Free Trade Is Mythical Road to Prosperity:
After stinging criticism of the two organizations by Nobel Prize winner and former World Bank chief economist Joseph Stiglitz, a new book from a Cambridge University professor challenges the very bedrock of these institutions — that globalization and free trade are a sure-fire path to prosperity.
Embarrassing, perhaps. But not surprising, according to Chang’s recently-published book, “Kicking Away the Ladder,” which examines the economic policies that today’s industrialized countries used during their development.
“The title of the book comes from a passage from German economist Friedrich List,” Chang said, adding that the 19th century economist complained that British calls for free-trade policies were simply attempts to thwart growth and development in poorer nations such as Germany.
The British were trying to kick away the ladder — protectionist economic policies — by which they themselves had climbed up, Chang quotes List as saying. Two centuries later, Chang said List’s complaint can be leveled against the United States.
American officials of the 19th century were deeply skeptical of free trade and Chang argues that U.S. industries were literally the most protected in the world until 1945.
Newly established industries were aggressively coddled and promoted, making the United States an early believer in the “infant industry” argument — the same one many developing countries use today to impose limits on free trade and liberalization.