. Ironically, this is what many, if not most of the developed nations have done, and of course it is the exact opposite advice we give to developing countries in Africa and South America etc. By prescribing the latter, we are making sure those developing countries remain poor and impoverished.

  24. 5 out of 5

    Nathan Fisher

    unsurprisingly throws extremely unnecessary, reflexive sops to anti-communism but successfully dismantles liberal orthodoxy. give it to your mom or dad or use it to brush up on thanksgiving talking points when sparring with WSJ subscribers. stays still well within the bounds of bourgeois acceptability, natch.

  25. 4 out of 5

    Micyukcha

    I quite enjoyed this book. We're dosed in free market, pro-private, decentralized orthodoxy in the US so it was good to get the other POV in a data-plus-theoretical way. He also makes it a point to focus on how the "winners" got to where they are (not just what they do today) - and who is "losing" at the expense of the winners. Chang breaks down concepts such as: - industry protection policies (IMF/World Bank loans requires developing countries to "open" before sectors are built but the West used I quite enjoyed this book. We're dosed in free market, pro-private, decentralized orthodoxy in the US so it was good to get the other POV in a data-plus-theoretical way. He also makes it a point to focus on how the "winners" got to where they are (not just what they do today) - and who is "losing" at the expense of the winners. Chang breaks down concepts such as: - industry protection policies (IMF/World Bank loans requires developing countries to "open" before sectors are built but the West used protectionist policies to build up manufacturing sectors, eg loom industry in UK, Smoot-Hawley tariff in US, Nokia, Toyota) - debt (necessary for investing/growth/jobs, loans requiring budget surpluses are like requiring a teenager to save/"show financial prudence" instead of investing in their own development; eg. what the West does in business cycle downturns via Keynesian spending vs what is required of developing country loanees through monetarist policies) - central bank/monetary policy (also prudent for long-term investing/growth/jobs, high-returns saving contributes to wealth inequality by depriving growing industries of investment thus hurting jobs/skills growth and increasing inequality) - free market’s intersection with democracy. 1 dollar 1 vote vs 1 person 1 vote is logically incompatible and has been proven in history, eg, wealth status requirements such as land ownership and literacy for voting, delayed suffrage rights for various discriminated classes (only in the last 50-70 years for many democratic countries). - intellectual privacy rights (increasing costs to the majority / public so a very small amount of people can extract extraordinary profit), trade agreements, a few more. Overall, I really appreciate this book because 1) he does present another way vs. the usual free market 2) often anti free market is presented as anti business but actually it can be pro business to protect/“grow up” industries and increase the time horizon for measuring growth+innovation and 3) he does it with nuance. Chang does not come off as an ideological person, rather, he does a great job of explaining why it's plausible one theory works (X sounds good because of this, Y because of this). He then will argue against it, using data (sometimes it feels selective but there are enough theories/correlations to go on), theory and anecdote. There is enough to make a strong case and to change minds even if it feels like he leaves room for the case to evolve, or even overturned for certain countries/sectors/moments. Ultimately, I think his incentives are to promote economic development and opportunity for those who need it, but Chang is guided to reach an effective ends, vs a pure means, which allows him to take an iterative and more objective approach to the means.

  26. 5 out of 5

    Tim

    I don't always read books on economy and politics, but when I do... All kidding aside, this is the third book by Chang I've read. The first one was the very informative Economie: de gebruiksaanwijzing (Orig.: Economics: The User's Guide). You can read my (Dutch) review here. It offered insight in what economics is about, which kinds/school exist, how and what role politics play, and so on. The other one was 23 Things They Don't Tell You About Capitalism (my [Dutch] review here), which also provid I don't always read books on economy and politics, but when I do... All kidding aside, this is the third book by Chang I've read. The first one was the very informative Economie: de gebruiksaanwijzing (Orig.: Economics: The User's Guide). You can read my (Dutch) review here. It offered insight in what economics is about, which kinds/school exist, how and what role politics play, and so on. The other one was 23 Things They Don't Tell You About Capitalism (my [Dutch] review here), which also provided a lot of interesting information on capitalism, the economy, and related things. As M. Chang referred in 'Economics: The User's Guide' to his other books, I had to read Bad Samaritans: Rich Nations, Poor Policies And The Threat To The Developing World, obviously. What it's basically about - I won't go into much detail, as economics isn't my field of specialty: free trade vs protectionism. The West vs the East vs the South. Or more specifically, the rich western countries, including the (un)holy trinity of The World Bank, the IMF and the World Trade Organisation (WTO), imposing rules and ways of economics development on poor(er) countries, so those western countries can more easily trade and even invade those countries. It's about the pot calling the kettle black. Each country had to start somewhere, either with free trade or with protectionism to let its national companies grow and improve their performance. But rich western countries don't like limitations, as they want to earn as much money as possible. Who doesn't, ey? Anyway, even those rich western countries have known periods of protectionism to let their companies grow to be able to compete with foreign companies. Either they blocked products or certain sectors, or they provided subsidies, or invested in a different way. That's sometimes what (some of) those developing countries want(ed) to do, but couldn't or weren't allowed because of certain trade agreements. Sometimes developing or poor countries can't take off due to copyright, patents, intellectual property, and so on. That's when some rich western countries - yes, it's really an attack on the rich west, which has risen to high levels of economic development, so they want to secure their position vis-à-vis other countries - decided and told the poorer countries how to be economically active. Do as I say, not as I do. Chang once again wrote an eye-opening book and allows you to look at economy with a different view. You don't have to agree 100% with his point of view, but you can't deny that some/most/... of his statements and explanations are bull's-eye. Nowadays, the book has become very actual again, as US-president Trump wants to (and will?) impose tariffs on foreign steel and aluminum. Tariffs were also used by western countries, by eastern countries, and were something the western ones were opposing when wanting to trade or invest in those eastern countries. Chang has used the US, the UK, France, Germany, Korea, China, Japan, Africa, ... as examples to explain the different themes. Some of those countries have totally changed their behaviour and culture in the last few decades. Yes, culture is also an aspect that influences or is influenced by economic development. He also showed how one solution may work for country x, but not necessarily country y. And thus, that one should let country x or y choose their own solutions, if tey deem them better than what the west (or someone else) advises/imposes. In case you wondered, corruption is also addressed in this book, for good and for bad. Corruption is part of the game, but not always as we think it is. The book should be accessible for a large audience, as Chang tried to keep the language as simple as possible, despite the not-so-accessible subject. I can only recommend this one and his other two books to anyone who seeks to understand and/or expand his/her knowledge on economy. Everyone, in fact, can learn something from these or such books.

