The Myth of Free Trade and the Secret History of Capitalism

The writer is from South Korea (or his parent). He gave a different perspective regarding copy right issues, corruption in developing countires. He wrote that corruption is a means for developing countries to move ahead. Poor system of taxation and resources redistribution prompt lowly paid civil servants to collect "tax".

He also blame the World organisations for doing the wrong thing for the right reasons.

In this brilliant book, Ha-Joon Chang, Assistant Director of Development Studies at Cambridge University, asks how rich countries became rich, whether free trade is the answer, whether countries should regulate foreign investment, whether private enterprise is always good and public enterprise always bad, whether it is wrong to borrow ideas, whether financial prudence can go too far, whether we should shun corrupt and undemocratic countries, whether some cultures are incapable of economic development, and whether things can get better.

Neo-liberal globalisation - de-regulation, privatisation and liberalised finance, trade and investment - has cut growth, equality and stability. In the 1960s and 1970s, the developing countries grew 3% per head, twice as much as in the years since 1980. In the period 1945-71, before the global financial market was liberalised, the developing countries had no banking crises and just 16 currency crises. In the period 1971-97, after liberalisation, they had 17 banking crises and 57 currency crises.

Some claim South Korea's growth proves the free market's virtues. Its income per head multiplied by 14 between 1963 and 2007; it took the USA 150 years to do this. Yet South Korea's government nurtured new industries through tariff protection and subsidies; it discriminated against foreign investors; and, since it owned the banks, it directed credit into promising firms. The resulting improved industrial production, not the market, was the key to its development.

The policies that the USA used to develop its economy are what we all need now to beat the slump: to direct investment into strategic industries, impose selective protective tariffs and import bans, provide prizes and patents for inventions, impose export bans on key industrial inputs, allow tariff rebates on imports of key industrial inputs, regulate product standards, develop transport infrastructure (especially railways), subsidise innovations, control foreign investment, relax intellectual property rights, adopt good technologies from abroad, impose local content requirements, and insist that foreign investors transfer their technologies.

Chang sums up, "History has repeatedly shown that the single most important thing that distinguishes rich countries from poor ones is basically their higher capabilities in manufacturing, where productivity is generally higher, and, more importantly, where productivity tends to (although does not always) grow faster than in agriculture or services."

Ha-Joon Chang categorizes Bad Samaritans as:

1. Opportunists: Those who advocate implementation of destructive policies in poor countries as a condition of bailing them out of financial trouble, with the intent to exploit and prevent them from becoming future competitors.

2. The ideologues: This group is genuinely convinced neo liberal economic policies are necessary to promote economic wealth. They are more difficult to contend with, as "self righteousness is often more stubborn than self interest."

3. Conformists: Neither opportunist, nor ideologue, conformists are just too lazy to challenge the conventional held beliefs that contribute to the economic failure of poor countries. The author's hope is to convince this group in particular, which in his opinion comprises a majority of Bad Samaritans to combat the status quo of neo liberal ideas.

The author's intent is to dissuade Bad Samaritans from advocating and imposing destructive policies towards poor countries through the IMF and the World Bank. These destructive policies are borne out of neo liberal ideas for building and maintaining successful economies, including low inflation, small government, private enterprise, free trade, friendliness towards foreign investment etc. Mr. Chang accuses rich countries of hypocrisy, as most of them practiced virtually everything they now preach against to aid them in their colossal success. This "do as I say, not as I did" attitude has been primarily responsible for the decline of the 3rd world.

While Chang agrees that the co-existence of state protectionism with economic development may not prove cause and effect, he puts the bourdon of proof on free market economists to explain how free trade has helped rich countries get rich when history clearly shows otherwise. Chang uses numerous examples of the checkered pasts of economic titans of today, e.g. the United States, England, South Korea, and to what extent they manipulated markets to their advantage with high tariffs, government interventionism and protectionism, ignorance of intellectual property rights etc. to attain their supreme status. And once on top they kicked the success ladder away, and instead, imposed ill conceived policies on poor countries suitable only for strong, mature economies.

Mr. Chang advocates a level playing field; a playing field where poor countries should be allowed to impose high tariffs, ignore intellectual property rights, control foreign investment, implement state owned enterprises, utilize government protection and subsidies etc. to nurture their "infant industries" until they can stand on their own and not be crushed by established global competitors. Therein lies the author's biggest fallacy: To what degree should poor countries be allowed to engage in unfair practices, and who decides when it is time to scale down? Rich countries of today have committed many atrocious acts unrelated to economics that aided their ascent to the top, e.g. pillaging and taking land by force (colonialism). Should poor countries follow in these footsteps too?

What could possibly compel rich countries to contribute to the creation of another South Korea?

Chang does a magnificent job of exposing neo liberal economic ideas as failures, but he preaches to the wrong audience. His critique was scathing, and no one halfway contributing or approving of the prevailing policies towards poor countries is spared his sword. He hopes to change the world by enlightening influential groups he readily trashes. This sounds a bit counterintuitive.

The captive audience here is not the conformists of neo liberal economic ideas as Chang hopes. Instead, poor countries would greatly benefit from studying Chang's ideas of long term economic development. While it is difficult to adopt his ideas of leveling the playing field when they depend on the IMF and World Bank for funding, they should strive to adopt as many of Chang's ideas as possible to minimize the risks of failure.

The main thesis of this very interesting book is that any country who ever achieved economic development did so using policies which are strongly discouraged by today's neo-liberal orthodoxy. The policies that allow evonomic development are protectionism, state investment, and "stealing" ideas and technologies from more developed countries. The idea is that some combination of this policies is necessary, even if not sufficient, fot economic development. The author is a professor of economics at Cambridge, and that is just one of many reasons to think he knows what he's talking about. The book is carefully argued, well researched, and well written. If Chang is right, what the rich nations are now doing is wrong on all levels. Most importantly, we are now imposing on poorer countries policies that make it impossible for them to improve.

There are few things economists agree on, but the one thing they seem to agree is that free trade is universally beneficial, whether you are liberal, conservative, or centrist. Ha-Joon Chang does a masterful job of giving us a history of every wealthy nation on earth and showing us that is, in fact, not how wealthy nations became wealthy. In fact, many countries employed techniques (mainly by their respective governments) that would be considered heretical in the field of economics today.

Ha-Joon is a rebel. His ideas developing countries are so fundamental it leaves you wondering why they are not the modus operandi everywhere. He challenges and confront first world arrogance and confound the complicated with the simple. If you are from a third world country read this to learn why your nation cannot climb the ladder to developed status... indeed there are not just rungs missing but in some cases the entire ladder had been kicked.

This book is simply brilliant. The style is delightful, it is very well-argued and comprehensive. I cannot recommend this book enough!

Ha-Joon Chang discusses historical cases in great detail and analyzes industrial policies that were used in various now rich countries. The main point of the book - that industrial capacity should be allowed to develop with the help of various nuanced policies before joining all out free competition - is well presented and buttressed.

Having a basic knowledge of economics helps to understand this book better, for example it is much easier to grasp the concept of an "allocative deadweight loss" of monopolies if one has taken an introductory microeconomics course. However, the author explains everything diligently, so no one should be lost. For those who have basic economics down, Chang offers some interesting food for thought by picking at certain assumptions of mainstream theory (e.g. perfect factor mobility in trade theory, inefficiency of public enterprises due to a soft budget constraint and principal-agent problem).

