Two opportunities to hear Ha-Joon Chang in DC

Want to hear economic and trade policy issues discussed in an accesible and engaging manner? You can  23-things-they-dont-tell-you-about-capitalism-ha-joon-chang-hardcover-cover-art
do little better than stopping by two events tonight and tomorrow in DC where Ha-Joon Chang is speaking on his new book 23 Things They Don't Tell You About Capitalism.

The first opportunity is tonight at 6:30 pm at Busboys and Poets on 14th St., NW, cosponsored by the Center for Economic and Policy Research page. The second opportunity is tomorrow at the New America Foundation at 12:15 pm.

Here's a little bit more about the book and Chang, from the promotional materials:

We may like or dislike capitalism, but surely we all know how it works. Right? Wrong. Today, most arguments about capitalism are dominated by free-market ideology and unfounded assumptions that parade as ‘facts’. With the help of the ‘Dead Presidents’ on the dollar bills, Walt Disney’s Rescuers, an Indian bus driver named Ram, and sheep-burning French farmers, Ha-Joon Chang’s new book, 23 Things They Don’t Tell You About Capitalism (Bloomsbury USA, January 2011), tell the story of capitalism as it is and shows how capitalism as we know it can be, and should be, made better.

About Ha-Joon Chang:

Ha-Joon Chang teaches in the Faculty of Economics at the University of Cambridge. His books include the international bestseller Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism and Kicking Away the Ladder, winner of the 2003 Myrdal Prize. In 2005, Chang was awarded the Leontief Prize for Advancing the Frontiers of Economic Thought.

Praise for 23 Things They Don't Tell You About Capitalism:

“Chang, befitting his position as an economics professor at Cambridge University, is engagingly thoughtful and opinionated at a much lower decibel level. ‘The “truths” peddled by free-market ideologues are based on lazy assumptions and blinkered visions,’ he charges.”—Time

“Chang presents an enlightening précis of modern economic thought—and all the places it’s gone wrong, urging us to act in order to completely rebuild the world economy: ‘This will [make] some readers uncomfortable…[;] it is time to get uncomfortable.’”—Publishers Weekly

“Myth-busting and nicely-written collection of essays”—Independent (UK)

“For 40 years, I have worked as a journalist and trained thousands of other journalists from my former perches as a University of Missouri Journalism School professor and as executive director of Investigative Reporters and Editors. I have written newspaper articles, magazine features and entire books with heavy doses of economics policy and business behavior. I wish the book 23 Things They Don’t Tell You About Capitalism had been available when I was a rookie; I would have been more alert to the hands-off-business catechism by which Americans are relentlessly indoctrinated.”—Steven Weinberg, Remapping Debate

“Shaking Economics 101 assumptions to the core … Eminently accessible, with a clearly liberal (or at least anticonservative) bent, but with surprises along the way—for one, the thought that markets need to become less rather than more efficient.”—Kirkus Reviews

“I doubt there is one book, written in response to the current economic crisis, that is as fun or easy to read as Ha-Joon Chang's 23 Things They Don't Tell you About Capitalism.”—AlterNet Executive Editor Don Hazen

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Rewriting Economic History for the Korea FTA

U.S. Trade Representative Ron Kirk and Han Duk-soo, Korean Ambassador to the U.S., discussed aspects of the Korea Free Trade Agreement (FTA) at a panel on Thursday. They talked about deadlines, little anecdotes, and so forth, but what Ambassador Han had to say about how the Korea FTA would impact Korean domestic economic policymaking was most intriguing. He said:

But more important for Korea is that we develop our economy by opening it to global competition. The Asian Financial Crisis of 1997 and 1998 was a good lesson for us. What the Korea-U.S. Free Trade Agreement offers the Korean people is a comprehensive legally-binding reform package that will lead to the opening of our market.

Here Ambassador Han alludes to what Thomas Friedman called the "Golden Straightjacket". The idea is that you should force harsh economic policies on countries, often through some less-than-democratic means (in this case, a trade agreement that has been negotiated in secret), and they will eventually prosper. Ambassador Han referred to these "painful prescriptions" in an earlier speech here. (In the first chapter of Bad Samaritans, Dr. Ha-Joon Chang does a great job of exploding the Golden Straightjacket myth while demonstrating that Friedman's beloved Lexus in his Lexus and the Olive Tree could never have been produced without significant government involvement in the economy.)