  27. 5 out of 5

    Ushan

    In 1963, when the author was born, South Korea was one of the world's poorest countries, with half the per capita income of Ghana. The fratricidal war with interventions by the United States and China had destroyed half her industry and three quarters of her railways. The country's principal exports were fish, tungsten, and wigs made of human hair. In 1982, when the author finished high school, South Korea was a middle-income country, on par with Ecuador. In 1997, when he was an adult professor In 1963, when the author was born, South Korea was one of the world's poorest countries, with half the per capita income of Ghana. The fratricidal war with interventions by the United States and China had destroyed half her industry and three quarters of her railways. The country's principal exports were fish, tungsten, and wigs made of human hair. In 1982, when the author finished high school, South Korea was a middle-income country, on par with Ecuador. In 1997, when he was an adult professor of economics, she was an upper-middle income country, on part with Portugal. She has since left Portugal behind, and is now a rich country on par with Italy; her principal exports are semiconductors, computers, ships, cars, and steel. The way South Korea did it was to limit her imports (in school, Chang was told to report to the authorities anyone smoking foreign cigarettes), and expand her exports in order to accumulate the capital necessary for launching the new industries. A lot of the new industries were state-owned; their management was focusing not on short-term profits, but on the long-term industrialization of the country. The ruthless exploitation of the workers that this entailed was incompatible with democracy, so the country was a military dictatorship through much of the period. This book claims that the rich countries, through the "Bad Samaritan" institutions of the IMF, the World Bank, and the WTO, deliberately hurt the poor countries by forcing them to adopt neo-liberal policies such as free trade, low tariffs and privatization; they would be better off following in South Korea's footsteps. In fact, says the author, that is what most rich countries themselves did when they industrialized. Now, in order for South Korea to be able to export so much, there had to be a market for her exports. The market was the United States, which wanted to support this outpost of anti-Communism. South Korea could not export to the Soviet Union, or to the People's Republic of China; likewise, North Korea could not export to the United States. Now, all the poor countries could not follow in South Korea's footsteps because they do not have wealthy patrons like that; how could all the poor countries limit their imports and expand their exports if they trade with each other? The industrializing United States in the late nineteenth century did have large tariffs, but how else could the government collect revenue and finance the American Civil War, there being no income tax? Among other criticisms of the "Bad Samaritans", Chang says that their fight against corruption is misguided: Indonesia under Suharto experienced large economic growth despite being a very corrupt country; Chang says that this is because in Indonesia, unlike in Zaire, the bribes were invested inside the country. First, apparently, Suharto did stash billions outside his country. Second, Zaire's Mobutu did spend a lot inside his country: he built a replica Versailles in the middle of his tribal territory in the jungle near the border with the Central African Republic, where he could quickly escape should things take a wrong turn for him, with a landing strip that could accommodate the Concorde; it is just that this spending did nothing for the country's welfare. I think, William Easterly wrote that many African presidents-for-life liked to build new national capitals in their tribal homelands. Is it really misguided for the IMF to demand that this practice stop before giving out new loans?

