Pierre Lemieux – What’s Wrong with Protectionism: Answering Common Objections to Free Trade
A “principles of” primer that starts strong and stays that way. Highly recommended, especially for people new to trade policy. The opening chapter on comparative advantage is probably the clearest explanation I’ve seen—countries with an absolute advantage in many industries, such as the U.S., should specialize in what they’re “more better” at, such as capital-intensive technology, aircraft, and services.
Countries with an absolute disadvantage in productivity, such as China or Bangladesh, should specialize in what they’re “less worse” at—mostly labor-intensive assembly and low-skilled manufacturing. This kind of specialization reduces opportunity costs.
If the U.S. had a billion-dollar garment industry, for example, it would have to sacrifice more than a billion dollars of value it could have created elsewhere. This is a recipe for poverty, not prosperity or national strength. It can create more value by specializing in those highest-value-added sectors, and leaving the rest to others, even if they’re less productive in absolute terms.
The rest of the book is just as good, especially the chapters on manufacturing and the trade deficit.
Inertia Wins! 