It's quite perplexing that Ambassador Han would invoke the Asian financial crisis as a reason to throw all the chains off financial markets. Sure, the Korean Ambassador to the United States can do a lot, but he can't rewrite history. Financial deregulation was the major cause of the 1997 Asian financial crisis and efforts to further open financial markets during the crisis actually deepened its severity.

As Mark Weisbrot of the Center for Economic and Policy Research has pointed out, the Asian financial crisis developed because of excessive short-term international borrowing among East Asian nations. What was the cause of the excessive debt?

This build-up of short-term international borrowing was a result of the financial liberalization that took place in the years preceding the crisis. In South Korea, for example, this included the removal of a number of restrictions on foreign ownership of domestic stocks and bonds, residents' ownership of foreign assets, and overseas borrowing by domestic financial and non-financial institutions. Korea's foreign debt nearly tripled from $44 billion in 1993 to $120 billion in September 1997.

Indeed, countries that bucked the International Monetary Fund (IMF) prescriptions of greater financial liberalization, such as Malaysia, did better than countries like South Korea that had shed their financial regulations and capital controls. A paper on the Asian financial crisis published by the National Bureau of Economic Research compared the IMF strategy of complete openness to foreign investment and floating exchange rates against Malaysia's strategy of imposing capital controls to combat the crisis. The study concluded that "Compared to IMF programs, we find that the Malaysian policies produced faster economic recovery, smaller declines in employment and real wages, and more rapid turnaround in the stock market."

More than ten years after the Asian financial crisis, even the IMF has come to its senses and reversed its position on capital controls.  As we document in our memo on the Korea FTA's harmful foreign investor and financial deregulation provisions, the Korea FTA bans key measure that governments have at their disposal to prevent and combat financial crises, including capital controls. Far from a prescription for stable growth as Ambassador Han claims, enactment of the Korea FTA will leave both Korea and the United States vulnerable to future financial crises.

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WTO Doha Round: Cranking up the Deficit

Hufbauer-schott-wong5034 The pro-WTO Peterson Institute for International Economics (IIE) recently published a new study projecting the effects of implementing the WTO Doha Round tariff cuts that are currently “on the table”, i.e. cuts that are in the “negotiating modalities drafted by the chairs of the Doha Round negotiating groups.”

The study finds that these tariff cuts that are on the table will lead to an increase in the annual U.S. trade deficit by $6.6 billion. The authors also test a scenario in which customs reform and liberalization in services, chemicals, electronics, and “environmental goods” are added to the “on the table” tariff cuts, which is supposed to make the Doha package more attractive to the United States. However, the authors estimate that adding in these additional sectors will still make the U.S. trade deficit rise by $6.5 billion.

Nowhere does the study indicate that this significant increase in the deficit may be a problem, though. This is partly because the authors use an overly simplistic method to estimate the GDP gains that are supposed to accrue because of the Doha Round. All they do is sum the increased imports to and exports from a country and then multiply that sum by 0.46, which is supposed to yield the “GDP gains” that the trade generates for that country (see footnote 5 here where they explain this questionable procedure). They treat imports and exports indiscriminately, so U.S. GDP is supposed to gain substantially even though the deficit rises higher. Under their methodology, U.S. exports could stay constant or even decline under the Doha proposal and U.S. GDP would increase significantly as long as imports increased substantially. It’s pretty surprising that this massive 200-page study would use such a simple method that glosses over the crucial difference between rises in exports and imports – we should expect something more sophisticated.

This calculation method is strange given how national statistical agencies calculate GDP. GDP equals all spending by consumers, businesses, and the government, plus exports, minus imports. The authors’ GDP growth calculation procedure strangely treats imports and exports as if they have the same effect on GDP.