It is a great book. Make sure to get it if you are interested in trade and development.

Even though I write mainly critical review of this book, I still give 4 stars.

The reason for that is there are already enough 4 and 5 star reviews for this book, and I don't want to bore the readers with the same positive reviews.

I would rather present positive criticism of this book so that both Ha Joon Chang and other readers who sicerely want to understand how economy works can learn from mistakes made by Mr. Chang so that they can improve their critical thinking levels.

Now, with that out of the way, I'll present my criticism of this book.

Author makes both minor and major mistakes in this book.

I'll presen minor ones first.

1. From page 6, "...but at least Korea has managed to provide at least six years'
education to virtually every child since the 1960's."

Mr.Chang makes it sound like it was free. But it wasn't, students had to pay about $1.50 every month in the mid 70's, I know this for a fact since I had to pay. Those who didn't pay had to go home.

I went to public, not fancy private school.

2. Mr. Chang is playing 'political correctness' Korean style.

From page 6, "Indeed, Korean university students were the 'nation's conscience' throughout the political dark age of the military dictatorship and they also played the leading role in putting an end to it in 1987."

From page 12, "By the time I was finishing my graduate studies at Cambridge in late 1980's, Korea had become a solid upper middle country."

From page 208, "Until the late 1980's, Korea had skillfully used capital controls to great economic benefit. But in the mid-1990s, it opened its capital market wide, and without careful planning."

Another word, it was military dictatorship that made South Korea prosperous. Mr.Chang fails to mention the connection of the dots, since that would be 'politically in correct' in today's Korea.

3. From page 33, "It is not that my diet and family life have no bearings whatsoever on my ability to manage my business. As my bank manager reasons, they are relevant. But the point is that their relevance is indirect and marginal."

Mr.Chang is showing incredible naiveness on this one. Those who make the loans decide what is relevant and what is marginal. Not those who ask for the loan!

He's confusing his personal values with economic facts, with what is, with what he think should be.

4. From page 60, "There were some exceptions, notably the Netherlands (which has had the best free-trade credentials since the 19th century) and Switzerland (until the First World War) consistently practiced free trade."

Now, Mr.Chang criticized other countries with advanced economies for engaging in mercantalism, but does he realize the Dutch did the same? Dutch had colonies in Indonesia. The Dutch only gave it up in late 40's after another colonial wars.

5. From page 63, "Some have discounted the generosity of the US during the 1947-1979
period on the grounds that it was being nice to poor countries only because of the rivalry with the USSR in the Cold War. It would be silly to deny that the Cold War had an important influence on US foreign policy, but that should not stop us from giving credit where it is due. During the 'age of imperialism' in the late 19th and the early 20th century, the powerful countries behaved abonminably towards the weaker countries despite the intense rivalry amongst themselves."

From page 34, "For example, on seeing Korea's 1997 agreement with the IMF, one outraged observer commented:'Several features of the IMF plan are replays of the policies that Japan and the United States have long been trying to get Korea to adopt."

From page 208, "But in the mid-1990s, it opened its capital market wide, and without careful planning. This was partly due to American pressure,..."

Obviously, Mr.Chang doesn't realize that U.S. was no longer being generous in 1997, and mid-1990s, because Soviet Union no longer existed.

Mr.Chang doesn't realize that U.S. didn't need third world for economic purpose to the extent the rival colonial powers did. The rival colonial powers were not in position to be nice to weaker nations without undermining their very own economic systems. That's why they couldn't have been nicer to weaker countries.

Now, I'll present major mistake made by Mr.Chang.

From page 34, "In 1997, in Korea, for example, the IMF laid down conditions on the amount of debt that private sector companies could have, on the grounds that over-borrowing by these companies was the main reason for Korea's financial crisis."

He is criticizing IMF for trying to reduce the irresponsily acquired debt level.

From page 159, "For example, when some Korean housewives campaigned for voluntary austerity measures, including serving smaller meals at home in the wake of the 1997
financial crisis, the Financial Times correspondent in Korea sneered at their stupidity, saying that such actions 'could deepend the country's plunge into recession since it would further reduce the demand needed to bolster growth.'

But what is the difference between what these Korean housewives were doing and the spending cuts imposed by the IMF, which the FT correspondent though were eminently sensible?"

Obviously, Mr.Chang is criticizing IMF for trying to reduce the irresponsibly acquired debt level.

Now, let's look at what Mr.Chang says in other places about the debt problem of Korea during the same crisis.

From page 208, "This was partly due to American pressure, but also because, after three decades of its economic 'miracle', the country had become too full of itself. It decided to join the OECD in 1996 and act like a rich country when it really wasn't one."

Now, Mr.Chang is saying South Korea was spending beyond her means and that's what it got her in trouble, so what is the nature of his complaint of IMF when it was trying to reduce the irresponsible debt acquired by South Korea?

One of the principle complaints of conservatives is that all education in America is deliberately skewed with a "left-wing" bias from kindergarten to college. And yet the field where this "bias", (if you accept this view) is clearly undone is the field of economic education. Whether you read the business section of the New York Times, the Harvard Business Review or National Public Radio, the actual bias present is really for the neo-classical economic model (AKA, neo-liberal economics) of the laissez-faire variety.

Dr. Chang, a professor of economics at Cambridge and former World Bank researcher, deconstructs in general and in detail many of the prevailing myths of the neo-liberal school of economic development. My favorite chapters were these two:

Chapter 1-The Lexus and the olive tree revisited. In this chapter Dr. Chang explains why he thinks that NYT columnist and author Thomas Friedman is full of crap about the benefits of globalization for ordinary people [pages 19-40].

Chapter 3-My six-year-old son should get a job. Says Chang: "I have a six-year-old son. His name is Jin-Gyu. He lives off me, yet is quite capable of making a living. I pay for his lodging, food, education and health care. But millions of children of his age already have jobs. Daniel Defoe, in the 18th century, thought that children could earn a living from the age of four. Moreover, working might do Jin-Gyu's character a world of good. Right now he lives in an economic bubble with no sense of the value of money. He has zero appreciation of the efforts his mother and I make on his behalf, subsidizing this idle existence and cocooning him from harsh reality. He is over-protected and needs to be exposed to competition, so that he can become a more productive person. Thinking about it, the more competition he is exposed to and the sooner this done, the better it will be for his future development. It will whip him into a mentality that is ready for hard work. I should make him quit school and get a job. Perhaps I could move to a country where child labour is still tolerated, if not legal, to give him more choice in employment" [page 65].

I found this tongue-in-cheek style of criticism of global capitalism both hilarious and enlightening.

There are many more examples of Chang's knowledgeable and funny criticism of neo-liberalism I could list here, but I don't want this review to be a spoiler. So go read Chang's book.

While the US continues to think its the "master of the Universe" -and that there is only one way to modernization, most only its own advocated way.

But Korea for example went a completely different way, and become just about as successful, more so by many accounts especially post the US induced global financial crisis. This book explains so well why -and is easily understood even by non-economists.

As just one example, fining companies and executives in abusive listed companies is one way to use a stick. Pointing this out to others, then avoiding these by so then telling others about their bad practices is another, perhaps a more effective way?

