I am glad my article on trade and protectionism generated debate among the readers of Prospect and others. In the article, as well as in my book Bad Samaritans: Rich Nations, Poor Policies and the Threat to the Developing World, I advance a totally unconventional view, so I do not expect to be accepted by all people. However, it is sad to see that some people refuse to see my argument for what it is.
One common reaction to my argument has been to argue that “Toyota [or South Korea, the USA, or whichever of my examples they find most difficult to dismiss] was an exception.” (See the review of my book in the Economist). But my argument does not rest on these few cases, however dramatic they may be. The weight of my argument lies in the demonstration that virtually all countries that have economically succeeded over the last two centuries (from 18th-century Britain, through to 19th century USA and Germany, down to late 20th-century east Asia and Europe) have done so by going against the free-market, free-trade orthodoxy (some in more ways than others). Most of them were protectionist. If they were not, they “deviated” in other ways. Switzerland and the Netherlands refused to grant patents until the early 20th century, while Singapore has had a huge state-owned enterprise sector (producing 30 per cent of GDP). My critics may dismiss one or two cases as exceptions that prove the rule, but if virtually all the relevant cases have to be dismissed as exceptions, then the rule that they are trying to defend is not meaningful any more.
Another symptom of my critics’ deliberate blindness is their assumption that I advocate some kind of across-the-board import substitution model simply because I say protectionism is usually necessary (although not sufficient) for economic development. However, there is a huge difference between the across-the-board import substitution model and the kind of protectionism I advocate. What I advocate is protectionism intended not to close off the economy but to create the space for domestic producers in developing countries to acquire the higher-level productive capabilities that they need in order to fully (albeit strategically) engage with the global economy in the long run. I explicitly said in the article that this type of protectionism is not anti-trade or anti-globalisation—in the long run, it is in fact more pro-trade and pro-globalisation than the free trade orthodoxy, as it is the best way to promote growth and international trade. This point was obviously not taken by my critics. As I said in my exchange with some free-trade economists following the review of my book in the Financial Times, I feel like a man being accused of promoting copious consumption of vodka when all I have done is to recommend moderate amounts of red wine as a part of a balanced diet.
I should obviously try harder in the future to persuade my critics, but in turn I hope they make an effort to see what I am saying instead of having a Pavlovian reaction to words like “protectionism” and “regulation.”