March’s Books of the Month

The international relations book is partially inspired by this Brad DeLong post. The highlights:

When economists talk about international trade and finance, they talk–first and most importantly–about building institutions to allow for mutually-beneficial acts of economic exchange. They talk about diminishing barriers and increasing confidence. They talk about playing positive-sum games with people in other countries that increase wealth, trust, and confidence and that ultimately align interests: the larger is the surplus from international trade and finance, the bigger is that stake that everyone has in continuing the free-trade-and-finance game…. Between 1850 and 1910–by accident–Great Britain built ties with the United States: economic ties, cultural ties, political ties of mutual deference where strategic issues were at stake. As a result, by 1910 Americans perceived Britain as their friend, and the British Empire as by and large a force for good in the world. This is in striking contrast to how Britain was perceived in 1850: the cruel corrupt ex-colonial power that had just starved a quarter of all Irishmen to death. Now this mattered a lot. This meant that when Britain got into trouble in the twentieth century–whether with Wilhelm II or Hitler or Stalin and his successors–it had wired aces as its hole cards in the poker game of seven-card stud that is international relations. The willingness of the United States to send Pershing and his army Over There, to risk war with and then to fight Hitler, and to move U.S. tanks from Ft. Hood, TX, to the Fulda Gap were all powerfully motivated by America’s affinity with Britain, its geostrategic causes, and its security. How does this apply to the present? It is obvious. Alexis de Tocqueville could project before the Civil War that the U.S. and Russia were likely to become twentieth-century superpowers. We can project today that at least one of India and China–perhaps both–will become late-twenty first century superpowers. We have an interest in building ties of affinity now. It is very important for the late-twenty first century national security of the United States that, fifty years from now, schoolchildren in India and China be taught that America is their friend that did all it could to help them become rich. It is very important that they not be taught that America wishes that they were still barefoot and powerless, and has done all it can to keep them so. The fact that these issues are not even on the radar screen of the international relations community is indeed terrifying…

There’s a fair amount to quibble with in this post — Brad’s statements about what diplomats want from trade is pure straw man; neither international relations scholars nor the foreign policy community is blind to the rise of China and India. Nevertheless, the point about U.S. economic openness yielding long-term policy dividends from rising great powers is spot-on. So, this month’s IR book is The United States and the World Economy: Foreign Economic Policy for the Next Decade, edited by C. Fred Bergsten of the Institute for International Economics. The book’s precis:

What are the key foreign economic policy issues facing the United States in the second half of this decade? How can the administration and Congress meet the economic challenges that lie ahead? This new book analyzes the dramatic importance of the world economy to both the domestic prosperity and overall foreign policy of the United States, describes the new global environment (e.g., the rise of China as a global economic superpower and the completion of European unification) in which US policy must operate, and proposes major US initiatives on a wide range of international economic issues, including correction of the huge current account deficit, new trade negotiations, and energy.

Of particular interest was the chapter by Scott C. Bradford, Paul L. E. Grieco, and Gary Clyde Hufbauer on “The Payoff from Global Integration,” in which the authors put a dollar value on the return from past and future trade expansion. Using different methods of estimation, they estimate that the cumulative payoff from trade liberalization since the end of the Second World War ranges between $800 billion to $1.45 trillion dollars per year in added output. This translates into an added per capita benefit of between $2,800 and $5,000—or, more concretely, an addition of somewhere between $7,100 and $12,900 per American household. As for the future, the gains from future trade expansion have been estimated to range between an additional $450 billion and $1.3 trillion per year in additional national income—which would increase per capita income between $1,500 and $2,000 on an annual basis. The fact is, there are few policies in the U.S. government’s tool kit that consistently yield rewards of this magnitude. [What about the costs in terms of jobs lost, etc.?–ed. Estimated as well — a bit less than $60 billion per year. So there are costs, but they’re much, much smaller than the benefits.] The general interest book [WARNING: COARSE LANGUAGE AHEAD] comes courtesy of Kieran Healy: Harry Frankfurt’s On Bullshit. The first paragraph alone is priceless:

One of the most salient features of our culture is that there is so much bullshit. Everyone knows this. Each of us contributes his share. But we tend to take the situation for granted. Most people are rather confident of their ability to recognize bullshit and to avoid being taken in by it. So the phenomenon has not aroused much deliberate concern, or attracted much sustained inquiry. In consequence, we have no clear understanding of what bullshit is, why there is so much of it, or what functions it serves.

[Why buy the book when the whole text is online?–ed. Well, this is just me, but I love small books that can fit in one’s pocket. More importantly, however, is that I’m traveling tomorrow and I’m already looking forward to reading the book on the plane just to see the reactions to the title. A printout just doesn’t have the same punch.]