As to, "Without law people fall back on something older, relationships, trust. This is fine for locals who have the relationship."

That is the whole point and more Westerners better start getting the message to look for experienced people on location; this rather then number crunching in ivory towers -or though lazy Exchange Traded Funds investing. Its an excellent book to all those whom want to understand more about emerging Asia and how one country rose high up the latter on a completely different model then advocated by traditionalist Westerners.

Best Regards,
Paul Renaud.
[...]

This is one economics text that should be read by everyone. Ha-Joon Chang the author, puts Free Trade and unfettered Capitalism within a historical and even political perspective. Along with an earlier book, "Kicking Away the Ladder: Development Strategy in Historical Perspective" he gives sufficient and tangible real world examples of how developing nations and infant & growing industries need tariffs and import substitution to both survive and thrive. An alternative title might be; Genuine & Honest Free Trade Maybe BUT Only Between Economic Equals With Adequate Social and Environmental Safeguards/Safety Nets.

Footnote: As of Jan. 2011, Ha-Joon Chang's latest book is available, "Twenty-Three Things They Don't Tell You About Capitalism."

"Free Trade" has been progressively wrecking America's economy for at least two decades. Meanwhile, economists in our colleges continue, almost without exception, to warn of protectionism while extolling the writings of Adam Smith and David Ricardo - written long before today's gross wage imbalance between Asia and the U.S., instant communications, and fast, economical international transportation. Finally, a Cambridge economist, Ha Joon Chang, brings facts and common sense to the debate - aided considerably by the free-trade ignoring successes of his native country, South Korea - eg. Samsung, and Pohang Iron and Steel. (And then there's Toyota - started out in textiles, was protected by auto tariffs, and now the world's #1 auto manufacturer and teacher of advanced management techniques.)

"Bad Samaritans," as Chalmers Johnson points out, refers to "people in the rich countries who preach free markets and free trade to the poor countries in order to capture larger shares of the latter's markets and preempt the emergence of possible competitors." They are saying "do as we say, not as we did" and take advantage of others who are in trouble. He also points out that all of today's rich countries (INCLUDING the U.S.) used protection and subsidies to encourage their manufacturing industries - anathema in today's economic orthodoxy and contrary to the WTO, IMF, and World Bank. As a result, third-world nations' growth rates have fallen to less than half of that recorded in the 1960s (1.7 percent instead of 4.5 percent).

As for corruption being incompatible with high growth, Chang points to Zaire vs. Indonesia. Both suffered from murderous corruption, yet the former's living standards fell two-thirds while Indonesia's tripled. The difference was that corruption funds in Zaire fled to Swiss banks, while those in Indonesia remained in the country to help create additional jobs.

"Level playing field" rhetoric is often used to justify WTO and IMF prescriptions. Chang, however, reminds us that this is inconsistent with our practice of segregating sports by size and age, and that it is similarly unrealistic to expect eg. Honduras to compete evenly with the U.S.

Capital markets have a bias towards short-term gains, not risky, large-scale projects with long gestations. This is especially pronounced in the earliest stages of development - thus, government support is kick-starting, not replacing capitalism. In France, Renault, Alcatel, Thomson, etc. used to be SOEs. Brazil's EMBRAER was also, and the state (lower Saxony) is VW's largest shareholder. Taiwan began with key industries owned by the state; even after 1996 privatization the government maintains a controlling stake (average = 35%) and appoints 60% of their directors.

Absent government support in developing economies is akin to becoming frozen in the status quo. Break-out requires government intervention, including subsidies, tariffs, regulation (eg. maintain quality), infrastructure, prohibiting exportation of raw materials, exempting imported raw materials from tariffs, currency controls. IMF, WTO, and World Bank decrees associated with loans have been a disaster.

Communists early-on saw private ownership as not just the source of distributive injustice but also economic inefficiency. Too many capitalists routinely invested in the same things because they did not know their competitors' plans, or overestimated future potential. Communism failed as a system, but that does not demonstrate that SOEs don't work. Conservatives argue that the imbalance of information between principals and agents makes it very difficult to appropriately pay/incentive managers. The 'free-rider' problem also essentially eliminates citizen monitoring. 'Soft budget constraints' (mid-year added subsidies) is another problem impeding SOEs, per conservatives. Change, however, contends these same problems confront private enterprise, with the 'soft-budget' issue becoming 'too big to fail,' and the 'Greenspan put.'

China's TVEs are a hybrid ownership form - owned by local authorities but usually operated as if privately owned by powerful political figures.

SOEs can be ideal where 'natural monopolies' exist - utilities, railroads, communications, etc. where the main cost is that of a distribution network. Assuring equity is another reason - eg. mail service in rural areas. Regulation is an alternative, but not always satisfactory - eg. California's electricity deregulation, England's defacto re-nationalization of rail tracks. Corrupt SOEs are difficult to sell off without even greater corruption (eg. Russia); privatization of natural monopolies without appropriate regulation can bring new problems (eg. Bolivia's 1994 sale of a water company to Bechtel brought a tripling of rates, riots, and re-nationalization). SOE performance can often be improved without privatization by simplifying and prioritizing goals. Simplifying regulation by consolidating agencies is another alternative. Requiring SOEs to export and compete internationally or setting up another SOE for competition also are used. There are no hard and fast answers as to when an SOE is best.

Chang also points out the strong agricultural subsidies in Europe (milk), the U.S. (corn), and Japan (rice). The good news is that these subsidies keep farming viable in those areas and the nations involved more independent; the bad news is that U.S. corn is exported to Mexico - making economic survival impossible for their farmers and driving them to illegal immigration into the U.S.

Free-trade reduction of tariff revenues also plays undermines national budgets in poor countries because they lack efficient tax collection capabilities and tariffs are the easiest taxes to collect. Combined with free-trade-caused damage, the struggling nations are left far less able to fund health care and education for their citizens.

Still another Chang insight is his pointing out that pursuit of copyrights and patents are simply a sophisticated form of protectionism that again works against third-world nations by preventing their starting important new industries (eg. drug manufacture) that boost not only their economy but citizens' health as well. (97% of all patents and the vast majority of copyrights are held by rich countries - these are also a special problem for poor countries wanting textbooks. IMF also insists on enforcement mechanisms, further adding costs to poor nations.) Chang sees the U.S. as the worst offender in this area. Chang asserts that self-development of new technology is difficult in third-world nations, using North and South Korea as examples. North Korea has tried to be self-sufficient (and done poorly), while South Korea has assiduously copied wherever possible and is now an industrial powerhouse.

Chang suggests that third-world countries use tariffs to protect their developing industries. However, he does not propose that the U.S. do likewise - perhaps in his next book. Nonetheless, "Bad Samaritans" punches enough holes in free trade thinking to help others rethink America's self-destructive commitment to it.

As the author of AMERICA FIRST: Why Americans Must End Free Trade, Stop Outsourcing and Close Our Open Borders, I am delighted that a distinguished economist is now taken up the issue of Free Trade. Mr. Chang focuses on the negative impact of Free Trade on developing economies, but gives short shrift to the equally devestating impact Free Trade has on developed economies.

Protectionist policies dominated U.S. economic policy until the mid-1960's when Milton Friedman and the Chicago ideology became the dominant model. The United States first bill was the tariffs of Alexander Hamilton, Lincoln restored tariffs prior to the Civil War and the Republican Party was a stalwart defender of protectionist policies.

