As the title suggests, Michael Lusztig offers a non-apologetic endorsement of liberal trade, coalition building, and the limitations of protectionism and rent seeking. Specifically, he argues that “flexible” rent seekers have a better opportunity to prosper than “inflexible” rent seekers. The goal, therefore, is for governments to reduce rents below a specific threshold to force sectoral interests to successfully adjust to or exit the market. Strategies include the big bang approach, divide and conquer, iteration, and the path of least resistance. Catalysts for change are periods of economic crisis, international obligations, and strategic considerations in which reform is linked to potential electoral success. Ultimately, in Lusztig's opinion, crisis and mandated international change offer the best opportunities for rent reduction, at least in terms of limited political backlash.
To test this thesis Lusztig reviews the trade policies of eight different states. Although these profiles are selective in their attempt to substantiate the main argument they are well written and informative. For Great Britain the discussion focuses on the “golden age” of free trade in the mid nineteenth century. In the case of the United States it examines the liberalization of trade following the 1930 Smoot-Hawley Tariff Act. For Canada and Mexico it reviews the Canada-United States Free Trade Agreement (FTA) and the North American Free Trade Agreement (NAFTA). The discussion of New Zealand focuses on the Labour Party's market-driven reforms of the 1980s. Australia's adoption of protectionism during the same decade is chronicled in the following chapter. Finally, Brazil and Chile are offered as contrasting examples, despite obvious geographic and historic similarities.
On one level, it is difficult to critique Lusztig's text. It is what it is—namely a thorough comparative defence of the limits of protectionism and how governments, by adopting appropriate rational-choice strategies, can purse specific liberal trade policies. At the same time, however, Lusztig's ambitious agenda does suffer from some shortcomings. One problem is the tendency to offer generalized statements that present debatable information as fact. An example is his assertion that students of international political economy “have long maintained [that] free trade represents a … public good” (2). While this might be true regarding liberal theories, it is certainly not the case with other frameworks, such as Marxism, and gender or critical approaches. Lusztig also has a tendency to target specific dates or events as catalysts for change. Although the author does provide considerable historical context in evaluating each case study his tendency to isolate specific “tipping points” does not reflect long-term economic cycles. Finally, the usual critiques of rational choice models apply, including the tendency to view the “national interest” as consistent with liberal objectives, the absence of normative considerations, and the failure to consider relevant non-state actors.
The evaluation of Canada and the FTA, however, raises additional questions and concerns. First, Lusztig is again prone to generalizations with statements suggesting that Canada has a “long tradition of left nationalism, which has stressed the importance of maintaining an arms length economic relationship with the United States” (103). He also asserts that Canadians are a “historically coddled population of industrial rent-seekers” that contributes to a “powerful protectionist alliance in Canada” (103). While there are elements of truth to these statements, which reinforce popular opinion in the United States, his argument ignores the fact that Canada adopts a selective approach to protectionism, which varies between, and even within, specific sectors.
Finally, there are sections of this discussion that do not relate back to Lusztig's overall analysis. Specifically, important developments, such as Canada's role in the establishment of the General Agreement on Tariffs and Trade (GATT) and the Auto Pact receive minimal attention. There is also a two-page review of Brian Mulroney's electoral alliance with Quebec and Western Canada that is not explicitly tied to the thesis. More importantly, however, the discussion stops in 1988, as it does in most other chapters, and ignores recent developments in Canadian trade policy, including the establishment of the World Trade Organization (WTO) and the collapse of both the Multilateral Agreement on Investment (MAI) and the Free Trade Area of the Americas (FTAA). Despite these concerns Lusztig's discussion of Canadian trade policy does provide an overview of political and economic developments, especially in his analysis of flexible and inflexible rent seekers. Therefore, as with the rest of the text, it serves as a useful source of information related to a specific period of trade liberalization. Readers that fail to share Lusztig's theoretical orientation, however, will likely find more to fault in his analysis.