IIE’s decision to gloss over the impact of a rising deficit is especially irresponsible at a time when the U.S. trade deficit is skyrocketing. Trade flow data for May was released Tuesday and it wasn’t pretty. The deficit increased by 5 percent even though the price of imported oil fell. The rise was so significant that some financial services firms revised their second quarter GDP growth projections downward, according to Reuters:

A 2.9 percent rise in overall imports suggested U.S. demand was holding up better than some had feared. But with more of that demand being sated by overseas products, the widening trade gap was seen weighing on U.S. gross domestic product.

RBS lowered its estimate of second quarter U.S. economic growth to 2.8 percent, while JP Morgan cut its to 2.5 percent. Both had previously forecast it at 3.2 percent.

This rise in the deficit was largely driven by surging Chinese imports, and the IIE study indicates that the Doha Round will only exacerbate the problems of our trade relationship with China. The nonagricultural market access offers on the table, mostly consisting of tariff cuts on manufactured goods, will raise U.S. imports by $12.7 billion annually, but only boost exports by $3.8 billion (see Table 1.2 here). China, on the other hand, will enjoy an export boost of $15.6 billion from nonagricultural market access, but will only import $6.7 billion more. This is the result of the concessions being so unbalanced in nonagricultural market access: under the Doha scenario, U.S. exporters will pay only $2.5 billion less in tariffs to export to other countries, whereas foreign businesses exporting to the U.S. will pay $11.7 billion less in tariffs (see Table 2.3 here).

We need a trade policy that promotes more balanced trade, not more of the same with the WTO.

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Lori Wallach's In-Depth Interview with Joseph Stiglitz

UntitledOur very own Lori Wallach recently conducted and hour-long interview with Nobel Prize winning economist Joseph Stiglitz on C-SPAN's BookTV. They discuss his new book, Freefall, about the global economic crisis.

Watch the interview here.

Check out the exchange starting at 24:50 where they talk about the WTO locking in and pushing for more financial services deregulation as the world is scrambling to reregulate in response to the crisis.

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Video from Book Event

For those who missed yesterday's book launch of "The Rise and Fall of Fast Track Trade Authority", you can watch the video here, and check out pics on the New America Foundation website.

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New Book: How to Build a New U.S. Trade Consensus

We just released a book on "The Rise and Fall of Fast Track Trade Authority." It is available online at and at Amazon.Com if you prefer a Kindle download.

The formal launch will be today at the New America Foundation at 12:15 pm here in DC. If you are interested in attending or watching the event on a live stream, please go to the New America Foundation website. I believe you can even ask questions live and online.

Here's our press release:

New Book: How to Build a New U.S. Trade ConsensusCover3

‘The Rise and Fall of Fast Track Trade Authority’ Provides Unprecedented Historical Review of Trade Authority Since Nation’s Founding and a Path Forward

WASHINGTON, D.C. – A new book released today by Public Citizen examines the colorful 220-year U.S. history of how the president and Congress have grappled with negotiating and implementing trade agreements given the constitutional separation of powers requirements. “The Rise and Fall of Fast Track Trade Authority” by Todd Tucker and Lori Wallach concludes that Fast Track (the most recent mechanism Congress used to delegate its trade powers to the president) is a historical anomaly and counterproductive to the creation of good trade pacts.

“We wrote this book because when we did the research necessary to give ourselves a clear picture of Fast Track and the delegation systems before it, we found distorted, partial and inaccurate information in existing journalistic and scholarly work,” said Tucker, research director of Public Citizen’s Global Trade Watch division and a co-author of the book. “Much like the conventional wisdom on financial and trade deregulation, the prevailing narrative was that Fast Track was inevitable and necessary for the creation of trade agreements. We show that this is false and that, on the contrary, Americans have frequently changed the way that the executive and legislative branches have shared trade-policy powers.”

The book will be released today at an event at the New America Foundation in Washington, D.C. It will be available in a variety of easily readable formats accessible at The research and publication of this material was made possible by a grant from the Alfred P. Sloan Foundation.

The book explores how the process of designing U.S. trade agreements has changed from 1789 to the present, examining five different regimes of trade-policy formation, the most recent culminating with the expiration of Fast Track during President George W. Bush’s second term.