So, how did the United States begin to engage in Free Trade. I offer three reasons.

1) The State Department urged that America engage in free trade policies with its defeated foes. This is under the assumption that coutries that trade will not go to war. A premise that is historically false. Germany, France and Britain have been trading partners, and been in frequent wars.

2) Milton Friedman used his influence as a conservative economist to sell Free Trade. Republicans desiring a smaller government and liberatarians followed Milton down the trail from monetary policy, to less regulation, to less government, lower takes, and into the world of free trade. It should be pointed out that nowhere in Friedman's massive study of the U.S. Great Depression does he even mention tariffs or trade. Yet, he then maintains that Free Trade and Smoot-Hawley tarriffs caused and prolonged the Great Depression. In short, Friedman was a libertarian, utopian economist who was devoted to his ideology, totally misunderstood international trade, and ignored the history of the U.S. that made it an industrial giant.

3. When tariff barriers began to fall, the global business realized that they could make more money by building a factory in China, than a factory in Iowa. And capital and technology began to flow out of the country, and cheap goods began to flow in. The return on capital investment is greater when wages are $1.00 per day, than $12 per hour for the factory workers.

4. Free Trade economists simply ignore the negative impact free trade has on developed economies. There total analysis is based on price. If a worker anywhere in the world is denied the opportunity to purchase a good at the lowest world price, he or she is being denied some fundamental right. The loss of jobs is simply ignored by these economists.

It is worth noting that the econmists who support free trade all make a nifty living in academic institutions that are supported by large corporatiions who have made trillions exporting American jobs and importing goods made at slave labor rates. These economists are more or less prostitutes for the corporations that feed them.

Free Trade is essentially labor, not trading economics. It is a replacement of the native labor, with world wide labor. It raises the value of capital and lowers the wages of any country that practices Free Trade. The global economy is a replacement of higher wage labor (whatever the country) with cheaper labor in the form of products made by such labor, outsourcing through electronic means, or massive legal and illegal immigration.

Wealthy nations that practice Free Trade, eventually crash. Given the choice between lower and higher priced goods, consumers will always choose lower priced goods. If those goods are produced outside the country, money will flow abroad. Eventually, savings are used up, more people are unemployed and the economy crashes.

Mr. Chang's book is a valuable read. One can only hope that he will apply his insight to developed economies. Does he expect that China when it becomes a first world power by practicing protectionism, will import products made in impoverished third world countries, like the future United States?

Paul Streitz
author
AMERICA FIRST, WHY AMERICANS MUST END FREE TRADE, STOP OUTSOURCING AND CLOSE OUR OPEN BORDERS

Finally, someone who can flesh out what ordinary folks know by the seat of our pants, namely that so called "supply side economics" is in truth no more than the voodoo it was called over thirty years ago.
Prof. Chang explains it in terms easily understood by laymen and does not get lost in a labyrinth of jargon. I highly suggest everyone read this - for some to gain an understanding, and perhaps for others a start along the road to deprogram themselves of all the complete economic nonsense that has been peddled around here since roughly 1980 (and has brought our country and maybe the globe to the brink of ruin as of this writing).
A thank you to Thom Hartman for bringing Ha-Joon Chang to the airwaves to explain some of this in person.

Bad Samaritans: the Myth of Free Trade and the Secret History of Capitalism - a review

By Ha-Joon Chang
BLOOMSBURY PRESS; 276 PAGES; $26.95

Bad Samaritans, Ha-Joon Chang's new critique of neoliberal economic theory, seems destined for an early remaindering. Despite glowing praise from the likes of Noam Chomsky and Chalmers Johnson, the book has been virtually ignored by the media, even on the left, and the inexplicable decision to place it in the business section of bookstores means that its natural audience is unlikely to trip over it by accident. This is a shame, because Chang has produced a well researched and tightly reasoned work that, as Chomsky puts it, "reveals the yawning gap between standard doctrines concerning economic development and what has really taken place from the origins of the industrial revolution until today."

Chang, an economics professor at Cambridge University, is also the author of Kicking Away the Ladder, a more technically oriented attack on neoliberalism written for professional economists. Bad Samaritans is aimed instead at interested laymen. In it Chang deconstructs the neoliberal agenda simply by going through its recommendations and showing that, in each case, today's rich countries achieved their prosperity by, like George Costanza, "doing the opposite." In the process he points out how the developed "bad Samaritans" are "kicking away the ladder" they themselves ascended to wealth on. The "unholy trinity" of the International Monetary Fund (IMF), World Bank and World Trade Organization combine to push destructive economic policies on developing nations under the guise of helping them. The result is that much of the wealth created in the Third World ends up in the hands of global corporations.

Bad Samaritans relies on Chang's native South Korea for a recurring example of economic growth by doing the opposite. Keep interest rates high to prevent inflation? South Korean inflation averaged almost 20% in the sixties and seventies. Protect intellectual property? South Koreans pirated everything from software to handbags. Open your markets to foreign goods and lower tariff barriers? The South Korean regime propagandized against even smoking foreign cigarettes. The list continues. Yet in spite of such heresy, or as Chang argues, because of it, South Korea advanced from a backward, war-ravaged nation with a per-capita income half that of Ghana to a modern industrial power in less than forty years. Nor is South Korea the only example. Nearly all of today's economic powerhouses, including the US and Great Britain, built their economies using methods that would have gotten them blacklisted by the IMF had it existed.

Chang spends nearly the entire book on this kind of analysis, reaching back as far as the 15th century for examples of economic practices and correlating them with growth and income data pulled from the academic literature. Along the way he throws in relevant personal anecdotes to illustrate his thesis. The result is an entertaining and informative perspective on economic history. Yet his sole focus on the economic picture raises a glaring question, namely, why on earth do developing nations put up with this kind of treatment? If the entire neoliberal program is designed to rob from poor nations to give to rich nations why would any poor nation subscribe to it?

Readers of Naomi Klein and John Perkins, among others, know all too well why. Crippling debt, CIA-sponsored coups and outright invasion by US troops are some of the less savory motivational techniques employed to keep developing countries in line. Yet aside from a brief history of the Opium Wars, Bad Samaritans contains no mention of such coercion. Nonetheless, its compelling economic arguments make it ideal for slapping Thomas Friedman fans upside the head. Particularly as it comes in hardcover...

In his book Bad Samaritans, Ha-Joon Chang argues that culture is irrelevant to economic achievements. Unfortunately he doesn't really get to grips with this interesting premise. Rather it seems Chang comprehensively misunderstands the word 'Culture' by conflating its meaning with what can best be described as jingoistic stereotyping and good old racism. He seems to think that Culture and xenophobic intolerance are the same thing.

I think this is made abundantly clear in Chang's own examples. His citations of 'lazy Germans' and 'thieving Japanese' or another writers take on Koreans as being "sullen, lazy and religionless savages" serve to highlight the paucity of his understanding of Culture. It is pretty clear that we cannot regard these archly condescending assessments of other cultures in a objectively reasonable manner. What these statements say is more indicative of the character of the speakers than that of the people under scrutiny since we are clearly dealing with pretty outlandishly obvious biases here.

