23 Things they don't tell you about Capitalism

According to free-market economists, attempts by developing countries to plan their economies and nurture them through protectionism are doomed to failure, whereas fully opening their economies promotes needed growth. Chang counters that many developing countries’ economies actually performed better during periods of protectionism and government intervention than they have since opening their markets to international trade and investment.

Chang describes two countries, which he refers to as Country A and Country B, as having high tariffs and corrupt governments. Country A, which he reveals as China, also had several large state-run corporations, while Country B, which he reveals as the US during the 1880s, discriminated against foreign investment. Despite these factors, both countries underwent massive growth during the respective timeframes. Indeed, the US Founding Fathers largely supported protectionist trade policies that would earn the disapproval of today’s US Treasury Department as well as the World Bank and the International Monetary Fund (IMF). Chang then illustrates that almost all of today’s rich countries relied on protectionist policies in their past to spur economic growth. Chang suggests that such policies were necessary to set up fledgling economies not yet ready to compete on the world stage, just as government regulations and state-owned enterprises helped kickstart economic activity.