Under the U.S. Constitution, Congress is responsible for crafting trade policy. Yet, over the past few decades, presidents have increasingly grabbed that power through Fast Track, which allows the executive branch to pick negotiating partners, determine trade pacts’ contents and even sign the deals – all before Congress gets a vote.

The book also notes that the trade agreements facilitated by Fast Track delve deeply into non-tariff, non-trade areas of policy such as investment, procurement and intellectual property. The book provides an unprecedented documentation of the arguments that motivated both opponents and proponents of the expansion of executive power over trade agreements. It is the result of a three-year scholarly investigation into hundreds of primary and secondary sources, many referenced in the book for the first time.

The book notes that growing numbers of voters and policymakers – including President Barack Obama and U.S. Trade Representative Ron Kirk – have opposed Fast Track and called for a more democratic process for creating a national globalization strategy.

“We look forward to a future new mechanism that can reduce political tension about trade policy and secure prosperity for the greatest number of Americans, while preserving the vital tenets of American democracy in the era of globalization,” said Wallach, director of Public Citizen’s Global Trade Watch division and a co-author of the new book. “Now is the time to have the debate about a new trade model, and this new book provides an essential starting point.”


Public Citizen is a national, nonprofit public interest organization based in Washington, D.C. For more information, please visit

Advance Praise for “The Rise and Fall of Fast Track Trade Authority”:

U.S. Sen. Sherrod Brown, Democrat of Ohio and congressional trade-policy leader
“If you wonder why trade policy over the past several years has reflected such narrow interests, look no further than the imbalanced trade policymaking process that is Fast Track. There is no other legislative mechanism with such extraordinary powers. Read this informed and engaging account of Fast Track’s history and take action.”

U.S. Rep. Mike Michaud, Democrat of Maine and co-founder of House Trade Working Group
“Most people now in Congress weren’t elected when President Nixon designed Fast Track to grab Congress’ exclusive constitutional authority over U.S. trade policy. President Obama discussed the need to replace Fast Track with a process that ensures a greater role for Congress. This book provides the lessons of 233 years of American trade authority history to inform Congress’ efforts to create just such a new trade negotiating mechanism.”

Alfred E. Eckes, eminent research professor in Contemporary History at Ohio University, author of “Opening America’s Market: U.S. Foreign Trade Policy Since 1776,” and former Reagan-appointed chairman and commissioner, U.S. International Trade Commission
“Candidates for federal office should be required to read and address the critical issues raised in this stimulating book. Wallach and Tucker make a persuasive case that the fast-track trade negotiating process produces agreements weighted to the interests of corporate giants and harmful to democratic governance and public safety. Their argument that a more democratic trade policy process is both possible and desirable merits the attention of public officials and thoughtful citizens everywhere.”

About the authors:
Lori Wallach is the director and founder of Public Citizen’s Global Trade Watch division and co-author of “Whose Trade Organization? A Comprehensive Guide to the WTO,” published by The New Press in 2004. One of the most widely cited trade and globalization policy experts, Wallach has testified before Congress, federal agencies and foreign legislatures. She graduated from Wellesley College and Harvard Law School.

Todd Tucker is research director of Public Citizen's Global Trade Watch (GTW) division. He is author of dozens of reports on the WTO, NAFTA, and various other consumer and economic issues. A graduate of George Washington University, he received his masters in development economics from Cambridge University.

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Join Us Thursday for a Live Discussion of a Mind-Blowing, Life-Changing Book

Friends, Readers, and all a yinz.

It's been years in the making, and it's finally arrived: the release of our new book this Thursday! Here areCover3 the details:

What: Book Release Event for "The Rise and Fall of Fast Track Trade Authority,"
Who: Authors Lori Wallach and Todd Tucker will speak; moderated by Barry Lynn, Senior Fellow at New America Foundation.
When: Thursday, May 7, 2009, 12:15 pm.
Where: New America Foundation, 1899 L Street, NW, 4th Floor, Washington, DC 20036
Why: Because you want to know about a much-needed new direction for trade policy
How: All's you got to do is RSVP right here.

More about the book:

The Rise and Fall of Fast Track Trade Authority is the first complete history of U.S. trade authority's evolution since the nation's founding. It shows how the balance of power between Congress and the executive branch has shifted regarding trade authority over the years.

