Transcript: Professor Ha-Joon Chang, March 6, 2008

Professor Ha-Joon Chang, a Professor at the University of Cambridge on the Faculty of Economics and Politics, wrote "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism" which tells the true history of tariffs in the United States as well as the very real problems with "free trade." Want to bust some myths? Listen to Professor Chang and read his book.

Thom Hartmann interviews Professor Ha-Joon Chang, 06 March 2008

[Hartmann]: Welcome back to the most labor friendly program in all of radiodom. Thom Hartmann program brought to you in part by the 200,000 health and hospital workers at SEIU 1199, fighting for quality, affordable health care for all Americans because keeping our families healthy should be a right, not a privilege.

Hi. It's amazing, I think about this, my father worked in a union shop all his life, two of my three brothers are shop stewards in their unions in Lansing. We have so far to go in the United States economically. We have slid backwards so far, and we've slid backwards in large part as a consequence of insane notions that have been put forward and by-and-large believed, particularly since the Reagan administration here in the United States.

One of the best books on this topic is called "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism." It's written by economics professor at the University of Cambridge in England, on the faculty of economics and politics, Ha-Joon Chang. And Professor Chang, welcome to the program.

[Chang]: Hi.

[Hartmann]: Thank you for taking our call all the way there in the UK.

[Chang]: Oh, my pleasure.

[Hartmann]: I loved your book.

[Chang]: Oh, thank you!

[Hartmann]: As You might have figured out by my review over in It was--this is just an absolutely spectacular book.

[Chang]: I think you are too generous.

[Hartmann]: No. I am not. You have done a brilliant--let's just start at the beginning because we only have about five minutes here to talk.

[Chang]: Sure.

[Hartmann]: The idea that a country is best served by throwing open its doors to "so-called" free trade, particularly a developing country, but even a developed country for that matter, is doctrine. I mean, you'll find everybody in the Republican Party in this country and three quarters of the Democratic party would agree with that statement. You call that statement--I don't recall the exact word, but I would call it crazy. Tell me why!

[Chang]: Well, yeah. This is probably the most enduring myth of our time. But you know actually if you look at the historical record, the countries have done collectively much better when they have major trade opening. No country succeeded through total free trade probably except for Hong Kong. In the 18th century Britain was the most protectionist country in the world, in the 19th century, until the – And then early 20th century, the U.S was the most protected economy in the world and even after that, you have had countries like Japan, Korea, Germany, all sorts of countries prospering by engaging in international trade but in a way that is commensurate with their needs and capabilities.

Now for the developing countries, this is becoming actually a big problem, because these countries are, or have been, in the last 25 years opposed to opening their borders when they are not ready, and they have had a lot of their industries destroyed and their livelihoods threatened. But this is also a problem for developed countries, because even if a rich country can usually benefit as a whole from freer trade with other countries, there are winners and losers. And not all countries have adequate mechanisms to compensate the losers. And you have in the States states like Ohio being basically wiped out through these trade policies.

[Hartmann]: Because of the so-called free trade.

[Chang]: Absolutely.

[Hartmann]: Your book just does a marvelous job of exploding all these myths and pointing out that the United States had tariffs that ran between 35 and 45% by and large basically from the founding of our country, certainly from the war of 1812, up until more or less the Reagan administration.

[Chang]: Yeah, yeah. Well, it decreased a little bit in the 60s and 70s.

[Hartmann]: In the Carter years.

[Chang]: Yeah, basically until the second world war the United States was actually the most protectionist country in the world.

[Hartmann]: And that built this enormous industrial powerhouse. How do we break the spell of free trade? I mean you point out in your book that Thomas Friedman's book, "The Olive Tree and the Lexus" [The Lexus and the Olive Tree], that the Lexus wouldn't have been possible if Japan hadn't protected the Toyoda Loom Company which became the Toyota Car Company.

[Chang]: Exactly.

[Hartmann]: The Lexus is a consequence of protectionist trade policies, its success. How do we break this spell in the United States?

[Chang]: Well. I think that the one thing that Americans should start doing is to learn its own history well. I mean here we are. You have a country whose first Finance Minister, that is Treasury Secretary Alexander Hamilton, invented this protectionist economic theory.

[Hartmann]: Yes.

[Chang]: A country that has practiced protectionism to its benefit for over a century, and you have scarcely anyone who even knows about this and when someone like Pat Buchanan says free trade isn't a very American thing. People laugh because they don't know their own history. So yes, I think not only should we talk about today's problems that this unrestrained free trade brings to all countries, we also need, especially the Americans, to look at their own history and try to learn lessons for themselves and for the poorer countries today.

[Hartmann]: Absolutely. And let me recommend to my listeners the best history of America's history of trade is Professor Ha-Joon Chang’s book, economic professor at the University of Cambridge. The book is "Bad Samaritans: the Myth of Trade and the Secret History of Capitalism." You can buy it at any bookstore, and it’s also my BuzzFlash book-of-the-month over at Professor Chang--thanks so much for being with us today.

[Chang]: Thank you.

[Hartmann]: And for writing a brilliant book.

[Chang]: Thank you.

[Hartmann]: Thank you. It's 27 minutes past the hour. 866-303-2270 our telephone number. if you want to drop into our live chat room.

Onward we go! Stick around. We'll be right back.

Transcribed by Caleb Burns.

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