  28. 4 out of 5

    Kumail Akbar

    You would expect an economist to present a hypothesis, evaluate all the data regarding the hypothesis and come to a conclusion after considering nuance, etc. Not so here. Ha Joon seems to have decided to sell fashionable left/anti capitalist takes to its typical consumers and he goes about doing so without putting in much intellectual rigor. If you want a more thorough history of trade which tries to go through the entire history of trade (or as much of it can be in a single volume history) I st You would expect an economist to present a hypothesis, evaluate all the data regarding the hypothesis and come to a conclusion after considering nuance, etc. Not so here. Ha Joon seems to have decided to sell fashionable left/anti capitalist takes to its typical consumers and he goes about doing so without putting in much intellectual rigor. If you want a more thorough history of trade which tries to go through the entire history of trade (or as much of it can be in a single volume history) I strongly suggest reading William Bernsteins 'A Splendid Exchange' instead. Your preferred world view can then take account of a lot more data points to decide if free trade is, or always has been a 'myth'

  29. 4 out of 5

    Razi

    I will rate this one! It is so easy, so simple and simple facts are put forward so succinctly that there is no way it should be rated anything less than five stars. Media, intellectuals, journalists and columnists all tell us that globalisation is good for the poor countries. Free market, it is repeatedly exhorted, is good for all. Organisations like WTO, the World Bank, the IMF are there to protect the poor countries and help them grow economically. Some countries are culturally lazy and corrup I will rate this one! It is so easy, so simple and simple facts are put forward so succinctly that there is no way it should be rated anything less than five stars. Media, intellectuals, journalists and columnists all tell us that globalisation is good for the poor countries. Free market, it is repeatedly exhorted, is good for all. Organisations like WTO, the World Bank, the IMF are there to protect the poor countries and help them grow economically. Some countries are culturally lazy and corrupt, hence they will never change, "fantastically corrupt countries" to quote our PM. Chang shows us that this could not be far from the truth. Globalisation is aimed at opening new markets to rich capitalist countries, free market is only free to help rich get richer, so-called international trade development organisations are there to protect the rich against the poor and the vulnerable. Cultural essentialism is nothing more than false stereo-typing because cultures are dynamic and change as they go through different phases in their histories. His examples are easily understood. I have always wondered why the golden age of Western economic advancement (from 17th to the 19th century) was also the golden age of monopolies. Where was the free market then? Countries went to wars to protect their monopolistic hegemonies. Lack of access to richer and waster colonies was one of the grievances that pushed Germany to start the World War I and for many historians, World War II was a continuation of the first war as underlying grievances remained the same, only more exacerbated during the hiatus of intervening two decades. Monopolistic protectionism was good enough for the rich countries to get rich but when it comes to poor countries, they are forced to compete on a 'level playing field' in a 'free' economy. Chang says that this is like asking his 11 year old daughter, Yuna's, football team to compete against the Brazilian national football team. We all know what the result would be of such a lopsided contest. The worst bit is that we all believe in this hogwash and the so-called expert are even more stubborn in their belief in spite of the overwhelming evidence to the contrary. None of them has the good grace of John Maynard Keynes to admit their mistake, "When facts change, I change my mind. What do you do, sir?"

  30. 5 out of 5

    Otto Lehto

    Very entertaining book. I would be wary, however, of taking its lessons too seriously. Basically it is an argument against the free markets as the best system for developmental economics. He makes the case that, in fact, DEVIATIONS from free market doctrine have been occasionally helpful, perhaps even necessary, for the development of almost all Western countries. He also tells the story of Korea, rising fast out of poverty, as an example of market socialism. He claims that preaching all-too-has Very entertaining book. I would be wary, however, of taking its lessons too seriously. Basically it is an argument against the free markets as the best system for developmental economics. He makes the case that, in fact, DEVIATIONS from free market doctrine have been occasionally helpful, perhaps even necessary, for the development of almost all Western countries. He also tells the story of Korea, rising fast out of poverty, as an example of market socialism. He claims that preaching all-too-hasty privatization and liberalization programmes can be detrimental to developing countries, and that without state intervention, certain parts of the economy will never grow. The historical case he makes is very strong, whatever one makes of his conclusions. It has a few major flaws. Let us take an example: he treats copyright as if it were a horrible "neoliberal" plot, whereas most liberal thinkers have been very skeptical of the whole notion of intellectual property. In fact, the author simultaneously blames the so-called liberals for inventing the copyright system to favour the rich West (to fight cheap copycats in Asia and elsewhere) AND blames liberalism for not taking copyrights SERIOUSLY enough! This requires a bit of mental gymnastics to make sense of. The author wants to have his cake and eat it too, it seems. Unfortunately, the copyright issue, where he distorts the picture, is just an example of the bigger problem: he doesn't differentiate (enough) between the theoretical, ideological underpinnings of free market capitalism and the practical, political uses of its rhetoric. He conflates Adam Smith and Ronald Reagan, Milton Friedman and Thomas Friedman. This is an unpardonable offence. But the book is fighting a good fight against intellectual dishonesty and historical amnesia. And it's very well written, funny and entertaining. In fact, it's almost TOO well written for its own good (it is easy to get blinded by a brilliant phrase). But luckily the substance, despite the author's flippant, occasionally heavy-handed, ideological crusade against free market economics, is mostly there to justify going through the non-sequitors and theoretical superficiality.

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