When he looks at 'the protestant work ethic' or 'Confucianism' Chang moves into a slightly more defined areas, but sadly uses those term as a catch-all's so general in their sweep that he doesn't really tell us anything about those groups. Nor does he delve into the question of who in that group are the main players on the economic stage or about those in that group who are not economically successful. It feels as if the hits were counted and not the misses and as if Chang has dismissed the idea of Culture without bothering to really understand and unpack what culture represents.

So, passing lightly over that, we have to define Culture a little more clearly -something Chang does not bother to do. Culture is not a standalone 'tent pole' that can be easily separated from a host of other factors. Rather it is more akin to the tent itself... Culture is an amalgam of a persons religion, education (who gets educated and who not), social status, individual rights, social customs, gender relations, the communal intellectual achievements, its a groups openness -or otherwise- to outside influences and its trade practices, its tradition and derived behaviour patterns. And how/to what extent these things are conveyed to the next generations. I can go on to add more to this such as a groups political inclinations/situation, but that becomes an even more complex discussion. Simply put, culture is the total sum of ones life experience as shaped by some or all of these influences.

A culture is not what somebody outside that group thinks of those in the group as Chang so effortlessly claims. It is quite incontestably absurd to think that these pat descriptions from outsiders hold any merit as to the character of those under scrutiny. I think one must admit that it is equally absurd to think these factors are not mirrored in a 'cultures' economic endeavors. A groups economic activity is part of the larger output of a country, people, community and can no doubt -as Chang shows- be curtailed or enhanced by outside factors (IMF, World Bank etc...) but to attest that , for instance, an American state and an Indian, African or even an Australian state's views on economic issues are simple direct equivalences of each other is overly optimistic , if not naive.

Chang in my view, is guilty of the same 'but they want what we want' attitude that he and others so vehemently -and often quite rightly- criticizes in America's foreign policies. When he claims that all people want to have safety, security , a place to live, access to resource and a future for their children he is quite evidently right, however he still has all his work ahead of him as to argue the different peoples attempt to achieve those goals all follow by the same route.

It is of note see how specific and impressive Chang's statistics and data on various economy's are, and his analysis of this is the work of an accomplished economist. But on the understanding of the nuances -even definition- of Culture he seems surprisingly vague and in doing so I think he dismisses a vast and hugely interesting subject -deserving of more reasoned insights- in an appalling superficially way.

Chang has a PHD in economics and is clearly an astute analyst of that field, but that does not mean he has unassailable insights into the social economic and cultural aspects of this debate and it is a pity this lapse occurred because it undermines the point of his thesis. Arguably he should simply have left the chapter on culture out of his book since he doesn't make anything substantial of it. Nor does what he presents reach anything other than some cozily warm conclusions -that would be great if they were true- but unfortunately comes across as condescendingly superficial.

This book is useful when read in tandem with Fukuyama's work and possibly other books that focus on the global economy, thus providing (at least) two very biased perspectives on the subject. In doing so, you get a very strong argument about the pros and cons of each approach.

However, I do not suggest reading this book on its own. It is, as expected, incredibly stilted and ultimately very repetitive in its argument. While I personally agree with at least some of what Chang argues in Bad Samaritans, even I became very bored of reading the book by the time that I got about 60% through it.

This book is very useful for a classroom so long as this book is balanced with books of other perspectives.

Ha-Joon Chang(C) demonstrates that the standard neoclassical international trade theory (model) applied by the economists at the World Bank(WB),the International Monetary Fund(IMF),the Import-Export bank,the World Trade Organization(WTO),and advocated by Thomas Friedman, is basically an artificially constructed ,purely mathematical,blackboard and chalk model that generally ignores major,relevant variables and necessary political and social prerequisites,as well as the time it would take to implement these kinds of institutions.The current collapse of Kenya is precisely the type of failure that results from the gross ignorance of the economics profession of the ancient wisdom of Adam Smith.The so-called " miracle" of Kenya was a chimera from the beginning. The absence of these institutions(overlooked,ingeneral,by C) doom the application of the model from the beginning.The theory works only if certain prerequisites are in place .For example,necessary prerequisites are (1) the existence of political,corruption free legal,governmental, and political institutions that enforce contracts impartially and uphold the rule of law, and (2) the existence of an independent,impartial,corruption free judiciary that will apply the law fairly.These necessary prerequisites do not exist in China,India,Africa,Mexico,South America,and Central America.They have evolved and are functioning effectively in the First World countries of the West and Japan.These institutions are barely present in the Second and Third World.These countries can be regarded as "infant" countries.C extends the argument based on the protection of infant industries to the protection of infant countries in chapter 3.The standard free trade prescription can only apply to " grown up"(1st world)countries.
C overlooks,in general,the extremely important policy discussions carried out by Adam Smith on pp.434-439 of the Wealth of Nations that support his overall position (1776;Modern Library (Cannan)edition).Smith (a) supports retaliatory tariffs if there is any probability greater than 0 of changing the policy of the offending country;(b)supports revenue tariffs ; (c)would dismantle protectionist tariffs carefully, in very slow gradations, in order to prevent the collapse of those industries that are being opened up to imported goods,and (d) recognized that a 100% free trade policy is a pipe dream, given the social and political realities of any society.
I recomend this book.C can easily get a full 5 stars from me by explicitly connecting his analysis to the wisdom of Adam Smith.Adam Smith would fire all the economists at the WB ,WTO,and IMF for gross incompetence and negligence.

This book attacks orthodoxies of the World Bank, IMF, WTO, neo-liberal economists, free-market economists, and pundits such as Thomas Friedman. Chang often implies that they all share a common orthodoxy, but the ideas he attacks are usually questioned by some of those groups.
His criticisms of the World Bank, IMF, and WTO are often correct, but it shouldn't be surprising that they serve goals that don't coincide with needs of developing countries.
His most important argument is a defense of mercantilist protection of infant industries. He shows that the evidence on the effects of tariffs is sufficiently mixed that his selective use of examples can give the impression that he has shown tariffs promote economic growth in developing countries. He makes claims of the form "X would have failed without protection", but doesn't say why his ability to predict failure is more reliable than other alleged experts (e.g. MITI's belief that Honda would fail in the auto business). This provoked me into searching for more complete tests of the effects of tariffs. The evidence I found confirms that his confidence that tariffs work is foolish, but I was surprised to find that the evidence is too unclear to provide a guide to policy decision.
Chang has a good argument that the common orthodoxy about comparative advantage is a less conclusive reason for removing tariffs than it appears. But his attempts to describe a mechanism by which tariffs can be beneficial are naive. He talks about government protecting infant industries the way a parent protects a child, without any analysis of the political forces which cause governments to protect entrenched declining industries at the expense of less politically powerful startups.
He gives only vague hints about how to distinguish the tariffs he thinks are good from bad tariffs. I'll offer a suggestion: any tariff that is designed to meet his notion of a good tariff should be set by statute to decrease to zero over a period of about a decade and never be reinstated for an industry to which they've been applied under this statute.
His complaints about privatizing state-owned enterprises contain some valid points. I wish people didn't assume government and stockholder control are the only available choices. Having governments spin off enterprises as nonprofits would sometimes (often?) be a better option.
His comments about how patents and copyright affect developing countries are mostly correct. But he underestimates our dependence on drug patents when he implies that the 57% of drug research funding that comes from not-for-profit sources means we could get 57% of the results without commercial funding. A drug startup that will go broke if it doesn't produce something valuable does different work than someone whose success comes from publishing papers.
Chang's modest suggestions for patent reform would provide much less improvement than ideas I've found by reading free-market economists (e.g. prizes instead of patents, or Kremer's patent buyout proposal).
His comments about inflation assume that it produces some benefits, but he shows no awareness of the economic literature which disputes that assumption.
He has plausible hypotheses that increasing market forces might cause an increase in corruption in some countries. I see no easy way to estimate the size of these effects.
His arguments that cultures change in response to economic change more than most people realize are strong enough to lower my opinion of Fukuyama's book Trust (Fukuyama seems unaware that the German current high-trust culture is very different from a century ago when they had a reputation for dishonesty). But Chang exaggerates a lot when he says immigrants from poor countries working much harder in rich countries proves that work habits result from economic conditions rather than culture - those immigrants are unlikely to be typical of the culture they came from.

