Matthew C. Klein & Michael Pettis's "Trade Wars Are Class Wars"

Matthew C. Klein is the economics commentator at Barron’s. Michael Pettis is professor of finance at Peking University’s Guanghua School of Management and a senior fellow at the Carnegie Endowment for International Peace.

Klein applied the “Page 99 Test” to their new book, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace, and reported the following:

Page 99 is at the very end of chapter 3, near the center of the entire book. The first three chapters are all about giving the reader a multi-century perspective on the history of trade, cross-border financial flows, economic development, and imbalances between production and consumption. The second half of the book, by contrast, is focused on detailed case studies of China, Germany, and the United States over the past few decades.

Taken out of context, I suspect that page 99 would be confusing to the general reader. It represents the culmination of an argument about the implications of the U.S. trade balance with Mexico and why many people misunderstand the economic relationship between Mexico and the U.S. People who hadn't read the preceding pages would probably have trouble following the concepts and the discussion. But many of the points we make are core to our overall understanding about what matters when it comes to thinking about international trade. So while I don't think it's the best page for a browser to pick to get a sense of whether they would like our book, it is fairly representative of the ideas in our book -- especially the idea that misconceptions about trade can lead to needless conflicts between countries with common interests.

Our basic thesis is that trade disputes between countries aren't caused by geopolitics or incompatible national interests, but by class conflicts within them. Unfortunately, many people don't understand this, such as those we criticize on page 99 who believe Mexico's prosperity comes at the expense of the U.S. Income inequality is the underlying problem in the global economy. It deprives consumers of the money they need to buy what they should be able to afford, which means they either will spend less than they should, or borrow to make up the difference. Under-spending depresses the economy, while borrowing breeds instability and crises. To end the trade wars, we must end the class wars.

Learn more about Trade Wars Are Class Wars at the Yale University Press website.

--Marshal Zeringue