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.
Peter Leeson – WTF?!: An Economic Tour of the Weird
Leeson, a former professor of mine at GMU, excels at applying the economic way of thinking in unexpected ways (see also his book about the economics of pirates, The Invisible Hook). Here, we tour the economics of gypsy social norms, medieval punishments, and more. Think of it as a more rigorous Freakonomics that is just as accessible to the layman.
Tomas Larsson – The Race to the Top: The Real Story of Globalization
Larsson is a Swedish-born journalist who lived in Thailand for ten years and studied in the U.S. In this quick-reading book, he shares real-world stories of people who globalization has enabled to become entrepreneurs, to move from bicycles to cars, from outdoor farms to air-conditioning, from word-of-mouth to the Internet, and more.
Since the book’s 2001 publication, many of the statistics he shares are now dated—they have almost all moved in a positive direction, which only makes his pro-trade and pro-openness arguments stronger.
This week Rep. Mike Gallagher (R-WI) introduced the Bicameral Congressional Trade Authority Act, which would reduce the president’s authority to unilaterally enact new tariffs by citing national security concerns. The Senate sponsors are Sens. Mark Warner (D-VA) and Pat Toomey (R-PA). The Democratic co-sponsor in the House is Rep. Ron Kind (D-WI).
Their bill contrasts with Rep. Sean Duffy’s (R-WI) bill to increase President Trump’s tariff authority, which I have written about before.
For reasons politically expedient at the time, Congress delegated some of its taxing power away under Section 232 of the Trade Expansion Act of 1962. In light of current abuses of this authority, it is time to restore taxing authority to Congress, where it belongs under Article I, Section 8 of the U.S. Constitution.
The Congressional Trade Authority Act would implement one of the planks of CEI’s new agenda for Congress, and has attracted a large, bipartisan group of co-sponsors. It has also garnered significant outside support. The National Taxpayers Union, along with more than three dozen other groups, including the Competitive Enterprise Institute, have sent a coalition letter to members of Congress urging them to rein in Section 232 abuses.
As recent tariff hikes begin to hurt the economy and obstruct the U.S. government’s foreign policy objectives, many politicians are realizing that trade is one area where sound policy is also sound politics. For a more thorough case on why tariffs are economically harmful, see Iain Murray’s and my paper “Traders of the Lost Ark.”
Ludwig Lachmann – Capital and Its Structure
Published in 1956, this book is a useful antidote to the Samuelsonian blackboard economics that were beginning to dominate the profession in Lachmann’s day and still do in ours. Capital is not some featureless black box that can be plugged into an equation; it is a multi-faceted, ever-changing part of the economic process that is subject to whatever an entrepreneur thinks the best use might be for a given resource at a given time. Sometimes they guess right, and sometimes they guess wrong.
Lachmann’s theory of capital doesn’t fit so well on the classroom blackboard, but it does fit human behavior. I leave it to the reader to decide which is more important.
The Midwest is in a bit of a cold snap right now. It was -24 degrees Fahrenheit earlier this morning here in the Chicago area. That’s 56 degrees below freezing, or as far below freezing as an 88 degree day is above it. This is excluding wind chill.
My house’s heating system is proving capable of maintaining a roughly 90-degree temperature difference against the outdoors. This is par for the course these days, even for people who aren’t that well off. As someone who works from home, this means I am able to be perfectly productive with little more than a sweater and a sleeping cat nearby for added warmth. Moreover, this productivity involves interacting in real time with colleagues who are hundreds of miles away using little more than a computer, a phone, and a small amount of electricity.
Of course, today’s weather does make commuting difficult, and in many cases impossible. So the schools around here are closed, and many workers have the day off. This will make them about as comfortable as I am in most cases, though hopefully rather less busy.
It’s worth taking a minute to imagine just how different this picture would be for a similar cold snap just a century ago. We are able to cozy up over hot chocolate, but not too long ago, we would have had legitimate worries about just surviving the next few days. This cold snap is a good opportunity to reflect on how good people have it today compared to any previous era in history, and why. Since things could also be a lot better, it is worth reflecting on what could make things even better for future generations.
Lawrence Krauss – The Greatest Story Ever Told–So Far: Why Are We Here?
Strong on science, weak on philosophy. Krauss correctly observes that science can answer all manner of how questions, but not the why questions. But he misses a golden opportunity to explain in depth that this is okay.
People, especially those given to strong religious or political beliefs, should admit when they don’t know certain things, instead of making answers up. Such assertions signal confidence and boost self-esteem, but stifle discovery and progress.
In a book of more than 300 pages, Krauss spends just the occasional paragraph or two addressing the question he thought important enough to ask in the title of his book. Instead, readers get a tour of the discoveries and personalities in modern physics from roughly Maxwell and Faraday to the present.
As a survey of modern physics leading up to the discovery of the Higgs boson, it’s pretty good. But this book could easily have been much more.