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.