Wages of Crime: Black Markets, Illegal Finance, and the Underworld Economy by R. T. NaylorReview by: Richard N. CooperForeign Affairs, Vol. 81, No. 5 (Sep. - Oct., 2002), pp. 200-201Published by: Council on Foreign RelationsStable URL: http://www.jstor.org/stable/20033290 .Accessed: 16/06/2014 12:20

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact support@jstor.org.

.

Council on Foreign Relations is collaborating with JSTOR to digitize, preserve and extend access to ForeignAffairs.

http://www.jstor.org

This content downloaded from 185.44.77.146 on Mon, 16 Jun 2014 12:20:33 PMAll use subject to JSTOR Terms and Conditions

http://www.jstor.org/action/showPublisher?publisherCode=cfrhttp://www.jstor.org/stable/20033290?origin=JSTOR-pdfhttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/page/info/about/policies/terms.jsp

Recent Books

technical, financial, and moral. In the end, Hamburg argues for a back-to-basics approach: deadly violence-including the new threats of catastrophic terrorism can be eradicated only if the major states

work with the UN and other international groups to foster democratic government, human rights, and economic development around the world. The recommendations are not surprising, but they are advanced

with a moral and intellectual conviction that makes them compelling.

they fear losing their recent gains, some times because their gains fall short of their new expectations. They are much

more likely to be dissatisfied than are the poorest members of society. This last point raises serious doubts about the alleged link between poverty and terrorism that has become fashionable since September 1i. An excellent review of a complex subject, the book still seems to raise more questions than it can answer. For example, why do people in the regions surveyed here seem to be much less happy than those in countries that are considerably poorer, such as China, India, and Nigeria? Economic, Social,

and Environmental RICHARD N. COOPER

Happiness and Hardsh# Opportunity and Insecurity in New Market Economies. BY CAROL GRAHAM AND STEFANO

P ETTI NATO. Washington: Brookings Institution Press, 2002, 174 pp. $42.95 (paper, $17.95).

This book addresses the interaction between people's sense of well-being and economics, drawing on surveys in Latin America and Russia and comparing them with previous work on Europe and the United States. Not surprisingly, greater satisfaction is associated with higher income within countries, although not across countries. But the relationship is not so strong as one might suspect. Happiness is a complex phenomenon, influenced by marital status, gender, hope for the future, and a host of other factors.

The most troubling finding is the high number of "frustrated achievers"-people

whose incomes have risen recently but who are less satisfied, sometimes because

Wages of Crime: Black Markets, Illegal Finance, and the Underworld Economy. BY R. T. NAYLOR. Ithaca: Cornell

University Press, 2002, 320 pp. $29.95. Written by a Canadian economist, this book offers informative chapters on the financial aspects of guerrilla movements, illegal transactions in weapons, bank secrecy and money laundering, and the underworld of gold. It is a useful compi lation of material drawn largely from public sources. The author draws attention to the long-standing and widespread use of "charities" (not only by Arabs) to support political dissidents and armed resistance. He also warns that police officials of many countries have used the recent terrorist attacks and the Bush administration's position on terrorism to get authorization for actions they have wanted for years-and these have little to do with apprehending terrorists.

He persuasively registers deep skepti cism regarding the current emphasis on blocking financial flows as a means to stop terrorism, pointing to the dam age such efforts can do to legitimate

[200] FOREIGN AFFAIRS S Volume 8iNo.5

This content downloaded from 185.44.77.146 on Mon, 16 Jun 2014 12:20:33 PMAll use subject to JSTOR Terms and Conditions

http://www.jstor.org/page/info/about/policies/terms.jsp

Recent Books

business activities, particularly in infor mal sectors. But he underestimates the potential intelligence value of tracing financial flows.

against free trade do not stand up under serious empirical scrutiny. He offers an especially informative chapter on anti dumping duties, which have historically been supported in the name of ensuring "fair trade." In fact, Irwin shows, the

manner in which they are executed by the United States (and increasingly by other countries) has introduced an arbi trary, even capricious, obstacle to some imports in ways that routinely violate normal canons of fairness.

Free Trade Today. BY JAGDISH BHAGWATI. Princeton: Princeton University Press, 2002, 128 pp. $24.95.

Free Trade Under Fire. BY DOUGLAS A. IRWIN. Princeton: Princeton

University Press, 2002, 257 pp. $27.95. Two vigorous and persuasive defenses of international trade. Bhagwati's short book is a revision of three lectures given in Stockholm, in which he provides a spirited riposte to all critics, to whom he pays respect by taking them seriously. He then proceeds to demolish their positions, finding them in logical error, empirically unsupported, or reflecting valid concerns that are better addressed directly rather than indirectly by restricting trade, which would impose unnecessary costs. The book is breezy and nontech nical in style, yet highly sophisticated in content and not easy to absorb without some prior background. It also contains autobiographical flashes and provides an informal guide to the author's own important contributions over the past half-century to the academic literature on the theory of trade and trade policy. It offers an especially cogent attack on the proliferation of "free trade areas," which Bhagwati sees as a damaging diversion from nondiscriminatory trade and a play ground (under the guise of liberalizing trade) for mischievous protectionists.