Ha-Joon Chang's "Bad Samaritans" is easily the best single work on the myths of Free Trade.

It would be worthwhile for the average American to read this book, so as to have a more accurate picture of the role of the State in Economic Development. This will be important for understanding the years and decades ahead, as China rises, and the U.S. stagnates, will we still have idiots who have a religious fanaticsm about the unfettered capitalism.

Critics of free trade tend to fall into two camps, irrational and rational. The irrational camp includes hard core socialists and developed world nationalists such as Lou Dobbs, who have an almost religious belief in certain statist policies as some sort of recipe for broad based prosperity absent much evidence and they simply ignore any evidence that policies such as protectionism may do more harm than good. Ha-Joon Chang falls into the second group. His book is generally quite well written and he regularly acknowledges the trade offs involved in his discussions.

Anyone looking for evidence to raise trade barriers or further regulate markets in the developed world won't find it in this book. Chang is quite critical of "neoliberalism" but he generally seems to suggest low trade barriers on trade and foreign investment are wise in the developed world, or at least he doesn't think they are wrong. His argument is whether such policies are wise in the developing world and he goes on to argue for state-driven development strategies for developing nations.

Some of his arguments are interesting and even persuasive. Chapter 9 ("Lazy Japanese and thieving Germans") provides one of the best rebuttals I have seen of the argument that suggests some cultures are destined to fail. He doesn't say culture doesn't matter; merely that it isn't fixed over time.

Chapter 8 ("Zaire vs. Indonesia") has an interesting discussion of corruption. He suggests corruption is not necessarily incompatible with economic growth and modern China is certainly an example of the argument's validity. Nevertheless, he concludes corruption is worth fighting because it erodes confidence in governing institutions.

Other parts of the book are less compelling. One of his central messages is that proponents of free trade are ignorant of (or at least unwilling to acknowledge) the history of protectionism among now developed world economies. That may be true of the free traders he encounters casually but anyone who is even remotely familiar with the economic and political history of the US and UK would know they employed protectionism in the past.

I can't completely reject the argument that developing nations should engage in some protection of domestic producers, but his discussion of the topic tends to omit two problems. He rarely discusses the downsides of protectionism, such as the fact that if tariffs are used, it raises the prices of consumer goods to citizens, rich and poor alike, of those countries. Second, he admits that industries should not be protected in perpetuity but seems to assume such protections will be phased out at an "appropriate" time. Protected industries and their advocates generally don't want to give up the special privileges they enjoy and are often quite successful at delaying or even preventing the day of reckoning. Developed world agricultural subsidies are a perfect example. It is much easier to prevent a special privilege from being enacted in the first place then to end it once it is in place and has developed a constituency to defend it. At some point the costs of a protection that has outlived its usefulness outweighs whatever initial benefits it might have brought.

His discussion of state-owned industry in Chapter 5 also omits certain complications. He ignores the political difficulty in rationalizing a money-losing state owned enterprise. Unions can make demands of a private firm but ultimately they don't have an interest in seeing it go bankrupt. However, there is less of a restraint on union demands in the public sector because the treasury can be seen as a bottomless till. On page 113 he also makes an argument for state ownership of natural monopolies, such as electricity or land line telephones, ignoring the poor performance of many instances when these industries are in state hands.

Chang likes to cite countries that rejected the free market approach, but he is often selective in his examples. Some Asian countries, such as South Korea, China and Japan do appear to have successfully managed state-driven development. However, there are still plenty of others that are less appealing. Many of the far left love to cite Venezuela but much of Venezuela's success is from the oil bonanza, not necessarily wise economic policy. After a decade of increasing state control, nearly half the Venezuelan work force remains employed in the informal economy, devoid of labor protections enjoyed by those in less statist economies; even though Venezuela is flush with oil revenues.

Chang makes some mistakes or dubious statements in a few cases. He associates the Chrysler bailout with the Reagan Administration, when it was actually enacted under President Jimmy Carter. He also makes a reference to the "September 11 bombing of the Word Trade Center" which makes him sound like some nut job conspiracy theorist, although I did a Google search and didn't find any references that associate him the 9/11 conspiracy theories, it was a curious statement just the same.

I gave the book three stars because it is generally well written and acknowledges real world trade offs. I don't find all or even most of his policy prescriptions persuasive but he does make some of the better arguments for state driven development in the underdeveloped nations. Anyone interested is some credible counter arguments should check out Freedom From Want: American Liberalism and the Global Economy or In Defense of Globalization: With a New Afterword

Would have made an excellent Atlantic article - not enough for a book. It is good that Chang challenges the conventional wisdom of the Washington consensus on free-trade. As an Economist reader I'm happy to my assumptions challenged. The best chapters are routed in history - not argument. I very much enjoyed hearing a first-hand account of the risk of South Korea, from one of the world's poorest countries to one of the wealthiest - and the policies that allowed this transformation. This story is particularly interesting to me as my in-laws are Korean immigrants. But Chang does not have enough new to say for a whole book, and ends up repeating himself and his argument far too often.

Grade: B-

"Bad Samaritans" makes the point well that effective steady state economic policies are not necessarily effective start-up policies. But I have some qualms about the author's grasp of what can make some countries rich and others poor when he proposes that sufficient protectionism could replicate in Mozambique the economic "miracles" of Japan or his home Korea.

As Lynn and VanHanen document extensively in "IQ and the Wealth of Nations", per capita GDP is highly correlated with a country's mean IQ. While they don't have direct data for Mozambique they estimate its mean IQ, based on neighboring countries for which they do have data, at 72. Japan and South Korea have measured mean IQ's of 105 and 106, respectively, meaning the average South Korean worker has greater cognitive ability than almost 99% of Mozambicans.

I'd still recommend it as an effective antidote for unrestrained "free trade now and forever" beliefs, but its understanding of the fundamental enablers of economic possibility seems naive.

The topics addressed in the book are worth examining for sure but the author is too biased. This is a politically driven book. The author should look at evidence and then make his conclusions. He has a political bent and that bent drives his observations. Here are a few of the problems with the book.

1. He opens the book with a straw man argument. Could you get any lower? He creates this view that since the 80's, Austrian school economics has been dominant. He calls it, neo-liberalism, a term that isn't used in the USA. First of all, Austrian school economics is not and has never been dominant. Even if you look at someone like Milton Friendman, he doesn't criticize government spending generally. His criticisms are specific. That's not Libertarian. Either way, mainstream economics is not neo-liberal. That either makes the author a liar or an ignorant. There is no other choice.

