By Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives
False Economy: A Surprising Economic History of the World by Alan Beattie
Misadventures of the Most Favoured Nations: Clashing Egos, Inflated Ambitions, and the Great Shambles of the World Trade System by Paul Blustein
Adam Smith observed that man has an intrinsic “propensity to truck, barter, and exchange one thing for another.” False Economy and Most Favoured Nations provide different and interesting perspectives on economic growth and trade.
Alan Beattie, the world-trade editor for the Financial Times, explores the basis for economic success and failure.
The central simple conceit (every non-fiction book now requires one!) is the contrasting fortunes of Argentina and America. Mr. Beattie shows that in the nineteenth century, the two nations exhibited similar potential and enjoyed not dissimilar natural endowments. The thought leaders of the time favoured Argentina to succeed relative to America. History records that the result, like most predictions beyond the next ten minutes, were different. America, despite its current problems, is the world’s largest and most successful economy and Argentina remains a basket case and serial defaulter on its debt.
Mr.Beattie’s analysis highlights that the choices of rulers and the sequences of decisions may influence success powerfully. Perhaps disappointingly for nationalists and conspiracy theorists, he finds little evidence that natural resources, religion or the interference of colonial masters affect economic success.
For example, natural resources are considered especially troublesome – the “Dutch” disease. Richness in natural resources can create few local jobs and profits for locals. Profits accrue frequently to foreign multinationals and corrupt politicians’ Swiss bank accounts. But sensible management of these resources can assist development. Mr Beattie uses the contrast between Botswana’s successful management of its resource wealth and other African countries to illustrate this.
Well written, False Economy does not purport to be comprehensive. The breadth of geography and topics covered at time make the book feel slight and superficial. Flights from topic to topic and the author’s desire to be clever sometimes jar. These minor criticisms aside, False Economy is both an interesting and at times insightful read.
In Most Favoured Nations, Paul Blustein, former Washington Post reporter, critically analyses the World Trade Organisation (“WTO”) and the reality of free trade. The author is singularly unimpressed, like many others, with both the WTO and the successive futile trade negotiations. We are currently in the Doha round soon to be followed by the Homer Simpson “Doh” Round.
Mr. Blustein’s thesis is that the benefits of global trade have been overstated, probably egregiously so. He argues for the simpler framework of the Global Agreement on Trade and Tariffs which made progress in reducing and eliminating barriers to trade in preference to the utopian and ultimately unrealisable objectives of the WTO which would ultimately benefit mainly the wealthier nations.
Short on historical and economic analysis, Mr. Blustein’s book is at its most compelling in its portraits of individuals, both ordinary and the great, in the world of trade. His portrait of Mike Moore – a former New Zealand politician who became a WTO director, after a massive campaign to obtain the position expending a part of his personal fortune on the effort – is a good example.
The coverage of negotiations within the WTO itself is especially acute. Mr. Blustein describes Kamal Nath, the Indian commerce minister, pressing Peter Mandelson, the European trade commissioner, to specify the year by which Europe would phase out its export subsidies: “I want a date! I want a date! I want a date! But not with you!” Kamal Nath features again in another session, questioning the U.S. position: “Next time you can bring a picture of an American farmer? Because I have never actually seen one. I have only seen US conglomerates masquerading as farmers.”
Most Favoured Nation shows that the machinations of the WTO and world trade are always lively if ultimately unproductive.
Interestingly, the third law of publishing says that the relative importance of the topic declines at a speed that is directly proportional to the number of books written on the subject. False Economy and Most Favoured Nations appear at a time when models of economic growth are changing and growth in global trade is reversing for the first time in years in the wake of the global financial crisis.