What do you think?
Rate this book
The Myth of Free Trade: A Plan for America's Economic Revival
The author of The Great Depression of 1990 argues that America's failure to keep an eye on its competitors and limit foreign imports has spelled disaster and he sets out a five-year plan for recovery.
288 pages, Hardcover
First published January 1, 1993
7 people want to read
About the author
Ravi Batra
61 books6 followersIndian-American economist, author, and professor at Southern Methodist University.
Batra is the author of six bestselling books of which "The Great Depression of 1990" reached #1 on the New York Bestsellers list in 1987.
In his works, Batra proposes an equitable distribution system known as Progressive Utilization Theory (PROUT) as a means to not only ensure material welfare but also to secure the ability of all to develop a full personality.
Batra is the author of six bestselling books of which "The Great Depression of 1990" reached #1 on the New York Bestsellers list in 1987.
In his works, Batra proposes an equitable distribution system known as Progressive Utilization Theory (PROUT) as a means to not only ensure material welfare but also to secure the ability of all to develop a full personality.
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 of 1 review
September 27, 2007
This shallow text is thoroughly unconvincing.
The premise of Batra's text is that America's trade to GDP ratio has been higher than the nation's historical average since 1973, causing real wage earnings for nonsupervisory workers to decline. Batra's solution to declining wages, which he attributes to monolithic American firms competing with lean foreign exporters who have lower wage costs, is to raise American tariffs from 5 to 40 percent and break up large US firms to replace "foreign competition" with "domestic competition." This will stop the "hemorrhaging" of US manufacturing jobs while increasing domestic productivity.
Although I cannot possibly refute all the errors in Batra's text, I would like to highlight a few examples to illustrate the weaknesses of Batra's assumptions and arguments. Some will be willing to dismiss his work solely on the basis of knowing his others works - The Great Depression of 1990 [1987], Stock Market Crashes of 1998 and 1999 [1998], The Crash of the Millenium [1999]. Nonetheless, let's talk about trade.
Batra makes a few really bad predictions in the text, which seriously undermine his credibility. Consider page 199, where he writes:
"Science has produced such a variety of goods to meet human needs that few new products will succeed in the already saturated markets. Almost everything on earth can be done by machines. The emphasis should now be on perfecting these machines rather than discovering new ones."
Writing in 1993, Batra had yet to see the popularization of the internet, the beginning of hybrid vehicles and shrinking of latops' size and price. His statement not only reveals a total lack of understanding in regards to technological advance, but also as to human desires.
He also offers contradictory predictions of NAFTA's potential effect on Mexico's labor market on pages 190-1:
"Mexico would face a great disruption as a result of opening its borders... Unemployment would soar in Mexico because of the large inflow of manufactures from its partners...
... With NAFTA, thousands more will rush over the border to take advantage of the penurious Mexican wage rates... US businesses will stampede south of the Rio Grande."
Is the "giant sucking sound" jobs or manufactures headed south? You can't have it both ways.
Next, Batra argues that US firms have grown into monopolistic entities that have decreased productivity to due to the absence of domestic competition. He argues that they have grown inefficiently large.
But Batra's argument largely disproves itself. Given a large market, it is impossible for a lone (or a few) firm(s) to dominate the market, because producing that much outputs places the firm on the increasing portion of their long-run average cost curve. If "monolithic corporations have monolithic problems," then smaller firms that are more efficient (as they are on the minimal portion of their long-run cost curve) will begin to take market share away from the corporate giant. Diseconomies of scale are a natural check upon monopolistic tendency.
It's unfortunate that Batra took so long to get to the meat of his argument. For nearly 150 pages, Batra complains about free trade's impact upon the US economy, but then identifies the need to redefine antitrust law to focus on size, not behavior, in order to boost US productivity and competition. He ought to have written an investigation into _why_ US firms are structured as they are and the possible impacts of radically rewriting US antitrust law, rather than explaining his "competitive protectionism" solution in under 50 pages. Batra's "solution" to the "problem" of free trade strikes me as terribly glib, given how little of his text discusses industrial organization.
I have many more complaints, but the above should make it plain that I found the text dissatisfying.
The premise of Batra's text is that America's trade to GDP ratio has been higher than the nation's historical average since 1973, causing real wage earnings for nonsupervisory workers to decline. Batra's solution to declining wages, which he attributes to monolithic American firms competing with lean foreign exporters who have lower wage costs, is to raise American tariffs from 5 to 40 percent and break up large US firms to replace "foreign competition" with "domestic competition." This will stop the "hemorrhaging" of US manufacturing jobs while increasing domestic productivity.
Although I cannot possibly refute all the errors in Batra's text, I would like to highlight a few examples to illustrate the weaknesses of Batra's assumptions and arguments. Some will be willing to dismiss his work solely on the basis of knowing his others works - The Great Depression of 1990 [1987], Stock Market Crashes of 1998 and 1999 [1998], The Crash of the Millenium [1999]. Nonetheless, let's talk about trade.
Batra makes a few really bad predictions in the text, which seriously undermine his credibility. Consider page 199, where he writes:
"Science has produced such a variety of goods to meet human needs that few new products will succeed in the already saturated markets. Almost everything on earth can be done by machines. The emphasis should now be on perfecting these machines rather than discovering new ones."
Writing in 1993, Batra had yet to see the popularization of the internet, the beginning of hybrid vehicles and shrinking of latops' size and price. His statement not only reveals a total lack of understanding in regards to technological advance, but also as to human desires.
He also offers contradictory predictions of NAFTA's potential effect on Mexico's labor market on pages 190-1:
"Mexico would face a great disruption as a result of opening its borders... Unemployment would soar in Mexico because of the large inflow of manufactures from its partners...
... With NAFTA, thousands more will rush over the border to take advantage of the penurious Mexican wage rates... US businesses will stampede south of the Rio Grande."
Is the "giant sucking sound" jobs or manufactures headed south? You can't have it both ways.
Next, Batra argues that US firms have grown into monopolistic entities that have decreased productivity to due to the absence of domestic competition. He argues that they have grown inefficiently large.
But Batra's argument largely disproves itself. Given a large market, it is impossible for a lone (or a few) firm(s) to dominate the market, because producing that much outputs places the firm on the increasing portion of their long-run average cost curve. If "monolithic corporations have monolithic problems," then smaller firms that are more efficient (as they are on the minimal portion of their long-run cost curve) will begin to take market share away from the corporate giant. Diseconomies of scale are a natural check upon monopolistic tendency.
It's unfortunate that Batra took so long to get to the meat of his argument. For nearly 150 pages, Batra complains about free trade's impact upon the US economy, but then identifies the need to redefine antitrust law to focus on size, not behavior, in order to boost US productivity and competition. He ought to have written an investigation into _why_ US firms are structured as they are and the possible impacts of radically rewriting US antitrust law, rather than explaining his "competitive protectionism" solution in under 50 pages. Batra's "solution" to the "problem" of free trade strikes me as terribly glib, given how little of his text discusses industrial organization.
I have many more complaints, but the above should make it plain that I found the text dissatisfying.
Displaying 1 of 1 review