2. He then mistakenly associates deregulation with the 80's. Again, that simply isn't true. Deregulation began long before Reagan. It's bizarre to me how many people are simply blissfully unaware that Reagan didn't usher in the era of deregulation but it's unforgivable when that ignorance is regurgitated in a book on economics.

3. His straw man argument presents two extremes, Libertarian/Austrian versus government-led capitalism. Sorry, that's not how the real world works. It's not black and white.

4. The book is essentially neo-mercantilist. Again, I expect this from regular people but not an economist. This instinct seems to be hard-wired into humans, but education SHOULD counteract that. No one ever told the author that when 2 parties trade with each other, both sides can indeed benefit. you don't necessarily have 1 winner and 1 loser. He just doesn't seem to get that in this book which is again, pathetic when you consider this is an economics book.

This book reads like it was written by a hallucinating hippie in a library, not by any kind of economist. There are so many flaws in the book that my review might become a length of another book. Indeed, it seems someone else has written such a book. I won't bore you with all the gory details, but let me highlight some of them.

History is what it is, written through victors' eyes. There will always be some distortions, and he is right to point them out. I'm surprised he didn't point out Nazi socialist "success". But to say it's all BS is, well, BS. If you read the book carefully, you can see how he distorts history to fit his flawed views.

Colonial India did not prosper, not because it was free, but because it was NOT free. Why do you think Ghandi made his trek to the sea? It was because Britain banned Indian companies from making salt. At least in this instant, Ghandi was protesting for free market! This kind of anti free market policies went on all over India during colonial rule. It was colonial rule and lack of free market (in other words, huge corruption market) that made India's growth so dismal during colonial rule. Keeping a country under another's thumb is not free. Yet, the author attributes the history of colonial India's dismal economic performance as the result of Britain opening up India for "free trade". Bogus!

Author confuses political policy with economic policy. In a real world they go together, that's true. But to argue economic policies based on political action is absurd. A nation can have any degree of one and the other. For example, a dictatorship nation can practice free market with all protection of private property or none at all: Hong Kong vs North Korea. What the free market can do despite dictatorship is phenomenal.

Author claims many "would have been disaster" scenarios had the emerging nations practiced free market economics. "Would have" "could have" are BS. I can claim the same by saying had those nations, such as South Korea, practiced free market, they could have made viable electric cars (key word, viable) with the resources that were instead dumped to wasteful government mandated efforts. It also could just as easily have gone the way of Zimbabwe as of 2013 with runaway inflation. Would or could is meaningless exercise and one can make any absurd claim and counter claim.

South Korea is an interesting example. Between the end of Korean war and Park's dictatorship, there was chaos in crime and security. But the dictatorship brought order and security to that mess, albeit through draconian methods. Author claims it's government mandated economic policies that brought prosperity. My take is that security along with free market (albeit limited) brought South Korean prosperity. Here's my more plausible "could have": if South Korean dictatorship did not dump the nation's resources to their pet projects, they'd be many times better off, as well off as another Asian nation with dictatorship provided security and free trade at the time (according to the book, many times that of South Korea): Hong Kong.

Nokia was losing money for 17 years before being profitable, yet the author thinks this was a good idea to continue. Would you buy crappy Nokia product today (2013)? Should the US government resurrect and continue to fund Solyndra despite their high priced crappy product that no one buys? The author seems to allude that's a good idea; it hasn't been 17 years yet. Damn the innovation, full corruption ahead!

It's clear the author has socialist bent and entitlement attitude. Author alludes that World bank is "flawed" because rich nations that put in majority of the money have most power. So? There's nothing wrong with World bank, etc. with more clout by those who put more money into it than those who did not. This is especially important, because those who put less money are more likely to withdraw. Would you let your local bank have democracy by having those who put in few cents and on the verge of overdraft have same clout as those who put in billions of dollars? Just because it's "world" bank doesn't change this simple fact that those who have more at stake should have more say. But if you're a socialist, "from each the best of his ability, to each the most of his need", this makes no sense as the rich nations must sacrifice for the sake of others. Bah Humbug!

Bad Samaritan is anyone who he doesn't like personally, not necessarily out of policies they implemented. He portrays evil capitalist spearheads such as Reagan and Thatcher. Yes, those that preach free market advocates. But they implemented protectionist policies, too. Then why are they evil? Because they didn't deeply implement them like North Korea? Then there's the tale of Dafoe's "A plan" of King (Kong?) VII; his policies on wool took 100 years to see fruit! Didn't people like to make money back then? One has to wonder what really was the reason why Britain stagnated. Yet, for having wool industry languish for 100 years, Kong is credited for doing good. What if Reagon's policies took 100 years to bring about change to rival that of its neighbor? I'm guessing he'd be a hero in authors words.

I could go on and on and on, but I won't. Above were found in just first tens of pages of the book. Faulty books like this makes for poor defense of left economic policies. At best, it'll sour those on the fence and open mind. At worst, it'll turn off left leaning critical thinkers to go right (heaven forbid!) If you have open mind and/or left leaning critical thinker, keep searching. While I haven't found any, I still have hope that some left economics book to make valid arguments, and not crumble in first few pages.

I thought I could read this book, but after few dozen pages, I got bored and distracted by so many flaws. I thought I can read the book as a work of historical fiction, but even at that it's too much. Maybe if I smoked pot like some hippie, it might be tolerable. Unfortunately, there is no free market for pot in the USA as of 2013 so I won't be able to finish the book. It's interesting how the lack of free market leads to high corruption and resulting crime, doesn't it?

This book could only have been written by an egghead academic insulated from the utopian solutions he prescribes. While the author does offer some valid criticisms of neoliberal capitalism, many of the arguments and logic he presents are full of holes. This is pie-in-the-sky UN economic institute material, hopefully never to be taken seriously by political leaders of the developed world.

This book is highly polemic in opposing "neo-liberal" economics. But the author often puts ideology above history like many "neo-liberal" opponents.

Chang argues that developing countries were actually in a much better shape in 1960s and 1970s when they embraced "statist" strategy than they are now after they embraced "neo-liberal" recipes. Now the interesting question is: If they were having such a good time with "statist approach", why would they want to change? Because the evil IMF, WB and WTO intend to ruin the beautiful gardens of socialism? Was it not true that Bolivia/Argentia etc were forced to control budget because they were having 2000% inflation? Was it not true that socialism failed to lift Africa out of poverty so socialism was at least as much a failure as "neo-liberalism" in Africa? Was it not true that people in East Europe and the Soviet Union had to stand in line for two hours for a piece of meat? Was it not true that the radical socialism in China's Great Leap Forward had caused deaths of about 30 millions?

The fundamental problem of Chang's argument is he didn't see or didn't want to see that the embracement of the "neo-liberal" recipe was much more driven by the prevalent and INTERNAL economic crises that "state socialism" has inflicted on many developing countries than by some outside lunatics whose agenda was to promote an ideology at the cost of people's welfare being.

