The Limits of Protectionism: Building Coalitions for Free Trade

Extract

The Limits of Protectionism: Building Coalitions for Free Trade. By Michael Lusztig. Pittsburgh, PA: Pittsburgh University Press, 2004. 288p. $27.95.

This is an ambitious and useful book that takes the reader through eight cases of governments that tried, with mixed results, to guide their countries from protectionism to free trade. A successful strategy requires the government to make allies of the industries that can transform themselves and survive in a more competitive environment (“flexible rent-seekers”) and quickly to kill the industries that cannot (“inflexible rent-seekers”). Michael Lusztig adopts from the classic public choice literature the term rent-seekers, a group that seeks to effect a zero sum transfer from others to itself, usually resulting in a negative sum game for society, by the amount of the transaction costs necessary to effect the transfer.