Authors Tucker and Wallach explore how this perennial constitutional issue has been shaped over time by people you've heard about - like Hamilton, Nixon, and George W. Bush - and lots of people you probably haven't heard about. Unsurprisingly, Fast Track comes out as an historical anomaly. But some other lessons are less expected and can help shape a new trade authority mechanism that can replace Fast Track in the future.

The central message? Like our trade policy itself, Fast Track was not a random inevitability: things can be and have been done differently, and moving forward we must learn from the past. The book includes a new trade pact negotiating and approval process  to replace Fast Track that is more appropriate for today's expansive, complex international commercial agreements.

Praise for The Rise and Fall of Fast Track Trade Authority

"If you wonder why trade policy over the past several years has reflected such narrow interests, look no further than the imbalanced trade policymaking process that is Fast Track. There is no other legislative mechanism with such extraordinary powers. Read this informed and engaging account of Fast Track's history and take action." - Senator Sherrod Brown, Democrat of Ohio and congressional trade-policy leader

"Most people now in Congress weren't elected when President Nixon designed Fast Track to grab Congress' exclusive constitutional authority over U.S. trade policy. President Obama discussed the need to replace Fast Track with a process that ensures a greater role for Congress. This book provides the lessons of 233 years of American trade authority history to inform Congress's efforts to create just such a new trade negotiating mechanism." -Representative Mike Michaud, Democrat of Maine and Co-chair of House Trade Working Group


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Two Opportunities to See Ha-Joon Chang in DC Tomorrow

Ha-Joon Chang is a Cambridge economist, author of the book Bad Samaritans, my mentor, and in DC tomorrow at several events you can attend.

Our colleagues at CEPR are organizing National Press Club and Busboys and Poets events for Ha-Joon tomorrow. You can find out more on their webpage.

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Saskia Sassen on monarchism; me on good books

Saskia Sassen has a fascinating piece on how the current era of globalization has increased executive power at the expense of Congress and democratic deliberation more generally. What will this mean for Obama?

The development of a global corporate economy has further strengthened the executive branch and weakened the legislative. This process started long before the second Bush administration and cuts across political parties. It began in the 1980s, when the current globalization phase took off, and has continued since...

A question appropriate for this week In fact, economic globalization has had its own autonomous effect in sharpening executive power and in weakening the legislature. This is separate from questions of national security and abuses of executive privilege. It will take more to stop this consolidation of power than having an administration that does not abuse its executive power and that would eliminate the Patriot Act, though this would certainly make a difference...

A new president genuinely willing to respect the balance of power and willing to cancel the Patriot Act will still be in a structural position of growing power in today’s liberal state. A hollowed-out Congress confined to domestic matters weakens the political capacity of citizens to demand accountability from an increasingly powerful and globally oriented executive. Today, the liberal state produces its own democratic deficit.

There is an ironic possibility in all of this. Can a president intent on fighting for a better and more just democracy actually use that expanded executive power to do this?

Also, for those of you interested in some good book recommendations, check out my essay on David Rothkopf, Ha-Joon Chang and Mark Engler's latest over at the Dissent website. The conclusion seems appropriate for this week of change:

THIS OCTOBER, the International Monetary Fund (IMF) and World Bank meetings came to Washington, and, as they do every year, an impassioned bunch of activists mounted protests, decrying the neoliberal agenda that has deregulated markets, pitted worker against worker, and devastated local communities and the environment.

The difference this time around was that, in the wake of the most significant financial meltdown of our times, the bankers were echoing the protestors’ calls for re-regulation. Indeed, as the number of people protesting the global institutions has shrunk since September 11, 2001, the mainstream acceptance of their basic critiques has swelled...

As economic conditions worsen, there will be a bevy of rich individuals and governments attempting to claim the reform mantle as their own. The WTO, IMF, and World Bank are already attempting to reposition themselves as the ideal brokers for solutions to the climate, finance, and food-price crises—despite their role in creating or exacerbating them. Decades of political marginalization have left too many progressives too timid to lay out their alternative visions in a meaningful policy form. If they fail to do so now, the current “told you so” moment will be sweet but short.
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