In This Review

The Political Economy of Trade Protection
The Political Economy of Trade Protection
Edited by Anne O. Krueger
University of Chicago Press, 1996, 112 pp
Taxing Multinational Corporations
Taxing Multinational Corporations
Edited by Martin Feldstein et al.
University of Chicago Press, 1995, 113 pp

These two books offer in brief, accessible form the results of two symposia by economists interested in public policy, both sponsored by the National Bureau of Economic Research. The first is on foreign trade protection, the second on taxation of foreign corporate income. They represent an effort to bridge the gap between increasingly technical research and general readers. The Krueger volume covers trade protection sought by seven U.S. industries, including automobiles, lumber, semiconductors, steel, textiles, and wheat. It can be summarized by saying that researchers found virtually no merit in the typical argument for protection. Protection did little to achieve the stated objectives of those seeking it. Their real motivation seems to be redistribution of income from purchasers of the products -- ultimately the consuming public -- to the owners and managers of the protected firms. Success in getting protection depended on their skill not at innovation, production, management, or restructuring but at working the U.S. political system. The Feldstein volume is somewhat less successful in its effort to bridge the technical gap. Existing tax law is complex, and economic hypotheses about the impact of tax provisions on corporate behavior and the economy more generally are arcane, even when the authors have been enjoined from using algebraic notation.