The reason of this cognitive problem is Chang fails to admit (like many others who advocate "statist" approach to development) that "statist approach" might be able to create a fast jump-start for development because state has a strong ability of mobilizing resources, BUT such an approach is never successful in creating SUSTAINABLE development, which is why almost all countries that experimented socialism encountered crises after late 1970s. When these developing countries turn to "neo-liberal" approach, some succeeded like China and India, and some failed like Argentina and Bolivia, but if they didn't turn to "neo-liberal" approach, ALL would fail (as they were already failing).

Regarding why the neo-liberalism succeeds in some countries and fails in others, it's too large a topic to elaborate here.

Chang might argue that what's happening in China, India, UK, US is not neo-liberalism because these countries still keep some protectionism, subsidies, SOEs... BUT, aren't Deng Xiaping, Reagon, Thatcher... seen representatives of "neo-liberals"? If they are NOT, who are those PURE neo-liberal who are allegedly advocating zero-tariff, zero-SOEs, zero-regulation and zero-public spending? Are these PURE neo-liberals just monsters created by Chang's imagination so that the argument against them is so easy to make that it doesn't take intelligence? Sadly, when Chang's right, he is arguing against an imagined enemy; and when he is arguing against the neo-liberals in reality, he is wrong.

This is one astoundingly poorly written book on economics by Chang. Probabaly the best way to review it is to present the reivew as if it were written honestly, openly, based upon factual evidence, and using facts rather than belief or national fanaticism to draw conclusions. So let us pretend Ha-Joon Chang is writing his own review this from his academic chair on another planet.
I am a social communist with a fanatical nationalistic orientation. I gained by eduation by breaking the law and committing criminal offenses to obtain pirated books. So, I strongly believe that pirating everything from CDs, soaftware, electronics etc., is entirely legitimate for poor countries. In fact, in my book I critize Bill Gates for wanting to protect his software through IP and not allow my country Korea or any other poor coutnry to outright pirate it and break international laws. I do not belive in economics 101, i.e. if I have 2 apples and 10 oranges the oranges are less valuable than the apples, and I will trade more oranges for an apple. That, of course, is how free trade works and I oppose it, except for poor countries since it reduces their freedom. I also feel strongly that foreign companies should be kept out of poor developing countries and believe very strongly in state owned industry and business. I am opposed to countries like the USA, Britain, France, etc. who have invested heavily thorugh public funding in R&D to gain competitive advantages, although my Korea has had significant state sponsored R&D along with Japan and China. I know that the trilogy of industry-government-univeristy is well established and has led to significant success for Japna, but I choose to ignore it. I think investing in a company for 17 years that looses money every year is an excellent investment, but I do not provide quantitative analyses to deomstrate why because: If one invests $100,000 at the rate of inflation of 10% per year. my principal value would be over $209,000, and I do not want you to realize that with a 20% interest on the $100,000 (to account for the high risk) your final return would actually be $12,489,365 and you would not make that investment,due to risk. You might also be dead in that time period. So, I do not want you to know. I like to make stupid statements as "stupid is as stupid does", e.g.: "corruption exists because there is too much, not too little market", and attribute this statement to myself as novel and original. Of course I have never heard of the marijuana trade or cocaine trade that is over 100 years old. I like to site the fact that people, provinces, countries will look after their own interests preferentially and call them "Bad Samaritans" when they do so. You see, for me, being a social communist, everyone must give up their livlihood to feed themselves, cloth themsleves, provide for their children's education, because they must sacrifice for poor or developing countries. if they do not they are "Bad Samaritans". I like to referecne tariffs without analyses. When I use the 40-80% tariff and state that it was bad for America and Britain to use tariffs but good for my Korea and Taiwan, China, India. I confuse facts with my beliefs. Of course I do not want to refernece that a 90% tariff in my Korea has prohibited all foreign car mfgs to import into my Korea. But the USA with a 7% tariff is still unfair and is a "Bad Samaritan". I do not want to reference, except in a tiny one sentence footnote, that the tariff varies with the goods. In my Korea, Steel has a tariff of 80% and cabbage a tariff of 90% while meat has a very low tariff. Of course I am against any person and country portecting its' economy and quality of life, but I do not use facts and draw logical, analytical conclusions. You see, for me belief implies knowledge. I like to change hisotrical facts to support my belief, e.g., I reference Lincoln and his ugly support of slavery when he says he would keep slavery to maintain his position on America. Of course I do not know or want to know that Lincoln's first priority was the preservation of thr union and he was speaking in that context. I like to cite irrelevant facts like Switzerland produces 18% more mfg output per head than the USA, without letting you know that the population is only about 1% that of the USA. See I am clever and I want you to belive my opinion and not facts. Why would I ever want you to understand that democracy, free ides, creativity go hand-in-hand with free markets and improved qulaity of life. If you knew that it would defeat my belief. I am against pharmaceutical, medical device, disneyland, microsoft, Boeing and any company or industry or country that looks to do well by looking out for themselves. I deny that CEOs and executives have a legal, morale, and fiduciary responsibility do just that. I think they should break the law and be "good Samaritans" to look after everyone one else, just like I did to get my books. I firmly state that GATT, the World Bank, IMF should not review any loans or put any requirements or preconditions on laons to any country. Just give them the loan as it is not the business of the lender to assure credibility, risk, and sound money management. When you get a bank loan for your house, that is a different story as you are in the USA, Britain, Spain, or Italy, etc. and it is fine for the taxpayers to fund a country like Braxil who has defaulted twice on their world bank loans..but you cannot. You must be a "Good Samaritan". All the successful countries of the world have "guilty secrets", and have been corrupt. Please note that I received my economics degree from the planet Nebulon, and I came from another plant Nebulous. I do teach an economics course in the basement of Cambridge Unviversity, but I have never received any noteworthy academic awards or recognition. I was however succesful in getting some morons from Bloomsbury Press to publish my beliefs. You see they have stupid editors who I was able to fool. I need this book to boost my academic credentials.
Yes, I give this book a one and have returned it for a refund. It is absolutely ludicrouse, ridiculous, and astoundingly stupid.

Citing historical evidence, the author argues against the neoliberal ideology and free-trade policies so pushed forward onto the developing countries by the "Bad Samaritans", in particular the World Bank, IMF and WTO. He claims that contrary to what general people believe, the adoption of a protectionist policy was closer to the truth for the economically successful nations to become what they are nowadays. Moreover, he uses some interesting yet convincing arguments to pinpoint the problems of the current globalisation movement. The example of likening pushing children into the workforce to forcing developing countries to prematurely open the markets of their infant industries is compelling. In the final chapter, the books actually goes beyond economics and examines some of the so-called cultural stereotypes of the people in developing countries, rebutting the unjustified claims of their economic underdevelopment being due to their national characteristics.

On the down side though, while agreeing with most of the issues raised by the authors there are a few points which I find not very convincing. Such examples include his rather neutral stance on corruption and his advocacy of promoting manufacturing industry as the primary goal of developing countries. Nonetheless, in overall I would say this book is a mentally stimulating and entertaining piece of work that anybody interested in this hot global debate should look into.

Ha-Joon is a rebel. His ideas developing countries are so fundamental it leaves you wondering why they are not the modus operandi everywhere. He challenges and confront first world arrogance and confound the complicated with the simple. If you are from a third world country read this to learn why your nation cannot climb the ladder to developed status... indeed there are not just rungs missing but in some cases the entire ladder had been kicked.