I was reading this article by John Cassidy on China’s economic policies and found myself getting ever-more confused. Not so much about the economics—I pretty much figured ahead of time that I’d remain at my usual high level of confusion about all macroeconomic issues—but, rather, I was confused about what Cassidy’s position was.

The background is that the recent economic growth of China is associated with a “state capitalism,” in contrast to the free-trade policies promoted in the West. The story goes that this is bad for three reasons: (1) even if China has economic success, its people will not have the benefits that come with political freedom, (2) China’s failure to follow the path of unregulated capitalism will reduce the standard of living of ordinary Chinese, who aren’t getting the opportunity to spend as the might like, (3) China’s state capitalism is unfair to industries in the West. (Underlying this third point is the idea that trade restrictions have the form a prisoner’s dilemma, in which each country gains by gaming the system, but when all countries manipulate trade, they’re all less well-off.)

I’ve seen this argument in the newspapers many times. But Cassidy argues that it’s wrong. His key point is historical, that Britain, the U.S., and other economic superpowers from different eras achieved their superpowerdom under high protective tariffs, so it’s a bit silly to suggest the Chinese do otherwise. Pulling up the latter and all that.

Here’s my problem with Cassidy’s piece—and, by extension, with other discussions I’ve seen on this topic. Cassidy appears to making the following claims:

1. Protection works. It was a key part of the strategies that led to the economic success of the world’s leading industrial powers.

2. Protection lives, even in the U.S. (In addition to the recent cases of the financial and auto industry bailouts, Cassidy mentions the huge world of semi-corrupt military procurement deals, subsidies and tariff barriers for ethanol and sugar, and military interventions to secure oil supplies.)

This would all be fine, but my impression is that Cassidy is critical of protectionist U.S. policies. At least, he doesn’t sound like he likes agribusiness subsidies, non-competitive bids, and overthrowing of foreign governments. So, is he saying that unfree trade used to be good for the U.S. but no longer is? How can he be so sure that China’s policies are good trade restrictions (like the protective walls that allowed Britain to build its world-conquering wool and cotton industries) and not the sort of barriers that simply inefficient transfer money from many poor Chinese to a few rich Chinese?

I think that Cassidy likens the current Chinese policy to the good restrictions on trade in Britain and the U.S. in the 1800s and early 1900s, because all these policies are based on growing new industries. But he doesn’t like the military procurement deals and sugar subsidies because they don’t serve this function. I’m not sure how he feels about the French government

I think what’s going on is that Cassidy is working within a world in which everything is divided into Good and Bad. As I’ve remarked elsewhere (see also here), I think this attitude can get in the way of clear thought. Here are Cassidy’s lists:

Good: Trade restrictions in Britain and the U.S. in the 1800s and early 1900s, protection in Korea in the second half of the twentieth century, protection in China

Bad: Free-market orthodoxy, sugar and ethanol subsidies