Irwin inevitably covers some of the same ground but is more accessible to nonspecialists. Here he provides an entree to recent empirical literature, which largely demonstrates that most of the charges

China in the World Market. Chinese Industry and International Sources of Reform in the Post-Mao Era. BY THOMAS G. MOORE. New York:

Cambridge University Press, 2002, 344 pp. $65.oo (paper, $24.00).

Despite its broad title, this book is mostly devoted to two Chinese indus tries during the 1980s and il9os: textiles and shipbuilding. The author thereby provides an informative window on China's economic reforms, viewed through detailed analysis of two highly successful sectors. Both were strongly influenced by developments outside

China, notably the 1975 Multifiber Agreement (revised in 1994) and the 1980s slump in world demand for ship ping. China's approach was to upgrade products, importing foreign technology (and fashion) as needed, rather than selling low-end products exclusively on the basis of price. The author concludes that China will have difficulty following the "Asian model" of state-guided in dustrial growth, given its heavy and particularistic concern for firms in trou ble-a tendency to support losers rather than winners. Success is more likely to be achieved by devolving decision-making

FOREIGN AFFAIRS September/October2002 [201]

This content downloaded from 185.44.77.146 on Mon, 16 Jun 2014 12:20:33 PMAll use subject to JSTOR Terms and Conditions

http://www.jstor.org/page/info/about/policies/terms.jsp

Article Contentsp. 200p. 201

Issue Table of ContentsForeign Affairs, Vol. 81, No. 5 (Sep. - Oct., 2002), pp. I-IV, 1-220Front MatterCommentsCan the EU Hack the Balkans? A Proving Ground for Brussels [pp. 2-7]From North-South to South-South: The True Face of Global Competition [pp. 8-13]Advancing Peace in the Middle East: The Economic Path out of Conflict [pp. 14-16]

One Year LaterBush and the World [pp. 18-43]America's Imperial Ambition [pp. 44-60]The Inadequacy of American Power [pp. 61-73]Public Diplomacy and the War on Terrorism [pp. 74-94]

EssaysChina's Governance Crisis [pp. 96-109]Japan's Dual Hedge [pp. 110-121]What Kind of War for Colombia? [pp. 122-141]The Death of a Treaty [pp. 142-161]The Future of Conservation [pp. 162-173]Poles and Jews [pp. 174-186]

Reviews & ResponsesReview EssayReview: Calling the Shots: Should Politicians or Generals Run Our Wars? [pp. 188-194]

Recent Books on International RelationsAfricaReview: untitled [p. 195-195]Review: untitled [pp. 195-196]Review: untitled [p. 196-196]Review: untitled [pp. 196-197]Review: untitled [p. 197-197]

Political and LegalReview: untitled [pp. 197-198]Review: untitled [p. 198-198]Review: untitled [p. 198-198]Review: untitled [pp. 198-199]Review: untitled [p. 199-199]Review: untitled [pp. 199-200]

Economic, Social, and EnvironmentalReview: untitled [p. 200-200]Review: untitled [pp. 200-201]Review: untitled [p. 201-201]Review: untitled [pp. 201-202]Review: untitled [p. 202-202]

Military, Scientific, and TechnologicalReview: untitled [p. 202-202]Review: untitled [pp. 202-203]Review: untitled [p. 203-203]Review: untitled [p. 203-203]Review: untitled [p. 203-203]Review: untitled [pp. 203-204]Review: untitled [p. 204-204]Review: untitled [p. 204-204]Review: untitled [p. 204-204]Review: untitled [pp. 204-205]

The United StatesReview: untitled [p. 205-205]Review: untitled [pp. 205-206]Review: untitled [p. 206-206]Review: untitled [pp. 206-207]Review: untitled [p. 207-207]

Western EuropeReview: untitled [pp. 207-208]Review: untitled [p. 208-208]Review: untitled [p. 208-208]Review: untitled [p. 209-209]Review: untitled [p. 209-209]

Western HemisphereReview: untitled [pp. 209-210]Review: untitled [p. 210-210]Review: untitled [pp. 210-211]Review: untitled [p. 211-211]Review: untitled [pp. 211-212]

Eastern Europe and Former Soviet RepublicsReview: untitled [p. 212-212]Review: untitled [p. 212-212]Review: untitled [pp. 212-213]Review: untitled [p. 213-213]Review: untitled [p. 213-213]Review: untitled [p. 214-214]

Middle EastReview: untitled [p. 214-214]Review: untitled [pp. 214-215]Review: untitled [p. 215-215]Review: untitled [p. 215-215]Review: untitled [pp. 215-216]Review: untitled [p. 216-216]

Asia and PacificReview: untitled [pp. 216-217]Review: untitled [p. 217-217]Review: untitled [pp. 217-218]Review: untitled [p. 218-218]

Lurie's Foreign Affairs [p. 220-220]

Back Matter